The mere mention of workers’ compensation fraud unfairly invokes the picture of an injured worker doing the limbo on some tropical island with a pinã colada in hand, while awaiting his next workers’ compensation check.
However, rarely does anyone discuss workers’ compensation fraud by employers. Does this exist? You bet, and it is a major problem in Ohio, which ranks second nationally in total fraud dollars.
Employer workers’ compensation fraud allows dishonest employers to operate with a competitive advantage and dilute the available overall dollars for the fund. It can take many different forms: Misclassification of the business activities; misclassification of employees’ job duties; or simply operating a business without paying the required workers’ compensation premiums.
According to an article by Cornelius Frolik in the Dayton Daily News on May 14, 2012, the Ohio Bureau of Workers’ Compensation (BWC) identified 41,247 private employers in Ohio that failed to pay their premiums by the required deadline. This earned Ohio the number two spot nationally in the “total fraud list” compiled by Leonard Jernigan in his article published in the North Carolina Workers’ Comp Journal on December 28, 2012.
Unfortunately, this failure to pay is not a one-time anomaly. An average of 40,000 employer policies lapse annually in Ohio according to the Daily News article. The majority of the lapsed policies are eventually paid, but over 12,200 employers’ accounts (5% of all employer policies in Ohio) had to be sent for collections.
Unpaid premiums by employers in 2012 totaled $5.6 million. This may not seem like an extraordinary amount but every dollar counts as the BWC’s Fraud Department coincidently collected over $6 million less in 2012 than they collected only two years earlier ($59.4 million v. $66.2 million), according to the BWC 2012 annual report. Further, the BWC’s efficiency also declined over the past two years when comparing dollars saved to dollars spent in collecting fraud dollars.
It is imperative that BWC collect every dollar owed from all Ohio employers who are failing to meet their obligations, to ensure that all employers operate on a level playing field, and to ultimately ensure that there are sufficient funds available to meet the medical and compensation needs of legitimately injured workers in Ohio.