Real Fraud In Workers’ Compensation
There are four types of fraud in Worker’s Compensation. In the order of their actual cost they are:
Employer Fraud:
An employer misrepresents the payroll or the proper classification for the employees thereby obtaining a smaller premium. The classic case is the roofing employer, high risk-high premiums who lists his employees as stackers in storage. The roofing employee is seriously injured, and audit establishes the fraud, the insurance company balks, there is no insurance, state fund or welfare picks it up. This fraud is rampant and represents the largest amount of lost dollars. There is very little prosecution by insurance companies who want to keep collecting premiums and just do an audit and up the fees rather than prosecute. Employers also commit fraud when they do not obtain WC Insurance at all. The worker just goes without. Or the employer insists the employee lie to the employee’s health insurance and say it didn’t happen on the job to avoid premium increase. It is estimated in this recession most employers do not have workers’ comp insurance. Employer fraud is rampant but not sexy or glitzy so the press does not present it to the public. A recent trend is small employer’s with workers’ comp insurance list themselves as injured employees and receive benefits fraudulently for nonexistant employees.
Provider fraud:
A health care provider provides billing for non existent services or patients. The provider double bills for services. A chiropractor bills for millions of dollars over several years for services that were never rendered. An independent medical examiner for employers billed millions even though he was not licensed to practice medicine. His statement to the investigative board,”There is no such thing as a totally disabled person”, “Most people on WC just want a free vacation” and “most people on WC are fraudulent.” His response to an injured worker he examined to deny benefits who committed suicide after denial was to laugh and say “Well his problems are over.” Hospitals and facilitators are under investigation for fraud. Once again this is hard to prove and does not present well for TV or the Internet so it goes unnoticed and unreported by the media thereby creating another layer of Journalistic Fraud by blaming the employees
Employer Fraud and Provider Fraud represent over 50% of Workers’ Comp moneys lost to fraud. Next blog, the most and least fraud in Workers’ Compensation: Insurance Companies, Workers, and the Media