Every state battles fraud and abuse of its Workers Comp system. An honest company that properly uses Workers Comp to protect its employees and keeps its premises safe might face a rising premium because other firms, employees, and medical services have no compunction about cheating the system.
Fraud
Workers Comp fraud involves such criminal acts as workers falsifying claims, employers mis-classifying high-risk workers with less dangerous jobs to lower their premiums, and physicians exaggerating injuries and their treatment and over billing insurance companies for expensive services never rendered. Fraud has led to desperate legislation simplifying the prosecution of offenders. California's court of appeals just started providing insurance companies with immunity from lawsuits if they report Workers Comp violators to the state. However, California insurance companies tread cautiously because a wrongfully accused firm does have legal recourse after a false report or misleading statement.
Abuse
Unlike fraud, Workers Comp abuse isn't a felony, although it too increases premiums for everybody. Usually, this abuse of benefits involves a worker who uses unnecessary medical services, misses work after the injury has healed, or reports an off-hours injury as happening on the job.
A recent Insurance Research Council survey revealed that 28% of workers believe Workers Comp claim-padding is justified to recover the insurance deductible, which they aren't even responsible for paying! This attitude may be an extension of society's broader belief that claim-padding is permitted when interacting with the insurance company that provides the individual's personal coverages. Insurance companies have trouble detecting this common abuse, especially when up against a stress or soft-tissue injury, because there are few if any physical symptoms. The firm must screen out potential Workers Comp abusers when recruiting employees and assigning jobs. A close, honest relationship with workers also discourages abuse generated by swelling resentment against management.