Legislators suggest ways to detect workers' comp insurance fraud

Legislators want to find businesses that are avoiding workers’ comp

mlocke@newsobserver.comJanuary 29, 2013 

  • More workers’ comp recommendations A task force of state leaders that convened last August to address reports of employers inappropriately classifying employees as contractors sent recommendations to Gov. Pat McCrory this month. It supports efforts to integrate business data kept by state agencies in a central system at the state controller’s office. The group also suggests: • Defining misclassification clearly in statutes, making it a crime and enhancing penalties for businesses that do. • Creating a fund to pay the claims of workers whose bosses were uninsured. • Prohibiting state and local governments from contracting with businesses that misclassify workers. • Giving licensing boards the authority to revoke licenses for businesses that inappropriately treat employees as contractors. • Provide more resources to the Industrial Commission to investigate businesses that fail to carry insurance

— A group of legislators will put forward several bills during this year’s legislative session that could make it harder for employers to skimp on workers’ compensation.

Legislators acknowledge the measures aren’t silver bullets but say they will provide tools to consumers and state officials to detect fraud.

The special committee charged with examining workers’ compensation fraud plans to propose bills that would make employers’ coverage information public again. Another bill would compel state agencies to turn over business information to the state controller for analysis in order to detect businesses that may be avoiding tax and insurance requirements. A third calls for the state to study ways to reduce costs and frequency of state employee workers’ comp claims.

The News & Observer reported last April that 30,000 or more employers required to carry workers’ compensation insurance don’t. The problem extends beyond workers’ comp insurance. A series last August highlighted how some businesses are getting ahead in North Carolina by skimping on insurance and taxes, while state leaders worked in silos, struggling to detect those who cheat.

Legislators had earlier urged the N.C. Industrial Commission, which handles workers’ comp claims, to rein in reimbursement rates for work-related injuries.

Those changes will go into effect in April, when inpatient service costs will drop 10 percent, outpatient and ambulatory center surgeries will be cut 15 percent, and implant costs will not exceed 28 percent above cost.

Already, the controller’s office is helping the Industrial Commission identify the tens of thousands of businesses failing to carry insurance. Limited technology has stymied efforts at the commission to detect those not carrying insurance.

Kay Meyer, who is spearheading the effort to collect and analyze business data from several state agencies, said the panel hopes to quickly offer the commission an automated way to identify employers not carrying insurance. Eventually, the hope is to use the data to catch businesses that may be misrepresenting the scope of their business to various agencies in order to avoid certain taxes and insurance.

“Our job here is not to pull back covers and point fingers but to help them find the stuff that will lead to detection,” Meyer said. “We’re starting to see people come around.”

Locke: 919-829-8927

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