As with other forms of insurance fraud‚ workers’ comp insurance can be compromised by either employers or its employees if false or misleading information is provided to insurance companies.
The most common ways an individual commits insurance fraud is if he or she:
- fakes an injury at work to get paid time off
- exaggerates the severity of a legitimate injury to get additional time off work
- claims an injury occurred on the job when it actually took place elsewhere
- takes a new job and lies to the insurance company about being unable to return to work at the previous place of employment‚ or lies by concealing his income from another job
An employer can commit insurance fraud if the organization:
- understates the amount of company payroll to reduce premium payments
- claims employees are independent contractors
- lies about the type of work employees do in order to qualify for and pay
- fails to carry workers’ compensation insurance
Here are a few typical scenarios to illustrate some of the different ways workers’ comp insurance fraud can be committed:
Phyllis injured her back while renovating her home’s bathroom, but she claimed a slip and fall at work caused the problem so she could claim workers’ compensation benefits and receive payment of her medical bills and
Tony owned a profitable roofing company. To save money, he told his workers’ compensation insurance company that a number of his staff were clerical workers, a much lower risk and therefore eligible for a lower premium.
Donna operated a restaurant and bar but didn’t purchase workers’ compensation insurance. After an employee was injured in a fight between bar patrons, there was no workers’ compensation insurance to pay the several thousand dollars in medical treatment needed by the employee.
Steve was injured at work and his employer’s workers’ compensation insurance covered his medical bills and lost wages for the time he was unable to work. While still receiving disability payments Steve went to work for another company. He concealed his new job from his old employer. He reported he was still disabled and signed a statement to that effect to his old employer’s workers’ compensation insurance company.
To view a TV spot from the prevention campaign that addresses the issue of workers' comp insurance fraud, click here.
To download a brochure from the prevention campaign that explains the issue of workers' comp insurance fraud, click here.
In 2011, crimes involving workers' compensation insurance accounted for 12 percent of referrals received about suspected fraud. The following cases show how this crime is committed – and prosecuted – in real life.
EMPLOYER FAILS TO PROTECT INJURED WORKER
On September 24, 2010, detectives of the Allegheny County District Attorney's Office filed a Criminal Complaint in Allegheny County charging a Pittsburgh couple with operating a tree service without state mandated workers’ compensation insurance. An employee suffered injury while at work, including a broken neck and arm, and finding his employer uninsured turned to Pennsylvania’s Uninsured Employer Guarantee Fund seeking payment of his medical expenses and lost wages. On February 15, 2011, from Negotiated Guilty Pleas in Allegheny Court of Common Pleas, the firm’s two owners were each ordered to serve 18 years probation and pay $282,786 restitution and court costs.
WORKPLACE INJURY LIES ARE NOT FUN AND GAMES
On February 10, 2009, a 31-year-old Berks County man was arrested by special agents of the Attorney General’s Insurance Fraud Section for having filed a fraudulent workers’ compensation claim. He’d reported to his employer that he’d injured his chest while moving a video arcade machine and attempted to obtain medical and wage loss payments from Travelers Insurance Company, his employer’s insurer. Investigation showed that the man had been injured but that his injuries were caused by his wrestling with another man after he’d left work. He was granted admittance to a rehabilitation program and was ordered to serve two years on probation, pay a fine of $150 and $1,548 in court costs.
TWO WRONGS DON’T MAKE A RIGHT
On July 28, 2010, agents of the Pennsylvania Attorney General's Office arrested a Bucks County man who'd fraudulently collected workers' compensation wage loss benefits. After reporting to his employer that he'd been injured at work, the man began receiving wage loss benefits from his employer's insurer PMA Insurance Company. While being paid by PMA for lost wages, the man signed several statements claiming that he remained unable to work and had no income. Investigation disclosed that those statements were false. The man was working as a contractor doing landscaping and snow removal work. In fact, after building a small patio roof for an elderly gentleman, he'd accompanied the man to the bank and while filling out the elderly gentleman's withdrawal slip added $3,000 to what was owed him. On December 6, 2010, he was sentenced to serve 4½ to 23 months incarceration and was ordered to pay restitution of $3,000 and all court costs.
Workers’ compensation insurance provides a “safety net” for workers injured on the job‚ and this is why workers’ comp insurance fraud is such a serious crime. As with all other types of insurance fraud‚ Pennsylvania considers it a felony. Violators can spend up to seven years in prison and spend up to $15‚000 in fines. There are also many other associated expenses such as court costs and legal fees. Plus‚ those found guilty of insurance fraud have the stigmas and limitations of being a convicted felon to carry with them for life.
Both employees and employers can avoid facing situations where there’s an opportunity for insurance fraud to be committed.
Employees must recognize and follow proper procedures for reporting on–the–job injuries. If receiving workers’ comp benefits due to such an injury‚ they must avoid providing misleading or false information to extend or expand those benefits.
Employers must‚ first of all‚ carry the required workers’ compensation insurance. They‚ too‚ can avoid committing insurance fraud by providing accurate information on employee classifications‚ full–time or independent contractor status‚ and amount of company payroll.
Whether you’re the employee or the employer‚ learning all you can about workers’ compensation insurance fraud will help you avoid costly and
To help all Pennsylvanians better understand workers’ comp and other types of insurance fraud‚ the Pennsylvania Insurance Fraud Prevention Authority (IFPA) in 2009 embarked on a statewide public education and prevention campaign which continues to inform consumers of the risks and penalties of insurance fraud through a variety of channels.
Click here to learn more about the IFPA Prevention Campaign.