Common Workers’ Compensation Employer Scams
Insurance companies would like you to believe that worker fraud, such as faking an injury, is a serious problem which drives up costs. Yet the statistics suggest otherwise. It is hard to believe, but employer fraud costs about 3,000 times more than worker fraud. That’s because employer fraud, unlike worker fraud, is often very widespread.
Employer fraud schemes always reduce the amount of money in the system. As a result, if you want a fair-sized piece of a very small financial pie, you need a tough Jackson workers’ compensation lawyer on your side. This slice of pie usually includes compensation for lost wages and medical bills.
This kind of fraud is probably the most common. As many as a third of employers intentionally misclassify their workers in order to reduce their premiums.
Workers’ compensation insurance companies determine premiums based, at least in part, on payroll size. Therefore, the lower the payroll, the lower the premiums. To artificially reduce their payrolls, many employers misclassify “employees” as “independent contractors.”
So, one of the first steps in a successful workers’ compensation claim often has nothing to do with the injury itself. An attorney must compare the actual number of employees with the declared number of employees. If there is a discrepancy, the insurance company often voids the policy. If that happens, job injury victims might be entitled to additional compensation.
Contrary to popular myth, employers cannot unilaterally decide which workers are employees and which ones are independent contractors. The difference is a question of law which an administrative law judge must determine.
On a related note, some employers simply underreport their payroll sizes. They blatantly make false claims on insurance application forms because they know there is little risk of getting caught. And, even if that happens, the punishment is usually only a fine which barely exceeds the amount the company unlawfully saved.
As mentioned, payroll size is one premium-determining factor. Worker risk is another factor. Construction workers are more likely to be seriously injured than payroll clerks.
Therefore, many companies lie about what their workers do. For example, a roofer might have 100 workers. To reduce its premiums, the employer might claim that most of these workers are office workers when, in fact, almost all employees are roofers.
The same thing could happen in these situations. If the employer submitted false information on application forms, the insurance company could void the policy.
If the employer does not have a legitimate insurance policy, victims may sue in civil court and obtain additional compensation. This additional compensation usually includes money for pain and suffering, emotional distress, and other noneconomic losses. As a bonus, under Mississippi law, these employers cannot use some “silver bullet” civil defenses, like comparative fault and assumption of the risk. So, negligence is easier to prove.
Count On an Experienced Attorney
Injured workers pay the price for employer insurance scams. For a free consultation with an experienced workers’ compensation lawyer in Jackson, contact Lunsford, Baskin & Priebe, PLLC. We do not charge upfront legal fees in these matters.