According to a report from CBS SF Bay Area, a psychiatrist based in San Francisco has been sentenced to prison in connection with a workers’ compensation fraud scheme. George Demetrius Karalis, 76, will serve a sentence of 120 days in prison and will pay $1.4 million in financial restitution to the affected parties. The judgment was handed down in a federal court in northern California. Here, our Fresno workers’ compensation defense lawyer discusses this workers’ compensation fraud case.

Workers’ Compensation Fraud Allegations: Psychiatrist Encouraged Employees to Seek Extra Benefits

The workers’ compensation fraud case pursued against San Francisco-based psychiatrist, George Demetrius Karalis, was filed in the United States District Court for the Northern District of California. Federal authorities alleged that Mr. Karalis engaged in workers’ compensation fraud by encouraging his non-disabled clients/patients to submit false medical reports so that they could receive workers’ compensation benefits that they were not truly entitled to under the law.

Notably, the clients/patients in this case were employees of the United States Postal Service (USPS). As federal workers, USPS employees are covered by the Federal Employees’ Compensation Act (FECA). When they file for workers’ compensation benefits, it is through a FECA policy. The San Francisco psychiatrist spearheaded a scheme through which these USPS workers submitted false medical reports of stress and other psychological disorders to get additional benefits. 

Workers’ Compensation Fraud Costs All Parties—Employers, Employees, and Insurers

Workers’ compensation fraud is far from a victimless crime. When parties defraud the workers’ compensation insurance system, it raises the costs for everyone else involved. This means higher workers’ compensation premiums overall, which results in more expenses falling on employees, employers, claims administrators, and insurance carriers.

In this case, the workers’ compensation fraud scheme perpetrated by George Demetrius Karalis may have resulted in as much as $1.5 million in total losses. Beyond accepting a 120-day prison sentence, Mr. Karalis will pay $1.4 million in restitution. Of that, USPS will receive approximately $900,000.00 and an additional $500,000.00 will be repaid to the California Employment Development Department.

An Overview of Workers’ Compensation Fraud Charges in California

While this case involved allegations of federal workers’ compensation fraud, most workers’ compensation fraud claims fall under state law. California has strict criminal and civil penalties in place for workers’ compensation fraud. Under California Insurance Code Section 1871.4, it is a crime to knowingly submit false records or false information for the purpose of helping any party get workers’ compensation benefits that they are not actually entitled to under the law.

Call Our Fresno, CA Workers’ Compensation Defense Attorney Today

At Yrulegui & Roberts, our California workers’ compensation defense lawyers are committed to protecting the rights and interests of employers, claims administrators, and insurers. If you have any questions about workers’ compensation fraud defense, we are ready to provide assistance. Give us a phone call or contact us online for a strictly confidential initial consultation. Our firm provides workers’ compensation defense representation in Fresno, Fresno County, and throughout Central California.