The insurance industry, employers, and others with a vested interest in discouraging worker’s compensation claims and reducing the amount of payouts have perpetrated the widespread myth that the system is inundated with fraudulent claims. This myth is based on isolated anecdotal incidents with little effort to identify the actual scope of the issue. Admittedly, there are isolated cases of employees faking or exaggerating injuries, as well as other examples of illegitimate claims. However, experts generally recognize that amount of fraud by claimants is infinitesimal. Generally, the rate of worker’s compensation fraud involving employees is considered to be about one percent or less. Ironically, worker’s compensation fraud committed by employers is far more extensive but almost never discussed in the media. This blog post is intended to advise employees about the real existence of employer fraud and to provide common examples.
Many people are unaware of the existence of employer fraud because it is so rarely discussed in the media or promoted as a problem. However, there are a number of reasons that it is far more prevalent than employee fraud. The first factor is the difference in incentives for employers and employees to cheat the system. The motivation to engage in fraud to receive $540 per week in benefit payments is almost non-existent compared to the millions of dollars that employers save by excluding entire classes of employees from obtaining worker’s compensation benefits. This disparity in the gains to be obtained by cheating also affects the risk-reward analysis for the parties on both sides of the employment relationship. When considering cheating, either party must consider the risk of detection and potential penalties compared to the reward associated with success in pursuit of the fraudulent scheme. The massive returns that employers can obtain from screening out hundreds of thousands of employees from worker’s compensation benefits dwarf the rewards of an individual employee successfully obtaining benefits.
Some of the most common examples of employer/insurance carrier fraud include the following:
- Misclassification of Employees: Employers frequently classify employees as 1099 independent contractors to avoid liability for worker’s compensation benefits. Since workers classified as independent contractors do not qualify for benefits, companies frequently engage in the practices of misclassifying workers to avoid the cost of worker’s compensation insurance and liability for claims. When companies with hundreds, thousands, or even tens of thousands of employees engage in this type of practice, the financial gains are staggering.
- Refusing Medical Care: Worker’s compensation claimants are entitled to free health coverage for virtually all expenses, including diagnostic testing, doctor’s appointments, specialists, medications, and other costs. However, carriers often routinely refuse to pay for necessary drugs and medical attention.
- Referring Employees to Biased Physicians: Employers often steer injured workers to unscrupulous doctors or industrial medical clinics where the physician denies care, prematurely returns the employee to the job, or issues unjustified low permanent impairment ratings.
- Retaliation: Some companies terminate an employee who files a worker’s compensation claim to discourage other workers injured on the job from filing valid claims.
- Improper Use of Health Insurance: Employees might be directed to use their own health insurance for expenses that should be covered by the worker’s compensation system.
- Failure to Secure Coverage: Certain companies intentionally avoid purchasing worker’s compensation coverage for their workers. This strategy shifts a significant portion of the cost of medical expenses from the employer’s worker’s compensation carrier to Medicare.
These are just a handful of the ways employers can engage in fraud schemes that result in a large number of employees receiving less in worker’s compensation benefits or none at all. Our Mississippi Worker’s Compensation Lawyers have successfully represented many injured employees during our decades of representing clients. At Barrett Law, we are here to help. Contact our firm today at 800-707-9577 to schedule your free consultation, so we can answer any questions you may have regarding filing your claim.