When you commit workers' compensation fraud, you are not only liable to reimburse the carrier for benefits received as a result of the fraud, you can also be ordered to reimburse the costs to investigate the fraud. A CHP officer who was prosecuted and pleaded guilty was ordered to pay restitution for disability benefits and over $70,000 spent by CHP and SCIF to investigate the fraud. He appealed the determination with regard to the investigation costs, arguing in part that as public investigative agencies, they were performing their normal job duties to investigate his fraud and as such, there was no economic loss. The court disagreed. Although the salaries would have been paid regardless of the investigation, while they were investigating the fraud, their work was diverted from other investigation activities.
“We conclude that as direct victims of defendant’s fraud, both CHP and SCIF are entitled to restitution for investigative costs incurred in an effort to justify discontinuance of payments and recoup money defendant fraudulently obtained," the Court of Appeal for the 3rd District of California held in a decision published Monday.