Understanding Workers’ Compensation Fraud
The North Carolina Industrial Commission’s Compliance and Fraud Investigative Decision recently reported that it collected more than $8 million in workers’ compensation fraud penalties for the 2017 to 2018 fiscal year, which marked a 465% increase of the previous fiscal year. These fraud penalties arise from more than 696 criminal charges. Proceeds gained from these investigations will go to North Carolina’s Civil Penalty and Forfeiture Fund, which benefits public schools in the area. The Commission cites the reason for these increases as a number of investigations that recently closed as well as the introduction of new review methods. The division works in coordination with businesses to make sure that these companies maintain adequate workers’ compensation insurance.
Fraud is common among workers’ compensation claims. Statistics reveal that workers’ compensation fraud costs $30 billion a year. Estimates even reveal that workers’ compensation fraud amounts to 10% of claim costs for insurers. The act of workers’ compensation fraud is committed by employees and employers alike. It is helpful to understand some of the most common ways in which insurance fraud occurs in order to avoid it at all costs. This article discusses some of the most common types of workers’ compensation fraud that is committed by both employers and workers.
The Types of Workers’ Compensation Claim
There are several ways in which workers’ compensation fraud can occur. Fraud can fall into one of the following categories:
● Adjuster Fraud. This offense involves tampering with evidence to support a fraudulent claim or accepting kickbacks in exchange for referrals.
● Applicant/Claim Fraud. This fraud involved an injured worker making false statements about his or her injuries or attempting to lie about the type of compensation that should be rewarded.
● Attorney Fraud. This act involves helping to file false claims or directing claims to a clinic conspiring with the lawyer to exaggerate the severity of a worker’s injuries.
● Billing/Provider Fraud. This offense involves overbilling by a medical provider or failure to render services as required by workers’ compensation law.
● Employer Fraud. Activities in this category involve providing false information to avoid or deny compensation for a worker. This offense can also include lying to workers to discourage them from pursuing claims.
● Premium Fraud. This offense involves giving fraudulent information to an insurance company so that a workers’ compensation policy can be obtained at a reduced rate.
Creating Shell Companies
Employers tend to commit workers’ compensation fraud by avoiding payment of premiums. One tactic commonly used by employers involves creating “shell” companies with the same or similar sounding names. An employer then submits claims under one company’s policy to cover workers at another company.
Misclassifying and Underreporting
Some employers try to reduce their workers’ compensation premiums by misclassifying employees at the company as owners or underreporting payroll. Companies then attempt to avoid paying the amount of workers’ compensation that is due. Sometimes, companies also attempt to classify workers as independent contractors because this helps to avoid the high penalties associated with workers’ compensation fees. For example, a company might attempt to claim that a person who is actually an employee at the company is instead an owner and as a result, avoid paying workers’ compensation for this worker. Employers that are determined to have committed fraud in this way can end up facing particularly large fines as well as being required to pay back taxes.
Other times, employers lie about the safety of the work environment so that they can receive reduced workers’ compensation premiums.
Renting Out Insurance Policies
Some employers attempt to rent out their workers’ compensation policies to others. As a result, these employers are able to rent their policy to other companies who charge their own workers’ compensation claims under the policy. For example, Company # 1 might take out an insurance policy fraudulently and then charge other companies a fee to make claims for their workers under its policy.
Nonexistent and Exaggerated Injuries
Some workers commit workers’ compensation fraud by filing claims for injuries that do not exist or conditions that are exaggerated. This type of fraud is rarely successful because it is often easy to establish that the worker does not have the actual injuries in question. For example, a worker might make up a back injury so that he or she can receive workers’ compensation benefits or lie about the severity of a shoulder injury so that he or she will qualify to receive benefits.
Falsely Conveying Work-Related Injuries
Sometimes, workers commit workers’ compensation fraud by lying about an injury that occurred elsewhere and claiming that it occurred while on the job. For example, a worker might lie and claim that an injury that arose while playing football in college was actually the result of lifting boxes that were too heavy at work.
Another similar act of fraud occurs when a worker has an old injury that resurfaces and then claims that this injury was caused at work.
Provider-Based Workers’ Compensation Fraud
Medical providers also sometimes commit workers’ compensation fraud, which often involves multiple parties that perform the act. Most often, providers commit insurance fraud through the use of kickbacks for patient referrals. For example, a provider might refer patients to a specialist because the provider receives a payback, even when the workers do not actually require this type of medical care.
Another common strategy is to increase the cost of medical implants that are used in surgeries. For example, a medical provider might increase the cost of mesh used in a hernia surgery rather than charge the actual cost for the medical device.
In other situations, health care providers attempt to commit fraud by exaggerating a worker’s injury so that more money can be charged to the worker’s insurance company. For example, a provider might falsely convey that a worker’s entire spine is seriously injured rather than report the injury is actually limited to only a certain area.
Other providers commit workers’ compensation fraud by telling workers that they need additional treatments. For example, a provider might inform a person that he or she needs rotator cuff surgery when this surgery is not actually necessary.
Workers’ Compensation Fraud
If a worker, an employer, or a provider is convicted of workers’ compensation fraud, they can end up facing substantial penalties, including fines and jail time. The fines that a person ends up facing vary significantly based on the offense that is committed. The imprisonment period that a person ends up facing can range from one to 30 years based on the severity of the offense that is involved. In some workers’ compensation cases, a convicted person might also be required to pay back the amount that they received as a result of the fraudulent claims.
Tips to File a Strong Workers’ Compensation Claim
To avoid being accused of fraudulent activity and to achieve the most that is possible from your workers’ compensation claim, there are some important pieces of advice to follow. These strategies in filing a claim include the following:
● Promptly Report Your Injury. The first step that you should take after being injured in the workplace is to file a workers’ compensation claim. Failure to meet the reporting deadline means that you might potentially lose your ability to collect workers’ compensation benefits.
● Receive Medical Treatment Quickly. You should make certain to receive medical treatment as soon as possible after an injury occurs. Adequate medical treatment increases your chances of successfully returning to how life was before the injury. Promptly receiving medical treatment also helps to provide documentation about how your injuries occurred.
● Understand Your Workers’ Compensation Benefits. Injured workers should understand the benefits that are available through the workers’ compensation system. That benefits that are typically available to injured workers include temporary disability benefits that are paid while you are not working and healing from injuries, permanent disability benefits that provide workers with compensation for longer-lasting injuries caused by accidents, compensation for medical treatment of on-the-job injuries, and compensation for the mileage spent traveling to receive medical treatment.
● Anticipate an Examination by an Independent Medical Examiner. Unlike other medical appointments, an independent medical examiner is hired by an insurance company and focuses on providing a report about your condition rather than treating your condition. It is critical to prepare for meeting with an independent medical examiner by looking over your medical records and anticipating the questions that the examiner will ask.
● Maintain Detailed Record. As an injured worker, it is critical to keep copies of all documents related to your workers’ compensation claim. Sometimes, work restrictions are not even placed on a person’s medical record. Not only will workers’ compensation benefits be assigned on the basis of the various records that are made, but a medical provider’s reports will be invaluable if a dispute about a worker’s conditions occurs.
● Think About the Possibility of Appealing a Denial of Benefits. There are many situations in which workers file legitimate compensation claims that are subsequently denied. As a worker, you are entitled to appealing a denial by the insurance company. If your workers’ compensation claim was denied, it might be valuable to consider how to appeal the denial.
● File a Form 18. The North Carolina Industrial Commission is responsible for administering the state’s workers’ compensation benefits. The claim process in North Carolina begins with filing a Form 18, which details how a worker notified an employer and the Commission that benefits are being sought. It is critical to not just fully complete Form 18, but to do so as soon as possible.
● Make Sure to Follow a Doctor’s Orders. Workers’ compensation programs are designed to help injured workers recover. It is important for injured workers to follow a medical provider’s recommendations about medical treatment exactly. Failure to follow these orders can sometimes result in a worker being denied benefit payments.
● Know When to Return to Work. A workers’ compensation insurer will almost always provide a worker with a date that they are permitted to return to work. It is also critical for workers to avoid engaging in any activities that are prohibited by medical providers.
● Make Certain that You Receive the Correct Disability Rating. When a medical provider decides that an injured worker has recovered as much as is to be expected from a condition, the worker is assigned a disability rating that influences the amount of workers’ compensation that the person is ultimately able to receive. It is critical that workers avoid agreeing to ratings that might not accurately reflect the severity of a condition.
● Obtain Adequate Compensation or Job Placement. If you have been left unable to work as the result of an injury, you should make certain that you either receive an adequate amount of compensation or that your employer provides a new job placement for you. This is an employer’s obligation under the law and settling for anything less can result in particularly serious complications.
● Attend All Important Legal Proceedings. If you do not have a worker’s compensation attorney, you are required to attend each legal meeting as well as any court proceedings. Failure to appear at one of these meetings can result in a person losing a portion or all of his or her benefits. Even if you obtain the assistance of a workers’ compensation lawyer, you will still be required to attend some important events.
● Speak with an Experienced Workers’ Compensation Attorney. In the case of some simple workers’ compensation claims, you might not require an attorney. In most situations, however, you should consider obtaining the assistance of a seasoned workers’ compensation benefits lawyer who understands how this process works and who will remain committed to making certain that you receive adequate compensation.
Speak with a Workers’ Compensation Lawyer Today
If you are a North Carolina or South Carolina resident who is interested in pursuing a workers’ compensation claim, it is important to speak with an experienced workers’ compensation attorney. At Wallace Childers, PLLC, we have significant experience in obtaining compensation for North Carolina and South Carolina workers. Contact our law office today to schedule an initial free case evaluation.