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California Law: Understanding Workers’ Compensation Fraud (Part 1)

California Law: Understanding Workers’ Compensation Fraud (Part 1)

Workers' compensation fraud is a well-planned scam to defraud insurance providers. In order to receive pay or benefits, a worker, employer, or health care provider may falsify records, make false assertions, or manufacture illnesses. Read on to learn and understand workers’ compensation fraud under California Law.

Workers Compensation Fraud

Workers' compensation insurance covers medical expenses, lost earnings, rehabilitation, and death benefits for employees who are injured on the job. It is a no-fault system in which neither the employer's nor the worker's negligence is required to prove liability.

Insurance Code 1871.4

1871.4 is the principal section of the statute that governs this type of fraud. It explains that making a materially false or fraudulent statement or representation in order to receive workers' compensation benefits, involving:

  • Confirming, opposing, or misleading a workers' compensation claim.
  • Conspiring with another to commit worker's compensation fraud.
  • Making a false or fraudulent statement about an injured worker's right to benefits, or inciting another person to make a false or fraudulent declaration.

Making a Representation or Statement

Making a representation or statement includes the following:

  • Payment for services
  • Fees for services
  • Making oral assertions based on medical records
  • Tests to look for indicators of damage or loss

Making a Materially False Representation about a Material Fact

A “material” statement or representation is one that is directly relevant to the investigation or evaluation of the claim. For example, consider an injured worker who fails to disclose that his work-related injury exacerbated a pre-existing non-work-related ailment.

Making a False or Fraudulent Claim

False representations made to an insurer, either verbally or in writing, to get benefits for oneself or, if you are an employer, to deny certain benefits to a worker, constitute fraud.

Other actions that may be considered “false or fraudulent statements” include failing to disclose a pre-existing injury, exaggerating or fabricating its severity, lying for the benefit of a coworker, working another job while receiving worker's compensation, staging an accident or faking an injury, and misrepresenting the worker's job duties and responsibilities to an insurer.

Penalty for Fraudulent Workers' Compensation Claims

Based on your prior criminal history and the nature of the deception, the district attorney may charge you with a misdemeanor or a felony.

Realignment AB 109

Nonviolent prisoners are sent from state prison to county jail or non-custodial monitoring under AB 109, where they are monitored by county agents rather than state officials.

The principal benefit of serving time in county jail is the prospect of expungement.

Penalties for Fraudulent Workers' Compensation Claims

Anyone who willfully provides misleading information to an employee in order to discourage them from submitting a legitimate claim or to the insurer in order to avoid payment of any benefits is penalized under California law. This may also include the following:

  • Falsifying any facts in order to obtain lower-cost workers' compensation insurance is one of the actions that could result in hefty civil fines.
  • Presenting or causing any knowingly false or fraudulent statement to be made in favor of or in opposition to any workers' compensation claim
  • Notifying clients of available workers' compensation services; for-profit services that refer patients to workers' compensation-covered medical or medical-legal services; or knowingly helping or collaborating with others to commit any of the preceding.

The Different Types of Civil Penalties

Each false claim carries a minimum of $4000 and a maximum of $10,000 in fines. Furthermore, the offender may be forced to pay up to three times the cost of medical treatment or legal fees covered by workers' compensation insurance.

Prior Felony Convictions Evaluation

The maximum penalty for defrauding a workers' compensation insurance company is $4000 for each service linked with the deception.


Being a responsible citizen and worker is not just about doing the job well. Sometimes, it’s also about being aware of your rights and being mindful of not breaking the law. Now that you are aware of the basic information regarding workers’ compensation fraud in California, you can continue making a living without encountering issues at your workplace.

Are you looking for workers’ compensation attorneys in California? Pacific Workers', The Lawyers for Injured Workers, provides you with legal representation by professionals whose credibility is unprecedented. Book a free consultation today at 800-606-6999..

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