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Anti-Fraud Campaign Launches

North Carolina is taking a stand against intentional worker misclassification in an attempt to more fully fund the state’s workers’ compensation program.


Governor Pat McCrory signed an executive order last December which directed the Industrial Commission chairman to create an additional anti-fraud unit in the state’s workers’ compensation system. The newly-established Employee Classification Section will be headed by Bradley Hicks, a North Carolina attorney and former head of the Office for Historically Underutilized Businesses (HUB).


The Governor promised that “The Employee Classification Section will be North Carolina’s watchdog against unethical businesses that attempt to skirt our state’s laws.”


Employer Fraud


Media outlets often perpetuate the myth that employee fraud is a crippling problem that siphons millions of dollars from the pockets of injured workers. The typical story highlights a worker who defrauded the system by filing false claims, and there is usually a bellicose “not on my watch” statement from a workers’ compensation official somewhere in the text.


But the fact is that employee fraud occurs in less than 2 percent of claims. On the other hand, employer fraud is rampant. According to a Texas Mutual Insurance Company study, employer fraud costs about 400 times more than employee fraud. Misclassification is only one aspect. Some other areas include:


  • Cash Payments: Some companies offer to pay cash under the table to injured workers if they agree not to file claims. Despite the way it sounds, the company wins. The victims may not receive all the benefits they are entitled to, and the company does not have to risk a higher premium payment.
  • Failure to Obtain Coverage: To protect profits, some companies simply do not obtain coverage and hope they do not incur any claims. Once again, the money saved probably outweighs the penalties if the company gets caught.


Employer fraud is aggressively prosecuted in only a few states (North Carolina is not one of them), and so many companies feel that the financial benefits of cheating outweigh the risk of being caught. Even if they are apprehended and prosecuted, which is doubtful, the penalty may not exceed the amount of money the company saved.


Workers’ Compensation Process


There are those who would argue that the process itself is also geared to deny fair compensation to victims.


Actually, when compared to some other states, Tennessee’s process is relatively streamlined. Claims are reviewed at a Benefit Review Conference. The BRC involves a rather cursory review of the facts and medical records, and the claims are generally denied. Afterwards, the victim can appeal the decision in state court, where there will be a full adversarial hearing on all issues.


If the victim receives a favorable ruling in state court, most judges will award benefits that are retroactive to the date of injury.


With benefits shrinking and fraudulent activity on the rise, it is more important than ever to partner with an aggressive workers’ compensation attorney in Memphis to obtain maximum compensation for your injuries. Call an attorney today for a consultation.

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