Which statement about workers' compensation fraud schemes is TRUE?

Which statement about workers' compensation fraud schemes is TRUE?

• A. In an organized fraud scheme, a lawyer, a capper, a doctor, and the claimant collude
• B. In an agent fraud scheme, agents sometimes issue certificates of coverage to the insured customer while pilfering the premium
• C. In premium fraud, an employer might understate the amount of the payroll for higher-risk classifications
• D. All of the above

Answer: (D)

This question tests recognition that workers' compensation fraud can occur in multiple forms, and each described scenario reflects a real fraud tactic. First, organized fraud can involve a collusive ring where a lawyer, a capper, a doctor, and the claimant work together to fabricate or inflate a claim for benefits. Each player has a role that facilitates the deception, from initiating the claim to providing fake medical support and handling the legal side. Second, agent fraud occurs when an agent or producer issues certificates of coverage to an insured customer while secretly pilfering the premium. This undermines the insurer’s exposure and leaves the insured with false documentation, a classic fraud vector at the point of sale and issuance. Third, premium fraud can involve an employer underreporting payroll, particularly for higher-risk classifications, to reduce the premium owed. Understating payroll or misclassifying job duties to lower rates is a well-known way to cheat the system. Because all of these are legitimate, real-world fraud schemes in workers’ compensation, the statement that all of the above is true is the best answer.

This question tests recognition that workers' compensation fraud can occur in multiple forms, and each described scenario reflects a real fraud tactic.

First, organized fraud can involve a collusive ring where a lawyer, a capper, a doctor, and the claimant work together to fabricate or inflate a claim for benefits. Each player has a role that facilitates the deception, from initiating the claim to providing fake medical support and handling the legal side.

Second, agent fraud occurs when an agent or producer issues certificates of coverage to an insured customer while secretly pilfering the premium. This undermines the insurer’s exposure and leaves the insured with false documentation, a classic fraud vector at the point of sale and issuance.

Third, premium fraud can involve an employer underreporting payroll, particularly for higher-risk classifications, to reduce the premium owed. Understating payroll or misclassifying job duties to lower rates is a well-known way to cheat the system.

Because all of these are legitimate, real-world fraud schemes in workers’ compensation, the statement that all of the above is true is the best answer.