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PEOs: A New Potential for Workers’ Comp Fraud?

When an employer is contracted with a PEO and a workers' comp. claim is filed, questions often arise as to whether appropriate insurance has been maintained, if there is documentary evidence to support the PEOs responsibility to defend the claim and even, sometimes, whether the PEO is fiscally solvent.

By Anthony Natale III | Updated on October 01, 2013

Editor’s Note: Anthony Natale III is a shareholder in the Workers’ Compensation Department at Marshall Dennehey Warner Coleman & Goggin.

Workers’ Compensation fraud has reached epidemic proportions within the United States, costing legitimate employers, employees and healthcare providers millions of dollars per year.  The landscape of this fraud is ever-changing; no longer is it limited to employees exaggerating workplace injuries or working for cash while collecting workers’ compensation benefits. More recent schemes involve employers under-reporting payrolls to receive lower workers’ compensation premiums, or incorrectly classifying employees to save insurance costs.  Throw in unscrupulous medical providers billing for services they never performed, and it’s no wonder that healthcare and medical care costs are so egregious. 

The result of these and other fraudulent activities is that businesses and much-needed jobs are often forced out of regions that operate under high workers’ compensation costs. In some  cases, in an effort to offset these costs, businesses may be forced to increase the price of goods and services, thus impacting local economies. These activities also serve to create an environment that results in unnecessary delays in the processing of legitimate claims that can affect an injured worker’s ability to obtain crucial medical treatment for true workplace injuries.

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