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10:40:31 PM CDT
Wednesday, May 27, 2015

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Definition of Fraud

In the simplest terms, fraud occurs when someone knowingly lies to obtain benefit or advantage or to cause some benefit that is due to be denied. If there is no lie, there may be abuse but it is not fraud.

Employer fraud is usually committed by an employer who misrepresents the amount of payroll or classification of employees or who attempts to avoid a higher insurance risk modifier by transferring employees to a new business entity rated as a lower risk category.

It is unlawful for any employer engaged in hazardous employment to employ anyone, or receive the fruits of the labor of any person, without first applying for workers’ compensation insurance coverage of that employee, or willfully misrepresent their payroll information. (Hazardous employment does not include agricultural or domestic service, railroads, or employment as a member of the clergy or as an employee of a religious organization operating, maintaining, or conducting a place of worship). Failure to acquire coverage or misrepresent payroll information is a CRIME, which may be punishable by fines and/or jail sentences.

Injured worker fraud occurs when someone lies or willfully provides a false statement, intentionally fails to notify WSI of work or income from work, or willfully misrepresents their physical condition to obtain benefits from Workforce Safety & Insurance.

Provider fraud is committed by health care providers and attorneys by inflating their bills for services or billing for treatment or services of nonwork-related injuries.

Workers’ compensation abuse is any practice that uses the workers’ compensation system in a way that is contrary to either the intended purpose of the system or the law. This includes some behavior that is not criminal and some that is, most significantly, fraud.

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