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Jackson & New Orleans Workers' Compensation / Blog / Workers Compensation / Watch Out For These Workers’ Comp Employer Fraud Schemes

Watch Out For These Workers’ Comp Employer Fraud Schemes


Employee workers’ compensation fraud stories, such as individuals who fake or overstate workplace injuries, usually make the headlines. Yet these incidents only make up about 1 percent of all workers’ compensation claims. Furthermore, authorities deal with these cases swiftly and severely.

Employer workers’ compensation fraud, on the other hand, is a much more widespread problem. Many employers care deeply about their workers. But at the end of the day, these companies are primarily concerned with profit. If a cost-cutting shortcut is available, most bosses will take it. Furthermore, many states do not prosecute employer fraud very aggressively. And, the penalties for getting caught might barely exceed the cost savings.

Employers and insurance companies usually do whatever it takes to reduce benefits. But a New Orleans workers’ compensation lawyer does whatever it takes to maximize these benefits for you and your family.


Generally, insurance companies use the number of employees to determine a company’s workers’ compensation premium payments. The more employees on the payroll, the higher the premium.

To save money, some employers classify their regular workers as independent contractors, interns, or other non-employees. So, these companies illegally pay lower insurance premiums. As a result, there is less money in the system to compensate injured workers.

Misclassification schemes may be one of the reasons workers’ compensation benefits have declined steadily since the 1960s, although jobs and payrolls have expanded since then. Because there is less money to go around, claims examiners are extra stingy. They look for loopholes, technicalities, and any other item which could reduce or deny compensation.


This common scheme is a subset of misclassification. In addition to volume, insurance companies also set premiums according to risk. Some employers take advantage of this fact.

Assume a construction company has ninety construction workers and ten office workers. Construction workers are much higher-risk employees than office workers. So, the company might claim it has ninety office workers and ten construction workers. As a result of this miscategorization, the company’s insurance premium will probably drop dramatically.

Once again, there is less money in the system. That means less money to compensate workers for their medical bills and lost wages.

Promised Medical Bill Payment

Usually, the number of prior accidents and prior claims is the third factor insurance companies use to determine premiums. So, many companies try to reduce the number of claims. That’s easier, and cheaper, than making the workplace safer.

When workers are injured on the job, some malevolent companies promise to pay medical bills under the table if the worker does not file a claim. This scheme may the the worst one of all. Many injured victims want to return to work and they do not want to file forms. So, the promise is tempting.

Almost inevitably, however, the company reneges on this promise. When that happens, the claim deadline has probably already passed. Therefore, the victim might have no claim for compensation.

Like the other two, this scheme hurts other victims as well. The company pays lower premiums, which means the financial pie shrinks even further. 

Reach Out to a Tenacious Attorney

Employers often resort to illegal schemes in their quest to bolster their bottom lines. For a free consultation with an experienced New Orleans workers’ compensation lawyer, contact Lunsford Baskin & Priebe, PLLC. Home and hospital visits are available.


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