The Three Most Common Types Workers Compensation Fraud

Workers’ compensation insurance is a safety net for employees who are injured on the job, as well as for their employers. It pays for lost wages, medical expenses and other expenses and benefits incurred by an injured worker. Sometimes, however, unethical employers, workers and medical providers attempt to bilk the system. The National Insurance Crime Bureau estimates that one in 10 of all property/casualty insurance claims are fraudulent.
There are three main types of workers’ compensation insurance fraud:

• Policy-Related Fraud: Policy-related fraud occurs when a company intentionally manipulates or withholds information from its insurance company in an attempt to lower its premium payment. For example, it is fraudulent for a business to inaccurately report the size of its workforce, misclassify employees or re-emerge as a new company on paper in an attempt to obtain a lower experience modification factor rating—a factor that adjusts the premium based on claims history.
• Claim-Related Fraud: Claim-related fraud typically occurs when an employee falsely claims a work-related injury or illness in an attempt to gain a workers’ compensation insurance benefit. This type of fraud can be committed if an employee is injured outside of the workplace, but claims the injury occurred at work. It can also happen if an employee exaggerates the severity of an injury in order to receive a greater benefit.
• Medical Provider Fraud: Medical provider fraud is committed when a medical provider deliberately attempts to profit off the workers’ compensation system by unnecessarily performing services on a claimant solely to collect an insurance payment. Fraudulent billing and kickback schemes with pharmacies or medical specialists are other examples.

Any kind of workers’ compensation insurance fraud can adversely affect policyholders, legitimately injured employees and insurance carriers. There are important steps claims professionals can take to mitigate the occurrence of fraud
Claims Journal, 8/23/18, full article here.
Key Takeaway: Workers Compensation fraud affects many people and many types of policies.  It raises the overall cost of workers compensation along with increasing medical costs and health insurance.  Do you part to help prevent, mitigate, and report workers compensation claims.  

Employment Practices Liability Coverage in Action; EEOC Sues California Restaurant Chain for Preferred Hiring of Females Over Males:
Burgers & Beer, a chain of Southern California restaurants, violated federal law when it denied males with the same employment opportunities as their female counterparts, the U.S. Equal Employment Opportunity Commission announced in lawsuit filed today.  The EEOC contends that since at least 2015, male applicants and employees were disqualified from server positions based on sex. The company routinely rejected male applicants for those positions and maintained a server workforce that was over 90 percent female, the EEOC charged.  Such action violates Title VII of the Civil Rights Act of 1964, which prohibits discrimination on the basis of sex. The EEOC filed suit in U.S. District Court for the Southern District of California after first attempting to reach a settlement.  The EEOC is seeking injunctive relief to prohibit Burgers & Beer from engaging in discrimination on the basis of sex, as well as compensatory and punitive damages for the victims.
Insurance Journal, 8/30/18, full article here.
Key Takeaway:   Employment related claims would typically NOT be covered under a general liability policy, however you can find coverage under an employment practices liability policy.  In California, the cost of coverage can be more pricey than other lines of coverage, but the overall cost of coverage would likely be much less than any settlement or claims made against your business.  

Is your Business in Compliance?
California’s Labor Enforcement Task Force issued 26 orders shutting down unsafe machines or operation at workplaces it inspected during the fiscal year 2017-2018 and found that 93% of businesses inspected were out of compliance with labor laws, according to an announcement Tuesday by the California Department of Industrial Relations.  The task force is charged with identifying “bad actors” and uncovering violations in high-risk industries such as agriculture and construction by matching data from various state agencies and using targeting methods, according to a statement.  In its investigations, they assessed over $10 million in initial penalties for a variety of labor law violations, including failure to maintain a valid workers compensation insurance policy, wage theft, exposing employees to unsafe working conditions, and failure to carry required licensing, according to the statement.  The labor commissioner’s office also issued 275 stop orders to employers with no workers compensation insurance coverage, according to the statement
Business Insurance, 8/29/18, full article here.
Key Takeaway: If your business is not in compliance, it could face significant fines.  Don't risk it - get in compliance!

September Charity/Cause of the month:
Our September charity for giving back is San Diego Leukemia/Lymphoma Society's Light The Night.  The Leukemia & Lymphoma Society's Light The Night Walk funds treatments that are saving the lives of patients today. LLS is making cures happen by providing patient support services, advocating for lifesaving treatments and pioneering the most promising cancer research anywhere.  This means that any policies bound or renewed during September will have a total amount of 5% of the net commissions donated to this charity.  As we grow, our monthly contributions will grow too!  

Schaub Insurance believes in the power of giving, and we genuinely care about the charities and causes we support.  The 2018 are charities San Diego Humane Society (January), San Diego Environmental Health Coalition (February), Women’s Resource Center (March), Escondido Creek Conservancy (April), NF2 (May), Palomar Audubon Society (June), Suicide Prevention/Awareness (July), DCS – Deaf Community Services (August), Leukemia/Lymphoma Society (September), Breast Cancer (October), AIDS – The Center San Diego (November), Mama’s Kitchen (December).
We believe in the value of community resources and giving back.  ❤