Tag: Comp

Why Workers Comp Fraud Doesn’t Pay

Ask any business owner and he or she will tell you that insurance is not just about commercial general, professional, and employee liability or property coverage. Generally, it is legally mandatory for a business to acquire workers compensation coverage so that employees will be able to claim benefits in the event they incur a work related injury.

So, it’s a fact – workers comp is an important factor in any company’s insurance portfolio.

The problem lies when a worker files a fraudulent claim. And, unfortunately, it happens fairly often. But contrary to what many believe, workers comp fraud does not just impact businesses and bosses, and the employees that go about life in a totally honest manner, it also affects the faker. File a fake workers comp claim and you risk losing your job, spending time behind bars, and paying expensive fines. Trust those in the industry: crime – as it relates to workers comp – surely does not pay!

Below you will find some examples of employees that thought they could earn some bucks while fooling the system. In the long run, the hoax turned on them.

Fake Workers Comp Claim – True Scenarios

1. Marc was employed as a gardener. One day, he slipped and fell on the job. Complaining about associated pain that rendered him unable to work any longer, Marc submitted a workers comp claim. The process went rather smooth and it did not take long for Marc to begin receiving his disability benefits. Unbeknownst to Marc, however, the insurance company was after his tracks. After viewing surveillance video showing Marc actively doing gardening work for two other properties, Marc was called to task. Not only would the disability checks be curtailed, but he was sentenced to four months of jail time and ordered to pay over $39,000 in fines.

2. Jack complained about injuries he incurred at work. He said the resulting back pains made it impossible to continue his employment. Jack told the attending doctor that he had not experienced any pains prior to his work injuries. It didn’t take long for the insurance to offer proof that Jack was lying about his inability to work. The surveillance camera caught him working as a landscaper in the family business following the claim he made, resulting in a 3-year prison term and a $14,500 fine.

3. Sarah filed a workers comp claim after she received injuries to her back and leg while walking up a slope at the business’s outdoor facilities. When filing, Sarah failed to reckon with the ability of the insurance company’s investigation department. The department’s thorough work uncovered the true nature of the injuries: the injuries had been incurred before the date given on the claim and so were the discussions fellow employees had with her about them. Sarah was given 120 days jail time, plus 5 years of probation, plus a fine of $28,000!

Is This a Form of Workers Comp for Your Business?

It’s the law: Workers Compensation is something that all business owners must procure for their employees.

Based on an a structure of US state legislature, Workers Comp is a required insurance for employers that ensures employees will receive proper medical attention, disability benefits and loss of wages compensation if they are hurt or injured while on the job. Employees can locate standard and difficult to place risk policies via the appropriate agencies that scout the network for both forms.

But there is another option – a different mode or plan that employees may want to substitute from the general workers comp and liability protection that most often is used. This alternative is called the self-insured Workers Comp Program.

What is it and how does it differ from the more popular version?

The self-insured Workers Comp program is also known as the self-funded Workers Compensation plan and is legal in most states. Allowing the business owner to pay for each claim as an out-of-the-pocket expense in contrast to paying up front with a standardized commercial insurance policy premium or through a state fund policy premium, this program is attractive because of a number of reasons:

• It gives employers the leeway in controlling insurance costs

• It allows employers to provide their hurt workers with timely medical care

Are all business owners eligible for this form of coverage?

Not all employers can take advantage of the benefits of this alternate form of workers comp. Eligibility is bound to the following terms:

• The business must be located within one of the states that endorse it

• The business must have appropriate credit merit

• The employer must register his enterprise as a self-insured business

• The employer must post a bond that pledges each claim will be remunerated

While the self-insured program might be exceedingly attractive to the business owner on account of what may be perceived as a means of savings, there is another side to this story. In the event a business finds itself flooded with far more claims than anticipated, catastrophic debts may be incurred – especially for the small business that cannot keep up with the expenses. Because of this risk, the insurance marketplace also presents Workers Compensation Excess Insurance.

Related excess insurance? What for?

This type of excess insurance will fund claims up to a prearranged amount. In this way, the business at risk for catastrophic losses will not incur the costs that would put it under in the event self-insured claims exceed expectations.

No doubt, the topic is a complicated one. For greater clarification, speak to an independent agency that understands all the ramifications and deals with many of the leading insurance companies.

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