Workers’ Compensation Fraud

Workers’ compensation insurance is designed to provide compensation for workers injured in job-related activities. Workers compensation fraud is many-sided and can be committed by employees, employers, doctors, and attorneys,

On the employee side, it occurs when claims are made for injuries that don’t exist, are the result of non-employment incidents, or are falsely exaggerated.

On the medical or doctor side fraud can result from doctors or other health care providers who overbill or use non-existent procedures merely to run up the bill to maximize their revenue.

On the employer side, fraud can be the result of lying to the insurance carrier about payroll, employee job descriptions, or the number of covered employees.

In any of its forms, fraud is a serious criminal activity with serious consequences for any party.

Common Employee Fraud and Employer Response

Employees who report a fake injury, lie about a prior and similar injury or fail to reveal that prior injury commits a common fraud. Often, the injury may be the result of activities that are not work-related, such as an injury from yard work over the weekend that is reported on Monday as having occurred on a job.

Beyond the original injury itself, employees commonly commit fraud when they conceal the fact that they are working while collecting disability payments for being unable to work.

Employers who suspect that a worker is faking an injury or the severity of the injury to collect prolonged or greater benefits should not act unilaterally. Terminating a worker during a protected leave or while on disability, such as those provided by workers’ compensation, FMLA, or ADA, is fraught with danger. A business should carefully evaluate any disciplinary actions and consult with an experienced workers’ compensation attorney before taking any action.

Workers’ Compensation Fraud Is Big Business

Workers’ compensation fraud affects a significant part of the economy. Between 2009 and 2010, California district attorneys prosecuted 1,300 cases involving more than $300 million in workers’ compensation fraud. The Fraud Division of the California Department of Insurance estimates that potential losses due to workers’ compensation fraud were greater than one billion dollars during that period.

With so much money at stake, businesses that suspect fraud or are seeking to defend against it should work with an expert attorney who understands workers’ compensation fraud cases and is able to offer advice regarding what may be needed.

Fraud by employees and other businesses should be reported to insurance carriers, the California Department of Insurance, or the County District Attorney’s Workers’ Compensation Fraud Division. Fraud of any kind makes it difficult for all legitimate businesses to operate and successfully compete in the marketplace.