On March 6, 2018, the Maryland State Senate passed a bill that would require self-insured employers to report workers’ compensation fraud to the Maryland Insurance Administration’s Fraud Division. S.B. 575 was sponsored by Senator Katherine Klausmeier of Baltimore County and is now pending in the Maryland House. Subject to any further changes and amendments, it is expected to be passed by the House and take effect in October 2018.
The bill requires all employers who self-insure or participate in a self-insurance group for workers’ compensation to report suspected insurance fraud cases, in writing, to the Maryland Insurance Administration’s (MIA) Fraud Division. Any information, documentation, and/or other evidence submitted to the fraud division in this manner would not be subject to public inspection, except under specified circumstances.
Insurance fraud is a felony in Maryland if the value of the fraudulent act exceeds $300.00. According to a legislative analysis of the bill, insurance fraud costs the industry more than $40 billion per year. The bill seeks to provide self-insureds with the same remedy to report insurance fraud as an employer that maintains worker’s compensation with an insurer carrier and permit the MIA’s Fraud Division to investigate fraud associated with self-insured employers, as well as self- insured government groups.
The bill is subject to final approval by the Maryland House. We will continue to monitor any amendments and changes made by the House and report on any further developments with respect to the bill as they occur.