8.11.2011

A Quick Look at Workers' Compensation Fraud

In all states, workers' compensation fraud is a common practice and a growing threat to the financial health of a state's economy and its business communities. Per Ohio Bureau of Workers' Compensation (BWC) reports, national industry studies estimate 5 percent to 20 percent of all workers’ compensation benefits paid are fraudulent. In Ohio alone, the BWC pays out $80 to $320 million in fraudulent medical and compensation payments each year. Needless to say, the resulting effect can be very costly for most employers and even disastrous for some. This is all the more reason for companies to be ever vigilant and to scrutinize their workers' compensation claims, even the most minor, on a regular basis.

In combating fraud, there are common, basic red flag indicators that employers should keep an eye out for:  the injured worker files a claim and then can no longer be reached for further information; tips from co-workers; there are no witnesses to the alleged accident; there are cross-outs, white-outs and erasures on reporting and medical documentation; the date, time and/or place of accident are unknown; and the injured worker cannot recall specific details of the alleged injury.

The most common fraudulent activity is the injured worker who works while also collecting lost time compensation benefits. Thankfully, some injured workers make their work activity obvious by showing up to hearings with fresh calluses on their hands or grease under their fingernails. Others are more brazen and "self-document" their activities with postings on social media, such as Facebook and Twitter. It is this kind of behavior which makes fraud investigations a little easier.

Some employers, though, also perpetrate fraudulent schemes in order to gain an edge. In Florida, uninsured contractors are preying on the construction and subcontracting industry. According to news reports, "shell" or fake companies are set up to obtain minimal workers' compensation insurance. Uninsured contractors then pay a fee to use the shell policy, enabling them to avoid purchasing required workers' compensation insurance. The end result is honest employers being outbid on construction projects by those who skirt premium requirements.   

The punishment for fraud can be quite severe, as a Warren County, Ohio, woman recently found out. After a BWC investigation, she pled guilty to a felony count of workers' compensation fraud related to her work as a bus driver. It was documented that she was working while receiving disability payments for a workplace injury she sustained while working as a driving instructor. The woman was sentenced to five years of community control and was ordered to pay restitution in the amount of $11,396.10, plus court costs and investigative costs totaling $2,000.



330.849.6717
cdebski@ralaw.com

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