AB 2046: Workers’ compensation insurance fraud reporting.

Existing law requires the Insurance Commissioner to aggressively pursue all reported incidents of probable workers compensation fraud, as defined. Existing law requires that an annual assessment be imposed on workers compensation insurers for purposes related to workers compensation fraud, and requires the Fraud Assessment Commission, as specified, to establish the amount of the assessment. Existing law requires that, for each fiscal year, the total amount of revenues derived from the assessment, together with amounts collected pursuant to fines imposed for unlawful acts, be not less than $3,000,000. Existing law requires that funds appropriated by the Legislature that are not expended in the fiscal year for which they have been appropriated, and that have not been allocated to district attorneys, be applied to satisfy for the immediately following fiscal year the minimum total amount required.

This bill would instead authorize, rather than require, funds appropriated by the Legislature that are not expended in the fiscal year for which they have been appropriated, and that have not been allocated to the district attorneys, to be applied to satisfy for the immediately following fiscal year the minimum total amount required, or, subject to appropriation by the Legislature, to be used to augment funding in the immediately following fiscal year.

Existing law requires the California State Auditors Office to evaluate the effectiveness of the efforts of the Fraud Assessment Commission, the Fraud Division, the Department of Insurance, and the Department of Industrial Relations, as well as local law enforcement agencies, including district attorneys, in identifying, investigating, and prosecuting workers compensation fraud and the willful failure to secure payment of workers compensation. Existing law also includes a related, obsolete provision requiring the office to submit a related report.

This bill would delete those provisions.

Existing law makes it a misdemeanor or a felony to engage in specified acts of fraud or material misrepresentation for the purpose of obtaining or denying workers compensation, as specified. Existing law, the Workers Compensation Insurance Fraud Reporting Act (the act), requires insurers and licensed rating organizations to release upon request to an authorized governmental agency, as defined, relevant information deemed important to the authorized governmental agency that the insurer or licensed rating organization may possess relating to any specific workers compensation insurance fraud investigation. The act requires, under specified circumstances, an insurer or licensed rating organization to notify the local district attorneys office and the Fraud Division of the Department of Insurance, and authorizes that entity to notify any other authorized governmental agency, of suspected fraud, as specified. The act also requires the Employment Development Department to release, upon written request, to an authorized governmental agency, relevant information that the Employment Development Department may possess relating to any specific workers compensation insurance fraud investigation. The act authorizes the governmental agency that is provided with information pursuant to those provisions to release or provide that information in a confidential manner to any other authorized governmental agency for purposes of investigation, prosecution, or prevention of insurance fraud or workers compensation fraud.

This bill would require an authorized governmental agency that is provided with information pursuant to those provisions to release or provide that information, upon request, as described above, unless it would violate federal law or otherwise compromise an investigation. The bill would also require an authorized governmental agency that seeks to disclose this information to any other governmental agency that is not authorized to receive that information to obtain Employment Development Department approval prior to disclosure, as specified.