Moore: Why I Skip the Subject of Comp Fraud

Monday, August 29, 2022 | 0

I am sometimes asked during presentations, at conferences or just in general conversations why I rarely cover workers' comp fraud in the 2,000 articles on this website, but I have covered fraud in a few instances over the last 15 years.

James Moore

The unknown variable

According to a PBS article, a study in 2000 showed that fraud cost employers $1.2 billion.

According to the National Insurance Crime Bureau, work comp fraud in 2017 cost employers $30 billion per year. I am not sure how that figure was calculated or estimated as yearly.

Did this figure grow from $1.2  billion to $30 billion in 17 years? As one of the components of fraud is concealment, I am not sure we know exactly how much it costs employers.

Definition and types

Workers' comp fraud occurs in many ways. The five I have listed are:

• Employer.
• Employee.
• Provider.
• Claims department (rare, but it happens).
• Agency (usually fake agents or keeping premiums and not procuring policies).

Let us look at the definition of fraud. The Free Dictionary tends to define any word or term very thoroughly:

A false representation of a matter of fact — whether by words or by conduct, by false or misleading allegations, or by concealment of what should have been disclosed — that deceives and is intended to deceive another so that the 
individual will act upon it to her or his legal injury.

Employer/employee/provider workers' comp fraud

Why do I not cover these three types of fraud? Many publications cover these three to the nth degree.

I could easily fill this website full of fraud-based articles. Why cover what other publications cover so well? Some of the publications I mentioned have sections devoted to fraud.

I Googled the term “workers' comp fraud” just now. Three TV stations were covering a restaurant owner in Texas who was indicted for fraud. Businesses accused of workers' comp fraud seem to make the news very often.

This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at www.cutcompcosts.com.