Will Workers Comp Employer Fraud Keep Rising?
By Robert Barker, Infoglide Senior Vice President & Chief Marketing Officer
In our collections of links about identity resolution, we often include stories about employees who defraud workers compensation agencies. Most of the time it concerns someone who’s claimed a disability in order to get payments and is then working another job that proves they are healthy. Another twist is covering up the fact that a relative drawing workers comp benefits has died in order to continue receiving payments.
The Ohio Bureau of Workers’ Compensation estimates that they pay as much as $320 million annually in fraudulent claims to both employees and employers. Their definition of fraud is “as an intentional act or series of acts resulting in payments or benefits to a person or entity that is not entitled to receive those payments or benefits. Fraud is committed when a person
• knowingly receives benefits which he or she is not entitled to receive by law;
• makes false or misleading statements for the purpose of receiving money or services; or
• enters into a conspiracy to defraud the Ohio State Insurance Fund or self-insuring employer under the Workers’ Compensation Act.”
While the employee fraud problem is significant, blogger Leonard Jernigan rightly points out that the third type of fraud in Ohio’s definition, i.e. fraud by employers, is an even bigger problem. “When thousands of employers across the country intentionally fail to pay required workers’ compensation premiums or misrepresent the job classification of employees who are covered, the fraud perpetrated on the system vastly exceeds the dollar amount of employee fraud.” Despite this fact, attention (and most of the news coverage) seems to be focused on employee fraud. Perhaps it’s the “gotcha” aspect of many of the nighttime news programs that makes employee fraud more appealing. Employer fraud isn’t as sensational but, based, on the financial impact, it should be getting more attention.
Jernigan lists no fewer than 14 different ways that employers defraud the system and thereby increase the burden on taxpayers for underwriting the healthcare costs of injured workers. Employer fraud takes many forms, but in all cases the object is to eliminate or reduce payments into the workers compensation system, and that increases the tax burden on all of us. The current challenging economic situation will likely increase the temptation for businesses to workers compensation payments. The losses incurred through employer fraud should increase detection and prosecution efforts.
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