Workers’ Compensation Insurance Fraud 101

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Employers Insurance Company of Nevada. Employers Holdings, Inc. is a holding company with subsidiaries that are specialty providers of workers' compensation insurance and services focused on

select, small businesses engaged in low-to-medium hazard industries. The company, through its subsidiaries, operates in 30 states and the District of Columbia from 12 office locations. Insurance is

offered through Employers Insurance Company of Nevada, Employers Compensation Insurance Company, Employers Preferred Insurance Company and Employers Assurance Company, all rated A-

(Excellent) by the A.M. Best Company.  Coverage is not available in all jurisdictions and varies by company.  See www.employers.com for coverage availability.

of American businesses carry workers’ compensation insurance.

94%More than

Source Referenced: 1

135,000,000That covers more than

workers across the United States

Source Referenced: 1

4In 2012, there were roughly 3 million non-fatal workplace accidents.

That’s nearly

injuries for every 100full-time

employees.

Source Referenced: 2

While most claims are legitimate, studies indicate that 1 to 2% or more of all workers’ compensation insurance claims are fraudulent.

Source Referenced: 3

And claimant fraud,

committed by a worker or

provider.

Workers’ compensation fraud essentially falls into two categories

Premium fraud,

committed by businesses.

(Misrepresentation of payroll, misclassification of employees or falsely changing a businesses experience modification in order to lower premiums)

(Attempts to cheat the system in order to receive more benefits than are deserved)

Source Referenced: EMPLOYERS Anti-Fraud Department

The Four

Most Common Types of Workers’

Compensation Insurance Fraud

The injury NEVER occurred, or was knowingly misrepresented as a work-related injury. Staging an accident also falls into this category, which is a worker intentionally injuring himself to receive benefits.

The False Claim

Working While Collecting Benefits

Workers who initially sustain a legitimate injury, but exaggerate its severity to collect more money and stay off the job for a longer period of time.

The claimant says that they cannot or are not working to continue receiving workers’ compensation benefits while they are actually working at another job.

The Exaggerated Claim

Fraud from the Top

Businesses can break the law through premium fraud. The two most common types of fraud are underreporting of payroll and employee misclassification.

Source Referenced: EMPLOYERS Anti-Fraud Department

Top 10 Warning Signs of Potential Workers' Compensation Claimant Fraud

Monday Morning Reports

Suspicious Providers

Conflicting Descriptions

Treatment is Refused

Claimant is Hard to Reach

Employment Change

No Witnesses

History of Claims

Late Reporting

Other Changes, such as to Physician, Mailing or Home Address, Etc.

Experience shows that when two or more of these factors are present in a workers’ compensation insurance claim, there is a chance the claim may be fraudulent. These are simply indicators, and many perfectly legitimate claims often contain some

of these indicators.

Source Referenced: EMPLOYERS Anti-Fraud Department

Red Flag Warning Signs of Potential Premium Fraud

Policyholder uses a mail drop or post office box for a business address

The business is located in another area of the state from the producing agent’s location

An excessive number of certificates of insurance issued on a small policy

An unusual ratio of clerical to non-clerical employees listed

The business avoids audits by changing carriers frequently

Reported injuries are not consistent with the risk that was written

These are simply indicators. A legitimate claim could have some of these indicators, however further investigation may be conducted by the workers’ compensation insurance carrier.

Source Referenced: EMPLOYERS Anti-Fraud Department

$900Workers’ compensation fraud costs the average consumer

annually in reduced paychecks and bonuses.

Increased Insurance Rates

Increased Health Care Costs

Revenue Stolen from Businesses

Source Referenced: 4

Do you have more questions about workers’ compensation fraud and what you, a small business owner, can do to protect yourself against it?

EMPLOYERS Fraud Hot-line

Call us: 1-800-750-3939Email us: fraudfighters@employers.com

Do you want to talk to an EMPLOYERS appointed agent about fraud and workers’ compensation insurance?

Click Here to

Get Started Now!

Sources Referenced: 1) David F. Utterback and Teresa M. Schnorr, “Use of Workers’ Compensation Data for Occupational Injury & Illness Prevention,” Department of Labor, 2010, www.cdc.gov/niosh/docs/2010-152/pdfs/2010-152.pdf.2) “Workplace Injury and Illness Summary,” Bureau of Labor Statistics, October 25, 2012, www.bls.gov/news.release/osh.nr0.htm.3) Quoted in Greg Hunter, “Worker’s Comp Scams that Push the Limits,” ABC News, March 3, 2013, http://abcnews.go.com/GMA/story?id=127996.4) Quoted in Selena Maranjian, “The Real Cost of Workers’ Comp Fraud,” Daily Finance, June 21, 2011, www.dailyfinance.com/2011/07/21/the-real-cost-of-workers-comp-fraud.

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