A reader says: “I fell at work and hurt myself. My boss said he’d pay my medical expenses if I lied and told the doctor I was an independent contractor. My job gave me a week off work after that so I could rest. When the bills showed up, I took them to work and asked my employer to pay for them. He refused, now I’m stuck paying those bills myself and looking for another job. Please warn your readers about the risks of lying for workers’ comp – I’ll never do that again!”
First, reader, we wish you a speedy recovery and a new job that suits your needs. You are in a tricky – and no doubt uncomfortable – situation. It sounds like you know that lying for workers’ comp, even at an employer’s request, is a bad idea. Let’s dig into the reasons why.
Lying for Workers’ Comp Can Cost Employers More Than Money
It’s important to understand first that every state has different laws for workers’ compensation. So, each state’s individual laws also define what counts as workers’ comp fraud. For example: In some states, it’s illegal to not carry workers’ compensation insurance. Employers in the following states face huge fines if they fail to purchase workers’ compensation insurance:
Most often, the number of employees in a business determines a company’s workers’ compensation insurance amount. States usually require a company to have workers’ compensation insurance when it hires its first employee. However, there are exceptions in some states for independent contractors and other types of laborers.
What to Do If Your Employer Asks You to Lie About a Workers’ Compensation Issue
Legally, there are serious consequences in most states if an employer tells an employee to lie about a workplace injury. The tricky thing is that these penalties and their thresholds vary by state.
Here is just one example:
In Texas, it’s a felony if employers tell employees to lie in order to deny them at least $2,500 in workers’ comp benefits. In fact, state law says employers found guilty of this crime will receive jail time. Injured employees (like our reader) may accidentally help employers commit workers’ comp fraud in this way without realizing it.
If you think your employer is committing workers’ comp fraud, be sure report it to the authorities. Failing to do so could make you complicit in workers’ comp fraud crimes in certain states.
Reporting Workers Comp Fraud Takes Just a Few Minutes
If you suspect workers’ comp fraud, you can report it anonymously 3 different ways:
- Online at the National Insurance Crime Bureau’s website.
- Text FRAUD to 847411 along with your tip.
- Call 1-800-TEL-NICB (1-800-835-6422) Monday-Friday, 7am-7pm CST.
Lying for Workers’ Comp by Employers Is More Common Than You Think
Statistics show that there is approximately $34 billion in workers’ comp fraud in America. This figure includes $9 billion in false claims from employees and $25 billion in employers who don’t pay premiums.
These countless cases of workers’ comp fraud are categorized into different areas. We’ll touch on each of these types of fraudulent activity below.
Pocketing Premium Money Is Another Way to Commit Workers’ Comp Fraud
Agent and broker fraud occurs when insurance agents or their office staff divert payments meant for premiums to themselves. In other words, they pocket that money to benefit financially while allowing their client’s workers’ compensation coverage to lapse.
Filing a False Workers’ Compensation Claim is a Crime
Claimant fraud is when an employee files a fake injury claim in order to receive workers’ compensation benefits. Sometimes an employee is injured when they file the workers’ compensation claim. However, the fraud arises because it’s not actually a work related injury.
In other cases, an employee might exaggerate an injury or illness to try and get more money. Lying for workers’ comp can also include an employee faking a work related injury entirely to try and receive benefits.
Misclassifying Employees as Independent Contractors Counts as Workers’ Compensation Fraud
Employer and premium fraud occurs when a company misrepresents how many workers they employ. This allows employers to lower the amount of money they spend on premiums each month for workers’ comp insurance. In some cases, employees lying for workers’ comp can help perpetuate this type of fraud.
Underreporting payroll is another common form of workers’ comp fraud. This happens when a company willfully underreports their payroll in order to reduce their required workers’ compensation premium payments.
For example: An employer who intentionally misclassifies employees as contractors to avoid higher insurance premiums is underreporting payroll. Another example might involve employers who pay certain employees in cash, “off the books.”
Experience Modification Evasion Also Counts as Workers’ Comp Fraudulent Activity
Experience modification evasion happens when a company changes its name specifically to commit workers’ comp fraud. This is one way employers try to trick the workers’ compensation system into thinking it has a lower “X-Mod score.” An X-Mod score is based on a company’s workers’ compensation claim history. A lower X-Mod score means that company pays less for workers’ compensation insurance coverage.
When a company has more workers’ comp claims in a calendar year than other, similar businesses, its X-Mod score goes up. What’s more, that X-Mod score stays with an employer when it switches to a new insurance carrier. Some companies will change names – and sometimes even transfer ownership – in an effort to change their X-Mod score.
In the reader’s example above, the employer lied and said he would cover the man’s medical treatment. By tricking his employee into not filing a workers’ compensation claim, that employer also avoided raising his X-Mod score. Lying for workers’ comp in this way helps dishonest employers lower their workers’ compensation insurance premium costs.
Health Care Providers May Also Commit Workers Comp Fraud to Pocket Extra Pay
Health care providers who commit workers’ comp fraud are less common, but it does happen. Doctors lying for workers’ comp may involve things like:
- Ordering unnecessary medical evaluations or tests, then pocketing the money
- Over-charging for medical care by entering the wrong billing code on purpose
- Prescribing physical therapy for an employee’s injury that is not needed in exchange for kickbacks from PT providers/clinics
Doctors and clinics who engage in workers’ compensation fraud face massive fines, jail time, and losing their licenses. Want a recent example? A judge sentenced Louisiana doctor Robert Clay Smith, who made $650,000 in workers’ compensation fraud money, to two years in federal prison in 2022. U.S. District Judge Timothy L. Brooks also ordered Smith to pay $800,000 back to workers’ compensation insurers.
How Injured Workers Can Get Free Expert Help Securing Workers’ Compensation Benefits
If your employer refuses to file a workers comp claim for your work related injury or illness, seek legal counsel. An experienced workers compensation attorney can review your case for free and help hold your employer accountable. It’s also illegal for a business owner to fire you for filing a workers’ compensation claim.
Not sure where to find a qualified workers’ comp attorney who can help you? We can connect you with one today by phone. If an attorney helps you get workers’ compensation benefits, then you pay just one small fee. But if you’re not successful, you owe your lawyer $0 for helping you.
Ready to speak with a workers’ compensation expert for free? Click the button below to start your free online benefits quiz and see if you may qualify:
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Lisa Allen is a writer and editor who lives in suburban Kansas City. She holds MFAs in Creative Nonfiction and Poetry, both from the Solstice Low-Residency Program in Creative Writing at Pine Manor College. Prior to becoming a writer, Lisa worked as a paralegal, where she specialized in real estate in and around Chicago.