Workers’ comp insurance is designed to help cover an employee’s medical costs and lost wages if they are injured at work. It is also meant to help protect employers from incurring personal financial losses as the result of a workplace injury that occurs within their small businesses.
That said, sometimes a service life workers’ comp can be used in a wrong—or even fraudulent—way. What happens when an employee, employer, or healthcare provider accidentally or intentionally commit workers’ compensation fraud? How can small business owners ensure workers’ comp coverage is being used effectively for its intended purpose?
Workers’ comp insurance fraud costs six to seven billion dollars each year according to estimates by the Coalition Against Insurance Fraud (CAIF) and the National Insurance Crime Bureau (NICB). This type of white-collar crime may lead to fines and imprisonment for fraudsters—and increased premiums or penalties for businesses. Therefore, it’s critical that small business owners and employers recognize the signs of workers’ comp fraud and take precautions to help protect their small business.
Workers’ compensation fraud typically falls into three main categories and may be committed by employees, employers, or healthcare providers.
It may be helpful to consider these specific examples of workers’ compensation fraud:
To reduce the risk of workers’ compensation fraud, small business owners can:
If a small business owner suspects workers’ compensation fraud has been committed, they should record the details of the incident in writing and contact their state’s department of insurance. Small business owners may also choose to contact a workers’ compensation attorney if they suspect an employee is committing workers’ compensation fraud.
Thanks for reading! Please note that this content is intended for educational purposes only. As laws change regularly, you should refer to your state legislation and/or an advisor for specific legal counsel. If you’re a small business owner, learn more about workers’ compensation insurance or check your current rate in 3 minutes.