Workers' compensation fraud is one of the fastest growing crimes in California. District attorneys' offices and other prosecuting agencies now have specialized and aggressive units that are specifically assigned to prosecuting these cases and recovering monies defrauded. This article is a brief overview of the law, penalties, and common defenses associated with California workers' compensation fraud cases. If you or a loved one is charged with workers' compensation, or a violation of California's Insurance Code Section 1871.4, contact our criminal defense attorneys without delay for a free case analysis.
Ins. 1871.4 Laws
There are two section of the California code that primarily deal with workers’ compensation fraud: Penal Code Section 550, and more commonly, Insurance Code Section 1871.4 (Ins. 1871.4). This article deals primarily with the latter, Insurance Code Section 1871.4.
Per Ins. 1871.4, Workers’ Compensation fraud is the act of doing any of the following:
Make or cause to be made a knowingly false or fraudulent material statement or material representation for the purpose of obtaining or denying any compensation.... (Ins. 1871.4(a)(1) Abbrev).
Present or cause to be presented a knowingly false or fraudulent written or oral material statement in support of, or in opposition to, a claim for compensation for the purpose of obtaining or denying any compensation…. (Ins. 1871.4(a)(2) Abbrev.).
Knowingly assist, abet, conspire with, or solicit a person in an unlawful act under this section (Ins. 1871.4(a)(3)).
Make or cause to be made a knowingly false or fraudulent statement with regard to entitlement to benefits with the intent to discourage an injured worker from claiming benefits or pursuing a claim (Ins. 1871.4(a)(4)).
Make or cause to be made a knowingly false or fraudulent material statement or material representation for the purpose of obtaining or denying any of the benefits or reimbursement provided in the Return-to-Work Program (Ins. 1871.4(a)(5)).
Make or cause to be made a knowingly false or fraudulent material statement or material representation for the purpose of discouraging an employer from claiming any of the benefits or reimbursement provided in the Return-to-Work Program…. (Ins. 1871.4(a)(6)).
Statement Defined: For the purposes of 1871.4, “statement” includes, but is not limited to, a notice, proof of injury, bill for services, payment for services, hospital or doctor records, X-ray, test results, medical-legal expense…, other evidence of loss, injury, or expense, or payment (Ins. 1871.4(a)(5) Abbrev.).
Thus, it is a crime to do any of the following:
Make a false statement in a worker’s compensation claim
Knowingly make an omission in a worker’s compensation claim
Make a workers’ compensation claim for an injury you did not receive
Make a workers’ compensation claim for an injury you did not receive while on the job
Convince another person to make a false workers’ compensation claim
Discourage an employee from making a valid workers’ compensation claim
Submit medical bills for workers’ compensation with no medical injury
Submit medical bills for a medical injury not suffered during employment
Submit multiple claims for the same injury related to workers’ compensation benefits
Submit false documents related to a workers’ compensation claim
Aiding and abetting a person in making a false worker’s compensation claim
Faking or exaggerating an injury related to a worker's compensation claim
Failure to disclose a preexisting injury, and more.
Also, when a workers’ compensation claim is based upon false documents that the defendant knows to be false, then the defendant will likely be charged with felony perjury in addition to the worker’s compensation fraud allegations. Perjury is the crime of knowingly making false statements under oath or affirmation. For more information, see Perjury Crimes.
Ins. 1874.1 Penalties
Wobbler Offense: Workers’ compensation fraud crimes are wobbler offenses. A wobbler offense is a crime that may be charged either as a felony, or alternatively as a misdemeanor. Whether a particular workers’ compensation claim is charged as a felony or as a misdemeanor depends largely on the monetary amount of fraud alleged, the defendant’s criminal history, the sophistication of the alleged facts, the terms of any plea bargain agreement between the district attorney and the defendant, the defendant’s remorse, or lack thereof, and more. For more information, see Felony v. Misdemeanor Crimes & Wobbler Crimes.
Felony Jail Sentence: When workers’ compensation fraud is charged as a felony (1871.4-F), the defendant may face up to two years, three years, or five years in jail. A non-jail probation sentence may also be available after a felony conviction of Ins. 1871.4 (See Probation Sentence).
Note: Whether the defendant receives a jail sentence of two years (low-term), three years (mid-term), five years (high-term), or a probation sentence, depends largely on the defendant’s criminal history, the presence of any aggravating or mitigating factors in the circumstances of the allegations, the terms of any plea bargain agreement (if any), and more.
Misdemeanor Jail Sentence: When workers’ compensation fraud is charged as a misdemeanor (1871.4-M), the defendant may face up to a year in jail. A non-jail probation sentence may also be available after a misdemeanor conviction of Ins. 1871.4 (See Probation Sentence).
Note: A defendant may be charged with a felony workers’ compensation fraud initially, and thereafter, have that felony charged reduced to a misdemeanor for various reasons. For more information, see PC 17(b) Defense below).
Good Conduct Credits: Any jail sentence, or work release sentence, which is ordered after a conviction for any Ins. 1871.4 crime, is reduced by up to fifty percent (50%) if the defendant serves her jail sentence or probation sentence with good behavior. For example, a sixteen-month jail sentence may usually be reduced to eight months if the defendant serves those eight months of actual jail with good behavior (i.e., no crimes committed while in jail).
Probation Sentence: A probation sentence is a period of supervision as opposed to an actual jail sentence. A probation sentence is available in Ins. 1871.4 cases, but a probation sentence is not guaranteed. Whether or not a defendant receives a probation sentence after a conviction of workers’ compensation fraud depends on the defendant’s criminal history, the facts of the case, the terms of any plea bargain agreement, the amenability of the defendant to serve a probation sentence (no failure to appear at court history, or transportation issues), and more.
A probation sentence includes “terms of probation” that must be obeyed during the probationary period in order for the defendant to remain on probation. Terms of probation are monitored by the court in misdemeanor cases (summary probation), and terms of probation are monitored by a felony probation officer in felony cases (formal probation).
The probation terms usually include conditions such as 1) Commit no Crime; 2) Pay Restitution; 3) Pay Fines and Court Fees; 4) Submit to a Body or Home Search by Law Enforcement (Formal Probation Term), and more. If the defendant fails to comply with a probation term, then the defendant’s probation may be terminated, and the defendant may be committed to actual jail (See Violation of Probation).
Also, a probation sentence can include a jail commitment as a term of probation. However, when a jail commitment is ordered as a term of probation, the jail commitment is generally much shorter than the jail sentence that otherwise would have been entered had the defendant not been granted probation. Additionally, a jail sentence that is ordered as a term of probation may usually, but not always, be served alternatively on work release or house arrest.
PC 1170(h) Sentence: A person convicted of any felony violation of a Ins. 1871.4, who does not receive a probation sentence, may have that felony jail sentence split (served partially in jail and partially out of jail on work release), or suspended (not served unless and until the defendant violates a term of her out-of-jail suspended sentence. Whether the judge allows split or suspended sentence in any worker’s compensation fraud conviction depends on the defendant’s criminal history, the terms of a plea bargain between the district attorney and the defendant, and the amenability of the defendant serving an out-of-jail sentence, and more. For more information, see PC 1170(h) Sentencing.
Also, a jail sentence ordered after a conviction for worker’s compensation fraud is served in a local county jail, as opposed to a California state prison. This is true regardless of the classification of crime (misdemeanor or felony), or the length of the jail sentence.
Restitution & Fines: Per Ins. 1871.4(b): “Every person who [commits workers’ compensation fraud] shall be punished by imprisonment in a county jail…, or by a fine not exceeding one hundred fifty thousand dollars ($150,000) or double the value of the fraud, whichever is greater, or by both that imprisonment and fine.... A person convicted under this section may be charged the costs of investigation at the discretion of the court" (Ins. 1871.4(b) Abbrev.).
Note: From the language of Ins. 1871.4(b) it appears that there is an option that the defendant may pay a fine instead of serving an actual jail sentence. However, in practice, the defendant will serve at least a probation sentence in this situation. Without a probation sentence, the court would otherwise have no way of securing the fine ordered per this section.
Enhanced Jail Sentence: Per Ins. 1871.4(c): “A person who [commits workers’ compensation fraud], and who has a prior felony conviction of workers’ [compensation fraud or similar crime], shall receive a two-year enhancement for each prior conviction in addition to the sentence provided in subdivision (b) (Ins. 1874.1(c) Abbrev. & Summarized).
CIMT: Workers’ compensation fraud is considered a crime involving moral turpitude, or CIMT. A CIMT is a crime that is based upon deception or is otherwise considered morally wrong. A CIMT can carry severe collateral consequences for non-US citizens (i.e., deportation, denial of citizenship, denial of reentry into the country, etc.), professionally licensed persons (i.e., doctors, therapists, lawyers, dentist, teachers, etc.), military service-related consequences for recruits, veterans, and enlisted military personnel (i.e., dishonorable discharge, loss of military benefits, denial of entry, etc.), and more. For more information, see CIMT.
Three Strikes Law Issues: Workers’ compensation crimes are not considered serious or violent crimes as those terms are defined respectively at PC 1192.7 and 667.5. Accordingly, Ins. 1871.4 crimes are not classified as “strike” offenses under California’s Three Strikes Law. Nevertheless, the jail sentence associated with a felony conviction of workers’ compensation fraud may be enhanced by any prior felony conviction of the defendant.
Bail: Bail is an amount of money or property that is staked with the court, and which is intended to assure the defendant’s presence in court during the pretrial proceedings. Money or property is usually staked with the court through a bail agent (bondsman). If the defendant does not appear as ordered, then her bail will be forfeited and she must either be released on her own recognizance (without the need for bail), or remain in jail during the pretrial proceedings. The scheduled bail amount for workers’ compensation fraud in San Bernardino County is $25,000 for felony cases, and $5,000 for misdemeanor cases. This amount may be increased or decreased based on several factors. For further information, see Bail.
Additional Penalties: Any conviction for Ins. 1871.4 may lead to any of these additional penalties: civil lawsuits, criminal protective orders, negative consequences with family law issues (especially adoption and child support issues), loss of insurance benefits, loss of rights to own and possess firearm (felony cases only), and more.
Ins. 1874.1 Defenses
Common Defenses: Common defenses associated with workers’ compensation fraud include: honest and reasonable mistake as to the defendant’s knowledge listed on relevant county and state forms; careless and innocent mistake with preparations of the benefits claims forms; coerced confessions; illegal search and seizure; double jeopardy; lack of intent to defraud; insufficient evidence to prove beyond a reasonable doubt the intent of the defendant, and more.
Plea Bargain: A plea bargain is an agreement between the district attorney (or Attorney General) and the defendant (usually through the defendant’s attorney. The agreement is designed to be mutually beneficial to the prosecutor and the defendant. In the plea bargain process, the defendant’s attorney will attempt to negotiate a non-jail disposition for the defendant if possible (i.e., probation sentence without jail). In return, the defendant will agree to plead either “not guilty” or “no contest.”
Note: A plea bargain is not a true defense in the sense that the defendant is found “not guilty,” or the case is dismissed. Rather a plea bargain is a defense option when the facts of the workers’ compensation fraud case against the defendant is supported by strong facts and evidence.
Judicial Diversion: Judicial diversion is a criminal court process whereby the defendant’s case is “diverted” from prosecution. Judicial diversion only applies to misdemeanor violations of worker’s compensation fraud. Judicial diversion is an agreement between the criminal court judge and the defendant, whereby the defendant agrees to perform certain probation-like conditions and the judge agrees to dismiss the defendant’s case if the defendant performs those conditions. The probation-like condition (diversion conditions) include: taking a diversion class, paying restitution, paying fines and fees, staying out of trouble for up to two years (no new misdemeanor or felony crimes), and more.
Note: Judicial diversion, while not a true defense in the sense that the defendant is ultimately found not guilty or the case is dismissed, is a great option for defendant’s who face strong evidence of a violation of Ins. 1871.4. This is because a Judicial diversion, if granted by the judge, can lead to an almost complete dismissal of the criminal charges without the defendant ever pleaded guilty.
Also, Judicial Diversion is not guaranteed. Whether or not the defendant will be granted a judicial diversion option depends largely on the facts of the case and the defendant’s criminal history. However, if the judge does decide to grant judicial diversion, the district attorney cannot stop the process…no matter how much the district attorney might otherwise object to the defendant’s grant of judicial diversion. /For more information, see PC 1001.95.
PC 17(b) Defense: When the defendant is charged with a felony violation of Ins. 1871.4, the defendant may motion the court to have that felony classification reduced to a misdemeanor classification. This is allowed because Ins. 1871.4 is classified as a wobbler, which means that workers’ compensation fraud allegations may be filed as felonies, or alternatively as misdemeanors. PC 17(b) is not a true defense in the sense that the workers’ compensation fraud allegation is either dismissed, or the defendant is found not guilty, but a successfully 17(b) motion will significantly reduce the jail exposure for the defendant.
After a defendant has been convicted of workers’ compensation fraud, she may have some or, all of the following post-conviction options available to her: appeal her criminal conviction; withdraw her guilty plea; motion the court to dismiss her case after probation completed (expungement); terminate probation early, remove a criminal protective order, request a certificate of rehabilitation (felony cases only), restore her gun rights (felony cases only), and more.
No Criminal Filing: If a person is cited for a violation of Ins. 1871.4, but that person is never convicted because her case was either not filed, dismissed pursuant to PC 1385, dismissed for lack of prosecution (Serna Motion), dismissed due to a violation of the statute of limitations, or the defendant was found not guilty after trial, then the defendant may motion the court to have her criminal arrest or citation removed from government files. For more information, see Seal & Destroy Arrest Record.
If you or a loved one is charged with workers’ compensation fraud, or Ins. 1871.4, contact our criminal defense lawyers without delay. Our criminal defense team will patiently explain to you your legal rights, your legal defenses, and your legal options. Our aggressive and experienced lawyers are available every day to discuss your case at no charge for a first-time, in-office consultation. We represent defendants charged with workers’ compensation fraud in both San Bernardino and Riverside Counties, including the cities of Fontana, Yucaipa, Rialto, Redlands, San Bernardino, Rancho Cucamonga, Grand Terrace, Victorville, Chino, Ontario, and more. Call today!
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