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What Employers Can Do When They Suspect a Fraudulent Claim


Because workers’ compensation insurance is a no-fault system in California, injured employees do not need to prove that their injury was someone else’s fault in order to receive workers’ compensation benefits for an on-the job-injury.  Injured workers are entitled to medical expenses and may also be entitled to a portion of their wages lost due to not being able to work. These benefits make fraudulent workers’ compensation claims an attractive target for criminals.
Common fraudulent workers’ compensation claims include an employee inflating the extent of his/her injuries or lying about their injuries altogether.  On the other hand, professionals such as doctors and lawyers, may encourage, pay, and conspire with other individuals in cheating the system through fraudulent activity. As a result, insurance companies “pick up the tab,” passing the cost onto employers, taxpayers, and the general public.
As a result, the Workers’ Compensation Fraud Program was established in 1991.  The law made workers’ compensation fraud a felony and required insurers to report suspected fraud.  The notification of insurance fraud may be made anonymously.  Furthermore, the Insurance Code provides that nobody can be sued for libel, slander, or any other related cause of action for reporting suspected fraud to the California Department of Insurance, Fraud Division.
During the fiscal year of 2010-2011, the Fraud Division identified and reported 5,741 suspected fraudulent claims, assigned 501 new cases, made 254 arrests and referred 272 submissions to district attorneys.  The potential losses amounted to $276,894,742.00

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