California Insurance Code 1871.4 – Workers' Compensation Fraud

Workers' compensation fraud is aggressively prosecuted in California. Under Insurance Code 1871.4, it is a crime to knowingly make false or fraudulent statements in order to obtain, deny, or manipulate workers' compensation benefits.

These cases often involve employees, employers, doctors, clinics, insurers, and business owners, and they frequently trigger parallel criminal and civil investigations. A conviction can result in imprisonment, substantial fines, restitution, and loss of professional licenses.

The criminal defense attorneys at the Hedding Law Firm in Los Angeles are here to help. Schedule your initial consultation at (866) 986-2092 or contact us here. 

What Is Workers' Compensation Fraud?

Workers' compensation fraud occurs when someone intentionally misrepresents facts to receive benefits they are not legally entitled to—or to prevent someone else from receiving benefits they deserve.

Workers' compensation benefits generally include:

  • Medical treatment

  • Temporary or permanent disability payments

  • Lost wages

  • Vocational rehabilitation

Fraud occurs when benefits are obtained or denied through deception.

What Does Insurance Code 1871.4 Prohibit?

California Insurance Code 1871.4 makes it unlawful to:

  • Make knowingly false or fraudulent statements to obtain workers' compensation benefits

  • Present false written or oral statements related to a claim

  • Assist, conspire, or solicit others to commit fraud

  • Make false statements to discourage an injured worker from filing a valid claim

The statute applies broadly and covers employees, employers, medical providers, and third parties.

Common Types of Workers' Compensation Fraud

Workers' compensation fraud can take many forms, including:

  • Exaggerating or fabricating injuries

  • Claiming an injury occurred at work when it did not

  • Submitting false medical documentation

  • Billing for medical treatment was never provided

  • Double-billing for the same service

  • Misrepresenting the ability to work while collecting disability benefits

  • Pressuring insurers to deny valid claims

Who Can Be Charged With Workers' Compensation Fraud?

Insurance Code 1871.4 applies to any person involved in the claims process, including:

  • Injured employees

  • Employers and business owners

  • Doctors, clinics, and medical providers

  • Physical therapists and rehabilitation centers

  • Claims administrators and adjusters

Fraud investigations often involve undercover surveillance, medical audits, and financial record reviews.

Examples of Workers' Compensation Fraud

Example 1 – Employee Fraud
An employee exaggerates the severity of an injury and collects disability benefits while secretly working another job.

Example 2 – Employer Fraud
An employer falsely claims an employee is exaggerating injuries to avoid higher insurance premiums, resulting in the denial of legitimate benefits.

Example 3 – Medical Provider Fraud
A healthcare provider submits inflated bills for services never rendered and conspires with the patient to split the excess payments.

All parties involved may be charged under Insurance Code 1871.4.

Related Fraud and Criminal Charges

Workers' compensation fraud cases often involve additional criminal charges, including:

Prosecutors may stack charges to increase exposure to sentencing.

Penalties for Workers' Compensation Fraud

Insurance Code 1871.4 is a “wobbler” offense, meaning it can be charged as either a misdemeanor or a felony.

Criminal Penalties

  • Misdemeanor:

    • Up to 1 year in county jail

  • Felony:

    • 2, 3, or 5 years in California state prison

Financial Penalties and Restitution

Regardless of misdemeanor or felony filing, a conviction can include:

  • Fines up to $150,000, or

  • Double the amount of the fraud, whichever is greater

  • Mandatory restitution to victims

  • Civil penalties of up to $10,000 per false claim

  • Enhanced penalties for prior convictions

Financial exposure often exceeds hundreds of thousands of dollars.

Defenses to Workers' Compensation Fraud Charges

Every case is fact-specific. Common defenses include:

Lack of Intent

Fraud requires knowledge and intent. Honest mistakes, misunderstandings, or medical disagreements are not fraud.

No Knowledge of False Statements

The prosecution must prove you knew statements were false at the time they were made.

Insufficient Evidence

These cases rely heavily on medical records, billing codes, and expert testimony—often exposing weaknesses.

Mistake or Negligence

Errors arising from confusion, clerical errors, or miscommunication do not satisfy the criminal intent standard.

Prefiling Intervention

In some cases, an experienced defense lawyer can negotiate with prosecutors before charges are filed, resulting in a DA reject or reduced filing.

Why Early Legal Representation Matters

Workers' compensation fraud cases are often investigated for months or years before arrest. Early representation can:

  • Prevent formal charges

  • Limit financial exposure

  • Protect professional licenses

  • Avoid prison time

  • Control damage from parallel civil cases

Get Help With a Workers' Compensation Fraud Case

If you are under investigation or charged with workers' compensation fraud under Insurance Code 1871.4, your future, finances, and professional reputation are at stake.

Contact The Hedding Law Firm for experienced defense against workers' compensation fraud allegations throughout California.

đź“ž Call (866) 986-2092 for a confidential consultation