There are examples of fraudulent practices among all the participants in workers’ compensation programs, including the insurers themselves.
Insurance fraud methods
Audits of insurance agencies have uncovered various methods by which insurance companies either defraud the system or cheat individual workers. The most prevalent method for systematic fraud is when an insurance company enters the receipt of premiums for workers’ compensation policies into their general liability fund in order to avoid paying the surcharge required if the receipts were correctly entered into their workers’ compensation fund.
Fraud against injured workers
Fraud against workers has been found to manifest in some of the following ways
- Unpaid benefits
- Late payments
- Inaccurate benefit notices
- Failure to notify injured workers of their rights, such as failing to notify an injured worker of the right to apply for vocational rehabilitation benefits after a certain amount of time off work due to injury
One study found that, on average, insurers shortchanged one of every six injured workers by an amount of $900 each annually.
Another study showed that audits of insurance companies uncovered the fact that 80 percent of them had unpaid funds still owed to injured workers.
Altering claim evidence
The most egregious forms of fraud are, of course, when insurance adjusters alter claim evidence in such a way that the company can justifiably deny the claim. If nothing else, this delays the need for payment of the claim by causing the worker to appeal and go through the hearing stage of the workers’ compensation administrative process. If the fraudulent alteration is noticed, it may be dismissed as adjuster error and eventually the claim will be paid. However, adjuster error may never even be noticed. In those cases, the insurance company avoids covering the injured worker, who either goes completely unpaid or finds coverage through taxpayer-supported programs such as Medicare, Medicaid, Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI).
Bribes, kickbacks, and gifts
Adjusters have been found committing fraud by accepting gratuities and/or bribes in exchange for an implied promise of patient referrals to a medical provider.
Workers’ compensation programs were instituted, at least in part, to take the burden from individual communities of caring for an increasing numbers of injured workers. Unfortunately, because fraudulent practices allow some insurance providers to escape payment of benefits to some workers, the costs that were to be borne by the workers’ compensation system may be borne either by the workers or by taxpayer-based benefit programs.
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