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Thursday
Sep302010

How Big is the Problem? 

Hundreds of thousands of workers are injured every year at work and, for a few thousand, those injuries are fatal. A century ago, injured workers were tossed aside and lived out their days in destitution. Workers Compensation was created to avoid that kind of fate and it's a critical part of the social safety net.

Unfortunately, there are some people who cheat Workers Comp programs and get money they don't deserve for injuries that are either nonexistent or exaggerated. How big is this problem? Well, it is almost impossible to say since nobody collects reliable data on Workers Comp fraud. The most frequently cited estimate comes from the National Insurance Crime Bureau, which has said that $7.2 billion is lost annually to Workers Comp fraud. That's big money, but it is hard to say how reliable this figure is. NCIB, which is funded by the insurers, doesn't release a careful accounting of its numbers and represents an industry that has never liked Workers Comp. Meanwhile, plenty of politicians don't care for Workers Comp for ideological reasons and lots of businesses hate these programs. So the knives are our for Workers Comp.

Not surprisingly, advocates for workers say that fraud in Workers Comp is way overblown. But this crowd doesn't seem to have much ready data to prove their skepticism. So at this point, the bottom line is that Workers Comp fraud is definitely a problem. It costs a lot of money. But we don't really know how much. Of course, everyone can at least agree on this: It is bad.

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