Fraud and Bad Faith in Workers Compensation

 

Virginia Does Not Recognize a Bad Faith Cause of Action for Injured Workers. This Creates an Environment Where Workers Comp Fraud Can Take Place With Few Consequences.

 

Insurance companies want the general public and elected officials to believe that workers compensation fraud is common. This talking point is dangerous. It is used to lobby for legislative changes that make it more difficult to receive workers comp benefits, reduce the value of benefits available, and increase policy premiums.

 

Claimant fraud, however, is rare in workers comp matters. Contrary to insurance industry claims, there are not tens of thousands of employees faking accidents or trying to turn minor injuries into millions of dollars.

 

In my experience serving as workers comp lawyer for hundreds of injured employees across Virginia, employer and insurance carrier fraud is just as likely, if not more likely, than claimant fraud.

 

This article discusses:

 

  • How employers commit workers comp fraud and act in bad faith
  • How insurance companies commit workers comp fraud and act in bad faith
  • Why fraud and bad faith are common in workmans comp
  • What you can do when the employer and its insurance carrier act in bad faith

 

If you suspect that your employer or its workers comp insurance carrier are acting in bad faith, call me today for a free consultation: 804-251-1620 or 757-810-5614. I’ll help you fight back, so that you and your family receive the temporary total disability, permanent partial disability, vocational rehabilitation, and lifetime medical benefits you deserve. I’ll also help you negotiate a workers compensation settlement that provides financial security. Call now.

 

How Employers and Insurance Companies Commit Workers Compensation Fraud and Act in Bad Faith

 

The definition of fraud includes any “deceitful practice or willful device, resorted to with intent to deprive another of his right, or some manner to do him an injury.”

 

Bad faith and fraud are synonymous, meaning they are the same thing. Bad faith and fraud are also synonyms of unfairness and dishonesty.

 

Both employers and insurance companies commit workers compensation fraud. Let us look at some examples.

 

Examples of Workers Comp Fraud and Bad Faith by Employers

 

Here are some of ways that employers commit workmans comp fraud and act in bad faith:

 

  • Some employers try to resolve workers comp claims outside of the system. For example, your employer may tell you that it will continue paying you wages and cover your medical bills if you tell the doctor you were hurt at home and do not file a workers comp claim. This is an effort to avoid the Workers Compensation Commission’s jurisdiction over your claim. And usually the employer backs out of this agreement when it sees how much the medical bills are. If you told your doctor that you were hurt at home, you will have a difficult time regaining credibility and winning your claim.

 

 

  • Some employers pay employees “under the table” or ask employees to sign a contract stating that the employee is an independent contractor. This is called workers misclassification. Often this is nothing more than attempt to avoid having to purchase workers comp insurance, to lower insurance premiums, or to discourage employees from reporting workplace accidents and filing claims. Whether a person is an employee or an independent contractor is determined by the actual relationship, not the employment contract. And the Commission makes the final determination.

 

  • Some employers take an active role in trying to manage an injured employee’s medical care. For example, your employer may send someone to the hospital with you and direct your co-worker to tell the health care provider not to prescribe certain medications or to take you out of all work.

 

  • Some employers offer bonuses if a person or department goes a specific number of days without a work accident. This makes reporting work accidents and filing claims unpopular. An injured employee may feel pressured into not pursuing a valid workers comp claim.

 

  • Some employers fail to purchase workers compensation insurance coverage or self-insure even though they are required to do so under the Virginia Workers Compensation Act. When this happens an injured employee may have to seek benefits through the Uninsured Employers’ Fund (UEF). This creates additional procedural hurdles and reduces the likelihood that the injured employee will receive a workers comp settlement.

 

  • Some employers under report the number of employees they have, the actual occupations of these employees, and their wages to get lower workers compensation insurance premiums.

 

  • Some employers fail to report accidents and workers comp claims to their insurance carriers. This means the injured employee has to wait longer to receive medical authorization, which can prolong the recovery.

 

Examples of Insurance Company Bad Faith and Fraud in Workers Comp Claims

 

Here are some of the ways that insurance carriers act in bad faith and commit workers compensation fraud:

 

  • Paying benefits voluntarily without offering an award order. This may lull you – the injured worker – into not filing a claim for benefits within the workers compensation statute of limitations. It also allows the insurance company to stop paying benefits without notice. This creates financial pressure and is designed to force you into accepting a lower settlement offer or giving up the claim.

 

  • Delaying the acceptance of claims and payments of benefits when the claim is compensable based on the evidence.

 

  • Refusing to pay workers comp benefits unless the injured employee gives a recorded statement.

 

  • Using aggressive vocational rehabilitation counselors who do not comply with the Commission’s Vocational Rehabilitation Guidelines. This causes the injured employee to have to seek protective orders or risk the insurance company cutting off benefits. Though many are good and care about injured employees, some vocational rehab counselors are focused on finding a reason that the insurance carrier can stop your payments.

 

  • Providing award agreement forms that do not list all the body parts injured. This forces the injured employee to have to take the case to trial – or waive medical treatment for the unlisted body part.

 

  • Understating the pre-injury average weekly wage. Your average weekly wage plays an important role in determining how much workers compensation pays. If the insurance company provides an award agreement form that states an inaccurate pre-injury average weekly wage, then it may be acting in bad faith and costing you tens of thousands of dollars potentially.

 

  • Giving inaccurate advice about Virginia workers compensation laws. For example, injured employees have called us after the claims adjuster told them they had to return to light duty work even though the authorized treating physician had disabled them from all work. Numerous employees have told us of insurance adjusters who told them that they were not entitled to mileage reimbursement.

 

  • Including prohibited items in the workers compensation lien. Some of you who were injured in a work-related motor vehicle accident may have both a workers comp claim and a personal injury claim arising out of the auto accident. If so, the insurance company has a lien against proceeds from the personal injury case. But the insurance company does not have a lien for every expense related to your claim. Your attorney should make sure that only legitimate items are included in the lien.

 

  • Allowing medical treatment and prescription medication to be covered by your health insurance carrier. This is unfair to the health insurer – and to you. The health insurer may ask you for repayment years after you have settled the claim.

 

  • Making payments late. This increases the likelihood that you will miss payments on your home or car, which may lead to you losing them because you are hurt.

 

  • Denying medical treatment for no reason. Or delaying authorization of medical attention with the hope that you will use private health insurance or just give up.

 

  • Telling you that hiring a workers compensation attorney is a waste of time and money – even though the adjuster uses attorneys and third-party vendors to manage your claim.

 

Why is Fraud and Bad Faith Common in Workers Comp?

 

There are several reasons that fraud and bad faith happen in workers compensation.

 

First, insurance companies are businesses whose primary purpose is to earn profits. By collecting premiums and reducing the amount of money they have to pay out in claims, insurance companies earn more profits. Being profit-driven can lead some claims adjusters and insurance companies to act in bad faith.

 

Second, your employer is the insured. Not you. The insurance company, therefore, does not consider you a customer, only a liability. It’s ok with you being unhappy. It’s not ok with your employer being unhappy because it may lose your employer’s premiums when it’s time to renew the policy.

 

Third, the workers compensation statutes do not provide injured employees with satisfactory remedies to combat employer and insurance company fraud.

 

For example, the Workers Compensation Act gives insurance carriers a two-week grace period on the payment of benefits owed under an award order. Only when a benefit check is 15 days late will the Commission order the insurance carrier to pay a penalty. And even then the penalty is nominal – what the insurer should have paid initially plus late charges equal to 20 percent of the amount owed.

 

The same is true of workers comp settlements.

 

Under most workers compensation settlements, the insurance carrier does not have to pay temporary total disability benefits after the date the Commission approves the settlement. But rather than issue the settlement check as soon as the settlement is approved, some insurance carriers will wait more than thirty days to issue the check. This causes financial stress for the injured employee. But there is nothing the injured employee can do unless he or she has not received the settlement check within 44 days of approval of the settlement.

 

What Should You Do if Your Employer or Its Insurance Company is Acting in Bad Faith?

 

Call an experienced Virginia work injury lawyer if the insurance company is committing fraud or acting in bad faith.

 

There are workers compensation statutes that address fraud.

 

Virginia Code Section 65.2-312 is entitled False statements, representations, etc., in connection with an award; penalties.

 

It states:

 

A. It shall be unlawful for any person to knowingly make, file or use any writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry in connection with an award under this title. It shall also be unlawful for any person to aid or abet another in a violation of this section.

 

B. A violation of this section shall be punishable as a Class 6 felony.

 

C. Any person convicted of a violation of this section who is licensed to practice any of the healing arts as defined in § 54.1-2900 or to practice law pursuant to Chapter 39 (§ 54.1-3900 et seq.) of Title 54.1, and who committed the violation while engaged in such practice, may have such license suspended or revoked in accordance with the provisions of Chapter 29 (§ 54.1-2900 et seq.) and Chapter 39 (§ 54.1-3900 et seq.) of Title 54.1, respectively.

 

This statute applies to injured workers, employers, and insurance carriers.

 

Virginia Code Section 65.2-712 applies to claimants only. It requires an injured employee to report to the employer and its workers compensation insurance company any change in earnings or incarceration.

 

If the insurance company acts in bad faith by defending your claim without a reasonable basis, the Commission may order the insurance company to pay your attorney fees. Other sanctions may be awarded, but this is rare.

 

Is the Insurance Carrier Treating You Unfairly?

 

Having your workmans comp claim delayed or denied is devastating. It may cause you to fall behind on home, car, and medical payments – damaging your credit score and lowering your quality of life.

 

Insurance companies know that forcing you to litigate and go through the entire workers compensation claims process gives them leverage in forcing a lower settlement. They also know that delaying payment or denying specific medical attention, even when an award order is in place, costs them nothing and you much more.

 

Fight back against insurance bad faith and fraud by calling me today for a free consultation. No matter where you and your family are located – Richmond, Newport News, Norfolk, Virginia Beach, Fairfax, Roanoke, Harrisonburg, or Bristol – I can help you with your workers comp claim: 804-251-1620 or 757-810-5614.

Corey Pollard
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