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California law requires employers to have workers’ compensation insurance to cover any injuries suffered by employees while engaged in work activities. It is a no-fault system that allows employees to receive compensation for their injuries without having to prove that the employer was negligent.
Despite this well-intentioned system, there are still those who commit workers’ compensation fraud to take advantage of the system for their personal gain. This can occur on any level of the system, from employees to employers to insurance companies. Even healthcare providers and legal professionals can commit workers’ compensation fraud.
While it is difficult to measure, this type of fraud is reported to be one of the fastest growing types of insurance fraud. The effects of these schemes are far-reaching and can influence the cost of services for customers and higher premiums for employers.
Some of the most common instances of workers’ compensation fraud are employees seeking more money and time off. Some of these schemes involve exaggerating injuries for more time off or compensation, so an employer should keep an eye out for when incidents occur.
If an employee sustains a work injury near a weekend he or she may have timed the incident to allow for more vacation time.
Cases of over-exaggerated injuries can be hard to notice. However, sometimes the employee gives the scheme away by performing activities that don’t line up with his or her injuries. This can involve lifting heavy boxes, completing extensive labor, or participating in recreational activities.
Sometimes an employer may happen to encounter the employee performing an activity that should be ruled out by the injury. Other times, employees may post on social media with evidence of his or her activities. In both cases, the employer would be able to identify a case of workers’ compensation fraud.
Employers often try to cheat the compensation system so that they can reduce the number of compensation premiums they owe. Some employers go so far as to not even purchase workers’ compensation insurance, despite the law.
One sign of employer fraud is the refusal to accept workers’ valid injury claims. This may be a sign that the employer does not have insurance or is trying to prevent the resulting claim.
Workers’ comp has different levels of coverage for different types of jobs and contracts. Businesses should be careful about how they categorize their employees, as they can pay greater premiums for unnecessary coverage as a result.
Some employers exploit this system to save money. Employees classified as administrative assistants have much less risk, and so have less expensive premiums. Any misclassification of jobs and contract types counts as fraud, though it can be harder to spot.
Even the providers of workers’ compensation can commit fraud to increase profits. One of the easiest places to spot provider fraud is in billing procedures.
The provider may bill for unused services or equipment, or even for individuals who have never received treatment. Duplicate billing occurs when a provider bills for services already paid. Bills may be larger than what makes sense for the injury. Keeping an eye out for any strange billing amounts can keep employers safe from provider fraud.
Workers’ compensation fraud is often a complex layering of schemes. Employees can contact their local labor departments if they suspect their employer is involved in a workers’ compensation scam, while employers can alert the insurance provider about suspicious employee activity.