California worker’s comp fraud: What all employers should know

Employees and medical providers may commit worker’s compensation fraud in order to scam the system and obtain benefits they are not entitled to.

Worker's compensation is a benefit that is provided to the majority of workers throughout California. It is meant to ensure that people are cared for in the event that they are injured on the job. Unfortunately, however, some employees seek to take advantage of the system by reporting fake injuries. In fact, the California Department of Insurance reported that its Fraud Division identified and reported more than 5,700 suspected cases of fraudulent worker's compensation claims in 2013 alone.

What is a fraudulent claim?

In general, fraud is an intentional misrepresentation or deception. According to the California Department of Industrial Relations, worker's compensation fraud occurs when someone knowingly lies in order to obtain benefits, or payments for services. For example, employees may falsify their specific injuries, the severity of their injuries or even how they were injured.

By the same token, health care professionals may also commit worker's compensation fraud. According to the California Department of Industrial Relations, some of the most common types of medical provider fraud include the following:

  • Billing worker's compensation carriers for services that were not provided
  • Charging worker's compensation carriers for visits that never occurred
  • Performing treatments that are not medically necessary
  • Billing procedures separately that are normally covered by a single fee
  • Receiving benefits or payments for making referrals

Additionally, billing someone's worker's compensation carrier and private insurance company for the same services may also constitute fraud. Regardless of whether payments are ever received, making fraudulent claims is considered a crime in California.

Reporting suspected employee fraud

Should employers suspect that an employee has made a fraudulent claim, they should notify their worker's compensation claims administrators. They may do this either by phone, or in person. Employers should provide their claims administrators with the facts of the case as they understand them, the contact information for any witnesses and any other evidence. After an initial report is made, the state's Department of Industrial Relations advises employers to follow up with a written letter.

Reporting suspected professional fraud

In cases when employers suspect a medical professional of worker's compensation fraud, they should fill out the suspected fraudulent claim referral form. Typically, this will initiate an investigation. If health care providers have committed fraud, they may face professional consequences, such as losing their medical licenses. In addition, they may also be subject to legal penalties, which could include jail time or fines.

Seeking legal counsel

Worker's compensation fraud can be costly for California employers. However, dealing with such cases is not always cut and dry. Thus, employers who are concerned an employee or health care professional may be scamming the system may benefit from working with an attorney. A legal representative may help them to gather evidence, as well as offer advice regarding the best course of action.