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Thursday, October 16, 2014

Misclassification of Workers Yields Penalties

Today's post is shared from
A lot of employers try to lower their workers' compensation costs by fudging the numbers on their payroll reports, or paying workers "under the table," or misclassifying their jobs.
Some employees take advantage of the no-fault design of the system to make claims that didn't occur, or inflate the severity of the claim.
And there are some people on the claims side that try to "meet the numbers" by denying, delaying and otherwise obfuscating claim realities and legal obligations.
But the penalties meted are different depending upon your place in the system and don't necessarily reflect the crime.
For instance, WorkCompCentral did an analysis of California Department of Insurance fraud statistics.
Between Jan. 1, 2013, and July 10, 150 individuals were convicted of defrauding workers' compensation carriers out of $8 million; $6.7 million, or 83.75%, came from 30 of the 77 convictions for premium fraud, such as misreporting payroll, classifying workers as independent contractors or operating without mandatory workers' compensation insurance.
The CDI data does not have an estimated loss for the remaining 47 of those convictions, but if extrapolated against the "known" losses, then the total for that time period is $17.5 million of losses attributable to employers.
$1.3 million out of that "known" $8 million is attributed to false claims filed by 67 of 73 individuals. Losses for the remaining six of those false claim cases were not included in...
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