The the San Diego County District Attorney’s Office announced that Daniela G. Birdwell, owner of GPS Plumbing, pleaded guilty to workers’ compensation insurance premium fraud.

She has been sentenced to two year felony probation plus 320 hours of community service. She has also been ordered to pay $1,030,062 to the State Compensation Insurance Fund in restitution of underpaid workers’ compensation premiums. She will be required to pay this restitution in payments of $10,000 per month.

The fraud was first discovered when a State Fund special investigation unit saw noticeable differences between wages the company reported to the Employment Development Department and wages reported to the State Fund during policy audits.

The report of suspected fraud was submitted to the district attorney’s office and the Department of Insurance for investigation by the SCIF Special Investigation Unit.

“Employers who engage in premium fraud are not only breaking the law, they also gain an unfair advantage over their competitors,” District Attorney Stephan said. “The dedicated investigators and prosecutors in our Insurance Fraud Division will continue to investigate this type of fraud to hold businesses accountable, protect employees, and level the playing field for law abiding companies.”

According to Forbes 2025 Insurance Fraud Statistics, between 1.3 and 2.1 million workers were misclassified or paid off the books each month in 2020, a tactic used to lower workers’ compensation premiums.

A comprehensive study of Fraud in Workers’ Compensation Payroll Reporting was published in 2009 by the Fraud Assessment Commission. The Fraud Assessment Commission (FAC) asked the authors to extend the prior study data to include the period from 2002 through 2005. The FAC also requested that the University examine whether employers were increasing the use of non-standard employment contracts (e.g., independent contractors) to avoid the high workers compensation rates.

The follow up audit showed that “despite auditing by insurers and the WCIRB and penalties for fraudulent reporting imposed by statute and regulation, dishonest employers are significantly and substantially under-reporting or misreporting payroll to insurers. In so doing, dishonest employers are gaining unfair advantage relative to honest employers in two ways. First, dishonest employers shift part premium payment onto honest employers. Second, by avoiding premiums, dishonest employers can price their products or services unfairly relative to honest employers.”

“An important aspect of these findings is that under-reporting and misreporting of payroll results in premium rates in highest-risk class codes that are several times the rate the employers would experience under full reporting. In these classes, honest employers are paying substantially more, more than double, for workers’ compensation than actual experience would imply is accurate. This is a substantial transfer of income and profits from honest employer to dishonest employers. This transfer compounds the competitive disadvantage faced by honest employers. It is important for the state to improve reporting in order to level the playing field for employers that try to play by the rules.”