California aims to crack down on workers’ comp fraud by employers

Workers' compensation is a no-fault system. This can be beneficial for both workers and employers, because it means a guaranteed resource pool for those who are injured on the job without having to prove negligence, and it protects employers from costly and unpredictable negligence lawsuits.

However, no-fault does not mean that workers' comp claims can be made outside the bounds of a narrow set of circumstances. For example, workers compensation only covers injuries that occur on the job, and one common type of workers' compensation fraud involves employees who claim an injury suffered in an accident outside of the workplace was actually job related.

While workers' who file false claims may be the type of workers' comp fraud that first comes to mind for most individuals, employer workers' compensation fraud is also relatively common. Businesses may attempt to lower their premiums through various strategies that can cross the threshold into fraud. With a recent multimillion dollar grant, California prosecutors will be cracking down on workers' compensation fraud more than ever throughout fiscal year 2014.

Misclassified employees, other attempts at lowering insurance premiums can be fraud

There are several ways a business may run afoul of workers' compensation fraud laws. One of the most common is misclassifying employees in order to qualify for lower premiums from a workers' comp insurer.

In these types of cases, the employer may tell the workers' comp insurer that employees work in safer positions than they actually do, for instance, reporting forklift operators in a warehouse as office clerks. Or, the employer might falsely classify employees as independent contractors for whom workers' comp coverage is not required. Employers may also simply hide employees or report a lower payroll in order to secure lower workers' comp insurance premiums.

Other employer practices that can rise to the level of workers' compensation fraud include deducting money from employees' wages to pay workers' comp insurance premiums, or simply failing to acquire required workers' compensation insurance coverage.

More than $30 million set aside to prosecute California workers' comp fraud in 2014

In October, Dave Jones, California Insurance Commissioner, distributed $32 million in grant funds to prosecuting attorneys across the state for the purpose of bringing workers' compensation fraud cases. In a statement accompanying the grant awards, Jones indicated that his department had received over 5,000 reports of suspected workers' comp fraud in fiscal year 2012-13, with costs to the workers' comp system in excess of $340 million.

Call a workers' compensation fraud defense attorney if you are concerned or have questions about how you are conducting your business.

Given the large estimated losses due to workers' compensation fraud and the millions recently distributed to support investigation and prosecution of workers' comp fraud, your business practices could come under increased scrutiny whenever there is an injury claim, especially if there is an attorney representing the injured worker. It can be easy to cross a line into practices that may not seems like they could be discovered, but could bring serious criminal consequences of workers' comp fraud if revealed. If your business is being run in a fashion that cuts corners to save money on your insurance premiums, the time to act is now. Remember that all your discussions with an attorney are privileged. An experienced California workers' compensation defense attorney can assist you with advice and recommendations. Get in touch with such an attorney today and begin protecting yourself before the next injury claim happens.