Cyrus Dugger

Workers’s Compensation Fraud: Employer Style

The usual narrative about workers’ compensation insurance fraud focuses on the image of lazy claimants who sit at home watching TV collecting checks when they’re not really hurt. And yet, this story exposes a different set of facts.

News from The New York State Public Employees Federation For more information: Darcy Wells, PEF Director of Public Relations, 518-785-1900 Ext. 277 or 518-859-1274 PEF Supports Crackdown On Workers' Comp Fraud To Cut Insurance Costs and Increase Benefits ALBANY, NY -- (01/25/2007; 1610)(EIS) -- Leaders of the New York State Public Employees Federation (PEF) are throwing their support behind a plan aimed at offsetting the cost of increased workers' compensation benefits by cracking down on fraud committed by employers. According to a study released today by the Fiscal Policy Institute (FPI), the state's workers' compensation system is cheated out of as much as $1 billion a year in required insurance premiums when employers fail to pay those premiums or misclassify the number or type of employees who work for them. The fraud results in higher costs to honest employers. "Governor Eliot Spitzer has promised to fix the workers' comp system which he said in his State of the State address, does not work for anyone," said PEF President Ken Brynien. "New York state not only has the lowest rate of compensation for injured workers in the country, those injured workers have not seen an increase since 1992," Brynien said. (link)

Here's more coverage from the New York Times:

A new study estimates that employers cheat New York State's workers'
compensation system by not paying $500 million to $1 billion a year in required insurance premiums, forcing other employers to pay higher premiums.

The study by the Fiscal Policy Institute, a liberal research group, found that these illegal underpayments represent 15 percent to 20 percent of all the workers' comp premiums that are supposed to be paid each year statewide.

Some companies pay no premiums while others underpay by underreporting the size of their work force to qualify for lower premiums, the study said.

Government, business and labor leaders say the noncompliance hurts the state's business climate by forcing law-abiding companies to pay higher workers' comp premiums when many corporations are already complaining that their premiums are too high. (link)

To read the report, click here.

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Posted at 10:35 AM, Jan 29, 2007 in
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