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Maryland strives to address the issue of workers’ compensation fraud

Last year, the Baltimore Sun published a series of articles which focused on instances of abuse in Maryland’s workers’ compensation system. The gist of several of the articles was that employees sometimes fraudulently receive workers’ compensation benefits that they are not entitled to. For example, one article focused on a former Baltimore police officer who pled guilty to charges that he committed workers’ compensation fraud and received some $30,000 in benefits that he should not have received.

Sensationalized stories of workers’ comp fraud committed by employees are both common and misleading. They tend to give the impression that the workers’ compensation program, which is meant to provide a financial safety net for injured workers, is rife with fraud. According to the National Economic and Social Rights Initiative, although the “mainstream discussion” of workers’ compensation tends to focus on the issue of employee fraud, the data from multiple studies reveals that only 1 to 2 percent of workers’ compensation claims are fraudulent.

The studies also underscore the fact that fraud committed by “other actors in the workers’ compensation system,” such as employers and medical providers, is far more pervasive than is employee workers’ comp fraud. According to the Claims Journal, employer and health-care provider fraud end up costing the workers’ compensation system much more money than employee fraud.

An article published on the Property Casualty 360 website observes that workers’ compensation fraud often involves employers who willfully misclassify employees as being independent contractors. They do this in order to pay lower workers’ compensation insurance premiums or no premiums at all. Since workers’ compensation benefits are only for employees and not independent contractors, employers who misclassify workers as being independent contractors cheat them out of workers’ comp benefits and rob state workers’ compensation funds of much-needed dollars.

Addressing fraud

According to the Maryland Department of Labor, Licensing and Regulation, data suggests that approximately 20 percent of audited Maryland employers misclassify employees as independent contractors in order to avoid paying their full share of workers’ comp insurance premiums. The National Employment Law Project notes that at just one company that it audited the Maryland Department of Labor, Licensing and Regulation found 537 misclassified workers.

In 2009, the Maryland General Assembly decided to tackle the problem posed by employers who commit workers’ compensation fraud by willfully misclassifying employees as independent contractors in order to keep their overhead costs low. The General Assembly passed the Maryland Workplace Fraud Act of 2009 in order to protect employees and honest businesses that play by the rules.

The Maryland Department of Labor, Licensing and Regulation was charged with implementing the Workplace Fraud Act. The legislation established the Maryland Workplace Fraud Unit as an investigative unit dedicated to rooting out employer fraud. In addition, the Governor established the Joint Enforcement Task Force on Workplace Fraud for the purpose of coordinating enforcement efforts among the appropriate state agencies, facilitating data and information sharing among agencies and increasing awareness about workplace fraud. Thanks to the Workplace Fraud Act of 2009, Maryland now has the necessary tools to crack down on workplace fraud by employers who wrongly classify their employees as being independent contractors.

Seeking legal assistance

Even though you may have been injured on the job, obtaining worker’s comp benefits can be difficult if your employer and its insurance carrier decide to contest your eligibility. This includes situations where your employer has classified you as an Independent Contractor. Depending on the facts and circumstances of the employment a person who has been classified as an Independent Contractor by his employer may be eligible for Workers’ Compensation benefits as he or she may be deemed to be an employee for purposes of the statute and be afforded Workers’ Compensation benefits, notwithstanding the employer’s assertion to the contrary.

If you are an employee who has sustained an on the job injury, you should contact a Maryland attorney experienced in handling workers’ compensation claims. An attorney can assist you with the claims process.

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