June 26, 1995
Worker's Compensation fraud is rare
Worker's Compensation fraud is rare in Wisconsin. Of 73,678 work-related
injuries reported in 1994, only 5 cases merited referral to district
attorneys for prosecution for fraud.
Those five cases totaled $44,674 in worker's comp payments. Wisconsin
worker's compensation paid $598 million in lost wages and medical costs in
1993, the most recent year available.
Another indication that fraud is negligible is that worker's comp insurance
is getting significantly less expensive for the second straight year. On
average, worker's compensation rates will go down 11.9 percent on July 1.
That translates into a $135 million savings in insurance premiums over the
next 12 months. It is the largest rate decrease in at least 20 years and
builds on the July 1994 decrease of 9.5 percent. Extensive fraud would
result in greater losses and higher rates, said Jack Martz, director of WC
insurance programs.
A new state law that took effect in 1994 requires the Wis. Department of
Industry, Labor and Human Relations to track worker's compensation fraud.
The Worker's Compensation Division of DILHR received 95 allegations (most
of them anonymous) of fraud. In 51 of those, no worker's compensation had,
in fact, been paid. In the remaining cases, the insurance carriers or self-
insured employers investigated and recommended prosecution in only five
cases.
District attorneys refused to prosecute in three of the five cases — one
because the parties reached a restitution agreement for $3,656. The other
two cases are pending. Local DAs must meet a higher standard than DILHR,
proving their cases "beyond a reasonable doubt," while the statute
requiring DILHR to report potential fraud requires only "a reasonable basis
to believe."
Based on the first year's experience, DILHR Secretary Carol Skornicka said
local district attorneys are taking their responsibility seriously.
Skornicka said she expected fraud reports to increase, primarily because
insurance carriers and employers are more familiar with the program.
She also noted that anonymous allegations of worker's compensation fraud
are generally unreliable, primarily because people tend to confuse the
program with other disability or insurance programs.
An estimated 200,000 work-related injuries occurred in the state in 1994.
Only the more serious injuries, primarily those involving at least three
days of lost work time, must be reported by law.