Re: Workers' Compensation Fraud in 2017 Across the Country
Studies have shown that employee fraud is less than 1% of all fraud committed.
I can post a few hundred blogs to support this fact but here's one that says it all.
Employer Fraud in Workers’ Compensation – Just How Significant Is It?
A widely-quoted 1996 Conning and Co. report asserted that claimant fraud was as high as 25%.3 However, that figure had no statistical reliability. It was based on a survey in which 25% of the respondents (the number and the identity of those surveyed is unknown) claimed they knew of individuals collecting workers’ compensation benefits whom they believed were capable of employment. In 1997, a television station in North Carolina heard about this report and actually told its viewers that employee fraud was as high as 25%.4 However, it’s been generally recognized through studies that employee fraud is less than 1% of all claims.5
Root Causes of Fraud
In his book, The Cheating Culture: Why More Americans Are Doing Wrong to Get Ahead, David Callahan argues that the potential payoff is so great and so enticing when compared to the risk associated with the discovery of fraud, many individuals and/or companies are willing to take that risk. For some, the payoff far exceeds the risk of punishment, disgrace, and even jail time for the perpetrator. In short, society has created an environment where there are huge incentives to cheat and there is a perception that “everybody does it.” As Callahan states:
“Why not inflate earnings reports if the chances of being prosecuted are next to nil? Why not commit a fraud that gets you $70 million when a year or two at a federal prison camp is the worst possible punishment?”6
Are the incentives as great for an employee making $540.00 a week, or for a company that stands to make millions off a fraudulent scheme? The answer seems obvious.
The law of unintended consequences may be catching up with insurance companies, employers, lobbyists, public relations firms, and others who for the past 20 years have been attacking injured workers with a fraud bat. As ethical fraud units and various justice departments are discovering, white collar crime dwarfs the amount of claimant fraud in the workers’ compensation system. All states are encouraged to adopt an aggressive policy toward uninsured employers and others who try to cheat.
Effective systems need to be in place to guarantee that required policies are purchased, that annual audits of employers are conducted, and that fraud investigators are authorized to shut down construction sites and other places of employment when the employer has not purchased insurance.
Each state should also adopt a Whistle Blower statute (see California ’s False Claims Act, Cal. Gov’t Code §§ 12650-12655). These efforts will keep costs down and keep the playing field neutral for employers.
Moderator Responses are based on my personal bias, experience and research - They do not represent the views of the admin nor may be accepted in the legal community, always consult an attorney.