Workers’ compensation is insurance for employees who are injured on their job. The entire premium is paid for by the employer without any cost to the worker. A claim is generated as soon as an employee reports an injury to their supervisor, which is in turn reported to the insurance company. The injured worker would have to use an approved medical provider for treatment; otherwise, the injury will not be covered under workers’ compensation insurance. If the injury requires a trip to the emergency room, the hospital must be told that the patient was hurt at work.
Unfortunately, the workers’ compensation system is an avenue for fraud by employees, employers, healthcare providers and attorneys. There are a number of ways to commit fraud; for instance, lying about the injury, misrepresenting the employee’s job status, filing false claims to the insurance companies, etc. An act of workers’ compensation fraud is considered a felony in most states, and punishment can include jail time and fines. According to an ISO Review article, the National Insurance Crime Bureau has estimated workers’ compensation fraud to be more than $5 billion each year.
Advanced computer technology in the insurance industry is used to investigate cases of fraud, as well as video equipment and background checks. Insurance carriers are committed to investigating cases where fraud is suspected and report the case to local law enforcement.
Fraud cases are investigated through the state’s workers’ compensation department where the injury occurred. Recently, the New York State Insurance Fund reported a New York case of workers’ compensation fraud. In this case of employer fraud, the NYSIF’s Division of Confidential Investigations, the NYS Insurance Department Frauds Bureau and the Workers’ Compensation Board Fraud Inspector General’s Office investigated the defendant, a Southampton man. According to the article reported by the NYS Insurance Fund, the defendant did not disclose the factual payroll and sales generated by his construction business.
Taking New York State as an example, cases of fraud is becoming less tolerated and abusers of the workers’ compensation system are paying.