WORKERS' COMPENSATION FRAUD - WHO'S GUILTY?

How many of you have heard reports put out by the insurance industry that the main problem with our work injury system is fraud committed by employees who claim to be much worse injured than they really are? How many of you have heard the insurance industry state that employee fraud costs insurance companies millions of dollars and makes insurance premiums go up? How would you feel if you found out that you had been misled, and that employers are the real guilty party when it comes to workers' compensation fraud? Well, guess what, you have been misled.

As a result of all the concerns voiced about fraud in workers' compensation claims, most states' work injury systems have set up fraud investigation units to investigate fraud in workers' compensation claims. The body that investigates workers' compensation fraud in North Carolina is called the North Carolina Industrial Commission Fraud Unit. What these investigative agencies have found is that in North Carolina, as well as in other states, the reports of alleged employee fraud is significantly less than 1%.

Contrary to what has been claimed by the insurance industry, investigative units nationwide are discovering that the biggest problem with workers' compensation fraud comes from employers, not employees. Many of these abuses come from employers lying about either their number of employees or the amount of money that they pay their employees. In Florida, an employer was indicted for misclassifying employees and under-reporting its payroll to avoid paying more than $800,000 in insurance premiums. Another employer in Florida was charged with defrauding insurers of more than $2 million in premiums. The Ohio Bureau of Workers' Compensation uncovered $19 million in underpayments by employers in the 1994-95 fiscal year, after only looking at 4 percent of it's employers. In California, almost 20 percent of its employers either underreported payroll or had no workers' compensation insurance.

In addition to fraud by employers to reduce their premiums, there are many other abuses by employers once an employee has been injured and is trying to recover the benefits that the law allows. These abuses are rarely punished, and often leave legitimately injured employees without benefits for extended periods of time.

The business and insurance industry is constantly pushing for workers' compensation reform to further limit the rights and benefits of injured employees, claiming that workers' compensation premiums are getting out of hand. Premiums for employers are not getting out of hand. In fact, they have decreased over the last eight years. Let your state representatives know that if they want to do something about workers' compensation premiums and fraud, they need to leave employee rights alone and focus on the abuses of employers and their insurance companies.