Employer fraud exists in worker’s compensation. Despite propaganda about worker alleged “fraud,” most fraud in the system is actually in the form of employer premium fraud-misclassying employees to avoid paying insurance premiums (especially in certain fields). Employers can falsely label an employee as an independent contractor or pay them in cash, and then effectively keep them off the books for insurance premium purposes.
This fraudulent behavior affects not only the specific insurance company with lost premium dollars, but the system and insurance industry as a whole by creating faulty rates.
A recent article shows the prevalence of employer fraud in Louisiana, as well as the significant amount of money recouped from prosecuting bad behaving employers.
Wisconsin now has greater ability to proscecute fraudulent employers. As of 2016, a new statute allows for criminal prosecution, by the state Department of Justice, to investigate and prosecute fraud committed by employers and insurance carriers.