NJ Personal Injury Law Report

Submitted by Pamela J. Johnson, Esq.

Certified Workers’ Compensation Law Attorney

What is fraud?

Fraud occurs when an individual knowingly and intentionally misrepresents an important fact for the purpose of inducing another person or entity to act, and upon which the other person relies and suffers injury or damage.  Fraud includes a knowing, and intentional failure to state material facts, the knowledge of which would be necessary to make the other statements not misleading.

What is Workers’ Compensation Fraud?

Workers’ Compensation fraud occurs when an individual or entity knowingly and intentionally makes such statements or submissions in an effort to secure or to deny workers’ compensation benefits.

Who can commit Workers’ Compensation Fraud?

Employers, employees, workers’ compensation insurance carriers, workers’ compensation third party administrators, health care providers and attorneys can all commit Workers’ Compensation fraud.

How can an employee commit Workers’ Compensation Fraud?

• By filing a claim for an injury that bears no relationship to the job.
• By submitting bills for medical treatment for a work-related injury to the private medical carrier.
• By accepting temporary disability benefits while working or attending school on a full-time basis.
• By failing to disclose prior injuries or treatment to the same part of the body that is the subject of the workers’ compensation injury.
• By misrepresenting the nature and extent of the work-related injuries to stay out of work longer, to receive more medical treatment, or to increase the size of the settlement.

How can an employer commit Workers’ Compensation Fraud?

• By directing an employee to tell medical providers that a work-related injury did not happen on the job.
• By directing an employee to submit bills for a work-related injury to the private health plan carrier.
• By forcing, suggesting or encouraging any person to make a false or misleading statement or submission concerning any material fact to wrongfully obtain or wrongfully deny workers’ compensation benefits for himself or another person.
• By misrepresenting to the workers’ compensation carrier or the State of New Jersey the amount of its payroll, or the proper classification of its employees.
• By failure to secure workers’ compensation insurance.
• By engaging in practices designed to lead to the evasion of full payment of benefits or premiums.

How can a Health Care Provider commit Workers’ Compensation Fraud?

• By assisting an injured worker in fraudulent schemes to secure workers’ compensation benefits for a non-work related injury.
• By assisting an individual or entity to avoid workers’ compensation benefits for a work-related injury.
• To participate in double-billing.
• To intentionally bill for services that were not provided.
• To intentionally bill for services that were unwarranted.

What are the penalties for committing Workers’ Compensation Fraud?

• If an employer commits fraud by making a false or misleading statement, representation or submission, including misclassifying employees or engaging in a deceptive leasing practice for the purpose of evading full payment of benefits or premiums shall be found guilty of a fourth-degree crime.
• A person who evades full payment of premiums or improperly denies or delays benefits shall be found liable to pay the sum due and owing plus simple interest and is civilly liable for damages and reasonable costs and attorney fees to any person injured by those violations.
• If an employer fails to provide workers’ compensation coverage, that employer shall be found guilty of a disorderly persons offense. If the failure to provide coverage is determined to be willful, that employer shall be found guilty of a fourth-degree crime.

What are the civil penalties for committing Workers’ Compensation Fraud by not providing workers’ compensation coverage?

Civil penalties for failure to provide workers’ compensation coverage are:

• Up to $5,000.00 for the first ten days.
• Up to $5,000.00 for each period of ten days, thereafter.
• If a judgment is entered by a Judge of Compensation against an employer, in addition to the amount of the judgment, a $1,000.00 penalty shall be imposed.
• An additional assessment of 15% (not to exceed $5,000.00) of the judgment amount.
• Civil penalties may be imposed even if there is no criminal prosecution.
• A stop work order may be issued by the Director of the Division of Workers’ Compensation.
• If an employer fails or refuses to comply with the stop work order, this shall result in a penalty of not less than $1,000.00 and not more than $5,000.00 for each day the employer is found to be non-compliant, in addition to other penalties allowed by law. All such money shall be paid into the Uninsured Employers’ Fund.

What are the criminal penalties for committing Workers’ Compensation Fraud by not providing workers’ compensation coverage?

• 18 months in jail.
• A $10,000.00 fine.
• In addition to civil penalties.

What are the penalties for an employee who commits Workers’ Compensation Fraud?

• If an individual fraudulently obtains workers’ compensation benefits, the Judge of Compensation has the power to terminate benefits. The individual would forfeit all additional benefits that he might have received. Medical treatment will be terminated, temporary disability benefits will cease, and there will be no monetary award of permanency benefits.
• If that individual has received benefits to which he was not entitled, he is liable to repay that sum plus simple interest. This shall be repaid to the employer or the carrier. The sum may be deducted from future benefits payable, if benefits are not terminated.
• That individual may be subject to indictment and conviction for a crime in the fourth degree with attendant fines and penalties.

What are the penalties for Health Care Claims Fraud?

It is illegal to submit a false claim form to an insurance company in order to be paid for health care services which were not received or provided.  This is a violation of the NJ Health Care Claims Fraud Act, and the penalties include:

• A person who is not one of the licensed professionals listed below could be sentenced to 3 to 5 years in jail for filing only one false claim.
• 5 to 10 years in prison if the person who submits the claim is a doctor, chiropractor, dentist, psychologist, nurse, pharmacist, physical therapist, lawyer or other licensed professional and the claim is submitted for professional services.
• In addition, this person can be required to pay a fine of up to $150,000.00 or up to 5 times the amount of the claim.

How do I report Workers’ Compensation Fraud?

If you have reason to believe that a worker, an employer, a medical provider or an attorney may be committing fraud in connection with a workers’ compensation case, you should contact:

New Jersey Division of Worker’s Compensation

Attention: WC Fraud Coordinator

PO Box 381

Trenton, NJ 08625-2515

If you have reason to believe that an employer who does not carry workers’ compensation insurance, you should fill out a “Report of Non-Compliance” via e-mail http://lwd.dol.state.nj.us/labor/forms_pdfs/wc/pdf/interactive_pdf/NonCompliance_i.pdf or you may contact:

Office of Special Compensation Funds

PO Box 399

Trenton, NJ 08625-0399

(609) 292-0165 (fax) (609) 633-7783

If you have reason to believe that an employer is misrepresenting the amount of payroll or the proper classification of its employees, you may contact:

Roland Brazda

Compensation Rating & Inspection Bureau

60 Park Place

Newark, NJ 07102

(973) 622-6014 ext 214

If you have reason to suspect an individual or an employer of other fraud, you should refer the matter to:

NJ Dept. of Law & Public Safety

Division of Criminal Justice

Office of Insurance Fraud Prosecutor

PO Box 094

Trenton, NJ 086245-0094

1 (800) 553-7283