Identity Resolution Daily

By the Infoglide Team

When you hear “workers’ compensation fraud,” it probably brings to mind the person who is supposed to be out with a bad back but somehow manages to do heavy yard work or play basketball while “injured.” But as we’ve seen before, there’s more than one way to defraud an organization. Another kind of workers’ compensation fraud that happens more often than you might think is the type that involves employers rather than employees.

Employers are using various methods to either reduce the amount they pay for workers’ compensation premiums or avoid paying all together. For example, from the North Carolina Workers’ Compensation Blog, a California construction company manipulated information about how many hours its employees were working to save on premium costs:

This is another example of how business owners often exploit the WC system to their advantage to line their own pockets. Cases such as this chip away at the misconception that the workers are the ones taking advantage of the WC system. When you disregard the pervasive, sensationalistic stereotypes and anecdotes about undeserving injured workers defrauding the comp. system, and look at the actual numbers, employer and insurance fraud almost always exceeds worker fraud.

Another post on The Pump Handle poses an explanation for why fraud by employers costs workers’ comp programs so much, particularly in New York.

While workers’ compensation in the U.S. was first introduced under President Theodore Roosevelt in 1908, there is no federal oversight or regulation of state workers’ compensation programs. In New York, the administration of workers’ compensation is fragmented with private insurance companies bearing some of the responsibility and the State Workers’ Compensation Board bearing some responsibility. Between the two, there is no overall strategic enforcement capability, much less systematic coordination with the Labor Department’s unemployment insurance system, which does operate under federal oversight.

Another technique employers use to avoid paying altogether is to not pay their premiums, and then, when the insurer threatens to cut off the insurance, the employer “goes out of business” to avoid payment. Then the employer re-opens for business with a different company name and different contact information so that it appears to be a different company. So Mike’s Home Remodeling, which is owned by Michael Robert Johnson, becomes Bob’s Building Services, which is owned by Bob Johnson where Michael and Bob are the same exact person. Or Mike’s Home Remodeling, which is owned by married couple, Mike and Sue, and uses their office address becomes Sue’s Home Remodeling and uses the couple’s home address.

Fortunately this is one type of employer fraud that can be addressed fairly easily with an identity resolution solution that can analyze the available data in different sources and find these types of connections between individuals and entities.

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This entry was posted on Wednesday, July 16th, 2008 at 3:18 pm and is filed under Insurance Fraud, Identity Resolution. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.