Menu Close

Insurance Commissioner Dave Jones announced he has awarded $32 million in grants to district attorneys across 36 counties in California to combat workers’ compensation fraud. The grants, funded through employer assessments, support law enforcement efforts in investigating and prosecuting workers’ compensation insurance fraud.

“Last fiscal year 2012-13, my department received more than 5,000 referrals for suspected workers’ compensation fraud, with losses totaling more than $340 million,” said Commissioner Jones. “The impact of fraud is felt across California businesses and is a drain on our economy. These grants will assist district attorneys across the state in uncovering workers’ compensation fraud schemes and prosecuting those who rip-off insurers and employers.”

Grant funding is based on assessments from California employers. The California Department of Insurance leads the Workers’ Compensation Grant Review Panel that reviews and makes grant funding recommendations based on multiple criteria such as previous year performance, applications, arrests and convictions. The panel sends a recommendation to the Insurance Commissioner who either accepts or amends the panel’s recommendation. Upon completion, the Commissioner’s recommendation is submitted to the Fraud Assessment Commission for their advice and consent, and then the grants are awarded.

Los Angeles County is at the top of the list with $5.8 million awarded. San Diego County will receive $4.5 million, Orange County $3.6 million, and San Bernardino $2.2 million.

In Fiscal Year 2011-12, the district attorneys reported a total of 819 arrests, which also included the majority of Fraud Division arrests. During the same timeframe, district attorneys prosecuted 1,332 cases with 1,565 suspects, resulting in 708 convictions. Restitution of $53,006,082 was ordered in connection with these convictions and $5,943,570 was collected during Fiscal Year 2011-12. The total chargeable fraud was $341,084,553, representing only a small portion of actual fraud since many fraudulent activities had not been identified or investigated.

Effective January 1, 2005, Assembly Bill 2866 (Frommer) enacted Insurance Code Section 1871.9 requiring the posting of all workers’ compensation fraud convictions to the CDI website. One of the more notable convictions of 2013 was the case of Corinna Montenegro in San Bernardino County. This was a conviction for a violation of one count of PC 550(b)(1) for a failure to disclose material Information.

A traditional understanding of a “fraud case” is the assumption that the perpetrator must make an affirmative fraudulent statement that is not true. However, Penal Code section 550(b)(1) allows prosecutors to make a case against someone who does not affirmatively disclose information adverse to their claim. The codes states it is a crime to “conceal, or knowingly fail to disclose the occurrence of, an event that affects any person’s initial or continued right or entitlement to any insurance benefit or payment, or the amount of any benefit or payment to which the person is entitled.” Thus it would seem that a claimant that does not disclose prior injuries or illnesses that could result in apportionment of permanent disability, or collateral income sources that would be an offset to temporary disability runs the risk of criminal charges for a violation of this Penal Code provision.