Tuesday, December 3, 2013

Fraud Notice???

I got my annual notice from the California Division of Workers' Compensation about fraud.

This notice is mandated by Labor Code section 3822, which states:

The administrative director shall, on an annual basis, provide to every employer, claims adjuster, third party administrator, physician, and attorney who participates in the workers' compensation system, a notice that warns the recipient against committing workers' compensation fraud. The notice shall specify the penalties that are applied for committing workers' compensation fraud. The Fraud Assessment Commission, established by Section 1872.83 of the Insurance Code, shall provide the administrative director with all funds necessary to carry out this section.

Let me just get to the bottom line - this notice is a ridiculous waste of money and resources. The notice smacks of political pandering and does nothing to prevent, curtail or even limit fraud.

The notice I received focuses on Employer Fraud but also warns of all sorts of other fraud.

Employer Fraud is described in the notice as paying less for coverage by under-reporting payroll, misclassifying employees, fudging on job descriptions, paying directly for medical treatment that should otherwise go through work comp (though there are plenty I know who would prefer that to being subjected to work comp treatment!), etc.

The notice further states that it is a felony to make, or cause to be made, some misrepresentation in an attempt to deny or limit claim liability.

There are all sorts of other fraud examples in the notice, and per the Labor Code, the penalties are outlined in the notice.

Listen, I know that fraud can be a problem. We see fraud in all sorts of systems, not just work comp. If there's a system then there's someone who figures its easier to commit the fraud and risk punishment than it is to be legitimate.

Because the risk is outweighed by the reward.

It's nice that the Legislature felt it important that everyone in California know about workers' compensation fraud because, as the notice says, "it harms employees by undermining the perceived legitimacy of all workers' compensation claims."

But I get a notice from my insurance company every year about fraud. Sometimes I get a poster with nasty looking n'er-do-wells posing as the criminals.

There's a fraud notice on every Application for Adjudication of Claim.

There's constant media stories (and WorkCompCentral is not immune to these stories) about someone, somewhere committing some sort of workers' compensation fraud.

So we need ANOTHER reminder?

It's almost like the entire workers' compensation process is undermined by all of the fraud notices - I mean, fraud must really, really be bad in workers' compensation to justify all of these warnings about fraud.

It seems to me that the perceived legitimacy of all workers' compensation claims is undermined by all of these fraud notices because why would we be getting all of these warnings if nearly every claim were in some way fraudulent?

My guess is that the vast majority of these junk mail pieces (it came with some other Employment Development Department notices that are likewise junk) get thrown in the trash without any consideration whatsoever anyhow.

Maybe I'm just cranky and getting old, but I don't need to be reminded of workers' compensation fraud and my guess is that most people in California don't need to be reminded either.


  1. Well said. We could just respond to the fraud notices with, 'Thank you for that blinding glimpse of the obvious!'

  2. Maybe your cranky and getting old, as most of us are,but your article is spot on.