What AB 1398 Changes About Workers’ Comp Kickback Enforcement

January 19, 2026 | JacobiJournal.com — California is strengthening its fight against workers’ compensation fraud with new felony prosecution tools under AB 1398 while authorities crack down on call-center schemes targeting Spanish-speaking workers for fraudulent claims.

AB 1398 tightens California’s legal framework against illegal referral and kickback schemes in workers’ compensation. The law clarifies when referral fees must be disclosed and makes it easier for prosecutors to pursue felony charges when parties conceal financial interests in claim referrals.

Previously, some schemes operated in a gray area where referral networks were hard to trace. AB 1398 closes that gap by requiring clear disclosure of financial ties, increasing the risk of felony prosecution for anyone involved in improper referral or kickback activity.

Why This Matters

By strengthening enforcement tools, AB 1398 aims to reduce the volume of fraudulent claims and protect the integrity of California’s workers’ compensation system.

How Authorities Are Targeting Call Centers That Exploit Spanish-Speaking Workers

Law enforcement and regulatory agencies have recently targeted call-center networks that specifically target Spanish-speaking workers. These operations reportedly use deceptive tactics—cold-calling workers, promising guaranteed payouts, and encouraging them to file fraudulent claims.

Investigators say the call centers then sell the completed claim paperwork to attorneys and other actors who profit from illegal referral fees. These schemes often involve multiple parties, including overseas call centers, local attorneys, and fraudulent billing networks.

Why This Is Dangerous

Workers who are recruited into these schemes may face legal consequences, including criminal charges, while the overall system suffers from increased fraud and inflated insurance costs.

Why Employers Should Pay Attention to These Fraud Trends

Fraudulent workers’ compensation schemes impact employers directly by raising insurance premiums and triggering audits. When fraudulent claims rise, insurers adjust rates to cover losses, which ultimately increases costs for businesses.

Employers should watch for patterns like:

sudden increases in claims from one location
unusual claim timing (e.g., just after hiring)
workers who were contacted through unsolicited calls or messages
claims involving suspicious medical referrals or “pay-to-play” networks

How Workers Can Protect Themselves from Fraud Recruitment

Spanish-speaking workers are particularly vulnerable to call-center fraud because scammers often promise quick money and simplified paperwork. Workers should know that legitimate workers’ compensation claims do not require payment to file or referral fees to obtain benefits.

Key warning signs:

unsolicited calls promising guaranteed payouts
pressure to sign documents immediately
requests for payment or “processing fees”
referrals to attorneys or clinics that offer cash incentives

What AB 1398 Means for Future Prosecutions

With AB 1398 in effect, prosecutors have stronger tools to pursue complex fraud networks that rely on hidden kickbacks and illegal referral schemes. This legislative change signals a broader enforcement shift—one that targets not only individual claimants but the entire chain of actors that profit from fraudulent claims.

Learn more about California’s official fraud reporting and enforcement efforts here: California Department of Insurance — Workers’ Compensation Fraud Division.

FAQs: Workers’ Comp Fraud & AB 1398

What does AB 1398 do in workers’ compensation law?

AB 1398 strengthens enforcement against illegal referral and kickback schemes by clarifying disclosure requirements and expanding felony prosecution tools.

Why are call centers targeting Spanish-speaking workers?

Fraud rings often target Spanish-speaking workers because they may be less familiar with the system and more vulnerable to deceptive recruitment tactics.

What should employers watch for to detect fraud?

Employers should watch for unusual claim patterns, sudden claim spikes, and suspicious referral networks tied to specific clinics or attorneys.

How can workers avoid being recruited into fraud schemes?

Workers should avoid unsolicited calls promising guaranteed payouts, never pay for claims processing, and only use trusted legal or medical professionals.

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