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New York insurance fraud crackdown: 154 arrests, $16.6 million saved


Posted on Feb 28, 2010

Workers’ compensation fraud accounts for huge losses every year, both to the insurance industry and to individual workers.  When businesses or employees commit workers’ comp fraud, they divert resources intended for truly deserving injured workers and drive up the cost of premiums for employers.

 

In New York, the battle against wasteful fraud is fought by the New York State Insurance Fund (NYSIF).  In the last 15 years, NYSIF’s efforts have led to 1,382 arrests for insurance fraud and have saved the state $183.1 million.

 

Last year alone, the NYSIF’s fraud program led to 154 arrests and saved $16.6 million.  Fraud is perpetrated in a variety of ways.  In some cases, workers claim to be injured and collect workers’ comp benefits, yet they hold a job or operate a business.  Some workers recover from a legitimate injury or illness, but fail to notify the insurance company that they no longer need benefits.

 

Theft from a deceased family member is another problem, for example the child of a deceased worker who was collecting workers’ comp benefits may withhold notifing the proper authorities so they can continue collecting benefits.

 

Businesses commit workers’ compensation fraud as well, sometimes misclassifying workers so they don’t have to pay the appropriate premiums on high-risk employees like construction workers.  Other businesses illegally classify full-time employees as “independent contractors”, which saves them money on premiums.

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