The amendments to the Workers’ Compensation Act include specific provisions to combat insurance fraud. Prior to the new amendments, the Act did not address the issue of fraud. Previously, fraud was addressed through the Criminal Code or through various health and legal ethical codes. For example, a person making a false workers’ compensation claim was, and still is, subject to criminal prosecution for theft by deception.
The new insurance fraud provisions apply not only to workers’ compensation claimants, but also to attorneys, health care providers, insurers, employers, and any type of corporation, partnership, etc. that participates in the workers’ compensation process.
The Act creates nine new specific crimes for various acts of insurance fraud. A person is guilty of the offense of fraud under the Act if he or she;
(1) Knowingly and with the intent to defraud a state or local government agency files false, incomplete or misleading information concerning any fact material to the agency’s determination in approving or disapproving a workers’ compensation insurance rate filing, a workers’ compensation transaction or other workers’ compensation insurance action which is required or filed in response to an agency’s request.
* While this provision is aimed primarily at filing with the insurance commission relative to setting insurance rates, it can also be interpreted broadly enough to apply to an attorney, employee, employer or insurance company representative, who files false, incomplete or misleading information with the Bureau of Workers’ Compensation relating to a workers’ compensation transaction.
(2) Knowingly and with the intent to defraud the insurer presents any statement part of a workers’ compensation insurance claim that contains false, incomplete or misleading information concerning any fact or thing material to the workers’ compensation insurance claim.
* This provision provides to fraudulent claims even if no claim has yet been filed with the Bureau of Workers’ Compensation.
(3) Knowingly and with the intent to defraud any insurer, assists, abates, solicits or conspires with another to prepare or make any statement that is intended to be presented to any insurer in connection with a workers’ compensation insurance claim that contains false, incomplete, or misleading information concerning any fact or thing material to the workers’ compensation insurance claim.
* This provision codifies existing criminal conspiracy laws.
(4) Engages in unlicensed agent or broker activity knowingly and with the intent to defraud any insurer or the public.
(5) Knowingly benefits, directly or indirectly, from the proceeds derived from a violation of the fraud provisions due to the assistance, conspiracy or urging of any person.
* Under this provision, a person who may not have directly participated in the fraudulent act may be equally as guilty if he or she is aware of the fraud and benefits from the proceeds of the fraud.
(6) Is the owner, administrator or employee of any health care facility and knowingly allows the use of such facility by any person in furtherance of a scheme or conspiracy to violate the fraud provisions of the Act.
(7) Knowingly and with the intent to defraud assists, abates, solicits or conspires with any person who engages in an unlawful act under the fraud provisions.
(8) Makes or causes to be made any knowingly false or fraudulent statement concerning entitlement to benefits with the intent to discourage an injured worker from claiming benefits or pursuing a claim.
* This provision would clearly apply to employers and insurance adjustors who purposefully give an injured worker false information in order to dissuade him or her from filing a claim. For example, an employer or adjustor who tells an injured employee that he/she cannot receive compensation for a work-related back injury simply because that employee had a pre-existing back problem would be subject to prosecution under this provision, assuming the employer or adjustor knew that information to be legally false.
(9) Knowingly and with the intent to defraud makes any false statement for the purpose of avoiding or diminishing the amount of payment in premiums to an insurer or a self-insurance fund.
Conviction under any of the above provision constitutes a felony of the third degree which is punishable by imprisonment of not more than seven (7) years and/or fines of not more than $50,000.00 or double the value of the fraud. Therefore, if the value of the fraud is in excess of $25,000.00 the fine, in theory, could exceed $50,000.00.
The fraud provisions can be enforced by any county district attorneys’ office of the Attorney General’s office.
However, despite the various public information campaigns by the insurance department concerning insurance fraud, statistics indicate that insurance fraud in workers’ compensation cases is a minimal problem.