Workers CompensationIs Workers’ Compensation Fraud a Rampant Problem?

December 7, 2016by Aaron Allison

Compensation Fraud a Rampant ProblemFive months ago, the Texas Division of Workers’ Compensation established a new in-house fraud unit to investigate fraud within the workers’ comp system. Since then, it has opened over 40 investigations and has expanded its workforce to cast a wider net to catch fraud when it happens. But is fraud really that big of an issue in the workers’ comp system?

Fraud: Workers vs. Employers

It is a myth that workers exploiting the workers’ comp system for personal gain is a common problem. In fact, a six-year study by the Department of Workforce Development found that the amount of prosecuted fraud by workers is less than one in 20,000 work injuries.

On the other hand, fraud by other players in the workers’ comp system can cause serious harm to workers. Last year, for example, almost $850 million in workers’ comp fraud was discovered in five U.S. states, with California being the location of the most egregious frauds. Compare that to the total $1.5 million in fraud by workers discovered in the same year, and you see that the problem is largely with the employers and other parties, not the workers.

Employer fraud can potentially involve hundreds or thousands of fraudulent transactions, and can happen in a variety of ways, including:

  • Intentional refusal to purchase insurance for employees
  • Misclassification of employees to obtain reduced premiums
  • Denial of valid claims in hopes the employee won’t pursue the matter
  • Denial of clear-cut occupational disease claims, forcing the employee to seek legal action
  • Referring injured workers to doctors that deny care and prematurely return the worker to work

So, is workers’ comp fraud a rampant issue? Yes – but fraud against workers is a much, much bigger problem than fraud by workers.

Aaron Allison

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Aaron Allison

Aaron Allison, a second-generation personal injury lawyer from Austin, follows in the footsteps of his father, who founded their firm in 1978. Admitted to practice by the Texas Supreme Court, the Federal Court for the Western District of Texas, the 5th Circuit Court of Appeals, and the U.S. Supreme Court, Aaron brings extensive legal expertise to his clients.

Specializing in personal injury cases, Aaron offers a distinct advantage for Texas workers injured on the job. With Texas workers' compensation laws leading many attorneys to avoid these cases, Aaron is one of only 40 lawyers among 95,000 in Texas who represent injured workers in straight workers' compensation cases. His firm continues to provide dedicated support for those suffering catastrophic work injuries, maintaining a proud tradition of advocacy spanning decades.