Ill. Director Says Worker’s Comp Fraud Is $300 Billion National Problem

The Illinois State Insurance Department receives reports of six alleged cases of workers’ compensation insurance fraud each week, according to insurance Director Michael McRaith. McRaith commented recently on a stop in Bloomington, Ill.

Some reports accuse employers of fraudulently denying claims, while others accuse employees of exaggerating injuries. Other reports accuse insurance companies of unjustly raising the rates on workers’ compensation insurance, said McRaith, director of the Illinois Division of Insurance.

Not matter who’s at fault, the fraud is increasing the cost of workers compensation insurance, he said.

“Illinois business owners simply pay too much for workers’ compensation insurance premiums,” said McRaith, speaking at an informational breakfast sponsored by the McLean County Chamber of Commerce, Snyder Insurance and state Rep. Dan Brady, R-Bloomington.

“Insurance fraud is a $300 billion national problem,” he added. “The cost of workers’ compensation insurance fraud can be costly on paper and in opportunity.”

The state instituted stricter penalties against workers’ comp insurance fraud last summer, Brady noted. Workers who file fraudulent claims face felony penalties, including jail time. Those who collect on fraudulent claims could have to repay up to three times the amount wrongfully collected.

“Both employees and employers have suffered when workers falsify their injuries,” Brady said. “The bill actually establishes real penalties, both civil and criminal, for workers who falsify their injuries.”

To deter malicious allegations, the law also provides misdemeanor penalties to those who knowingly file false fraud claims against others.

“We are not investigating cases of fraud reported by spouses in divorce proceedings,” McRaith said.

The act also appropriated $900,000 for fiscal years 2006 and 2007 for a Workers’ Compensation Anti-Fraud Unit to investigate reported cases of fraud throughout the state, McRaith said, but it will not investigate anonymous tips.

To report a case for the unit to assist with investigations, call 1 (877)WCF-UNIT.

Source: Scott Miller, Bloomington Pantagraph