Workers compensation fraud has increased in the United States because of the current economic situation, reduction in unemployment benefits, and the weak labor market. Despite the increase in fraudulent claims, several studies show that only two percent of these claims are fraudulent.
Even though the percentage of fraudulent claims is relatively low, they play a huge part in increasing premiums paid y employers as well as increasing scrutiny on injured workers. Thankfully, there are laws that already exist to help minimize the number of fraudulent claims as well as expedite the claims process.
Are all Workers Compensation Claims Investigated?
While most workers’ compensation claims are genuine, they can still be subjected to random evaluations to establish if they are credible. However, investigation occurs when a worker files numerous claims within a short period of time against the same employer. Insurers will first evaluate the credibility of your claim before processing your claim.
They will first review your employment and medical history. They will also want to interview you to find out if you received any kind of treatment and information surrounding your accident. They might also request you to undergo an independent medical examination, which they will pay for.
Common Workers Compensation Fraud Examples
Fraud by Employees
Exaggerated Injuries
Filing for a workers’ compensation claim that involves an exaggerated injury is a common example of insurance fraud.
Example: Joe was injured at work and his left arm was left feeling a bit sore but still functional. Joe, however, decides to say that his arm cannot function and he has to miss work as a result.
He stays away from the workplace for more than a month claiming that he needs time to heal. He, however, posts activities on his social media showing him going rock climbing, kayaking, and other activities that require him to use both his hands.
In such a case, if enough evidence is gathered to show that his arm is still fully functional, Joe might have to pay back the money he was paid in benefits, get imprisoned and lose his job as well.
Faked Injuries
If you are thinking of faking an injury at work, you might consider thinking twice about it. Insures nowadays hire private investigators to investigate your claims especially if the sum of money involved is very high.
Example: Jane slips and falls on some debris at work. The injury is documented on CCTV within the premises. She claims that the accident left her with a broken back and the doctor claimed she might be temporarily disabled. This means that Jane would be confined to a wheelchair for quite some time. For the next few months, Jane will receive disability benefits of not less than $200, 000. The insurer, however, becomes suspicious and hires a private investigator to follow Jane around. The investigator discovers that Jane jogs around her neighborhood in the evening, attends Zumba classes and even went mountain climbing with no indication of an injured back.
Fraud by Providers
Employees aren’t the only people who like committing fraud. Some providers like committing fraud.
Example: The DOJ charged five people in California, including a chiropractor and two doctors for an elaborate scheme to de-fraud the State of California millions of dollars in workers compensation. The hospital involved was Pacific Hospital in Long Beach Long Island. The chiropractor and spine surgeons received kickbacks from the hospital’s executives for procedures they never performed. In order to cover their tracks, they created fake documents to account for work that they never performed.
The hospital would then bill the Department of Labor and workers compensation insurers. The operation lasted for over 10 years. The FBI discovered the conspiracy and all six parties involved plead guilty to insurance fraud.
Fraud by Employers
Employers mainly commit workers’ compensation fraud to avoid paying workers compensation premiums. A common tactic used by employers to achieve this goal is by creating a shell company.
Example: Ousama Karawia was convicted in 2012 for workers’ compensation fraud. He was the former owner of International Protective Services Inc, a security firm that provided security for government agencies as well as other firms in the country.
Prosecutors argued that Karawia hid the true number of employees in his company by creating a shell company so as to avoid paying high insurance premiums for workers compensation. The shell company he formed was called International Armored Solutions Inc., which he claimed had only 35 employees. The fraud cost the state of California over $10.1 million.
Under-reporting Employees or Mis-classifying Employees
Some employers choose to reduce their workers compensation premiums by lying about understating payrolls and mis-classifying employees.
Example: Shawn Campbell, a former owner of a drywall business called E&E Acoustics, classified some of his employees as company owners and understated his payroll.
Renting Out Insurance Policy
Some employers create shell companies, obtain workers compensation and then rent it out to other companies that do not have workers compensation.
Example: Yucet Batista helped uninsured contractors avoid $2.1 million in workers compensation premiums by creating a shell company called Y&L COnstruction Services Inc. Batista claimed she had been running her company for 10 years and had hired five employees. She then approached a workers compensation insurance company and applied for workers compensation which she rented out to several uninsured subcontractors for a fee. She also underreported her payroll and underpaid premiums by $2.1million.
Third Party Claims Administrators
Some third party claims administrators prefer to enrich themselves through self-insurance.
Example: Charles Costanzo and Marc Boriosi created a company known as Executive Claims Administration Inc to administer self-insurance fund for workers compensation. The fund was intended to issue various reports, pay claims and review receipts from providers. However, instead of doing this, the two decided to watch porn and smoke cigars all day. They embezzled $650, 000 for personal expenses.
Hiring a Workers Compensation Lawyer in Fall River, MA.
If you feel you have been unfairly accused of workers compensation fraud, it’s very important that you hire a workers compensation lawyer. It could be that your employer is looking for ways to dismiss you claims or they are committing insurance fraud. Whatever the case might be, our Fall River workers compensation lawyers can help you.
