Workers Compensation Fraud

A recent article in a national insurance publication points to the problem of workers’ compensation fraud by employers.

In my work with clients, I frequently hear of employees who manipulate claims by shopping for doctors, malingering, or turning in injuries that did not originate in the workplace. Fraud is common on the employer side too.

Underreporting payroll and blatant misclassification are the two big classifications of employer fraud.

–Employer tells the insurance company he has only clerical staff when, in fact, there are ten guys out painting houses.

–The application for insurance shows concrete construction instead of the higher rated (and hirer exposure to injury) work that is actually being done, structural steel.

I have long said that the workers’ compensation insurance system is similar to the tax system. There are rules and regulations that affect how much is to be paid. Employers work to follow the rules without paying too much. There is a line you can’t cross. Being aggressive with classifying employees correctly is ok. Telling a workers’ compensation auditor that your shop foreman never goes into the shop (when he does) is clearly not ok.