Workers’ Compensation Fraud

In both private and public sectors, Workers’ Compensation fraud can involve doctors, lawyers, employers, insurance company employees, and claimants. The National Insurance Crime Bureau reports that claimant fraud, while relatively low at one-third of one percent, still accounts for $7.2 billion in unnecessary costs. However, there is a lack of consensus on how to measure the degree of Workers’ Compensation fraud, leading to varying opinions on its significance.

The Coalition Against Insurance Fraud highlights billions of dollars in false claims and unpaid premiums within the United States annually. Workers engage in various types of fraud, including reporting remote injuries, inflating the seriousness of injuries, faking injuries, claiming old injuries as recent, malingering, and failure to disclose relevant information.

Employers are also involved in fraudulent activities, such as underreporting payroll, inflating experience to reduce risk and expenses, evading required Workers’ Compensation coverage, and utilizing “opt-out plans” regulated by the federal Employee Retirement Income Security Act (ERISA).

The Coalition Against Insurance Fraud, formed in 1993, is a collective effort of insurance organizations, consumers, government agencies, and legislative bodies. Their mission is to combat insurance fraud by uniting private and public organizations, controlling insurance costs, protecting public safety, and reducing crime.

The Coalition engages in three primary areas of activity:

  1. Government Affairs:
    • Advocate for stronger anti-fraud laws through local and grassroots campaigns.
    • Develop model bills, including those defining insurance fraud as a crime.
    • Reinforce anti-fraud bills.
    • Organize significant summits.
    • Support prosecutions.
  2. Communication:
    • Increase public awareness of insurance fraud and ways to combat it.
    • Empower and alert consumers.
    • Coordinate outreach efforts.
  3. Research:
    • Sponsor prominent research and surveys.

The Coalition publishes several resources, including the Journal of Insurance Fraud in America (JIFA), FraudWire, Fraud News Weekly, and an action guide called “Get a Grip on Fraud: Fraud Awareness Manual.” Research studies over the past decade have covered topics such as the effectiveness of warnings on benefit checks, understanding why people tolerate fraud, measurement of insurer fraud, drug diversion, and the performance evaluation of Special Investigative Units.

The Coalition also issues fraud warnings covering various schemes, including those related to agents and insurers, counterfeit airbags, auto repair scams, bogus health plans, fraudulent contractors, dental billing fraud, fake medical discount cards, drug diversion, medical identity theft, staged auto crashes, and Workers’ Compensation fraud by employers.

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