What is Workers Compensation Premium Fraud?

Premium fraud happens when someone intentionally manipulates the system with the intention of securing some kind of monetary gain. Ok, don’t quote me on this because I’m not an attorney or legal professional but it’s pretty close. Let’s talk about this hot topic!

Employers, employees and insurance carriers alike are all susceptible to committing fraud or having a fraudulent act committed against them. In today’s insurance environment it seems that more and more attention is being paid to situations that in the past may have been chalked up to a mistake or misunderstanding where today is being treated as fraud. Maybe we’ve just become better at detecting these situations. Maybe we’ve just become more aware of these situations. Maybe there’s just more people out there that think they can perpetuate a fraud against another and get away with it! I don’t know. But I do know that our firm has provided more and more fraud related expert witness and expert consulting work in the last year than in the past. I do know that once in a while a seemingly insignificant act can be blown up into a serious case of civil fraud costing the parties involved significant dollars in legal costs to charge and defend one of these cases.

Who would have thought that the act of preparing and issuing a certificate of insurance by an insurance agent could lead to charges of fraud. Well we just finished up a case where we provided expert witness services to defend the agent in just such a case where an insurance company sued the agent. The insurance company alleged that they should have been able to rely on a certificate issued to one of their clients to indicate that workers compensation coverage, as referenced on the certificate, applied in every state where the client conducted business. Have you read a certificate of insurance lately? All that disclaimer information that Acord puts on the front of the certificate is there for a reason! The certificate itself says, in paraphrase, to refer to the actual policy in question if you want to know any details about the policies listed on the certificate. In other words, the certificate only tells you that on the day the certificate was issued, the policies listed on the certificate were in place. And for an insurance company to make such a jump and indicate that they should be able to rely on the certificate to indicate anything about the policies listed runs contrary to what everyone in the insurance industry should believe about those documents. It’s very simple, if you want to know anything about the conditions or restrictions of an insurance policy, the place to look is within that policy, not on a certificate of insurance!

So I guess we should add insurance agents to that list along with employers, employees and insurance carriers!

There’s certainly enough fraud to go around. How about when an employer purposely tries to manipulate the class codes for his workers to get a cheaper rate? How about the employee who fakes up a claim or who drags out a claim just so they can collect more benefits under the workers compensation policy. And lets not forget the insurance company who denies coverage on legitimate claims or who manipulates rates and rating of a policy in some wholesale plan to generate more premium from their policyholders. And don’t forget the providers out there that fake up billings and submit them to the insurance company for payment on injured workers for procedures not performed.

No doubt that workers compensation has a fraud target on it’s collective back! Given that, I can only imagine that in the future our firm will be more and more involved providing expert witness, litigation support and expert consulting services for those involved in workers compensation fraud cases.

Hope this helps you out! And for our regular readers, thanks for putting up with the delay in the regular posting of our blog. A case, where we provided services, necessitated we put on hold our blogging efforts. That case is over and we’re back blogging on a regular basis!

Thanks for reading!