Workers’ compensation is a type of insurance designed to replace the wages and cover the medical bills of employees who have been injured on the job. Generally, in exchange for coverage under the insurance, the employee gives up the right to sue for negligence. The employee can still file suit against their employer or another party if other wrongs occurred, such as:
- Defective products;
- Exposure to toxic substances;
- Intentional conduct by your employer;
- Injury at work; and/or
- Failure to carry adequate workers’ compensation insurance.
What is Workers’ Compensation Fraud?
Workers’ compensation fraud is when an employee intentionally makes a false statement or conceals information in order to obtain workers’ compensation benefits from their employer or prevents someone from receiving benefits to which they might be entitled. It is important to know that both employees and employers can be held liable for workers’ compensation fraud.
Employers can be held liable for worker’ compensation fraud when an employer intentionally misrepresents facts about their employees to obtain a workers’ compensation coverage for a price that is that is less than what the employer would actually have to pay of all facts present were known to the insurance company.
What are Some Examples Workers’ Compensation Fraud?
Some examples of workers’ compensation examples include the following:
- Applicant/Claimant fraud: This occurs when the injured employee makes false or fakes/exaggerates their injury in order to receive workers’ compensation benefits.
- Adjuster fraud: This occurs when insurance adjuster tampers with evidence to support denying a claim and not pay claimant for their injuries. The insurance adjuster usually works for the insurance company.
- Premium fraud: This occurs when the claimant gives false information to the insurance company in order to obtain a workers’ comp policy at a discounted rate.
- Employer fraud: This occurs when the employer does not want to pay workers’ compensation and intentionally makes false representation or statements about the claim.
What are the Elements of Workers’ Compensation Insurance Fraud?
In order for the prosecutor to be able to convict the defendant of workers’ compensation insurance fraud, the following elements must be met:
- Defendant knowingly made a false statement;
- The statement is in connection with a claim or payment made/to be made from an insurance company; and
- The statement is key part to the insurance payment or claim.
How Frequently Does Workers’ Compensation Fraud Occur?
While an exact figure is impossible to determine, studies have indicated fraud only occurs in 1 to 2% of claims. According to statistics taken from the U.S. Bureau of Labor, more than 3 million nonfatal workplace accidents occur yearly. If 1 to 2% of those are fraudulent, that’s roughly 30,000 to 60,000 instances of fraud.
In a system that costs over $90 billion a year, the dollar amount of that fraud can add up quickly. For example, in 2011-2012 the state of California had estimated that over 5,000 arrests were made for workers’ compensation fraud, amounting in upwards of $300,000,000 of potential losses.
Who Can Commit Workers’ Compensation Fraud?
While many assume employees only commit this type of fraud, employers and providers can commit workers’ compensation fraud too:
- Employees: Employees can commit fraud by exaggerating claims, claiming an injury that never occurred, working while a disability claim is being evaluated and not reporting wages, or claiming a non-work related injury as a work injury.
- Employers: An employer commits fraud by misclassifying employees, deducting insurance premiums from their employees’ checks, or by misreporting their coverage.
- Healthcare Providers: Health care providers can also commit Workers’ compensation fraud. This type of fraud occurs where the medical provider performs unnecessary tests, bills for tests that the provider never performed, or by billing multiple times for one treatment.
Should I Seek Legal Advice?
Workers’ compensation is designed to facilitate the quick treatment of injuries that occur on the job. Unfortunately, fraud can complicate this system and hurt those who have already unnecessarily suffered. If you feel you have been subject to workers’ compensation fraud, consulting with a local employment attorney can help ensure your rights are protected. If you fear an employee is abusing your workers’ compensation insurance, an experienced lawyer can help you handle the situation.