Workers’ Compensation Fraud

Doctors, lawyers, employers, insurance company employees, and claimants may perform Workers’ Compensation fraud in private and public sectors.

The National Insurance Crime Bureau reports statistics that claimants commit fraud as low as one-third of one percent, accounting for $7.2 billion in unnecessary costs. However, government entities acknowledge a lack of an accepted method or standard for measuring the degree of Workers’ Compensation fraud. Therefore, a vast difference of opinion on the problem and its importance.

The Coalition Against Insurance Fraud reports billions of dollars in false claims and unpaid premiums with the United States each year.

The following are the most common types of Workers’ Compensation fraud by workers:

1. Remote injuries: Workers report Workers’ Compensation claims due to a work injury when the injury occurred away from work to cover medical bills. 
2. Inflating injuries: A worker lies about the magnitude of a relatively minor job injury to collect more on a Workers’ Compensation claim and extend time away from work. 
3. Faking injuries: Workers report Workers’ Compensation benefits when an injury did not occur. 
4. Old injuries: A worker claims an old injury that did not entirely heal as a recent injury to receive coverage of medical bills. 
5. Malingering: A worker claims the injury or disability is ongoing when healed to remain out of work. 
6. Failure to disclose: Workers make a false statement or representation of an injury, knowingly or not.

The following are the most common types of Workers’ Compensation fraud by employers:

1. Underreporting payroll: Employers report a worker’s salary as less to lower their premiums. 
2. Inflating experience: Employers make false statements about workers’ expertise to reduce their risk and expense to cover. 
3. Evasion: The employer does not obtain appropriate Workers’ Compensation coverage when required by law. As a result, the worker believes they are covered when they are not. 
4. The introduction of “opt-out plans,” managed by the federal Employee Retirement Income Security Act (ERISA) and regulated by the Labor Department: Opt-out plans suggest lower and fewer payments but are challenging to qualify for benefits, manage access to doctors, and limit independent decisions of benefits appeals.

The Coalition Against Insurance Fraud

The Coalition Against Insurance Fraud is a collection of insurance organizations, consumers, government agencies, and legislative bodies to pass anti-fraud legislation, deliver public education, and provide advice. In addition, the Coalition Against Insurance Fraud provides a resource for consumers to find scam warnings, where to report fraud, and methods to protect themselves.

After a rapid rise in insurance fraud by several organizations, the development of the Coalition occurred in 1993.

Mission

The Coalition’s primary mission is fighting against insurance fraud by uniting and empowering private and public organizations by controlling insurance costs, protecting public safety, and reducing crime.

The three primary activity areas include:

Government Affairs

• Legislate more robust anti-fraud laws through local and grassroots campaigns. 
• Develop model bills, such as establishing insurance fraud as a crime. 
• Reinforce anti-fraud bills. 
• Maintain significant summits. 
• Support prosecutions.

Communication

• Raise the public’s awareness of insurance fraud and methods to dissolve it. 
• Empower and alert consumers. 
• Converge outreach efforts.

Research

• Sponsor prominent research and surveys.

Publications

Journal of Insurance Fraud in America (JIFA) is a quarterly journal that provides in-depth trend analysis, research, and public policy topics affecting anti-fraud efforts.

FraudWire publishes two quarterly digital reports on the critical developments within legislative activity and public awareness.

Fraud News Weekly is a paid digital publication that offers weekly legislative and regulatory development trends, state and federal court decisions, public outreach and media coverage, fraud arrests and convictions, civil cases, administrative actions, upcoming meetings, seminars, and conferences.

Get a Grip on Fraud: Fraud Awareness Manual is an action guide to creating memorable fraud-awareness events.

Published research studies over the past decade by the Coalition include the following:

Effectiveness of warnings on benefit checks: The determination of selected insurance companies in their experience and perceptions with printing warnings on the back of benefit checks.

Four faces: determining if Americans tolerate fraud: The decision of why people accept the fraud and do not report it when understanding it raises premiums through qualitative and quantitative research, focus groups, and statistical surveys.

Insurer fraud measurement: 65 Special Investigative Unit managers completed a survey from property and casualty insurers regarding their practices to measure anti-fraud activities for case referrals, fraud savings, and investigators’ performance evaluations.

Prescription for Peril: The examination of drug diversion underreporting and elusion, financing prescription abuse due to fraud, and the high expense to insurers and consumers.

Special Investigative Unit study examines how insurers measure their Special Investigative Units’ performance. The review of 52 insurers concluded little consistency between insurers in their performance systems methods.

State Insurance Fraud Bureau Survey: A state agencies’ fraud fight snapshot by the numbers to understand the structure, responsibility, and overall insurance fraud activity within the United States.

Fraud Warnings

Topics the Coalition issues scam alerts for typical schemes, variation elaborations, best prevention, and defense measurement include the following:

• Agents and insurers: The Coalition cautions against agents and insurers who pocket premiums, sell fake or unnecessary insurance, or provide unneeded coverage to bolster premiums. 
• Airbags: Counterfeit airbags within the market pose fatalities to innocent motorists. 
• Auto repairs: Auto repair scams inflate repair costs, pad existing repairs, or perform low-quality work. 
• Bogus health plans: Selling inflated or fake insurance plans create consumer vulnerability during the tough economy. 
• Contractors and adjusters: Precaution of fraudulent contractors after natural disasters to perform repairs, which may increase damage and costs, illegally lower deductibles, receive payment without performing work or work without a license. 
• Dental: Billing for unprovided or unneeded dental services. 
• Discount medical cards: Fake medical discount cards do not provide coverage or discounts. 
• Drug diversion: Abuse of prescription drugs. 
• Medical identity theft: Filing fraudulent insurance claims with social security numbers, Medicare or Medicaid numbers, or other identifying information for illegal gain. 
• Staged auto crashes: Warning of those who claim absent injuries after an auto accident to exploit insurance coverages, purposely crash into unsuspecting drivers, or produce an accident in person or paper. 
• Workers’ Compensation: Precaution against employers without adequate employee coverage or those who fake injuries for paid time off.