TITLE 28
Labor and Labor Relations

CHAPTER 28-33
Workers' Compensation – Benefits

SECTION 28-33-17.3


   § 28-33-17.3  Fraud and abuse. – (a)(1) The workers' compensation court is authorized and directed to impose sanctions and penalties necessary to maintain the integrity of and to maintain the high standards of professional conduct in the workers' compensation system. All pleadings related to proceedings under chapters 29 – 38 of this title shall be considered an attestation by counsel that valid grounds exist for the position taken and that the pleading is not interposed for delay.

   (2) If any judge determines that any proceedings have been brought, prosecuted, or defended by an employer, insurer, or their counsel without reasonable grounds, then:

   (i) The whole cost of the proceedings shall be assessed upon the employer, insurer, or counsel, whoever is responsible; and

   (ii) If a subsequent order requires that additional compensation be paid, a penalty of double the amount of retroactive benefits ordered shall be paid to the employee and the penalty shall not be included in any formula utilized to establish premium rates for workers' compensation insurance.

   (3) If any judge determines that any proceedings have been brought or defended by an employee or his or her counsel without reasonable grounds, the whole cost of the proceedings shall be assessed against the employee or counsel, whoever is responsible.

   (4) The court shall determine whether an action or defense is frivolous or conduct giving rise to the action or defense was unreasonable. Where the amount at issue is less than the actual attorneys' fees of the parties combined, the court shall exercise particular vigilance. Nothing in this subsection, however, is intended to discourage prompt payment in full of all amounts required to be paid.

   (5) The appropriate body with professional disciplinary authority over the attorney shall be notified of the action.

   (b)(1) It is unlawful to do any of the following:

   (i) Make or cause to be made any knowingly false or fraudulent material statement or material representation for the purpose of obtaining or denying any compensation;

   (ii) Present or cause to be presented any knowingly false or fraudulent written or oral material statement in support of, or in opposition to, any claim for compensation or petition regarding the continuation, termination, or modification of benefits;

   (iii) Knowingly assist, aid and abet, solicit, or conspire with any person who engages in an unlawful act under this section;

   (iv) Make or cause to be made any knowingly false or fraudulent statements with regard to entitlement to benefits with the intent to discourage an injured worker from claiming benefits or pursuing a claim;

   (v) Willfully misrepresent or fail to disclose any material fact in order to obtain workers' compensation insurance at less than the proper rate for the insurance including, but not limited to, intentionally misleading or failing to disclose information to an insurer regarding the appropriate rate classification of an employee;

   (vi) Willfully fail to provide a lower rate adjustment favorable to an employer as required by an approved experience rating plan or regulations promulgated by the insurance commissioners;

   (vii) Willfully fail to report or provide false or misleading information regarding ownership changes as required by an approved experience rating plan or regulations promulgated by the insurance commissioner; or

   (viii) Knowingly assist, aid and abet, solicit or conspire to coerce an employee to willfully misrepresent an employee's status as a shareholder, director or officer of a corporation, or as a member or manager of a limited liability company, or as a partner, in a general or, limited partnership, registered limited liability partnership or a registered limited liability limited partnership, or as an independent contractor for the purpose of avoiding the inclusion of that or other employees in a workers' compensation insurance application, renewal or both.

   (2) For the purposes of this section, "Statement" includes, but is not limited to, any endorsement of a benefit check, application for insurance coverage, oral or written statement, proof of injury, bill for services, diagnosis, prescription, hospital or provider records, x-rays, test results, or other documentation offered as proof of, or in the absence of, a loss, injury, or expense.

   (3) If it is determined that any person concealed or knowingly failed to disclose that which is required by law to be revealed, knowingly gave or used perjured testimony or false evidence, knowingly made a false statement of fact, participated in the creation or presentation of evidence which he or she knows to be false, or otherwise engaged in conduct in violation of subdivision (1) of this subsection, that person shall be subject in criminal proceedings to a fine and/or penalty not exceeding fifty thousand dollars ($50,000), or double the value of the fraud, whichever is greater, or by imprisonment up to five (5) years in state prison or both.

   (4) There shall be a general amnesty until July 1, 1992 for any person receiving compensation under chapters 29 – 38 of this title, to the extent compensation has been voluntarily reduced or relinquished by the employee prior to that date.

   (c) The director of labor and training shall establish a form, in consultation with the attorney general, to be sent to all workers who are presently receiving benefits and those for whom first reports of injury are filed in the future which shall give the employee notice that the endorsement of a benefit check sent pursuant to § 28-35-39 is the employee's affirmation that he or she is qualified to receive benefits under the Workers' Compensation Act. The insurers and self-insured employers are directed to send the form to all workers receiving benefits.

   (d) Any employer, or in any case where the employer is a corporation, the president, vice president, secretary, treasurer, and other officers of the corporation, or in any case where the employer is a limited liability company, the managers, and the managing members or in any case where the employer is a general partnership or a registered limited liability partnership, or in the case where the employer is a limited partnership or a registered limited liability limited partnership, the partners, that are found to have violated this section or § 28-36-15, shall be guilty of a felony for failure to secure and maintain compensation, and upon conviction, shall be subject to imprisonment of up to two (2) years, a fine not exceeding ten thousand dollars ($10,000), or both. In any case where the employer is a corporation, the president, vice president, secretary, treasurer, and other officers of the corporation, shall be severally liable for the fine or subject to imprisonment, or both. In any case where the employer is a limited liability company, the managers and managing members shall be severally liable for the fine or subject to imprisonment, or both. In any case where the employer is a partnership or a registered limited liability partnership, the partners shall be severally liable for the fine or subject to imprisonment, or both. In any case where the employer is a limited partnership or a registered limited liability limited partnership, the general partners shall be severally liable for the fine or subject to imprisonment, or both.

History of Section.
(P.L. 1992, ch. 31, § 7; P.L. 1994, ch. 101, § 4; P.L. 1994, ch. 401, § 5; P.L. 1998, ch. 105, § 2; P.L. 1998, ch. 404, § 2; P.L. 2000, ch. 109, § 34; P.L. 2000, ch. 491, § 4; P.L. 2003, ch. 388, § 3; P.L. 2003, ch. 395, § 3; P.L. 2004, ch. 273, § 3; P.L. 2004, ch. 293, § 3; P.L. 2005, ch. 342, § 2; P.L. 2005, ch. 403, § 2.)