According to the South Carolina Attorney General’s website, the average American household pays $1,030 per year in out-of-pocket costs as a result of insurance fraud. While insurance fraud comes in many different forms, workers’ compensation insurance fraud is one of the most common types of insurance fraud perpetrated in the United States today. Workers’ compensation fraud can be broken down into two main categories: employer fraud and employee fraud.
Employer Fraud
When an employer engages in workers’ compensation fraud they generally commit “premium fraud.” Premium fraud involves the employer lying in some way when they purchased their workers’ compensation insurance policy. In order to be guilty of insurance fraud the employer must have lied with the intention of getting away with paying less in premiums than they should. However, employers are capable of committing workers’ compensation fraud in a variety of different ways. The LexisNexis Legal Newsroom provides a very helpful list of examples of workers’ compensation fraud, which includes employers engaging in any of the following activities:
- Intentionally refusing to purchase workers’ compensation insurance for its employees,
- Misclassifying its employees as independent contractors in order to obtain reduced premiums,
- Denying valid claims submitted by injured employees in the hopes that the employee will just drop that matter,
- Issuing disability checks late,
- Refusing to pay for necessary medical treatments or prescription drugs,
- Allowing their insurance provider to pay for costs that the company should rightly be paying,
- Providing employees within the company, or insurance adjusters, with incentives to deny claims,
- Incorrectly calculating an employee’s average weekly wage for workers’ compensation purposes,
- Referring injured employees to doctors or other healthcare professionals who have a reputation for prematurely returning injured employees back to work, and
- Firing employees who file a workers’ compensation claim in order to send a message to other employees.
According to SummitHoldings.com, warning signs of employer premium fraud include submitting Certificates of Coverage with inaccurate data, under-reporting payroll stubs, misclassifying workers, and paying workers cash “under the table.”
Employee Fraud
Employee workers’ compensation fraud also comes in a variety of different forms, but generally involves an employee exaggerating the severity of their injury, or making up a fictitious injury all together, in order to avoid work or to collect undeserved workers’ compensation benefits. Employee workers’ compensation fraud, also referred to as “claimant fraud,” is committed when an employee takes any of the following actions in order to improperly obtain workers’ compensation benefits:
- Filing a false or exaggerated accident report,
- Continuing to receive workers’ compensation benefits after returning to work,
- Falsely claiming to have been injured on the job,
- Denying a preexisting injury,
- Earning wages from a separate source while still accepting workers’ compensation benefits,
- Presenting a false or exaggerated injury to a healthcare provider in order to obtain workers’ compensation benefits, or
- Trying to unjustly benefit from the workers’ compensation system in any way.
Sometimes it can be quite hard to identify claimant fraud. However, SummitHoldings.com notes that warning signs of employee workers’ compensation fraud include:
- A new employee filing a workers’ compensation claim,
- An employee who is facing an upcoming layoff, job change, or retirement filing a workers’ compensation claim,
- An employee with a poor attendance record filing a workers’ compensation claim,
- An employee has an accident Monday morning directly after a vacation or holiday,
- A workplace injury where the only witness to the accident is a close personal friend of the injured employee,
- The injured employee delays obtaining treatment, and
- The employee alleges physical restrictions that are not in line with their injury.
Penalties for Committing Insurance Fraud in South Carolina
Committing insurance fraud in South Carolina is a serious crime that can be punished by fines and even jail sentences. The severity of the punishment varies depending on how much the fraudster unjustly benefited from the fraud and whether or not it was the defendant’s first insurance fraud conviction.
First Offense:
- Less than $1,000: A misdemeanor offense punishable by a fine of $100 to $500 and up to 30 days in jail.
- $1,000 to $10,000: A misdemeanor offense punishable by a fine of $2,000 to $10,000 and up to three years in prison.
- $10,000 to $50,000: A felony offense punishable by a fine of $10,000 to $50,000 and up to five years in prison.
- $50,000 or more: A felony offense punishable by a fine of $20,000 to $100,000 and up to 10 years in prison.
Subsequent Offenses:
- Regardless of the amount: A felony punishable by a fine of $20,000 to $100,000 and up to 10 years in prison.
Reporting Workers’ Compensation Fraud in South Carolina and Whistleblower Statutes
If you suspect that workers’ compensation fraud is occurring in South Carolina be sure to report the situation to the proper authorities by calling the South Carolina Insurance Fraud Hotline toll free at 1-888-95-FRAUD or report the incident via the Insurance Fraud Complaint Form.
Fraud in the workplace has the potential of going unreported if employees are afraid that reporting the fraud will jeopardize their careers. Therefore, the federal government passed the False Claims Act in order to help protect whistleblowers and to encourage individuals to report suspected instances of fraud. South Carolina has also enacted a separate whistleblower statute (South Carolina code of law section 41-15-520) in order to provide additional protection and encouragement for whistleblowers in the state. This law makes it illegal for an employer to discriminate against or fire an employee because they reported suspected illegal actions or violations.
Speak to a Legal Expert
If you were injured while on the job in South Carolina and believe that you have not received the workers’ compensation benefits that you are entitled to due to workers’ compensation fraud contact the Elrod Pope Accident & Injury Attorneys today. Our determined Rock Hill workers’ compensation lawyers are committed to zealously defending our clients and would be happy to help fight for you and your rights.
