Friday, July 15, 2011

Prison Crowding Law May Affect WC Fraud Prosecutions

I don't know about you, but I'm sick of studies! So in taking a break from my review of various reports concerning the RVRBS debate, an interesting article this morning in WorkCompCentral News points to one of the unforeseen consequences of government budget issues.

California's well publicized budget problems and the Supreme Court's mandate to reduce state prison populations seems like it might have quite an impact on insurance fraud prosecutions and sentencing.

Assembly Bill 109, signed into law in April will require cities and counties to house in their jails offenders convicted of felonies that are not violent, sexual or otherwise deemed serious in nature beginning as early as October 1.

Already county district attorneys, whose offices recently were distributed nearly $32 million in insurance fraud prosecution money earlier this month, are saying that the lower level fraud - that typically brought against injured workers for violations such as claiming disability when there is evidence otherwise - may take a back seat to more egregious crimes.

Don Marshall, chairman of the Fraud Assessment Commission, which distributes to district attorneys funds made available under the Insurance Department's Workers' Compensation Fraud Program, told WorkCompCentral reporter Greg Jones that he thinks it is too early to tell what will happen when AB 109 takes effect, but he would be surprised if there was a considerable increase in the number of cases that went to jury trial, because district attorneys aren't able to threaten defendants with the possibility of serving time in prison.

Orange County DA Joe D'Agostino told Jones that the larger white collar crimes can still go to prison under AB 109, and regardless he feels that there is plenty of room available in county jails to house criminals that deserve incarceration.

How this plays out over the next year or two will be interesting. We're used to seeing frequent press releases about an injured worker getting busted and sent to prison for fraud, and every once in a while a larger case of white collar fraud makes its way into the headlines. Will district attorney offices now start ignoring the low hanging fruit of injured worker fraud? Will we see an increase in insurance fraud due to a lack of state imprisonment as a deterrent? What will happen with insurance fraud funding distribution that is based on a county's aggressiveness in prosecuting fraud?

San Bernardino DA David Simon said his office is just going to have to get more creative in how it approaches prosecuting workers' compensation fraud.

"We're not changing our zeal or willingness to bring new cases or to prosecute workers' compensation fraud," he told Jones.

The proof will be in the fraud assessment fund distribution next year.

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