Fraud and exaggerated claims are driving up the cost of workers' compensation insurance by billions of dollars a year, a variety of experts say, and have become a significant, though still largely unrecognized, factor in the skyrocketing cost of health care.
This conclusion has been reached by regulators and law-enforcement officials in several states who are examing the reasons for the rising health care costs and by insurance officials who have begun investigations of suspicious claims. It is suggested, too, by a number of studies.
To many workers, these authorities say, lying about injuries or illness related to work has become no more sinister than crossing the street against a red light. That attitude and the resulting false claims are helping to push workers' compensation systems in some states into crisis or even to the edge of collapse.
Although other factors are also driving up the $60 billion paid out by employers to public and private insurers for workers' compensation each year, officials and insurance companies in Oregon, California, New Jersey and other states say 20 percent or more of the claims may involve cheating.
They say it is costing legitimately injured workers many of the benefits they rightly deserve.
Experts say cheating by individuals illustrates a larger phenomenon in American society that government and insurance companies have often ignored: the belief that cheating on insurance is acceptable because the system always seems to have endless amounts of money to pay for it. That is an attitude, they say, the nation can no longer afford.
"It is socially acceptable to exaggerate, or even lie, to insurance companies and workers' compensation agencies," said Douglas F. Stevenson, executive director of the national council of self-insurers, a trade association of large corporations.
In the last decade, the costs of insurance programs that care for workers injured on the job in the 50 states have grown more than 150 percent -- or 50 percent faster than the overall cost of health care.
In more than a dozen states where employers have been hit by double-digit premium increases, officials say, rising workers' compensation costs have devastated small companies and sapped the competitiveness of entire industries.
In states such as Maine and Rhode Island, where costs have risen more than 50 percent a year, insurance companies are abandoning workers' compensation as unprofitable.
For years, specialists have attributed the rising cost of workers' compensation to growing litigation, the rising price of medical care and the expanded coverage and benefits awarded by states. But rarely have insurers, government agencies, employers or social scientists studied the impact of fraud on costs.
Today, the average premium that an employer pays for an employee has jumped to more than $500 from the $92 it was 20 years ago. The number of claims doubled in the 1980s, and the cost of claims during that time rose by 154 percent.
Employers have often been timid in challenging dubious workers' compensation claims, many executives say, partly out of fear of being seen as attacking vulnerable workers and partly because fraud is hard to prove. In addition, they say, insurance companies often discourage investigations.
Recently, however, a growing number of government officials and insurance companies have begun to look into the question.