15 ways to identify and deal with false workers' compensation claims
Before we start talking about False Workers’ Compensation Claims, we need to fully understand what Workers’ Compensation is.
Table of Contents
What is Workers’ Compensation?
What is Workers’ Compensation Insurance?
What is False Workers’ Compensation Claim?
Workers’ Compensation Fraud by employees.
Workers’ Compensation Fraud by Employers.
Workers’ Compensation Fraud by Health Care Providers.
Identifying false Workers’ Compensation Claims.
Dealing with False Workers’ Compensation Claims.
Penalties for filing a false Workers’ Compensation Claim.
What is Workers’ Compensation?
Workers' Compensation is a form of monetary compensation provided to employees who suffer work-related injuries or illnesses that prevent them from continuing to work at their workplace. This compensation ensures that the employee continues to receive payment, despite being unable to work due to their physical condition. However, it's important to note that Workers' Compensation does not cover any disability that is sustained outside of work.
For instance, if an employee gets into an accident while driving to or from work and cannot come to work the following day, they will not be eligible for Workers' Compensation. This compensation is only applicable when an employee is unable to work due to a disability that they sustained while on duty.
Workers' Compensation provides financial assistance to employees who are unable to work as a result of a disability that they sustained while on the job. It ensures that they continue to receive payment despite their inability to work. However, it's essential to understand that this compensation only applies to work-related injuries or illnesses and does not cover disabilities that occur outside of work.
What is Workers’ Compensation Insurance?
To fulfill their legal obligation of looking after employees, employers must provide Workers' Compensation Insurance. This insurance covers a range of afflictions, including:
Replacement wages for the employee while they are unable to work due to a work-related injury or illness.
The expenses associated with medical treatments required for the employee's recovery.
Disability benefits if the employee's injury or illness results in a permanent disability.
Death benefits to the employee's family if the injury or illness results in the employee's death.
Vocational rehabilitation for the employee if they are unable to return to their previous job.
Employers purchase Workers' Compensation Insurance to ensure that they can provide their employees with the necessary support and compensation in case of a work-related injury or illness. However, it's up to the employees to decide whether they want to accept this insurance or not.
What is a False Workers’ Compensation Claim?
Workers' Compensation Fraud refers to the act of an employer or employee fabricating or exaggerating an injury, ailment, or illness to obtain compensation from insurers. This fraudulent behavior is also commonly referred to as a False Workers' Compensation claim.
Instances of Workers' Compensation Fraud demonstrate that both employers and employees can commit this offense. Essentially, those who engage in this illegal activity are lying about an injury or illness in order to receive monetary compensation from insurance companies.
False Workers' Compensation Claim by Employees.
Employees can commit Workers' Compensation Fraud in several ways, including:
Lying about the extent of their injury or illness. This could involve claiming to have an injury that affects their ability to work when they are still capable of doing their job.
Fabricating a fake injury or illness. Employees may create a false story about how they became sick or injured to obtain compensation.
Misrepresenting a non-work-related injury as a work-related injury. Some workers have falsely claimed to have been injured while on the job when the injury occurred outside of work.
Prolonging their compensation period. Employees may extend their compensation period by pretending to be injured even after they have recovered.
It's important to note that committing Workers' Compensation Fraud is illegal and can result in serious consequences for both employers and employees.
False Workers' Compensation Claim by Employers
Employers can engage in Workers' Compensation Fraud in various ways, including:
Misclassifying employees or hiding their actual count: Some employers may misclassify employees as independent contractors or provide insurance providers with a smaller count of employees to reduce their Workers' Compensation premium. This practice is illegal and can result in serious legal consequences.
Falsely demonstrating a safe work environment: Employers may misrepresent the safety of their work environment to insurance providers to reduce their premium expenses. However, this can lead to fraudulent claims and costly legal repercussions.
Under-reporting payroll: Some employers may under-report their payroll to insurance authorities to reduce their Workers' Compensation premium. This can result in financial penalties and legal repercussions.
Not purchasing Workers' Compensation Insurance: Employers may choose not to buy Workers' Compensation Insurance to save on expenses. However, this is illegal in some states, and failing to provide insurance coverage to employees can result in hefty fines and legal consequences.
Providing insurance providers with a smaller count of employees: Employers may give insurance providers a smaller count of employees to reduce their premium expenses. This practice is illegal and can lead to fraudulent claims and costly legal repercussions.
It's important for employers to provide truthful and accurate information to insurance providers and follow legal guidelines to avoid committing Workers' Compensation Fraud.
False Workers' Compensation Claims by Health Care Providers
Healthcare providers, including hospitals and doctors, have also been involved in Workers' Compensation Fraud in the past. Some of the ways they commit this type of fraud include:
Issuing overpriced medical bills: In California, medical professionals and marketers committed a fraud of over 200 million dollars by hiring migrants to file false Workers' Compensation Claims against their employers. This fraudulent activity involved issuing overpriced medical bills to the workers' compensation system.
Conducting a medical business without a license: Some individuals in the medical sector have been known to practice medicine for commercial purposes without possessing a license to practice or conduct medical evaluations. This illegal activity can lead to Workers' Compensation Fraud.
Creating fake contracts for medical work that was never performed: In 2013, a group of 5 healthcare professionals defrauded the workers' compensation system of 580 million dollars for over 8 years by billing their insurers for surgeries that were never performed and inflating the cost of medical implants used in those surgeries. This fraudulent activity was uncovered by the FBI in what became known as Operation Spinal Cap.
It's essential for healthcare providers to follow legal guidelines and provide accurate medical bills and services to avoid committing Workers' Compensation Fraud.
Identifying a False Workers’ Compensation Claim
Identifying false Workers' Compensation Claims can be challenging, as there is no standard protocol or set of rules to follow. It largely depends on the situation, and it's up to the employer or insurer to use their own common sense and deductive abilities.
However, before taking any legal action against a claimant suspected of filing a false Workers' Compensation Claim, it's essential to take the following steps:
Be cautious of newly hired employees who file a claim.
Be wary of late filings of Workers' Compensation Claims.
Look for witnesses to corroborate the claimant's story.
Be suspicious if the claimant refuses to undergo medical diagnosis.
Pay attention to inconsistencies in the claimant's description of the accident.
Investigate the scene of the injury and talk to witnesses.
Check the recent past of the claimant, such as previous requests for vacation and dissatisfaction as an employee.
Conduct a background check on the claimant for financial troubles, job hopping, and past Workers' Compensation Claims.
Look for evidence of activities that would have been impossible with the claimed injury.
Be wary of claims reported after a holiday or hiatus period.
Be suspicious if the claimant hires an attorney close to filing a Workers' Compensation Claim.
Be cautious of claimants who push for a quick settlement.
Investigate if the claimant is difficult to reach while on leave due to injury.
Look into the matter if a claim is reported just before a layoff, termination, or contract expiration.
Trust your instincts and conduct an investigation if you have a feeling that something might be wrong.
Dealing with False Workers’ Compensation Claims
Preventing false Workers' Compensation Claims is essential for businesses to protect themselves from fraud. Here are seven preventive measures to take:
Avoid underpaying employees.
Maintain a healthy work environment for workers.
Perform thorough background checks on employees.
Conduct investigations promptly.
Report workplace injuries immediately.
Hire a supervisor to oversee workplace injuries.
Establish a "Zero-Tolerance for Fraud" policy and ensure employees understand Workers' Compensation Insurance.
By taking these preventive measures, employers can reduce the risk of false Workers' Compensation Claims and ensure their businesses are protected from fraudulent activity.
Penalties For Filing False Claims For Workers' Compensation
According to estimates, 3% to 6% of Workers' Compensation Claims are fraudulent. However, it's important to note that not all cases of suspected fraud turn out to be actual fraud.
False Workers' Compensation Claims are a serious crime and can result in heavy penalties, including fines and jail time, depending on the scale of the fraud and the amount of money involved. Jail time may range from one to ten years, and fines can start at $10,000 and go up to $100,000, plus the requirement to pay back the defrauded amount.
Here are some frequently asked questions (FAQs) about false Workers' Compensation Claims:
What is a Workers' Compensation Ghost Policy? It is a policy used by businesses with no employees other than the owners to provide proof of Workers' Compensation Coverage.
Do Workers' Compensation Claims show up on background checks? No, they are only available to the current and previous employer and the court.
What does a Workers' Compensation Claims examiner do? They verify documentation, cross-check compensation amounts, review claimant claims, and ensure Workers' Compensation guidelines are followed.
Can a worker sue for damages not included in Workers' Compensation? Yes, they can sue for damages such as sexual harassment and emotional distress.
What does a Workers' Compensation Policy cover? It covers rehabilitation, medical coverage, disability benefits, and death benefits.
What happens if I don't carry Workers' Compensation Insurance? You may be committing an illegal act if your state requires you to carry it.
How can data help prevent false Workers' Compensation Claims? Public data on employees can show up in background checks and help identify false claims.
Money has a tendency to blur the lines of morality, and this is particularly true for those who depend on a steady paycheck. Driven by financial pressures and disillusionment with their mundane jobs, some workers seek out illicit means to supplement their income, often turning a blind eye to the ethical and legal implications of their actions. In this pursuit of easy money, they may knowingly or unknowingly commit felonies that compromise their integrity and financial stability in the long run.
Also read: 19 ways to reduce workers' compensation costs