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Workers’ Comp Insurance Fraud: Increasing Costs for Businesses

July 25, 2012 - 6:00pm

Lesser known than auto insurance fraud, but just as insidious, is fraud found in the workers compensation insurance market.

Workers compensation insurance is also a coverage required to be carried by almost every business to protect employees who may suffer on-the-job injuries.

Unfortunately, workers compensation insurance fraud has morphed into more complex schemes by those who unfairly seek to evade paying the premiums necessary to protect their employees.

Just as unfortunate is the impact this behavior has on law-abiding businesses, whose premiums escalate as a result. This is because insurance is all about spreading risk to a group of premium payers who, by pooling together their resources in the form of premium payments, aggregate enough resources so that no one single person has to pay for the entirety of the costs related to an unfortunate catastrophic event.

Very simply, it is an effective cost-containment tool.

Alas, when certain people who should be paying premiums choose to avoid them, the pool constricts, and the ones left holding the bag are the businesses who are doing the right thing, following the law, and protecting their employees. This means that when bad actors commit workers compensation fraud, both employers and employees suffer the consequences.

When CFO Jeff Atwater took office, he took his responsibility for oversight over the detection and investigation of insurance fraud to heart, and instructed all of his staff --me included --to leave no stone unturned when it came to fraud prevention. Of course, PIP was at the top of this list because of its effect on every driver in the state, but he also took a hard stand against workers compensation insurance fraud.

As our economy continues to recover, he felt that we owed it to our states many small businesses --which employ four out of every five Floridians --to ensure that they were not subjected to further pressure by fraudsters illegally extracting dollars from the marketplace.

Consequently, CFO Atwater convened a working group to study workers compensation insurance fraud and identify opportunities for law enforcement to be better equipped to stamp it out. I was proud to participate in this working group of diverse stakeholders, including representatives from Attorney General Pam Bondis office, and with the help of Sen. John Thrasher and Rep. Daniel Davis, many of the recommendations were adopted by the Legislature.

This legislation equipped regulators and law enforcement officials with critical tools to help detect workers compensation insurance fraud more quickly, so that we can rid the marketplace of this misbehavior. We are very hopeful that these changes will also lower insurance costs for thousands of honest and hard-working small-business owners.

The Division of Insurance Fraud, led by the CFO, has also forged strategic partnerships with law enforcement officials across the state, most notably the Broward County sheriffs office under Sheriff Al Lambertis leadership.

Other insurance fraud schemes may evolve to plague consumers and small businesses, but I am confident that CFO Atwater will marshal the resources necessary to tackle them in the same way using reliable data, forging partnerships with law enforcement and other stakeholders, and working with the Legislature to implement policy changes that net positive results for Floridians.

To learn more about what our office does to serve Floridians, I encourage you to log on to

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Ashley Mayer is the director of Policy, Research and Legislative Affairs for the Office of Chief Financial Officer Jeff Atwater.

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