Lorenz). This proves little if any about the real problem, though, because only about 1,000 claims were investigated in Kansas over five years (Lorenz), while over seven times that amount were investigated in New York and California in the same time period (“Insurance Fraud”). Throughout most sources, though, it is clear to see that employer fraud is the most prevalent and costly type of fraud. Employer fraud includes a number of schemes used by employers to reduce the number of workers’ compensation insurance premiums by underreporting payroll, misclassifying employees’ occupations and misrepresenting their claims experience. According to the National Council on Compensation, the most common frauds include: Misclassification of workers. Employers can either classify workers as independent contractor or misrepresent the work performed, which places workers in a less hazardous occupational category. Both of these tactics are intended to avoid or reduce premiums. Underreporting payroll. Another method of premium reduction is employers not reporting parts of the work force, paying workers off the books, or creating a “companion corporation” to hide a portion of the employees. Misrepresentation of claims experience. Employers hide previous claims by classifying employees as independent contractors or leased employees or creating a new company on paper.Despite laws in states across the nation, many corporations fail to purchase workers’ compensation insurance for their employees. There are also reports of employers instructing injured workers to seek treatment under group health insurance rather than workers’ compensation, employers discouraging workers from filing claims, and firing workers who file claims. (Helvacian and Shim, sec. 14-16)The other major type of fraud is provider fraud, more specifically medical provider fraud. Defined by the United States De...
