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FRAUD

California Insurance Code §1877.3 requires a carrier to notify the Insurance Department's Fraud Division within 60 days of having reason to believe that "it knows the identity of a person or entity" suspected of committing workers' compensation fraud. The Insurance Code further states that an authorized governmental agency can "release or provide" information received from a carrier "in a confidential manner to any other authorized governmental agency for purposes of investigation, prosecution or prevention of insurance fraud or workers' compensation fraud."

Labor Code §3820 declared "that there exists a compelling interest in eliminating fraud in the workers' compensation system. The Legislature recognizes that the conduct prohibited by this section is, for the most part, already subject to criminal penalties pursuant to other provisions of law. However, the Legislature finds and declares that the addition of civil money penalties will provide necessary enforcement flexibility. The Legislature, in exercising its plenary authority related to workers' compensation, declares that these sections are both necessary and carefully tailored to combat the fraud and abuse that is rampant in the workers' compensation system."

The specific provisions recognize that employers, insurers, treaters, evaluators, and others besides workers might be committing fraud.

Various agencies are involved in anti-fraud efforts. See, e.g., Ins. Dept Fraud & Convictions.

Label Item Links Comments
Labor Code Public policy and definition of fraud Labor Code §3820   
  "The administrative director shall, on an annual basis,
provide to every employer, claims adjuster, third party
administrator, physician, and attorney who participates in the workers' compensation system, a notice that warns the recipient against committing workers' compensation fraud. The notice shall specify the penalties that are applied for committing workers'
compensation fraud."
Labor Code §3822  
Reporting requirement and protection from civil liability: "No insurer, self-insured employer, third-party administrator, workers' compensation administrative law judge, audit unit, attorney, or other person that reports any apparent fraudulent claim under this section shall be subject to any civil liability in a cause of action of any kind when the insurer, self-insured employer, third-party administrator, workers' compensation administrative law judge, audit unit, attorney, or other person acts in good faith, without malice, and reasonably believes that the action taken was warranted by the known facts, obtained by reasonable efforts." Labor Code §3823  
Regulations/Rules Numerous - search here (type “fraud” in search box on top right)  
Forms 2012 required warning (see Labor Code §3822) Fraud warning notice  
Websites California Department of Insurance Ins. Dept Fraud & Convictions  
  Coalition Against Insurance Fraud CAIF   
  The Myth of Workers' Compensation Fraud (Frontline) Myth of Fraud   
Practice Tips Know the red flags of fraud  Red flags   
Articles Department of Insurance Workers' CompensationSpecial Investigative Unit’s 2011 Guidelines and Protocols Dept. of Insurance Guidelines & Protocols
Magazine Articles Fraud and the Holy Ghost: A “war story” from the trenches of workers’ compensation practice by Bob Levin, Esq.

Something Wasn't Right by James T. Stewart
Fraud & The Holy Ghost


Finding fraud
 Was she or wasn't she?
Roundtable    
Miscellaneous      

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