Rampant Workers' Compensation Fraud is a Myth
A supposedly injured worker is caught on hidden-camera video doing strenuous work in his backyard.
Footage such as this, shown on NBC’s Dateline, makes for compelling television news. But it also perpetuates the myth that workers’ compensation fraud is rampant.
But it’s not.
Insurance Industry estimates of worker fraud are always extremely high but are largely based on conjecture. And they are clearly biased in favor of the insurance companies. But in virtually every unbiased, statistical study done, worker fraud has been shown to be less than 2 percent of total claims.
What’s more, employers and insurance companies are as likely or more likely to perpetrate workers’ compensation fraud than are their employees.
Yet, the myth persists that many workers are faking injuries in an attempt to collect workers’ compensation benefits.
I’ll share some theories about why this is in a later blog posting.
But now, I want to talk about how this myth that large numbers of workers are defrauding the system is affecting injured workers.
- States are restricting benefits available to injured workers under the theory that less generous benefits will provide fewer incentives for workers to defraud the system.
- Employers are more likely to view workers who file for workers’ compensation as malingerers or frauds.
- Workers’ compensation insurance companies are more likely to view every claim with suspicion and to thus contest more claims, which prolongs the amount of time it takes for injured workers to receive their benefits.
- Due to the social stigma, workers who are legitimately injured may decide not to file for workers’ compensation benefits for fear of being seen as a fraud.
More on this topic later.