What you should know about your rights when your insurance acts in bad faith
Most people associate workers’ compensation fraud with situations where workers either fake injuries or try to pin off-the-job injuries on workers’ compensation. The trope of a dishonest employee wearing an unneeded neck brace to extort money from their employer is a common mental image, but this is clearly not the case.
Employee workers’ compensation fraud is actually very rare. In fact, many workers are hesitant to file workers’ compensation claims even after legitimate work-related injuries and will often do so only if it’s necessary.
However, fraud is still common.
Employers and their workers’ compensation insurance providers are often less than scrupulous when reviewing or investigating claims. Given the dire situation that surrounds these claims, it is crucial to be well-informed of your rights and duties. Although it is impossible to know the exact numbers, thousands of workers’ compensation claims are likely denied in bad faith every year.
What is bad faith in workers’ compensation?
Legally speaking, “bad faith” simply means that an employer or insurer committed fraud by failing to validly investigate or approve a workers’ compensation claim. If an employee is injured during the course of their employment, public policy dictates that the employer should bear at least some of the costs associated with that injury.
Workers’ compensation is not a fault-based system. Thus, the question isn’t who is responsible for the injury. Rather, the determination is whether or not the nature or requirements of the job contributed to the injury. This is a purposefully low bar to recovery. Therefore, whenever an employee’s good-faith claim for workers’ compensation is denied, suspicions should immediately be raised.
Whenever an employer or their insurance fails to validly review a claim or disregards findings and denies a claim, fraud has likely occurred. However, the process is often not as simple as receiving a letter that says “your claim has been denied.”
Common types of workers’ compensation fraud
There are numerous ways that an employer may try to manipulate the system and deny you the compensation that you deserve.
1. Intentionally miscategorizing an employee
An increasingly prevalent method of workers’ compensation fraud is for employers to change the label of their employees. For example, by categorizing an employee as an independent contractor instead of an employee, an employer may avoid paying out a valid claim. There are a few important warning signs to consider.
If you are managed and treated like a regular employee, you likely are not an independent contractor — regardless of what your employer says. Independent contractors are marked by their use of their own tools and equipment and the ability to set their own schedules. Further, independent contractors typically are hired to complete a certain task or job, rather than being given ongoing duties. In short, if you are required to keep regular office hours and your manager has control over your job performance, it is unlikely that you are an independent contractor.
If your manager changed your job title suddenly or attempted to have you sign an agreement that states you’re an independent contractor, fraud may be occurring. When in doubt, keep a record of all transactions and contact an attorney immediately.
2. Offering to “help directly”
Often, an employer will attempt to manipulate employees into not filing a claim. A common method is for an employer to offer to pay an employee’s medical expenses to “save them the trouble” of having to file a claim. While this may seem like a charitable move, it is a common form of fraud. By offering to pay medical bills or other expenses directly, an employer is often attempting to circumvent the established rules of the workers’ compensation system.
Crucially, these empty promises are typically not legally enforceable. Once the time comes to pay for the expenses, an unscrupulous employer may simply deny that the agreement ever existed. By this time, the window for filing a claim may have closed. Thus, the employee is left shouldering the burden of the injury and the employer is relieved of any duties.
3. Using threats or intimidation
Perhaps the most despicable method used by employers to avoid workers’ compensation costs is the use of threats or intimidation. If an employer states or implies that there will be consequences for filing a workers’ compensation claim, fraud is likely occurring.
It is unlawful for an employee to be fired or reprimanded in any way because they filed or plan to file a workers’ compensation claim. If an employer attempts to discourage an employee from filing a claim, fraud should be immediately suspected.
4. Not providing required insurance
Fraud that takes place in the workers’ compensation system is often perpetrated by individuals or businesses who fail to obtain the required workers’ compensation insurance.
If a worker gets hurt on the job and their company does not have workers’ compensation insurance (even though they should), the injured worker might be out of luck. They still may be bound by the workers’ compensation system—meaning they can’t sue their employer for a liability claim—and there may be nothing left to recover.
The employer will be subject to penalties and fines and will be responsible to pay the injured worker’s medical bills and lost wages under the Act. But quite frankly, many of these companies just close up shop, leaving the injured worker in the cold.
Some employers have also been known to provide “fake coverage” to general contractors. The coverage that they show as proof to general contractors might be legitimate, but it may only cover office workers of the subcontractor—not the laborers that they hire. In turn, this may shift the burden of workers’ compensation to the general contractor and result in a very messy coverage dispute.
How to combat workers’ compensation fraud
The best way to fight workers’ compensation fraud and prevent it from happening to you is to seek help from an experienced workers’ compensation attorney near you who can help maintain a complete record of all communications between your employer and their insurance company. If you suspect that your workers’ compensation benefits have been wrongfully denied, the best solution is to contact an attorney immediately. Further, if you suspect that your employer is using any wrongful tactics to prevent employees from submitting claims, legal representation may also be able to help you.
Submitting a workers’ compensation claim is an employee’s right, and they should never be made to feel ashamed or apprehensive about filing one. If bad faith occurs, a claim may be reversed, and additional damages may be recoverable. Thus, if you suspect fraud in a workers’ compensation case, do not hesitate to contact an attorney who works in the field.
