While the workersâ€™ compensation program is a great support for injured employees and is awarded only after a detailed review of all relevant medical records, it is unfortunate that fraud is rampant in connection with this program. Workersâ€™ compensation benefits are designed to provide injured workers with the treatment they need to recover from a work-related injury/illness, partially restore the wages lost during recovery, and help them to return to work. When people indulge in fraud, it cripples the system and has a negative impact on the efficiency of the program.
Workersâ€™ compensation fraud occurs when a person intentionally makes a false statement or hides information in order to receive workersâ€™ compensation benefits, or prevents someone from receiving benefits that are due to them. The fraud is not limited to the employee alone who may exaggerate his/her medical condition or work for wages while supposedly disabled. Employers also commit fraud by underreporting their payrolls so that they receive lower premiums. Another group that commits fraud is the healthcare provider group that bill for services they have never performed.
Here let us examine one type of fraud, namely, that committed by employers. Employer fraud occurs in the following cases:
- Underreporting payroll or misclassifying employees to obtain lower insurance premiums
- Deducting insurance coverage from employeeâ€™s wages
- Failure to pay insurance premiums â€“ no insurance coverage
- Asking employees not to go to the doctor
- Suppresses information about an employee getting benefits
- The employer refers employees to a particular medical facility and receives compensation in return for the referral
- Fails/delays to report employee injury claims
Recently two Lee County residents (including a local insurance agency owner) were arrested for conspiring to create fraudulent insurance certificates. The certificates that indicate proof of WC insurance were presented to a Lee County contractor. The uninsured subcontractor cost the contractor more than 21,000 dollars in additional premium costs. The Georgia state board of workers compensation enforcement division investigated 160 criminal cases that resulted in 28 arrests, and 10 of these involved employers creating and passing fraudulent certificates. Employers were also prosecuted for misclassifying employees, lying about the number of employees, and misrepresenting insurance applications. It is estimated that employer fraud causes the greatest monetary losses to the system.
Given that workersâ€™ compensation related fraud is rampant, how can businesses and contractors minimize fraud and reduce risk?
- Ensure thorough screening for new hires. This will help identify prior fraudulent activity if any.
- Make sure to have a clear company policy with regard to workersâ€™ compensation and conduct timely investigation when claims are filed.
- Employees should be aware of the importance of safety. They should be able to confide in the employer when an accident/injury occurs.
- Employers can also ensure that the employee receives prompt treatment that will help him/her recover quickly and thereby minimize costs. Monitor the progress of ill/injured employees, and stay in touch with them.
- Get to know the workersâ€™ compensation insurance claims adjuster and medical providers on the panel of physicians posted at their business locations. This is beneficial because the physician can make sure that the injuries are consistent with the accident, and the insurance agent can help with the investigation.
- Business owners must stay up-to-date on workersâ€™ compensation issues. They should be constantly wary about fraudulent activities.
Business owners who are not very sure about their insurance coverage or workersâ€™ compensation issues should ideally consult a legal or insurance professional thoroughly knowledgeable in the field.