Insurance Fraud is a vaguely defined crime under Penal Code section 550. To prove Insurance Fraud the prosecution has to establish knowledge by the defendant. The knowledge element requires at least some understanding that the conduct that the defendant engaged in or assisted in was wrong. The problem for the defense is that there seems to be unlimited types of conduct that are deemed “wrongful” or “fraudulent”. The law simply requires that a “false” or “fraudulent” claim be submitted for payment.
There has been a major law enforcement push to charge insurance fraud in the Workers’ Compensation context. Some of the most common workers’ compensation fraud charges include:
1. The paid vacation scenario where an employee files a claim for an injury that did not occur.
2. A claim that the injury took place on the job or in relationship to the job when it really
took place off the job.
3. Bills for work conditioning, muscle re-education or other complex treatment when standard medical care was all that was provided.
4. Billing high reimbursement codes for routine treatment with either inadequate chart
notes or falsified chart notes. (Often undercover agents are used to establish these facts)
Common charged offenses for medical fraud (in general) are:
1. Billing for services that were never rendered.
2. Upcoding. A common example is for a very cursory initial examination being
written as if it involved a comprehensive medical history and complex diagnosis.
3. Performing medically unnecessary services which might include excessive blood
tests, drug tests or referrals to outside entities either to promote cross referrals or
to generate income from the review of these unnecessary tests.
4. Changing the diagnosis so that the treatment(s) are covered by insurance.
The mental state element is that the person made the claim or presented some documentation separate from the insurance claim itself with the intention of supporting a false claim. See: People v. Scofield (1971) 17 Cal.App.3d 1018, 1025–1026 This means that medical records, a report, a document taking a person off work for a month, an inaccurate bill – can all support an insurance fraud claim. This is true even if the documents are sent to an attorney for an injured person rather than to the insurance company itself.
The cases are often hard to understand in terms of what is being charged. A count of insurance fraud might have a date range of many years. If that is the case, the defense should ask the court to instruct the jury that there must either be one, unbroken and continuing course of conduct or they must unanimously agree on at least one single wrongful act. (See People v. Dieguez (2001) 89 Cal.App.4th 266, 274–275 In other words, there might have been thousands of documents submitted to an insurance company but the jury has to find one document that was fraudulent, transmitted for the purpose of promoting a fraud and that this transmission was done by the defendant (or someone working with the defendant) and on purpose.
The prosecution usually focuses on the physician/chiropractor but staff are often drawn in on a conspiracy theory. Pressure is then applied to staff by law enforcement. “Cooperate against the doctor” and no charges will be filed.
The physician/chiropractor who is charged may escape liability by providing information against other medical practitioners. In those cases a corporation plea is often negotiated. This means that the medical corporation pleads guilty and pays a huge fine but the practitioner him/her self gets off.