N.C. Ramps Up Workers’ Comp Fraud Investigations, Fines for No Coverage

May 23, 2018

North Carolina has stepped up its efforts to identify businesses not complying with state workers’ compensation laws which it says has resulted in a significant increase in fines collected compared to the same time frame last year, according to a statement from the North Carolina Industrial Commission.

Through the end of the third quarter of fiscal year 2017-2018, the North Carolina Industrial Commission’s Compliance and Fraud Investigative Division said its Compliance Unit had collected more than $5.1 million in penalties from businesses not complying with the state’s Workers’ Compensation Act. The number of fines is up significantly compared to the $1.15 million collected in the first three quarters of fiscal year 2016 through 2017.

The commission said it attributes a significant portion of the increase in penalty collections to the earlier assignment of cases to investigators and the substantial number of investigations commenced and completed. On average, cases are now assigned to investigators within 87 days, down considerably from an average of 590 days in early 2016, according to the commission.

The bulk of the penalty proceeds will go to the North Carolina Civil Penalty and Forfeiture Fund to benefit North Carolina’s public schools.

“Failure to carry proper coverage for any period is not a harmless act, but instead creates an unnecessary hazard to North Carolina’s employees,” said Bryan Strickland, director of the NCIC Fraud and Investigative Unit.

The unit, which also conducts criminal investigations, reported an increase in criminal fraud or violations this fiscal year, as well. Through the conclusion of the third quarter of the current fiscal year, 504 charges of criminal fraud for suspected workers’ compensation fraud or violations related to workers’ compensation claims were issued by the unit. That’s almost double the 269 criminal fraud charges it issued in fiscal years 2013-2014 through 2015-2016 combined.

The Compliance and Fraud Investigative Division works with businesses to ensure they maintain adequate insurance and identifies noncompliant businesses by using an advanced data-matching system. This system analyzes data from partnering state agencies to determine if a business is reporting three or more employees, and whether they have workers’ compensation insurance coverage.

Source: North Carolina Industrial Commission

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