The Court of Appeal ruled that “In specified circumstances, a worker who engages in criminal fraud in attempting to recover workers’ compensation benefits and is convicted of doing so is thereafter barred from recovering benefits growing out of the fraud. However, in given circumstances where, independent of any fraud, a worker is able to establish his or her entitlement to benefits, benefits may be awarded.”

In 2006, while working at Pearson Ford, Leopoldo Hernandez accidentally slammed the trunk of a car on his left hand and crushed one of his fingers. He applied for and received workers’ compensation benefits.

Dr. Byron King, an orthopedic AME, had some difficulty in examining Hernandez’s left arm and hand; in particular, although Hernandez complained about his inability to use his left hand and arm, he would not permit Dr. King to perform grip or pinch strength tests on the hand..

Subsequently, Hernandez was examined three times by Dr. Walter Strauser, a pain specialist who had been treating Hernandez. On each of his visits, Hernandez wore a sling on his left arm and complained of continuing severe pain and an inability to use his left arm and hand.

Video surveillance was conducted following each of the three visits to Dr. Strauser in early 2010. Following each visit, Hernandez was observed taking off his sling, using his left hand to get in and out of his truck or a car, using his left hand to steer his truck or car, and on one occasion stopping at a grocery store and using his left hand to carry a bag of groceries.

Hernandez’s also saw Dr. Greg M. Balourdas, acting as Hernandez’s primary physician. As he did when he was examined by Dr. Strauser, Hernandez appeared wearing a sling on his left arm. Following his visit to Dr. Balourdas, Hernandez was observed once again taking off his sling, driving his car and stopping at an appliance store where, using both hands, he lifted a washing machine into the back of the car he was driving.

After AME King was made aware of the surveillance, Hernandez appeared for another exam, more cooperative than before. King performed a number of objective tests and concluded that his hand was severely compromised, and had suffered a 38 percent impairment. He said the videos were not very helpful in making any diagnosis because “it was difficult to identify any actual finger motions of the left hand other than using the left hand and thumb to hold and move objects.”

In March 2011, Hernandez was charged with four counts of violating Insurance Code section 1871.4 ; three counts were based on his three visits in 2010 to Dr. Strauser and one count was based on his 2010 visit to Dr. Balourdas. Hernandez was also charged with insurance fraud within the meaning of Penal Code section 550 subdivision (b)(3). On May 10, 2012, Hernandez pled guilty to one count of violating Insurance Code section 1871.4, based on his May 2010 visit to Dr. Strauser. He was placed on summary probation and required to pay $9,000 in restitution.

In 2016, a WCJ, relying on Dr. King’s conclusions found that Hernandez suffered a 70 percent permanent disability. The WCAB denied reconsideration, and the Court of Appeal affirmed in the unpublished case of Pearson Ford v WCAB.

The main issue on appeal was the employer’s argument that any award to Hernandez for the injury is barred by Labor Code section 1871.5. which provides “”Any person convicted of workers’ compensation fraud pursuant to Section 1871.4 . . . shall be ineligible to receive or retain any compensation, as defined in Section 3207[ ] of the Labor Code, where that compensation was owed or received as a result of a violation of Section 1871.4 . . . for which the recipient of the compensation was convicted.”

The leading case interpreting section 1871.4 is Tensfeldt v. Workers Compensation Appeals Board (1998) 66 Cal.App.4th 116. The court in Tensfeldt took pains to expressly limit the scope of its holding so that section 1871.5 would not be used as an automatic or broad prohibition on the payment of benefits which were not directly connected to a worker’s fraudulent misrepresentation.

Here, the WCJ found Hernandez met the three requirements set forth in Tensfeldt, and the WCAB adopted those findings. The WCJ found that Hernandez suffered a compensable injury, there was substantial medical evidence supporting an award which did not stem from his fraudulent statements, and his credibility had not been so damaged as to make him unbelievable concerning the underlying compensation case.