Workers’ Compensation

What is Workers Compensation Employer Fraud?

By January 31, 2017 No Comments

Workers Compensation Employer FraudWhen a person is seriously injured in the course of their work, they expect that their employer’s workers’ compensation cover will cater for their medical costs and income loss. It is a fairly straightforward process that often proceeds without hiccups as long as all parties (employee, employer and insurance company) are acting in good faith.

Sadly, workers’ compensation just like other forms of insurance, has been infiltrated by fraud that has caused billions of dollars in losses. The long term consequences of insurance fraud are negative for all stakeholders. It is a significant systemic risk which is why Florida law provides for severe penalties to ensure it’s kept at a minimum.

Workers’ compensation fraud tends to fall into two categories: premium fraud (executed by employers) and claimant fraud (employee seeking payment under false pretences). While a lot of news on workers compensation fraud tends to focus on employee perpetrators, a significant proportion of compensation fraud is executed by employers.

In addition, the amounts involved in the average employer workers compensation insurance fraud case are far larger than those in employee cases. The possibility of potentially making millions of dollars from fraud is a bigger incentive than employee fraud where the payoff is often a couple of thousand dollars. Of 178 workers compensation fraud convictions in Florida in 2005, 130 were employers. Our experienced Florida workers’ compensation lawyer can help if you are victim of employer fraud.

Also Read: How A Workers Compensation Lawyer Can Help

We take a more detailed look at premium fraud.

Employer Premium Fraud

Premium fraud takes place when employers, using one or more techniques, defraud their insurance company by either failing to pay for the cover or paying less than they ought to. It can be a sophisticated operation and businesses will try to hide the scam using fake accounting and dummy companies. The most common schemes used to defraud the insurer include:

  • Giving the insurance company a payroll amount that is less than the actual total being paid to employees
  • Misleading classification of workers by concealing certain job duties that a particular employee may be tasked with. For instance, a construction company could report its electricians as desk clerks.
  • Paying employees in cash under the pretext that they are subcontractors
  • Employing illegal immigrants
  • Failure to inform an employee that they are entitled to workers’ compensation from day 1 on the job
  • Failure to report workplace injuries to the insurer
  • Failure to take workers’ compensation when the business is not exempt


Employers who engage in premium fraud face a number of penalties.

  • Lying to the insurer will lead to a loss of workers’ compensation insurance. The suspicion of fraud will also make it much more difficult to secure a cover from another insurer. The aggrieved insurance company is also within its right to pursue civil charges against the employer.
  • The government will shut down the business if it discovers the employer has failed to take workers’ compensation insurance despite not being exempt. The employer will be required to pay a penalty before they can reopen.
  • Workers compensation fraud is a criminal offense and in Florida, may be considered a first degree felony depending on how much money is involved. The statute of limitations is 5 years after the fraud’s’ discovery.


Workers Compensation Florida Attorney

A suspected incident of workers’ compensation fraud is usually first reported to the Florida Division of Workers’ Compensation. If you are a worker who has been injured in the course of your duties and suspect that your employer’s fraudulent actions could make it difficult for you to obtain appropriate compensation, get in touch with an attorney from Florida Workers Compensation Help Center attorney.

We believe that employees should not lose out on receiving reimbursement for their injuries and loss of income simply because of their employer’s sins. Get in touch with us for a discussion on your case. We do not charge any fees unless your case is won.



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