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System's boldest cheaters highlight comp's shortcomings


The creativity and audacity of some workers compensation claimants is breathtaking. Looking at some of the incidents of fraud in just the past several months, it's clear that people will go to some lengths to cheat the system.

The story of the beauty queen who pleaded guilty to fraud last September after she was caught strutting her stuff in high heels during a pageant when she was supposed to be laid up with an injured foot is almost mundane compared with other examples.

As is the tale of the guy who worked as a dancing hamster in a Kia commercial while he was claiming comp benefits. In January, he wound up facing $24,000 in restitution and was sentenced to 400 hours community service for his efforts.

Moving onto the more grisly and unusual claims, this month a husband and wife were convicted of fraud after the man claimed he was shot and paralyzed while on duty as a correctional officer. Prosecutors, however, claimed that the shooting resulted from an argument that ensued after the couple had visited a swinger's club and was far from work-related.

All of these incidents occurred in California, which, according to the latest data available, prosecuted 1,371 comp fraud suspects in fiscal 2013-'14 and won 644 convictions.

Of course, it's not just a California problem. People all over the country are posting pictures of themselves on Facebook skiing, surfing, participating in a triathlon, etc. etc., while claiming comp.

And while the stories of claimants perpetrating fraud often provide the most interesting details, it's not a one-sided affair. Employers who pay workers off the books or misclassify workers as contractors are just as guilty of fraud. And medical mills, where doctors and lawyers collude to inflate claims and scam insurers, also add to the problem.

While it's safe to say that the vast majority of comp claims are legitimate and are dealt with fairly, fraud is still an expensive and difficult problem. The nature of the grand bargain of the workers comp system, where workers give up their right to sue their employers over work-related injury in return for a no-fault guarantee of benefits, means that people on all sides will be tempted to abuse the system.

Advocates of the Texas and Oklahoma opt-out systems would say that they have found the solution. The closer control over a comp benefits delivery system that individual employers achieve by setting up alternative plans allows them to clamp down on fraud. But the opt-out option and other comp alternatives are struggling to gain ground in other states after being blasted by critics.

For now, employers have to look to other ways to curb workers comp abuse: enhanced safety to prevent the opportunities for claims, speedy investigations, clear claim protocols, improvement in pre-employment screening and manager training can help, but, absent more radical solutions, audacious comp cheats will still have plenty of opportunities to keep the creative juices flowing.