The Real Culprits in Workers’ Compensation Fraud Cases

On August 12, 2013, authorities issued an arrest warrant for suspected workers’ compensation fraud perpetrator Olumide Adeolu.

The warrant alleges that, in 2010, the county worker filed two workers’ compensation forms on the same day for the same body part. Mr. Adeolu now faces one count of workers’ compensation benefits fraud and one count of insurance fraud.

Employee or employer fraud?

We often see stories such as this in many media outlets, and rightfully so. Yet, situations such as the one involving Mr. Adeolu account for less than two percent of all workers’ compensation costs. Some speculate that certain media outlets and industry advocates may exaggerate employee workers’ compensation fraud in an attempt to draw attention away from a much larger problem — employer workers’ compensation fraud. Despite the fact that workers’ compensation premiums make up a miniscule portion of overall payroll costs — less than three percent, according to some estimates — some employers are determined to cheat the system. Several common employer fraud schemes include:

  • Intentionally misclassifying employees as low-risk instead of high-risk, in order to pay lower premiums
  • Paying workers off-the-books and in cash, to avoid paying premiums altogether
  • Giving workers a 1099 instead of a W-2
  • Having a large number of “corporate officers” and almost no regular employees
  • Promising an injured worker that the company will pay the doctor bills if the employee does not file a claim
  • Underreporting employee hours to the Workers’ Compensation Board

These and other scams siphon millions of dollars in premiums away from the workers’ compensation fund every year. An underfunded system means that some injured workers may be denied the benefits they deserve.

Despite employer fraud, workers’ compensation benefits are still available to injured workers as reimbursement for medical bills and lost wages. Contact the experienced Alabama workers’ compensation attorneys at McPhillips Shinbaum to discuss your case for free.