The Fraud Defense in Louisiana Workers Compensation

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What Constitutes Fraud in Louisiana Workers Compensation?

Under Louisiana workers compensation law, workers compensation fraud is defined as:

    1. A false statement or representation willfully made by any person for the purpose of obtaining (or defeating) any workers compensation benefit or payment, either for himself or for any other person; 
    2. Aiding and abetting, or counseling an employer or claimant, either directly or indirectly, to willfully make a false statement or representation; or
    3. A failure by an employee to answer truthfully in response to an employer's inquiry about previous injuries, disabilities, or other medical conditions, when this failure to answer directly relates to the medical condition for which a claim for benefits is made, or when this failure to answer affects the employer's ability to receive reimbursement from the second injury fund.  

The "benefits claimed or payments obtained" relating to the fraud includes the cost or value of indemnity benefits, and the cost or value of health care, medical case management, vocational rehabilitation, transportation expense, and the reasonable costs of investigation and litigation.

Any employee who is found to have committed fraud - after a determination by the  workers compensation Judge - will forfeit and lose any and all workers compensation benefits.

Additionally, criminal penalties for fraud include the following:

    1. Imprisonment for up to 10 years, or fines up to $10,000, or both, when the benefits fraudulently claimed or payments fraudulently obtained are $10,000 or more;
    2. Imprisonment for up to 5 years, or fines up to $5,000, or both, when the benefits fraudulently claimed or payments fraudulently obtained are $2,500 or more but less than $10,000;
    3. Imprisonment for up to 6 months, or fines up to $500, or both, when the benefits fraudulently claimed or payments fraudulently obtained are less than $2,500.

In addition to the criminal penalties, civil penalties for fraud include the following:

    1. Civil penalties of between $500 and $5,000 payable to the Kids Chance Scholarship Fund of the Louisiana Bar Foundation; and
    2. Restitution for benefits claimed or payments obtained through fraud and only up to the time the employer became aware of the fraudulent conduct.

The bottom line for injured employees is that, if the employee makes a false statement in order to obtain workers compensation benefits, this employee will lose all his or her benefits and owe a substantial amount in penalties.

However, these fraud provisions also apply to false statements or misrepresentations by the employer or the workers compensation insurance company in denying benefits.

Intent to Commit Fraud in Louisiana Workers Compensation

Likely, the most disputed part of fraud allegation in workers compensation is the “intent” element of the fraud offense.

Both employees, employers and workers compensation insurance companies will regularly claim in a fraud situation that their misrepresentations were not made intentionally.

The problem with fraud disputes involving intent is that the only way to resolve an intent issue is at a workers compensation trial, and usually not at settlement. But both the employee and the workers compensation insurance companies are generally inclined to settle a claim, so as to avoid the trial expenses and the risk that comes with trial, especially the trial risks with proving subjective "intent" in an all-or-nothing win-lose outcome.

Another important and related fraud issue is the determination of whether the misrepresentation was actually made for the purpose of receiving or defeating workers compensation benefits.

Though most fraud allegations are made against employees, this element can be difficult when the misrepresentation is made by an employer, since often it is a supervisor or other employee with little to no bias who lacks a personal stake in the employer's business aside from their continued employment. 

Finally, it is extremely important for the injured employee to go above and beyond in making sure that the employee is being 100% truthful at all times, especially considering the proliferation of varied methods of surveillance and social media.

An injured employee must be extremely careful and thoughtful when making statements to:

    • Employers;
    • Other employees;
    • Doctors;
    • Nurses;
    • Physical therapists;
    • Vocational rehabilitation therapists;
    • Functional capacity examiners;
    • Nurse-case managers;
    • Insurance adjusters; and
    • Opposing attorneys during depositions.

The injured employee must be aware that the workers compensation insurance company is constantly doing everything it can to identify and/or even just allege fraud, because it knows that if it can show fraud, then it won't have to pay a cent on that claim.

Fraud is "The Kiss of Death" in Louisiana Workers Compensation

Among workers compensation attorneys, fraud is frequently referred to as "the kiss of death" because its remedies are so harsh.

These fraud remedies and penalties are so harsh because the employee will likely give up all of his workers compensation benefits, both past and future.

In fact, Louisiana workers compensation law requires the employee who is found to have committed fraud to pay back all the workers compensation benefits that he or she has received up until the fraud was discovered.

In other words, the forfeiture is “retroactive” and cancel alls workers compensation benefits from the outset of the claim.

Even if the workers compensation insurance company was arbitrary in denying benefits, or was untimely in paying benefits, the employee who commits fraud cannot pursue those claims for penalties and attorney's fees, because those claims will be forfeited due to the fraud.

And even simple mileage reimbursement fraud will result in the complete forfeiture of all benefits, both past and future, and not just a forfeiture of the right to mileage reimbursement.

So fraud is frequently referred to as "the kiss of death" because if the employee is credibly accused of fraud, sometimes the employee's best move can be to withdraw all claims for benefits and hope that the workers compensation insurance company does not pursue restitution (meaning reimbursement of prior benefits) or other penalties (both civil and criminal) against the employee. 

The Two Types of Fraud in Louisiana Workers Compensation

In Louisiana workers compensation, there are two types of fraud:

    1. Section 1208 Fraud; and
    2. Section 1208.1 Fraud.

Section 1208 Fraud involves any false statement or misrepresentation, including one concerning a prior injury, made specifically for the purposes of obtaining workers compensation benefits.

Section 1208.1 Fraud involves a failure to answer truthfully an inquiry by the employer about prior injuries, disabilities or other medical conditions, if the failure directly relates to the medical condition for which a claim for benefits is made or affects the employer's ability to receive reimbursement from the second injury fund.

The major differences between Section 1208 Fraud and Section 1208.1 Fraud are:

    1. Section 1208 Fraud does not require the employee have knowledge that the misrepresentation will result in the forfeiture of workers compensation benefits, while Section 1208.1 Fraud does require such knowledge;
    2. Section 1208 Fraud does not require that the employer be prejudiced by the misrepresentation, while Section 1208.1 Fraud does require such prejudice;
    3. Section 1208 Fraud has a criminal penalty, while Section 1208.1 Fraud does not a criminal penalty; and
    4. Section 1208 Fraud does not have any notice requirements, while Section 1208.1 Fraud has very stringent notice requirements. 

The Louisiana Supreme Court has rules that Section 1208 Fraud and Section 1208.1 Fraud serve separate purposes and thus the requirements of each statute should not be imposed on the other.

Specifically, Section 1208 Fraud applies to false statements made to anyone and generally becomes applicable at the time of an accident or claim, while Section 1208.1 Fraud is somewhat more narrow, applying to the employment-related questioning of an employee or prospective employee by an employer, even when there is no pending workers' compensation claim.

In fact, concerning notice requirements, under Section 1208.1 Fraud, the employer must print a notice (in ten-point type) on the questionnaire of the effect of untruthful answers; these notice requirements do not apply to Section 1208 Fraud.

And, concerning prejudice, under Section 1208.1 Fraud, there must be a showing of prejudice on the part of the employer prior to the forfeiture of an employee's benefits; this prejudice requirement does not apply to Section 1208 Fraud.

Section 1208 Fraud in Louisiana Workers Compensation

Under Louisiana workers compensation law, the three requirements for the forfeiture of benefits under Section 1208 Fraud are:

    1. There is a false statement or representation;
    2. The false statement or representation is willfully made; and
    3. The false statement or representation is made for the purpose of obtaining or defeating any benefit or payment.

All three of these requirements of Section 1208 must be met for finding fraud for the purposes of Section 1208 Fraud.

Section 1208 Fraud applies to any false statement or misrepresentation, including one concerning a prior injury, made specifically for the purposes of obtaining workers' compensation benefits.

So basically, a forfeiture pursuant to Section 1208 Fraud is not necessary if the false statement is inconsequential or was made inadvertently.

And if the incorrect statement was not made for the purpose of obtaining workers' compensation benefits, then there will be no finding of Section 1208 Fraud.

Section 1208 Fraud does not require that the employee be put on notice of the consequences of making false statements or misrepresentations, and does not require that the employer be prejudiced by the employee's false statement or misrepresentation.

Section 1208 Fraud frequently concerns an employee's misrepresentation regarding a prior medical problem or medical treatment. 

But all the employee needs to do is tell the truth, because usually the employee's false statements have little or no effect on whether the employee will receive workers compensation benefits.

But, if the employee purposefully lies about his or her prior medical history, the employee will lose all of his or her workers compensation benefits, including both past and future benefits. 

Section 1208.1 Fraud in Louisiana Workers Compensation

Section 1208.1 Fraud applies to employment-related questioning of an employee or prospective employee by an employer concerning a prior injury, when there is no pending workers compensation claim.

Section 1208.1 Fraud results in the forfeiture of an employee's workers compensation benefits when:

    1. The employee made false statements concerning a prior injury in response to such an inquiry;
    2. The false statements are directly related to the medical condition for which the employee is seeking benefits or to the employer's ability to receive reimbursement from the second injury fund; and
    3. The employer has provided contemporaneous notice to the employee that false statements made in response to the inquiry may result in forfeiture of workers compensation benefits. 

So, under Louisiana workers compensation law, there is no forfeiture of workers compensation benefits under Section 1208.1 Fraud unless the false answer relates to a medical condition for which benefits are claimed or it affects the employer's reimbursement from the second injury fund.

Also, under Section 1208.1 Fraud, the employer must be prejudiced by the non-disclosure of the employee's prior injuries on the employer's medical history form in order for there to be forfeiture of the employee's workers compensation benefits, even if there were false statements or misrepresentations made by the employee pursuant to employment-related inquiries regarding prior medical history.

So, to simplify, under Louisiana workers compensation law, the three requirements for the forfeiture of workers compensation benefits under Section 1208.1 Fraud are:

    1. A false statement by the employee;
    2. Prejudice to the employer; and
    3. Notice to the employee about such false statements.

The workers compensation insurance company must prove each of these elements to successfully avoid liability under Section 1208.1 Fraud.

Concerning the prejudice to the employer, Section 1208.1 Fraud is different from Section 1208 Fraud, because Section 1208.1 Fraud requires that the misrepresentation prejudice the employer, while Section 1208 Fraud does not requires that the misrepresentation prejudice the employer.

The employee's misrepresentation must affect the employer's ability to receive reimbursement from the second injury fund, which simply means that if the employee had answered truthfully, the employer would have had the necessary knowledge to win a second injury claim. 

Concerning the notice to the employee about such false statements, the notice form must contain a warning in ten point type in bold print stating that failure to answer truthfully may result in the forfeiture of workers compensation benefits.

The Louisiana Statutes for Fraud in Louisiana Workers Compensation

The primary Louisiana statutes regarding fraud are La. R.S. 23:1208, La. R.S. 23:1208.1, and La. R.S. 23:1208.2, which read as follows:

§1208. Misrepresentations concerning benefit payments; penalty

A. It shall be unlawful for any person, for the purpose of obtaining or defeating any benefit or payment under the provisions of this Chapter, either for himself or for any other person, to willfully make a false statement or representation.

B. It shall be unlawful for any person, whether present or absent, directly or indirectly, to aid and abet an employer or claimant, or directly or indirectly, counsel an employer or claimant to willfully make a false statement or representation.

C.(1) Whoever violates any provision of this Section, when the benefits claimed or payments obtained have a value of ten thousand dollars or more, shall be imprisoned, with or without hard labor, for not more than ten years, or fined not more than ten thousand dollars, or both.

(2) Whoever violates any provision of this Section, when the benefits claimed or payments obtained have a value of two thousand five hundred dollars or more, but less than a value of ten thousand dollars shall be imprisoned, with or without hard labor, for not more than five years, or fined not more than five thousand dollars, or both.

(3) Whoever violates any provision of this Section, when the benefits claimed or payments obtained have a value of less than two thousand five hundred dollars, shall be imprisoned for not more than six months or fined not more than five hundred dollars, or both.

(4) Notwithstanding any provision of law to the contrary which defines "benefits claimed or payments obtained", for purposes of Subsection C of this Section, the definition of "benefits claimed or payments obtained" shall include the cost or value of indemnity benefits, and the cost or value of health care, medical case management, vocational rehabilitation, transportation expense, and the reasonable costs of investigation and litigation.

D. In addition to the criminal penalties provided for in Subsection C of this Section, any person violating the provisions of this Section may be assessed civil penalties by the workers' compensation judge of not less than five hundred dollars nor more than five thousand dollars payable to the Kids Chance Scholarship Fund, Louisiana Bar Foundation, and may be ordered to make restitution. Restitution may only be ordered for benefits claimed or payments obtained through fraud and only up to the time the employer became aware of the fraudulent conduct.

E. Any employee violating this Section shall, upon determination by workers' compensation judge, forfeit any right to compensation benefits under this Chapter.

F. Whenever the employer reports an injury to the office pursuant to R.S. 23:1306, the employer and employee shall certify their compliance with this Chapter to the employer's payor on a form prescribed by the assistant secretary, which form shall include all of the following information:

(1) A summary of the fines and penalties for workers' compensation fraud.

(2) The names, addresses, phone numbers, and signatures of the employee and the employer.

(3) The fine or penalty that may be imposed for failure to report to the payor as required by this Section.

G. Whenever an employee receives benefits pursuant to this Chapter for more than thirty days, the employee shall upon reasonable request report his other earnings to his employer's payor on a form prescribed by the assistant secretary and signed by the employee.

H.(1) Whenever an employee fails to report to his employer's payor as required by this Section within fourteen days of his receipt of the appropriate form, the employer or payor may suspend the employee's right to benefits as provided in this Chapter. If otherwise eligible for benefits, the employee shall be entitled to all of the suspended benefits after the form has been provided to the payor. Suspension of benefits by the employer or payor shall be made in accordance with the provisions of R.S. 23:1201.1(A) through (E). The employer or payor may move for an order to compel the employee to return the form.

(2) Whenever an employer fails to report to its payor as required by this Section, the employer may be subject to a penalty of five hundred dollars, payable to the payor.

(3) The payor may request an assessment of a penalty for the employer's failure to report as provided in this Subsection by filing a form LDOL-WC-1008 with the assistant secretary.

I.(1) No person acting gratuitously and without malice, fraudulent intent, or bad faith, shall be subject to civil liability for libel, slander, or any other relevant tort, and no civil cause of action of any nature shall exist against such person or entity by virtue of the filing of reports or furnishing of other information, either orally or in writing, relative to a violation by any person of the provisions of this Section.

(2) The grant of immunity provided by this Subsection shall not abrogate or modify in any way any statutory or other privilege or immunity otherwise enjoyed by such person or entity.

Acts 1989, No. 454, §5, eff. Jan. 1, 1990; Acts 1992, No. 763, §1; Acts 1993, No. 829, §1, eff. June 22, 1993; Acts 1995, No. 368, §1, eff. June 16, 1995; Acts 1995, No. 1129, §1, eff. June 29, 1995; Acts 1997, No. 88, §1, eff. June 11, 1997; Acts 1997, No. 90, §1, eff. June 11, 1997; Acts 1997, No. 394, §1; Acts 1997, No. 1108, §1; Acts 2003, No. 702, §1; Acts 2005, No. 257, §1; Acts 2013, No. 337, §1.

§1208.1.  Employer's inquiry into employee's previous injury claims; forfeiture of benefits

Nothing in this Title shall prohibit an employer from inquiring about previous injuries, disabilities, or other medical conditions and the employee shall answer truthfully; failure to answer truthfully shall result in the employee's forfeiture of benefits under this Chapter, provided said failure to answer directly relates to the medical condition for which a claim for benefits is made or affects the employer's ability to receive reimbursement from the second injury fund.  This Section shall not be enforceable unless the written form on which the inquiries about previous medical conditions are made contains a notice advising the employee that his failure to answer truthfully may result in his forfeiture of worker's compensation benefits under R.S. 23:1208.1.  Such notice shall be prominently displayed in bold faced block lettering of no less than ten point type.

Acts 1988, No. 938, §2, eff. Jan. 1, 1989; Acts 1989, No. 454, §5, eff. Jan. 1, 1990.

§1208.2. Duty to report fraud; immunity from civil liability

A. Any person having knowledge of or who believes that an act is being or has been committed in violation of this Chapter shall report orally or in writing to the assistant secretary the information that forms the basis of such knowledge or belief, as well as any such additional information relevant thereto as the assistant secretary or his employees or his agents may require.

B. Any person who provides information pursuant to this Section without malice, fraudulent intent, or bad faith, shall be immune from all civil liability for such action.

Acts 1995, No. 368, §1, eff. June 16, 1995.

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