Workers Compensation Insurance Fraud in California

 

“The weekend warrior”—

One Monday morning, Gene Preston, a 24 year old apprentice roofer,  filed a workers comp as soon as he reported to work.  He claimed he fell off a ladder and broke his right ankle the preceding  Friday afternoon after the boss was gone for the weekend.  Preston said he suffered in horrible pain all weekend and had to literally drag himself into work on Monday to report the injury and seek medical care. 

His boss, Mick Mills, the owner of a small Southern California based roofer, immediately reported the injury to their workers compensation insurance carrier.  Mills also told the claims adjuster he was a little suspicious of the circumstances of the injury.

The claims adjuster put the claim on Delay in Decision status while it was investigated.  Preston received treatment at the industrial injury clinic.  The doctor verified Preston had a fracture in his ankle and put him in a cast.

The claims adjuster alerted the Special Investigation Unit and I was assigned to investigate.  The adjuster and I agreed to hire an outside private investigator to conduct the standard investigation interviews--- the PI spoke with the boss, Mr. Mills, and Preston’s father, Brian, who also worked for Mills.  Brian Preston was the only other person working with his son on that Friday afternoon.

In the workers comp investigations, we talk about the “Friday afternoon/Monday morning” injuries.  These are suspicious injuries that supposedly occur on Friday afternoon (after the boss has gone home for the weekend) and reported first thing Monday morning.  Gene Preston’s claim is a near perfect example of this fraud scenario.

Mike Mills told our PI Gene told him he had fallen off a ladder that Friday afternoon and landed wrong.  Gene told Mike he had been in extreme pain but he toughed it out the rest of the day and over the weekend.  When the PI spoke to Brian, the father, he said he did not see his son fall off a ladder and his son never mentioned it to him that day.  He said his son seemed absolutely fine.

The PI called Gene to take his statement about the injury but he declined to talk to him, because he said he was getting a workers comp attorney to represent him.   

Based on the statement of Gene’s father, the adjuster denied the claim on the basis that it did not appear to have occurred on the job. 

Gene retained a workers comp attorney and they eventually brought the case to trial at the Workers Compensation Appeals Board (WCAB).  During preparation for the trial,  the claims adjuster and our defense attorney continued the investigation, along with myself.  We knew Gene had a legitimate broken ankle on the Monday morning.  However, according to Gene’s dad, he was fine on Friday afternoon.  So, we asked the question-- what happened over that weekend?

 

We canvassed hospitals in the area where Gene lived and we got a hit.  We subpoenaed medical records from a local emergency room and found the rest of the story.   Gene went to the hospital on the Saturday before he reported the injury.  He told the ER doctor he had gotten very drunk on Friday night and fell down the stairs at his apartment, breaking his ankle.  Gene declined treatment at the time because he was uninsured.  He just wanted some painkillers. 

This account of the injury was obviously very different from the one of he gave Mike Mills on Monday morning.  The claims adjuster provided the ER records to the workers comp Qualified Medical Evaluator (QME) who opined that the injury was non- industrial, i.e. not related to his work.  In the WCAB trial, the judge reviewed the QME’s report and the ER records and heard testimony from Gene and his father.  The administrative judge did not believe Gene’s account of the injury and ruled against him.  The judge awarded a “Take Nothing” in favor of the workers comp carrier.  Gene was to receive no further workers comp benefits from this injury.

After the outstanding work of our claims adjuster and defense attorney, I referred the case to the local District Attorney and the Department of Insurance Fraud division.  They filed Felony fraud charges (Penal Code section 550(b)(c)) against Gene.  Even as a criminal defendant, Gene maintained his story that he had fallen off a ladder at work and he did not enter a guilty plea.

The D.A. took the case to trial in Superior Court.  Our claims adjuster and defense attorney were called to testify along with Gene and his father.  However, the jury returned a hung verdict—ten jurors voted “Guilty” but two others voted “Not Guilty”. Speaking with jurors afterwords, the two “not guilty” told the DA they knew Gene had lied, but they felt sorry for him.

Nevertheless, the DA refiled the case, based on the strong evidence that Gene had lied when he said he was injured at work.  This time, Gene entered a guilty plea to misdemeanor charges of fraud.  He was ordered to pay restitution to the insurance company for their expenses and served four years formal probation.

Lessons learned—The general public is usually not very sympathetic to insurance companies as victims of insurance fraud.  We have to explain how people who cheat the system hurt the people who play by the rules.   And even when the insurance companies win, the outcomes do not fully repay the losses.