General / overarching principles

Overview

Workers compensation fraud can take many forms. Insurers have a responsibility to prevent, detect and respond to fraud. SIRA also has a role in preventing, detecting and responding to fraud. SIRA also has powers to investigate allegations of fraud and prosecute under various legislation.

This guidance considers the different types of fraud, including the respective roles of SIRA and insurers, in preventing, detecting and responding to fraud.

Fraud in the workers compensation system

What is fraud?

Fraud is the intentional and/or reckless deception by a person to obtain property or financial gain, or cause financial disadvantage to another person.

Section 192E(1) of the Crimes Act 1900, states that:

A person who, by any deception, dishonestly —

(a)  obtains property belonging to another, or

(b)  obtains any financial advantage or causes any financial disadvantage, is guilty of the offence of fraud.

Maximum penalty — Imprisonment for 10 years.

Section 235A of the Workplace Injury Management and Workers Compensation Act 1998 (1998 Act) deals with fraud on the workers compensation scheme. It provides that a person who, by deception, obtains or attempts to obtain any financial advantage in connection with the workers compensation scheme, is guilty of an offence if the person knows or has reason to believe that the person is not eligible to receive that financial advantage. This offence carries a maximum penalty of 500 penalty units or imprisonment for 2 years, or both.

Examples of fraud on the workers compensation system

Worker fraud

Examples of worker fraud include knowingly:

• claiming for an injury that didn't occur at work
• failing to notify return to work or change in income
• making multiple claims relating to the same injury
• making false or overstated travel and/or expense claims
• falsifying medical certificates
• supplying false or misleading information in relation to a claim.

Employer fraud

Examples of employer fraud include knowingly:

• failing to take out workers compensation insurance
• conspiring with a worker to support a false claim
• supplying false information to obtain or renew a policy
• falsifying documents like a certificate of currency
• deliberately underestimating wages or worker numbers
• failing to pass on workers compensation benefits, and
• working with others to supply false documents in respect of any aspect of a claim.

Provider fraud

Examples of provider fraud include knowingly:

• billing for consultations that didn't occur
• billing for services that weren’t provided
• providing false or misleading information on a medical certificate or other documents
• providing receipts for individual consultations when group rehabilitation has occurred
• requesting a worker to sign more than one certificate of capacity for one consultation.

Insurer fraud

Examples of insurer fraud include:

• setting up fake claims
• knowingly processing fake invoices.

Other types of fraud

Fraud may also be perpetrated by other parties who are not directly involved with a claim or policy. Examples include:

• a spouse or friend of a worker or employer submitting false documents on behalf of a worker
• a witness to an alleged work-related injury making a false statement in support of a claim
• staff involved in administering the system making false entries or transactions.

Insurers and fraud

Insurers should have risk management systems and processes in place to:

• prevent fraud - proactively putting into place measures and controls designed to help reduce the risk of fraud from occurring at the outset
• detect fraud - designing and implementing controls to uncover instances of fraud or potential fraudulent behaviour
• respond to fraud – taking action to mitigate the impact of fraudulent activity and pursue prosecution when appropriate.

The action taken when responding to fraud will depend on the individual circumstances but may include:

• disputing liability on a claim
• raising an overpayment against a worker or provider
• reporting a provider to their professional association
• ceasing to use a particular provider
• amending insurer systems and processes
• referring to SIRA for formal investigation and/or potential prosecution.

SIRA and fraud

SIRA’s risk-based approach to fraud will determine the response to reported fraud. SIRA will focus its efforts on those incidents where the risk and potential for harm is the greatest.

In most situations, the fraud can be addressed at the insurer level, however SIRA may become involved where prosecution or criminal charges may be appropriate.

Fraud can be reported to SIRA by:

• calling the Customer Service Centre on 13 10 50
• emailing [email protected], or
• writing to Compliance, Investigations & Prosecutions, Locked Bag 2906, Lisarow NSW 2252.