Uncovering Fraud in Workers' Compensation Claims

Posted in Legal Alerts on December 21, 2021

Workers’ compensation fraud remains a serious problem in Florida. When employees wrongly file fraudulent claims, it raises the cost of doing business for employers, who must then pay higher premiums. In turn, this affects employees who may get lower wages. Although state law aims to prevent workers’ compensation fraud and imposes stiff penalties on alleged fraudsters, it is not always a successful deterrent. There are hundreds of investigations each year in Florida, and many of them result in prosecutions. 

How Workers’ Compensation Fraud Is Committed 

Employees can commit workers’ compensation fraud in a number of ways. This includes falsely claiming injuries when they file for benefits, as well as exaggerating complaints to adjusters and doctors. When employees file a workers’ compensation claim, they must sign a statement that acknowledges that filing a false claim constitutes insurance fraud under state law. False claims are punishable by significant penalties. If the total amount involved in the fraud exceeds $100,000, it is a first-degree felony. Even people who assist others in committing workers’ compensation fraud may be severely punished.  Healthcare providers also commit fraud in connection with claims by overbilling for services or sending invoices for care that was never provided. 

How Florida Pursues and Punishes Workers’ Compensation Fraud 

Florida has an entire office dedicated to ferreting out workers’ compensation fraud. There is a state interest in discovering these schemes because insurance companies may not want to do business in Florida if they suffer heavy losses due to fraud. 

The name of that office is the Bureau of Workers’ Compensation Fraud (BWCF). There are over 20 detectives on this team spread across the state. In addition, there are five prosecutors dedicated to prosecuting workers’ compensation fraud crimes. The BWCF engages in a number of activities, including discovering and investigating the following illegal practices: 

  • Employees faking or exaggerating work injuries to file and collect workers’ compensation benefits
  • Employees who work other jobs while collecting comp benefits
  • Businesses that break the law by not having enough coverage 

In 2018, the BWCF referred over 500 cases for prosecution. This resulted in nearly 400 arrests.

Punishing Workers’ Compensation Fraud 

Florida takes workers’ compensation fraud very seriously. Any type of workers’ compensation fraud is considered a felony and can be punished with jail time. Even fraud that involves less than $20,000, it can result in a prison sentence of up to five years. If more than $100,000 has been fraudulently obtained, the crime is charged as a first-degree felony with the following penalties: 

  • Up to 30 years in prison
  • A fine of up to $10,000 

There have been numerous high-profile incidents of workers’ compensation fraud uncovered in Florida, including: 

  • A Broward County Sheriff’s Office employee being arrested and charged with falsifying a workers’ compensation application
  • Seven employers covering up more than $40 million in payroll to avoid paying workers’ compensation premiums 

How Workers’ Compensation Fraud Investigations Happen 

The BWCF does not need much to initiate an investigation. The agency accepts tips from practically anyone, and it can act on practically anything. While the BWCF receives referrals from other government agencies, it has also initiated investigations based on anonymous tips and citizen complaints. Most often, an insurance carrier will refer a suspected fraudulent matter to the BWCF. After all, insurance companies are the ones who are stuck with the tab when an employee submits a fraudulent claim. Carriers also refer employers who have made false statements when obtaining a workers’ compensation policy. Employers may also report cases of fraud they uncover on their own. 

Another way that the BWCF catches bad faith actors is by sending agents out into the field to conduct surveillance on people who have committed fraud. For example, in one case, the BWCF found that a water distribution operator trainee misrepresented the extent of his injuries. In his case, the agents witnessed him performing physical activity that was inconsistent with his claim. In the end, the employee was charged with workers’ compensation fraud. 

In addition, the BWCF has discovered that numerous companies have tried to obtain lower workers’ compensation premiums by providing inaccurate information. These employers have lied about payroll or revenues to get cheaper policies. Understating payroll leads to lower premiums because the insurance company has less to insure. Whether committed by a business owner or an employee, insurance companies have the right to be protected from fraudulent practices. 

Federal Workers’ Compensation Fraud Investigations

There is also a federal workers’ compensation insurance program. This covers civilian employees of the federal government. There is an anti-fraud division that is housed within the Department of Labor that is run by the agency’s Office of Inspector General (OIG). Specifically, the agency looks for: 

  • Benefit recipients who fail to disclose income or that they have been working
  • Individuals who report fake medical information or falsify their health documents
  • Individuals who falsely claim to be injured when they are not 

The OIG casts a wide net in its investigations. Not only does it look at individual employees, but it will also target healthcare providers who submit fraudulent bills for claimants’ medical expenses. In some cases, healthcare providers will even pay kickbacks to employers and claimants. 

Whether it is a state or federal issue, those who have been charged with workers’ compensation fraud may be punished severely and will need legal help to deal with the charges. If you suspect someone with your business or a company you insure is engaging in fraudulent practices, our experienced Florida workers’ compensation defense lawyers can facilitate an internal investigation and assist with dealing with all applicable government agencies.