As employers, it is mandatory that worker’s compenstion coverage is in place in the event an employee is injured on the job. Many employers see this as a large expense which has an impact on the profit of the business and do what they can to avoid paying this insurance.
Employer fraud is when an employer schemes to defraud their worker’s compensation insurer by paying less for their insurance than they should. This could be due to under-reporting wages earned and/or misclassifing employees’ job descriptions. An employer may also pay a medical provider directly for medical treatment for an employee to avoid rate increases. Failure to secure worker’s compensation insurance coverage is also considered fraud.
Worker’s compensation fraud may be punished by imprisonment for up to five years. A fine may also be imposed not exceeding $150,000 or double the amount of fraud, whichever is greater. A person convicted under Insurance Code section 1871.4 may be charged the costs of the investigation.
Worker’s Compensation fraud can increase the cost of doing business and can result in decreases (or no increases) in employee salaries, laying off employees, or going out of business. It can also increase health care costs and the cost of insurance. If you would like more information, call the Department of Insurance Fraud at 800-927-4357 or visit www.insurance.ca.gov/0300-fraud-0100-fraud-division-overview/.
If you need a referral to an agent who can assist you with finding the best policy to meet your needs, feel free to contact my office at 310-534-5577 or [email protected]. We’ll give you a referral to someone we trust.
Candy
