[Fraud Trends Series] Trend #10: Workers’ Compensation Fraud

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hand holding American dollar currency isolated on blurred blackground injured woman with broken hand and green cast on arm, insurance health concept.

This is the final blog in our Top 10 Fraud Trends in 2022 series.

The Bureau of Labor Statistics (BLS) confirms that private industry employers reported 2.7 million nonfatal workplace injuries and illnesses in 2020. While these numbers declined by 5.7 percent from the previous year (that’s good news, at least), it’s important to note that total reported respiratory illness cases more than quadrupled to 544,600. (Note that’s a 4,000 percent increase from 2019. Thank you, once again, COVID-19.)

The National Council on Compensation Insurance (NCCI) states in a multi-bureau collaboration report that COVID-19 has had a considerable impact on America’s workers’ compensation industry. The report compiles information from across 45 jurisdictions, representing a combined amount of approximately $630 million in COVID-19-related loss dollars. These cases were associated with approximately 80,000 COVID-19 claims averaging $7,800 per claim. (In other words, there’s plenty of room for fraudulent claims in there.)

There are typically four common types of workers’ compensation insurance fraud:

  • Fraud from the top: Businesses can break the law through premium fraud by either underreporting payroll and intentional employee misclassification.
  • Working while collecting benefits: Claimants continue to receive workers’ compensation benefits while working another job.
  • False Claim: Claimants misrepresent a work-related injury, report an injury that never occurred, or stage an accident to fraudulently receive benefits.
  • Exaggerated Claim: Workers who may sustain a legitimate injury exaggerate the severity of the injury to remain off-the-job for a longer period of time.

Take for example, Ajani Shaw, 23, of Staten Island, N.Y., who is accused of submitting multiple fake positive COVID-19 tests so that he could collect workers’ compensation. (This case is a combination of “False Claim” and “Exaggerated Claim.”) Shaw filed a workers compensation claim for exposure to COVID-19 while working part time in a nursing home kitchen. He included a physician’s note and a positive COVID-19 test with his claim. Seven more positive COVID-19 tests and two more doctor’s notes were submitted providing evidence that he should stay off work through August. Benefits continued to be paid until the insurance carrier noticed that many of the positive test results used the same specimen ID. Shaw received a total of $1,700 in workers compensation benefits. (It turns out that two of the positive tests were real, but the rest were fakes. One of the doctor’s notes was also a fake.)

In another COVID-19 related workers’ compensation fraud case, Shaneesha White, 25, of Buffalo, N.Y., pleaded guilty to defrauding the New York State Department of Labor by fraudulently collecting unemployment insurance benefits during a presidentially declared national emergency. White applied for and received benefits in her own name and used the personal identifying information of two individuals to create benefits accounts and collect benefits in their names as well. The benefit money was deposited into bank accounts that were controlled by White, then she made cash withdrawals of $48,833.15. When sentenced, she faces a maximum penalty of 30 years in prison and a $1 million fine.

There’s no doubt that all types of workers’ compensation fraud will continue in 2022; however, I’m betting on there being a proliferation of COVID-19-related cases to come as we work our way out of the pandemic.

 

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Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.