Billions of dollars are lost in the U.S. every year due to fraudulent insurance claims.1 When workers’ compensation fraud takes place, everyone gets hurt.
Workers’ compensation fraud falls into three main categories:
- Claim-Related Fraud. This occurs when an employee intentionally and dishonestly fakes a workers’ comp injury or illness and files a false workers’ compensation claim. There are three ways claim-related fraud commonly happens:
- False claims: It is fraudulent for an employee who was not injured at work or not injured at all to file a false workers’ compensation claim to collect benefits for which he or she is not eligible. Claim-related fraud is also committed when a worker intentionally downplays his or her recovery to stay out of work – and collect workers’ compensation benefits – longer than necessary.
- Exaggerated claims: Even if a legitimate injury occurs, a crime is committed if an employee exaggerates its severity in order to collect more money or remain on medical leave longer than is necessary.
- Working while collecting benefits. It is illegal to receive workers’ compensation benefits from one employer while earning wages from another.
- Health Care Provider Fraud. In addition to injured employees, health care providers can also commit workers’ compensation fraud. It occurs when services are billed to benefit the health care provider and not the injured employee. Some examples include:
- Billing for services that were not provided
- Intentionally misclassifying medical diagnostic codes or double-billing for services
- Charging patients out-of-pocket for medical treatments that are also covered by their workers’ compensation insurance provider
- Billing for unnecessary medical care or equipment
- Accepting kickbacks or bribes
- Policy-Related Fraud. Employers who fail to pay required workers’ compensation premiums or misrepresent their business in an attempt to pay less workers’ compensation insurance premium are committing policy-related fraud, even if they are doing it unintentionally. Policy-related fraud can also include:
- Dishonestly reporting the number of employees on your payroll in order to lower your insurance premiums.
- Preventing an employee from filing a valid workers’ compensation claim in hopes that the employee will not pursue the matter further
- Intentionally misrepresenting your business’s operations and claims history in order to pay lower insurance premiums.
To prevent workers’ compensation fraud, it is important for businesses to be aware of how fraud can occur. EMPLOYERS’ Fraud Investigation Department’s Anti-Fraud Program helps discourage workers’ compensation fraud and vigilantly pursues and prosecutes fraudulent claims.2 EMPLOYERS also provides formal anti-fraud training, materials and signage, as well as a 24-hour hotline for policyholders to report potentially illegal activity. For more information on ways to combat workers’ compensation fraud, contact an agent today.
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