Workers' compensation insurance is an important social tool that provides benefits to covered employees who become ill or who get hurt because of their job. The insurance benefits can help cover those employees' medical expenses and the wages they might lose if they must miss work. Workers' comp insurance also eases the financial burdens on insured companies by spreading these costs among all insured businesses. And, of course, health care providers treating injured workers can be compensated under the schedules provided by workers' comp programs.

Unfortunately, however, workers' comp insurance programs operating in New York and other states across the country, as well as in the federal system, are rife with fraud. The Coalition Against Insurance Fraud has estimated the loss to workers' comp programs due to fraud at $32 billion per year. The estimate of the National Association of Insurance Commissioners (NAIC) is even higher: $34 billion per year

Insurance company counsel, insurance professionals, fraud investigators and government officials identify three different groups that may engage in workers' comp fraud: employees, employers, and health care providers. When criminally charged, defendants can face significant financial penalties as well as prison. The balance of this column highlights various fraud schemes that these parties frequently use.