January 21, 2026 | SIBTF.org — California employers collectively fund an annual workers’ compensation fraud assessment — money earmarked to support investigations and prosecutions of fraud across the state. Traditionally, this assessment has been split between local District Attorneys (DAs) and the California Department of Insurance (CDI) to help ensure fraud gets uncovered, prosecuted, and deterred. But now, funding is under renewed debate as lawmakers consider whether the current split still reflects the best use of fraud enforcement resources.
But as the state prepares its 2026 budget and enforcement strategy, a fierce discussion has erupted over how these funds should be allocated in the coming year.
Why the Fight Over Funding Matters
Local DAs use their funding to go after a wide range of fraud — from staged injury rings to fraudulent medical billing. These prosecutions can lead to criminal convictions that protect employers and workers alike from bad actors hurting the system. Meanwhile, the CDI oversees fraud enforcement priorities statewide and supports coordination among law enforcement through grants and strategic enforcement plans.
With growing concerns about under-staffed fraud units and budget pressures, some lawmakers want more flexibility in how the fraud assessment funding is split between local prosecutors and the state. A proposed California bill would allow unused fraud funds held by the CDI to flow to district attorney offices — but only if certain enforcement conditions are met.
What’s at Stake for 2026 Enforcement Budgets
1. District Attorneys Could See More Funds
If the proposed bill becomes law, the CDI could channel unspent fraud assessment funds directly to local DAs — giving them more resources to investigate and prosecute fraud. This could significantly boost local enforcement capacity.
2. CDI Must Report on Anti-Fraud Outcomes
Under the proposed changes, the Department of Insurance might need to provide a much more transparent accounting of how its anti-fraud dollars are used each year — including arrests, convictions, and restitution amounts collected.
3. Smaller Counties Could Benefit Too
If local prosecutors are empowered to combine resources or access redirected funds, even smaller counties may be better positioned to fight fraud that is currently under-resourced.
What This Means for Employers and Workers
Pressuring how fraud dollars are split also raises broader questions about system accountability and consumer protection:
- Employers want assurance that fraud assessments are being used effectively to lower premiums and reduce abuse.
- Workers want a system where genuine claims get attention — and bad actors are swiftly brought to justice.
- Lawmakers must balance enforcement efficiency with transparency and fairness.
For deeper background on this evolving budget debate and enforcement strategies, read the original article on Workers’ Comp Executive.
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FAQs: About California Workers’ Comp Fraud Funding
What is the workers’ compensation fraud assessment?
It’s a fee employers pay annually that funds anti-fraud enforcement by both local prosecutors and the California Department of Insurance.
How is the fraud assessment currently divided?
By state law, a portion goes to local DAs and a portion to CDI, with some flexibility allowed under certain legislative proposals.
What proposed changes could affect the 2026 budget?
A new bill would allow unspent funds at the CDI to be redirected to local DAs if enforcement metrics are met.
Why does this funding dispute impact employers?
How the money is spent can affect fraud enforcement outcomes, insurance premiums, and the overall integrity of the workers’ compensation system.