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Counterfeit workers' compensation insurance scheme uncovered

Workers' compensation insurance is designed to promote two agendas. It allows injured workers to quickly obtain compensation for injuries that occur on the job, without needing to resort to the often slow and time consuming personal injury process. This ensures they receive the medical treatment they need in a timely manner and helps them return to work sooner.

Workers' compensation also provides a benefit to businesses, protecting them from potentially catastrophic lawsuits, say if a worker were killed on the job due to negligence by their employer. They also benefit by having their employees recover from their injuries and return to work. Workers' compensation helps both parties, by lowering costs for employers and making compensation readily available to workers.

Out of California comes the unsettling report that three individuals created a series of sham companies and sold hundreds of fraudulent workers' compensation insurance certificates to businesses.

The insurance commissioner stated, "The greed and deception of these three individuals is egregious. This illegal activity not only left honest businesses unprotected, but also put the health and recovery of legitimately injured workers in jeopardy."

They were arrested and face multiple charges of theft, fraud and forgery. This fraud is troubling because an injured worker could be left uncompensated, since their employer did not have a genuine workers' compensation insurance policy. The employer also could be forced to defend a negligence lawsuit brought by an uninsured worker.

Fraud within the workers' compensation insurance system damages all legitimate businesses, whose rates increase to cover the added expense of the fraud, and places workers at risk by leaving them uninsured.

Source: California Department of Insurance, "Counterfeit workers' compensation insurance leave injured workers without benefits," April 5, 2013

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