Workers’ compensation fraud perpetrated by employers is a big problem, both for injured workers, the state – who in many cases assumes the cost of care for workers, and for the employer.
Workers’ compensation fraud also impacts other businesses that are not committing fraud, as their insurance costs will be raised to compensate for the insurer’s cost of operations, since dishonest employers are not covering their fair share.
Employers commit fraud mainly to get out of paying high insurance premiums, but this fraud is absolutely considered to be theft, and should be reported immediately. The employer is stealing from the insurance company and is causing more harm to injured workers, who then have even more limited means of remedy after becoming injured.
Fraud is committed by employers in several different ways.
Misclassifying the Business: Insurance companies use business codes to give employers ratings that compare that employer to other businesses in the same industry. If the employer does not accurately describe the nature of the business, the rating will not be accurate.
Misclassifying Employees: The employer also misclassify the employee by saying they are a different type of employee than they actually are. Usually the employer will misclassify an employee as another type of employee who does not require workers’ comp coverage.
Underreporting Payroll: The total amount of payroll also has an impact on how insurance premiums are calculated. In order to pay lower premiums, employers will sometimes report having fewer employees than they actually have and report a lower payroll amount than the reality.
Cash Economy: Employers will sometimes use a cash economy in order to lower premiums. Employers who do this may tell workers that they are independent contractors, rather than employees of the company, and give them 1099 forms, instead of standard W-2 forms. However, they treat the “standard contractors” as if they were regular employees.
Bartering: Another tactic employers sometimes use is to barter with workers and instead of paying them via cash or check, they will pay their rent, or provide some other type of compensation.
Intimidating or Blocking Employees From Filing a Workers’ Comp Claim: The more workers’ compensation injury claims that are filed, the higher an employer’s insurance premiums will be. Some employers will block employees from filing a claim by intimidating them. Others may offer to pay for the medical care themselves, in order to avoid filing an insurance claim.
Failing to Obtain Workers’ Comp Insurance: Another type of fraud is when an employer fails to obtain workers’ compensation insurance at all. They may get away with this for awhile until an employee becomes injured. When this happens the injury is usually paid for through a state funded pool that is reserved for uninsured injuries.
However, the fund is essentially paid for by honest employers because the state maintains the fund through assessments against insurance companies. The insurance companies cover these costs by raising costs for legitimate employers who are insured through them.
Missouri Workers Comp Lawyers
Committing employer fraud could result in fines, jail time, a criminal record, loss of business license, payment of underpaid premiums, and loss of income from being out of business.
Employers who have workers’ comp insurance are protected against employees taking them to court. But when employers fail to obtain coverage, an injured employer can take legal action. If you are injured at work in the state of Missouri, contact the Law Office of James M. Hoffmann.
St. Louis Workers’ Compensation Lawyer James M. Hoffmann has been working to protect the rights of injured Missouri workers for over 20 years. To schedule a free and private consultation call us today at (314) 361-4300 or fill out our online contact form.