Workers’ compensation fraud is a serious concern that impacts employers, insurance companies and employees.
While some believe the numbers are higher, studies and information from authorities suggest fraudulent claims account for a small percentage of the total number of claims filed, typically ranging from 1% to 2%.
Why the misconception?
The misconception about how common workers’ compensation fraud is can be explained because many of these cases have become high-profile, and media coverage highlights extreme instances, giving the impression that this problem is happening everywhere at high rates.
Types of fraud
Workers’ compensation fraud can take many forms. For example:
- Employee fraud (individual fabricates or exaggerates an injury to get benefits)
- Employer fraud (misclassifying employees, under-reporting payroll)
- Provider fraud (billing for services not rendered or unnecessary)
How to combat fraud
States have implemented strict measures to combat the many types of workers’ compensation fraud. For example:
- Advanced data analysis
- Cross-referencing between databases
- Surveillance
Employers also play a crucial role in minimizing the risk of fraud by fostering a work culture of transparency and vigilance.
Educating employees about the consequences of committing workers’ compensation fraud is critical because doing so can help deter employees from committing crimes that affect the employer and, ultimately, everyone’s bottom line.