Bill Requiring Self-Insureds to Report Fraud Passes Senate

Wednesday, March 7, 2018 | 0

The Maryland state Senate on Tuesday unanimously adopted a measure that would require self-insured employers to report workers' compensation fraud to the state Insurance Administration's Fraud Division, and would allow the agency to investigate the cases.

Sen. Katherine Klausmeier

Senate Bill 575, sponsored by state Sen. Katherine Klausmeier, now goes to the Maryland House. 

If approved, the measure would take effect in October. The bill would give self-insured employers and government agencies the same remedy in investigating fraud as do companies that carry workers' compensation.

Insurance fraud is a felony in Maryland if the value of the fraudulent payment is more than $300. Insurance fraud costs the industry more than $40 billion a year, a legislative analysis of the bill reported. 

Karl Aumann, chairman of the Maryland Workers' Compensation Commission, told a Senate committee in February that the commission has no authority to investigate insurance fraud. However, an attorney for the commission discovered that the statute does not give the Insurance Administration authority to receive referrals from self-insured employers, only insurers. He said the bill will remove the problem.