On June 2, 2021, the California Department of Insurance announced that a grand jury has issued indictments on seven people who allegedly stole workers’ compensation benefits and are part of a scheme operated through a Bakersfield-based vocational training school. In this article, our Bakersfield workers’ compensation defense attorneys provide an overview of the workers’ compensation fraud charges.

Allegations: $330,000.00 in Benefits Were Stolen

After learning of allegations of misconduct, the California Department of Insurance launched an investigation into a vocational school in Bakersfield, California called Instituto Hispano Americano or (IHA). Based on the findings of the agency’s investigation, a Kern County Grand Jury has now issued indictments against seven individuals associated with the school. The indictment alleges that at least $330,000.00 in workers’ compensation benefits meant to help injured employees train to re-enter the state’s workforce were stolen.

Workers’ Compensation Retraining Benefits Were Misused

In California, people who were injured on the job are entitled to no-fault workers’ compensation benefits. Most importantly, those benefits cover medical treatment and wage replacement. Additionally, up to $6,000.00 per applicant is available for vocational rehabilitation and retraining to help an injured worker re-enter the workforce in a new, less physically demanding position.

In this case, the California Department of Insurance alleges that the school committed systematic fraud by submitting fake documents, records, and information to get vocational training benefits paid out. Five of the defendants charged are/were employees of Instituto Hispano Americano. Two other defendants were associated with area law firms and reportedly improper referral bonuses.

Nearly Two Dozen Insurance Companies Were Affected by the Fraud

In total, California regulators believe that more than 20 insurance companies were bilked out of approximately $330,000.00 in workers’ compensation benefits. Although the Bakersfield, California vocational school sent extensive records and documentation to insurance carriers, state officials believe most of that information was fraudulent.

Essentially, the school was finding as many injured workers as possible to enroll in costly vocational retraining programs. However, most of the workers did not come close to meeting the minimum requirements from such a program. Further, the California Department of Insurance believes that Instituto Hispano Americano created fake test results to justify the enrollments and bills to insurers.

Workers’ Compensation Fraud is a Serious Problem

To work effectively, California workers’ compensation insurance system relies on good faith by all parties. Workers’ compensation fraud results in improper payments by insurers, higher premiums for employers, and less available benefits for injured workers. As emphasized by Kern County District Attorney Cynthia Zimmer, workers’ compensation fraud “will be investigated and prosecuted.

Call Our Bakersfield, California Workers’ Compensation Defense Attorneys Today

At Yrulegui & Roberts, our California workers’ compensation defense lawyers are devoted to protecting the rights of our clients. If you have questions about workers’ compensation fraud, our legal team is here to help. Give us a call now or send us a message online for a completely private case evaluation. We represent employers, insurers and administrators in Bakersfield and throughout Kern County.