Author, Jim Malone, Workers’ Compensation Claims Advocate, Rancho Mesa Insurance Services, Inc.
Fraud can happen in every industry, including workers’ compensation. According to standard definitions, “in law, fraud is intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right. Fraud can violate civil law, a criminal law, or it may cause no loss of money, property or legal right but still be an element of another civil or criminal wrong. The purpose of fraud may be monetary gain or other benefits, for example by obtaining a passport, travel document, or driver's license, or mortgage fraud, where the perpetrator may attempt to qualify for a mortgage by way of false statements.”
Within workers’ compensation claims, fraud is a term that can be overused by employers who may not agree with a claim, or a condition that has been considered work-related/work-aggravated. Many times, instead of fraud, there is simply a difference of opinion as to whether a specific work incident caused an injury. For these disputes, it usually comes down to a medical opinion addressing whether something is work-related or work-aggravated.
Examples of Workers’ Compensation Fraud
A claim can become fraudulent when the employee lies about how the injury occurred or about their ability to work. The treating physician may be asked to provide their opinion as to whether the injured worker mislead them about how their injury occurred, and the significance of their complaints or physical capabilities. The doctor is provided records or sub rosa videotape contradicting information previously provided by the injured worker. Fraud can also occur when the injured worker lies under oath during a deposition, thus becoming a felony.
Workers’ compensation fraud is not limited to employees, but others within the system can also knowingly participate in the fraud. Physicians can be fraudulent in their billing for services not rendered, for accepting kick-backs, or realizing financial benefit for referrals to and from other physicians, vendors or other entities. Employers can commit insurance fraud by understating their number of employees, under-reporting payroll or misclassifying employees into cheaper job/class codes in order to secure cheaper insurance policy rates and premiums. Vendors can commit fraud by billing insurance carriers for products or services never provided. Attorneys can use illegal capping schemes to retain injured workers for clients.
Combating Workers’ Compensation Fraud
Each insurance company is now required to have a Special Investigative Unit (SIU) that provides ongoing monitoring and investigation of questionable activities related to claims. Fraud continues to cost tax-payers millions of dollars (some estimates are up to $80,000,000) per year. The money and resources the employers and insurance carriers are spending to combat fraud are also increasing each year.
In the event of a fraud conviction, fines or assessments, prison sentences, or restitution can be ordered. Workers’ compensation fraud is not a victimless crime; from the losses caused by fraudulent activities, to the money used to combat and prosecute fraud. The money lost to workers’ compensation fraud can never be replaced, but we are all responsible to do our part in remaining vigilant and reporting suspected fraud to the appropriate person or agency.