Keeping Employees Honest: Workers Compensation

9 May 2018

WorkSafe Victoria has charged a Roxburgh man with dishonestly obtaining financial advantage by allegedly receiving more than $700,000 in unlawful workers compensation payments between 2006 and 2016. He has been directed to appear at a Committal Mention Hearing in the Melbourne Magistrates’ Court on 27 July 2018.

When is employee conduct fraudulent?

Fraud occurs where a person attempts to get more out of the system than he or she is entitled to – in workers compensation, this most often occurs where an employee sees payments as an extra source of income.

Fraudulent claims cost employers in increased premiums, lost productivity and overtime pay, and substantial resources in negotiating with the insurer and complying with statutory return to work obligations. In addition is the immeasurable cost of loss of morale and damage to company culture.

Fraudulent conduct may manifest itself in:

  • Claiming for an injury/illness that did not occur, or happened outside of work;
  • Exaggerating symptoms; and
  • Failing to disclose income from secondary employment and/or Centrelink. 

Rate of prosecution

Employees found guilty of workers compensation fraud can be liable for criminal convictions, fines or imprisonment. They can also be ordered to pay back any money obtained dishonestly and costs incurred by the Authority in investigating and prosecuting the matter.

Despite this, the Authority is generally hesitant to prosecute fraudulent employees, making instances of workers compensation fraud difficulty to quantify. This reluctance is due to budgetary constraints, prioritisation of offenses, the strength of the evidence, and a range of mitigating factors (e.g. whether the matter is a first offence, the seriousness of the offence, and the actions of the person since the commission of the offence).

As such, the relatively small number of prosecuted frauds in Australian jurisdictions is unlikely to be truly reflective of instances of fraudulent conduct.

Claims management to reduce fraud

Hentys proactively works with clients to prevent workers compensation fraud, and where this occurs to identify the conduct, gather credible proof and prosecute the offense to the extent possible.

Using a direct and forthright approach to the various regulators and courts, Hentys continuously achieves successful and positive outcomes for employers.

For example, in a recent case Hentys’ intervention influenced the regulator to prosecute the claimant for fraudulently obtaining workers compensation benefits, whilst she was dishonestly engaged in secondary employment. The claimant was prosecuted in the Magistrates’ Court and was convicted of fraud and given a suspended prison sentence.

In terms of her common law claim, Hentys’ involvement resulted in the claimant receiving approximately one quarter of the amount of compensation being sought. Most importantly, the outcome saw $138,763 being credited by the Authority to the client’s premium calculation for the financial year.

If you suspect fraud in your business or for further information about our workers compensation claims management service, please contact us by email: hjk@hentys.com.au