State Insurance Fund

Workers' Compensation Program Claims Fraud and Abuse

Workers' compensation insurance coverage is provided to about half the employers in New York State by the State Insurance Fund, a not-for-profit agency of New York State. According to insurance industry estimates, fraudulent claims account for between 10 and 20 percent of all workers' compensation costs.

While the Fund has procedures for preventing and detecting fraudulent claims, we found that these procedures often were not followed. For example, when a claimant is unable to work for an extended period, the claimant must be medically examined, the circumstances of the claimant's injury must be confirmed, and the continued disability of the claimant must be verified. However, in our random sample of 50 compensation claims with at least six months of compensation payments, at least one of the required procedures was not followed for each of the claims. We therefore concluded that fraudulent claims were less likely to be detected and payments on such claimswere less likely to be prevented. We recommended that the Fund's monitoring practices be improved. 94-S-94