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Understanding the Basics of Workers’ Compensation Fraud

Fraud occurs in almost every industry. It is especially common when it comes to workers’ compensation cases. The fact is many workers’ compensation claims are fraudulently filed in an attempt to make money without actually being injured. It’s important to understand how the fraud process works and what steps can be taken to avoid it.

Claim Mills Fraud

Claim mills are legal centers and medical facilities (commonly referred to as ‘claim mills’) where employees are sent to report fake injuries. Fraud rings find individuals who are willing to file fraudulent work injury claims. Once the claims are filed, the doctors and lawyers receive payment on the claims and provide the employee with a cut of the payouts.

Provider Fraud

Health care providers may sometimes increase the number of referrals or medical reports to maximize their billing potential. Even though the original claim is legitimate, the excessive number of referrals can result in over-billing and the patient receiving unnecessary treatment. Provider fraud is a serious business and costs billions of dollars each year.

Employer and Insurance Carrier Fraud

Employer and insurance carrier fraud involves an employer or agent making a false statement against an employee’s claim. In most cases, this is done hoping that the worker will refrain from filing a justifiable claim. Employer and insurance carrier fraud means fewer payouts to injured employees and less risk for the employers and insurance carriers.

Premium Fraud

When applying for Workers’ Compensation insurance, the number of employees a company has will determine their monthly or quarterly premiums. The more employees a company has, the higher its premiums will be. To lower these costs, an employer will only claim a fraction of the number of employees they actually have on their payroll or misstate the designation of some of the employees. This is known as premium fraud and can prove disastrous if one or more employees are injured at the same time.

Applicant Fraud

Applicant fraud involves employees who are less than truthful when filing their workers’ compensation claims. They will sometimes fake an injury or exaggerate the extent of their injuries. They may also try to claim a non-work-related injury as something that happened at work. Many applicant fraud cases are uncovered by surveillance footage obtained from the facility or investigation.

Reporting a Workers’ Compensation Fraud

It is everyone’s responsibility to report Workers’ Compensation fraud. You can either report it to your employer, an insurance carrier, or the California Department of Insurance. Reports can be completed online and then mailed into the CDI office. Visit http://www.insurance.ca.gov/ to learn more.

If you want to learn more about Workers’ Compensation fraud, contact an insurance agency specializing in this type of insurance. At CF&P Insurance Brokers, our insurance experts have received extensive training on dealing with Workers’ Compensation claims and the fraud that sometimes occurs. Call and talk to our team today. We can give you the answers you need to file your claims and be as honest as possible properly.

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