April 3, 2025 | JacobiJournal.com — A California plumbing contractor fined $1 million in restitution has been ordered to compensate the State Compensation Insurance Fund after admitting to a long-running workers’ compensation insurance fraud scheme. Prosecutors said the case highlights how underreporting payroll to reduce insurance premiums not only cheats the system but also puts employees at financial and medical risk when workplace injuries occur.
The contractor, identified as Daniela G. Birdwell, 41, of GPS Plumbing, pleaded guilty after a state investigation uncovered millions in unreported payroll. Authorities say the restitution order is intended to recover losses sustained by the insurance system and to send a strong deterrent message to other employers who may consider similar practices.
Fraud Discovery and Investigation
Authorities reported that Daniela G. Birdwell, the owner of GPS Plumbing, carried out the scheme by intentionally misrepresenting payroll records, allowing her to significantly reduce the workers’ compensation insurance premiums owed by her company.
The State Compensation Insurance Fund’s Special Investigation Unit (SIU) began reviewing GPS Plumbing after identifying discrepancies between payroll data reported to the Employment Development Department (EDD) and the information submitted during insurance policy audits.
A deeper audit revealed that millions in payroll had gone unreported, exposing a scheme that not only placed workers at risk but also shifted financial burdens onto the state’s compensation system. The SIU then referred the case to the San Diego County District Attorney’s Office and the California Department of Insurance for prosecution.
Legal Consequences
Birdwell pleaded guilty to a felony count of workers’ compensation premium fraud. As part of the sentencing, the court imposed:
- Two years of formal felony probation
- 320 hours of community service
- $1 million in restitution (payable in $10,000 monthly installments)
Deputy District Attorney David Bagheri, who led the prosecution, emphasized that such cases highlight the importance of protecting workers and ensuring fair contributions to the state insurance fund.
The ruling serves as a warning to other business owners that intentional underreporting of payroll to reduce premiums can lead to severe financial and legal consequences.
Broader Impact on Workers’ Compensation Enforcement
Cases like this underscore California’s commitment to enforcing workers’ compensation laws and deterring fraud that undermines the insurance system. By holding employers accountable, the state seeks to ensure that workers injured on the job receive proper benefits while maintaining fairness for businesses that comply with the law.
Source: Insurance Journal
FAQs: California Plumbing Contractor Fined
Why was the California plumbing contractor fined?
She was fined for underreporting payroll to reduce workers’ compensation insurance premiums, which is considered insurance fraud.
How much restitution did the plumbing contractor have to pay?
The court ordered her to pay $1 million in restitution to the State Compensation Insurance Fund.
What penalties did the plumbing contractor receive besides restitution?
She received two years of felony probation, 320 hours of community service, and structured monthly restitution payments.
What does this plumbing contractor fraud case mean for other employers?
It reinforces that fraudulent payroll reporting can lead to criminal charges, large financial penalties, and reputational damage.
What are the penalties for a plumbing contractor convicted of workers’ compensation fraud in California?
Penalties can include felony probation, community service, restitution payments, and in more severe cases, prison time. Contractors may also face loss of licenses and long-term reputational damage.
Stay informed on major insurance fraud prosecutions, enforcement actions, and compliance updates. Subscribe to JacobiJournal.com for weekly coverage on fraud, law enforcement, and public integrity cases.