(Editor’s note: This is the first of a two-part series regarding workers’ compensation fraud. In Exhibit “A”, we will look at the reality of surveillance videos and highlight California Insurance Code section 1871.4 as an important defense tool. In our next installment, Exhibit “B”, we will attempt to explain—preferably without needing heavy medication—discovery alternatives for catching the bad guys.)
Let’s face it: the California Workers’ Compensation Appeals Board (WCAB) is already such a beautiful circus of the absurd that it is almost impossible to tell where normal bureaucratic chaos ends and actual criminal intent begins.
As the great Robin Williams once said, “Reality is just a crutch for people who can’t cope with drugs.”
In the WCAB world, reality is just a temporary placeholder until someone writes a better medical report. Yet, if you ask the average person to describe workers’ comp fraud, they will paint a surprisingly similar picture: an “injured” employee caught on a hidden camera casually lifting a commercial refrigerator, running a Spartan Race, or snowboarding in Aspen while claiming they can’t hold a coffee cup.
(I have personally seen films involving bronco busting and bull riding… on the same day! Many, many years ago, my private investigator also caught the applicant committing the third of his three-felony allotment. That is the point where even opposing counsel stops arguing and just starts taking notes.)
Television news devours these stories. Defense attorneys fantasize about them. On one of my favorite days in my career, an applicant’s attorney quietly admitted, “Yeah, that’s a tough one to spin.”
The problem? The successful cases become legends. The unsuccessful ones become invoices.
Although many of us—including myself—can cite examples of such classic fraud highlights, those cases are about as common as a Qualified Medical Evaluator (QME) report that actually answers your questions without creating three entirely new disputes. Maybe that explains why my approximately 30 years in the industry—or 7,826 workdays (but who is counting?)—have only given rise to two of the aforementioned type of film-based fraud “gotchas.” (For those nerds who really cannot resist asking, that’s a fraud rate of approximately 0.0256% over my career. 0.0256% is statistically somewhere between a “rounding error” and a “Bigfoot sighting.”)
Nonetheless, you can rest your fears about making sure the “bad guys” do not win the battle. We “good guys” have more arrows in our quiver, though two of the most important may be cynicism and coffee. (You want milk and sugar with that?)
The Glamour vs. The Glamourless Reality
Real WCAB fraud does not involve high-stakes, cloak-and-dagger spy work. It is usually just someone claiming profound spinal devastation while simultaneously posting a public Facebook video of themselves winning a local deadlift competition.
(Speaking of Facebook, if you have reason to believe it contains valuable information, you cannot just slide into Meta’s DMs for evidence. First, make it easy on yourself: smash that print-screen button on any public posts before the applicant gets wise and hits delete. If their profile is actually private, it is time to stop stalking their page and file a formal subpoena through Facebook’s legal gauntlet. The “how-to” in that regard will require another—long—article.)
The overwhelming majority of fraud cases don’t start with a creepy, unmarked van parked across the street. They start with:
- A mundane subpoena
- A painful deposition
- A medical history that suddenly suffers from selective amnesia
Find and compare all of the contradictory things the applicant says and, with a little luck and strong reading glasses, you may have a eureka moment.
Lies, Damn Lies, or Faulty Memory?
At the WCAB, a consistency problem does not make you a criminal mastermind. The trick is to determine whether you are dealing with a liar or does the Applicant truly just have a “teflon brain”— nothing sticks?
Every experienced defense attorney has watched an applicant’s origin story morph over time. The version given to the boss on Monday does not match the Emergency Room records from Tuesday. The ER records do not match the Primary Treating Physician (PTP) report from Thursday. By the time they see the QME, the narrative has evolved into a sci-fi epic. And by the deposition? We are looking at a sixth version that attempts to fuse the previous five.
As litigators love to say: The facts didn’t change—just the storytelling.
Sometimes an applicant’s six versions of his workers’ compensation trials and tribulations represent a deliberate desire to misrepresent; sometimes it is simply the result of highly fallible human memory—the struggle to rely on recall and not lose the forest for the trees during cross-examination. I’ve personally had the joy of being cross-examined many times… every time as an expert on the AMA Guides, not as a criminal defendant (thankfully!). Despite being a highly qualified retained expert witness—in my not-so-humble opinion—I found that I had to carefully consider and reconsider my answers to questions that were rephrased in a myriad of ways aimed to challenge my memory and my knowledge. Happily, I had the advantage of law school, three decades as a defense attorney, excellent trial preparation, a career involving the presentation of nearly 100 seminars/webinars regarding permanent disability and the AMA Guides, and performing thousands of AMA Guides-based analyses since 2005! 1
The Wide Net of Insurance Code § 1871.4
Insurance Code section 1871.4 is California’s primary workers’ compensation fraud statute. It casts a much wider net than many people—including comp experts—realize. Contrary to popular belief, it is not aimed solely at applicants caught carrying refrigerators while collecting temporary disability. The statute applies to virtually everyone involved in the workers’ compensation system. Injured workers, employers, physicians, attorneys, medical providers, interpreters, vocational experts, and anyone else who knowingly participates in a fraudulent scheme can find themselves on the wrong side of the statute.
The law makes it a crime to knowingly make or present a false material statement for the purpose of obtaining or denying workers’ compensation benefits. That word—material—does a lot of heavy lifting. Not every mistake, exaggeration, or fuzzy memory amounts to criminal fraud. The falsehood must be significant enough that it could influence the handling of the claim or the determination of benefits. Forgetting whether physical therapy was on Tuesday or Thursday probably will not earn anyone a visit from the fraud unit. Lying about whether you can lift 50 pounds while posting videos of yourself deadlifting twice that amount is a different conversation.
Insurance Code section 1871.4 also reaches beyond the person telling the lie. Those who knowingly assist, encourage, conspire with, or help carry out the fraud can face the same consequences. In other words, if your litigation strategy requires recruiting accomplices, it may be time to reconsider your litigation strategy.
The penalties are anything but humorous. A conviction can result in imprisonment, substantial fines that may exceed the amount of the fraud itself, restitution, repayment of investigative costs, and, in some cases, sentence enhancements for repeat offenders. As criminal statutes go, Insurance Code section 1871.4 is not particularly forgiving. 2
The lesson is simple. Workers’ compensation fraud isn’t limited to the occasional surveillance video that leads the evening news. More often, it begins with a material false statement buried in a medical report, deposition, claim form, billing record, or witness testimony. And unlike most questionable litigation tactics, this one can end with a criminal case number instead of a WCAB case number.
If every contradiction were a felony, we’d have to turn the WCAB into a prison colony. Instead, real investigations usually revolve around three hilariously ordinary things:
- The “Immaculate Conception” Prior Injuries: An applicant swears under oath they’ve never had back pain in their life. Then the subpoenaed records arrive. Surprise! Here are chiropractic bills from 2018, physical therapy logs from 2021, a hidden MRI from 2023, and a previous workers’ comp claim they apparently just… forgot about.
- The “Ghost Employee” Work History: Claiming total, bedridden disability while payroll records, tax forms, or an active Etsy shop suggest they are very much open for business.
- The Shifting Medical Narrative: Forgetting to mention to the QME that they had major spinal surgery three years ago because they “didn’t think it was relevant.”
Don’t forget to watch for “Exhibit B,” where we will tackle discovery alternatives for catching the bad guys—ideally without needing a decoder ring, a Ouija board, or a second cup of defense counsel optimism.
Don R. Barthel is one of the founding partners of Bradford and Barthel, and is based in the firm’s Sacramento office. He has taken dozens of doctor depositions and analyzed thousands of medical-legal reports in order to correct innumerable errors, including misapplications of the AMA Guides, statutory misunderstandings, and other errors making the underlying medical reporting entirely speculative and unreliable. If you have any questions about workers’ compensation defense issues, please feel free to contact him at 916.569.0790 or via email at dbarthel@bradfordbarthel.com.
1 Time for a shameless plug. Bradford & Barthel’s (B&B) AMA Guides Analysis & Rating Department reviews medical-legal reports to determine whether doctors correctly applied the American Medical Association Guides to the Evaluation of Permanent Impairment (5th ed. 2001). They identify rating gremlins that can turn a case from “reasonable exposure” into “please send more reserves and a sedative.” The department features raters who have approximately a century of combined permanent disability analysis experience, have analyzed tens of thousands of reports, and have identified millions of dollars in potential permanent disability savings. They have demonstrated that more than $80\%$ of final reports overstate impairment when compared to an accurate rating under the AMA Guides.
2 See Heidary v. Superior Court, 26 Cal. App. 5th 1059 (2018). Peyman Heidary, a former chiropractor, orchestrated a massive $150 million workers’ compensation and insurance fraud scheme in Southern California. He owned a network of medical clinics and sham law firms, such as “California Injury Lawyers”, entirely run by non-attorneys from 2009 to 2014. In April 2024, following an extensive investigation by the California Department of Insurance and the Riverside County District Attorney’s Office, Heidary was convicted on dozens of felony counts, primarily arising under California Insurance Code section 1871.4 for making false or fraudulent material statements to obtain or deny workers’ compensation benefits, along with related insurance fraud and money laundering charges. He was sentenced to 54 years and 8 months in California state prison and ordered to repay $23 million in restitution to defrauded insurance companies. As of July 2026, there is no evidence of a sentence reduction; the full penalty stands as handed down by the court. Holding the historical world of “Baby Face” Nelson to one side, enforcement postings by the California Department of Insurance and other sources suggest that the “average” penalty meted out is far less dramatic than Heidary, or even Insurance Code section 1871.4 on its face, might suggest. For ordinary applicant-style false-statement cases, the penalty often looks like probation plus restitution, fines, fees, or community service, with little or no actual custody. For example, 2024 CDI-posted section 1871.4 cases included one year of probation and restitution in one case, fees/fines only in another, one year of probation and restitution in another, and community service, one year of probation, and restitution in another.
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