In Iowa, a part time postal employee broke his hand. How did he do it? He hit a trailer in a fit of rage. His reward… winning an $8,000 worker’s compensation suit. While the judge agreed that the employee’s behavior was “inappropriate”, he ruled in the plaintiff’s favor because he did not “intend to injure himself”.

In Australia, a truck driver was convicted of worker’s compensation fraud. His story… I can’t work because of a back injury. He was evaluated by doctors and deemed unable to work. He won his claim, sat home and began collecting his insurance checks until he was well enough to return to work. Shortly after returning to work, he filed another claim… citing his shoulders as the problem this time. And for a second time, he was awarded the claim. However, the truck driver was recently convicted of insurance fraud. Apparently while his back and shoulders were too damaged to allow him to work for one company, they were not so damaged that he could not work doing the same thing for a different company.

These are just a couple of the most recent incidences of frivolous and fraudulent workmans compensation claims. It is estimated that 10% of the claims are fraudulent and even more are frivolous. But I am left to wonder why is workman’s comp abuse so rampant?

Well first… what is workers’ compensation? Set forth by state and federal laws, workers’ compensation offers protection to employees for work related injuries (or death) that renders the employee unable to work. If an employee is unable to work, then his livelihood is dramatically reduced. Therefore, under workman’s comp laws, an injured employee can receive medical benefits, a pre-formulated cash benefit to replace lost wages, and other benefits. This protects the workers income. But it also protects the employer from potential litigation that might have resulted from the injury. Businesses are required to purchase worker’s compensation insurance, although the particulars varies from state to state.

So what about this abuse of worker’s comp?

Well, it is three fold? Employees lie, employers lie and medical providers lie… all in an attempt to defraud the system.

Employees lie. They exaggerate, make up or even intentionally cause their injuries. In some cases, they hold another job while receiving workman comp benefits… which in most cases is illegal.

Employers lie… this is usually in an attempt to circumvent paying the appropriate amount of workman comp insurance premium. They sometimes pay employees under the table. Or they may lie about the occupational group an employee belongs to. For example, instead of rightfully classifying an employee as a brick mason, an employer might classify the employee in the less risky class of secretaries.

Medical providers lie. They may do deceitful things such as billing for services that were never rendered, billing for a more expensive treatment when a less expensive treatment was performed. They may sometimes perform unnecessary treatments. There are even cases in which doctors were in cahoots with patients and even gave them kickbacks.

Why should we care? Because workers’ comp abuse affects us all. One estimate states that in Massachusetts alone, the cost of this type of fraud exceeds $400 million. And consequently, this cost is shoved to the rest of us in the form of higher premiums.

So what can we do about it… well first and foremost, we should not participate in these schemes. Secondly we can report others who do. Finally call your legislators and ask them what they are doing to address the issue. It is a small step, but if every one takes the small step eventually, it can create leaps towards solving the problem.