Work Comp Fraud Losses Surge Since 2020

As of 2024, workers’ compensation fraud costs U.S. employers and insurers significantly more than previous estimates.

The National Insurance Crime Bureau now reports that fraud in this sector amounts to approximately $34 billion annually, a significant increase from the $7 billion figure we reported in 2020. Of this, $9 billion stems from false employee claims, while $25 billion is attributed to employers misclassifying workers or underreporting payroll to dodge premiums.

Additionally, estimates still suggest that 5-10% of all property and casualty insurance claims, including workers’ compensation, are fraudulent. These are the main causes of workers comp fraud:

1. Fraudulent Billing and Billing Codes: Providers may bill for services that never occurred or double-bill both the workers’ comp insurer and another insurer, like health insurance, for the same service.
2. Unnecessary Treatments: Providers perform services unrelated to the injury or claim, often to increase profits.
3. Illegal Kickbacks: Providers receive payments in exchange for referring injured workers to specific medical services.
4. Soliciting on Behalf of Colleagues: Involves runners or steerers directing injured workers to particular providers for a fee.
5. Pharmaceuticals and Medical Equipment Fraud: Pharmacies bill for expensive brand-name drugs but give patients cheaper generic ones or bill for equipment that was never used.

These schemes are sometimes carried out by individuals but can also involve organized crime, resulting in multimillion-dollar fraud rings. Modern technology and data analysis are now used to detect and prevent such frauds occurrences, though unfortunately, technology is also being used by offenders as well.

In this issue:

Fourth of July Exuberance Ruled Non-Compensable

Pros and Cons: Fee Caps on Workers’ Compensation Cases

Presumption Laws Make Strong Showing Among New Comp Laws Passed

What’s the Difference Between a Stipulation and a Compromise & Release?

Work Comp Fraud Losses Surge Since 2020

The information presented and conclusions within are based upon our best judgment and analysis. It is not guaranteed information and does not necessarily reflect all available data. Web addresses are current at time of publication but subject to change. SmartsPro Marketing and The Insurance 411 do not engage in the solicitation, sale or management of securities or investments, nor does it make any recommendations on securities or investments. This material may not be quoted or reproduced in any form without publisher’s permission. All rights reserved. ©2024 Smarts Publishing. Tel. 877-762-7877. https://smartspublishing.com