Commission on Health and Safety and Workers' Compensation
Information Bulletin

August 24, 2001 Christine Baker
(415) 703-4220

CHSWC Issues Report on the
Workers' Compensation Anti-Fraud Program in California

SAN FRANCISCO -- The California Commission on Health and Safety and Workers’ Compensation (CHSWC) has approved a report on the state’s program against workers’ compensation fraud.

This report, which contains CHSWC’s recommendations for improving anti-fraud efforts, is the result of a collaborative effort among California government agencies, the workers’ compensation community and interested members of the public

Through a "call for information" to the public and several informal discussions with principal participants in the anti-fraud program, CHSWC received input on several issues:

CHSWC then hosted public roundtable discussions in San Francisco in April and June 2001. While the participants had opposing opinions on some of the core issues, there was general support for many of the ideas expressed. Many recommendations in this report are an outgrowth of the roundtable discussions.

CHSWC is making the following recommendations:

  1. The Legislature should consider raising the criminal penalty for knowing failure to secure the payment of compensation.

  2. The Legislature should consider making statutory changes to increase the identification and pursuit of illegally uninsured employers, including possible changes to the existing anti-fraud laws.

  3. The Fraud Division of the Department of Insurance and district attorneys should take steps to publicize the methods for filing reports of suspected employer and insurer fraud and should publicly document the number and outcome of the reports.

  4. The Fraud Division should work with insurance company SIUs, as well as self-insured employers and third party administrators, to insure that all cases involving suspected "insider fraud" are referred to law enforcement authorities for investigation.

  5. Due to their economic impact, the foremost targets of fraud program budgets and resources should be medical provider fraud and employer premium fraud.

  6. The Fraud Division and district attorneys should also remain vigilant in investigating claimant fraud and be more responsive to allegations of employer and insurer fraud in connection with the reporting and handling of injury claims.

  7. To the extent permitted by law and regulation, private and public agencies should share information that may assist in the detection and investigation of suspected fraud.

  8. Private and public employees should be encouraged to report suspected fraudulent activities and to cooperate in the investigation of those activities.

  9. The Legislature should consider amending Insurance Code section 1872.83 to include employee representation on the Fraud Assessment Commission.

  10. The Division of Workers’ Compensation should provide an information pamphlet for injured workers that has, among other things, complete information about the general types of workers’ compensation fraud, including how to avoid it, how to recognize it, and how to report it.

  11. Consideration should be given to changing the form generally used for reporting suspected fraud to make it more "user friendly" to injured employees.

  12. CHSWC should conduct a further review of the role of insurer special investigation units (SIUs) in reporting suspected workers’ compensation fraud.

  13. The Fraud Division should make full restitution to the victims of workers’ compensation fraud a more important aspect of the anti-fraud program.

  14. CHSWC should continue to study issues raised by the community with respect to the anti-fraud program.

CHSWC is charged with overseeing the health and safety and workers' compensation systems in California and recommending administrative or legislative modifications to improve their operation. CHSWC was established to conduct a continuing examination of the workers' compensation system and of the state's activities to prevent industrial injuries and occupational diseases and to examine those programs in other states.

This report and other publications are available through the Internet at CHSWC’s home page at A copy of the report may also be obtained at no charge by writing to the Commission on Health and Safety and Workers' Compensation, 455 Golden Gate Avenue, 10th Floor, San Francisco, California 94102, by calling (415) 703-4220, by faxing a request to (415) 703-4234, or by emailing