Workers Compensation Insurance Fraud Committed by Employees
Both employees and employers are capable of committing workers compensation insurance fraud, and both are liable for abusing the workers compensation insurance system.
Employees can commit workers compensation insurance fraud by misrepresenting an injury or illness. One example of this is when an employee claims that an illness or injury is attributable to a job-related event when in actuality it was contracted outside of work. Some employees may do this because they will be responsible for fewer or no medical expenses if an illness or injury is covered by workers compensation insurance. Other employees may do this as a means to secure extra paid time off work.
In either of case, there are steps employers can take to prevent workers compensation insurance fraud by employees or to catch employees committing workers compensation insurance fraud in the act.
When an employee files a workers compensation insurance claim, your insurance company should maintain contact with the employee, the employee's physician, and your business. The employee's supervisor or your business's human resources department should be responsible for ensuring this open communication. That way, confusion over what benefits your employee is entitled to receive is less likely to occur.
As you choose a workers compensation insurance policy, look for an insurance company that can supply you with one adjuster who will handle all of your business's claims. That way, you can get to know your adjuster and your adjuster can become familiar with your business rather than treating your business as a name only.
Take a proactive stance in helping your employee recover from a work-related illness or injury. Offer emotional support and make sure the employee knows that he or she is missed at work. If it is possible for your employee to still come in to work with modified responsibilities until he or she recovers, encourage your employee to still spend time in the office. When an employee is engaged in his or her job, the employee is less likely to entertain the idea of trying to fraudulently extend workers compensation benefits by presenting an illness or injury as more severe than it actually is.
Employees who are happy with their work are also less likely to attempt to commit workers compensation insurance fraud. Maintaining a positive atmosphere and instilling a sense of professional fulfillment in your employees will help them want to stay at work and respect your business.
Workers Compensation Insurance Fraud Committed by Employers
There are two types of workers compensation insurance fraud: fraud committed by an employer and fraud committed by an employee. Both carry consequences and can be prevented with accurate communication between the insurance company, employees, and employers.
When employers commit workers compensation insurance fraud, they provide less than the minimal amount of workers compensation insurance required by the state government. Employers accomplish this by misreporting the number of employees they have, misreporting the wages they pay their employees, or by misclassifying the level of risk inherent in their employees' job duties. Since the cost of workers compensation insurance depends on a percentage of each employee's wages and this percentage is determined by the riskiness of each person's work, appearing to have fewer employees or to pay employees less than they actually do reduces the amount a business has to pay for workers compensation insurance premiums.
One way businesses commit workers compensation insurance fraud is by paying employees off the books either in full or in part. That way, there is no record of employment. Misrepresenting what your employees do on the job is also workers compensation insurance fraud. Downplaying any safety hazards faced by your workers or presenting your business as having proper safety procedures that are actually not in place is considered workers compensation insurance fraud.
While some businesses think they can save money by committing workers compensation insurance fraud, the cost of being caught without a workers compensation insurance policy that meets your state's standards can be financially devastating. If your business purposely did not provide your employees with the workers compensation insurance they are entitled to, that gives your employees the right to sue if they do become ill or injured in a job-related incident. These lawsuits can cripple a business, and courts are not likely to look favorably on a business that knowingly evades the law.
Another risk of failing to provide the legally required workers compensation insurance to your employees is government fines. Aside from the cost of potential lawsuits, your business could face expensive fines for trying to defraud the workers compensation insurance system. If you have any concerns about whether or not your business meets your state's requirements for providing adequate workers compensation insurance, check with your state government or a workers compensation insurance agent. Trade organizations in your industry can also provide information and resources about workers compensation insurance requirements.
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