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Fraud Fighting Tips from Prosecutors

Fraud Fighting Tips from Prosecutors

Workers’ Compensation fraud is an ever increasing problem in California, but enforcement agencies, employers, adjusters, investigators, and attorneys are developing new and innovative ways to combat the increased economic burden that fraud places on the Workers’ Compensation system.  California Department of Insurance Investigators and regional District Attorneys emphasize the need for communication and due diligence early in the discovery process in order to ensure successful fraud referrals. Further, they are increasing their efforts to educate Workers’ Compensation professionals and the public as a whole to ensure successful investigation, referral, and prosecution of legitimate fraud claims. They emphasize several key factors for defendants to consider when assessing suspected Workers’ Comp Fraud.

First, it is important for Workers’ Compensation professionals to know and understand the elements of fraud as set forth in California Insurance Code § 1871.4: (1) a lie/misrepresentation, (2) knowledge, (3) materiality, and (4) intent.  If the facts do not support one or more of the elements, it is less likely that the local enforcement agency will investigate or prosecute the claim.  Enforcement agents recommend tailoring a discovery plan to obtain additional evidence as needed, when one of the elements may be lacking, before submitting a referral.  For example, attorneys and adjusters can coordinate with investigators to develop very specific deposition questions where surveillance footage is inconsistent with an applicant’s statements about activities of daily living, work activities, etc.  Attorneys and adjusters also should ensure that medical-legal evaluators and treating providers address the specific areas where fraud is suspected.  Further, it is difficult to prove knowledge or intent where a relevant question is either not clear or not asked.  A fraud claim will be much stronger where there is evidence that the injured worker intentionally, knowingly, and repeatedly lied or omitted crucial facts in response to direct, succinct, and specific questions.

Also, it is important to consider whether a lie or misrepresentation is material in assessing a potential fraud claim. If the adjuster would have paid benefits regardless of the lie, then the injured worker’s actions likely do not constitute criminal fraud. Further, a fraud claim is less likely to be successful where the doctor does not change his or her opinion in any material way after reviewing information about the lie or misrepresentation.

In addition, enforcement agents encourage employers to recognize any “red flags” in a Workers’ Compensation claim, report them to the claims examiner, and conduct an investigation as early in the process as possible. “Red Flags” include injuries reported after termination, new employees who are injured shortly after hire, inconsistent witness/claimant statements, injuries that are not consistent with job duties, and injuries occurring near the weekend.  The earlier the employer investigates a suspected fraud claim, the more likely it is that they will preserve important evidence and obtain accurate statements from the injured worker and witnesses.

Ultimately, law enforcement agents emphasize knowledge, cooperation, and awareness as an effective way to combat fraud.  The California Department of Insurance has updated their website, www.insurance.ca.gov,  to provide resources for Workers’ Compensation professionals addressing suspected fraud claims. Enforcement agents also encourage parties to contact their regional CDI office with questions about suspected fraud claims or pending referrals.  Their hope is that through increased education and coordination, fraud reporting and convictions will increase in the future.

Contributed by: Kristin Bergesen, Esq. the senior RTGR attorney at our Sacramento office. You can contact her at Kristin@nullrtgrlaw.com

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