Recognizing the Red Flags for Workers’ Comp Fraud
Jun 27, 2012
Here are two critical questions: How often are workers’ compensation claims filed against your company? And how often do you contest them? The answers are important.
The National Council on Compensation Insurance recently estimated that 25 to 33 percent of all workers’ compensation claims are invalid, yet less than 10 percent of these claims are challenged. The U.S Department of Labor calls it a crisis and says that for most companies, workers’ compensation is growing faster than any other expense. The estimated cost of an average claim is at least $34,000.
Workers’ compensation coverage is legally mandated in most states. Generally, fraud occurs when an employee:
- Makes false or misleading statements to receive money or services.
- Knowingly receives benefits he or she isn’t entitled to.
- Enters into a conspiracy to defraud an insurance company, state insurance fund or self-insured employer under the Workers’ Compensation Act.
The scams are pervasive, ranging from faking a back problem to passing off a weekend sports injury as a workplace accident on Monday morning.
Fortunately, some red flags can suggest workers’ comp fraud is happening. For example:
- The injured employee isn’t home or is said to be sleeping and can’t be disturbed.
- There are a lack of witnesses to the reported accident. Or the employee can’t recall specific details of the injury.
- The accident occurs just before a strike, layoff, plant closing or job termination.
- The employee moves out of the state or country shortly after filing a claim.
- There are conflicts between what the employee reports and the initial medical evaluation.
- The employee refuses or continually delays undergoing diagnostic procedures to confirm the injury.
- The injury is inconsistent with the nature of the work or business.
So what can you do?
Here at Extra Help, Inc. we see a rise in claims usually in the summer months and late fall. We conduct investigations on all workers’ comp claims that are filed with our company. We also have a Return to Work/Light Duty Policy in place to help detour fraudulent claims. If an employee is filing a workers’ comp claim to get off work and then find out they still have to go in, miracles can happen and they are ready to return to full duty.
It is imperative to be consistent with how you handle your claims. Treat everyone the same. Do investigations on all accidents. Be involved in the claim. Just don’t let your claims adjustor take over. They don’t know your employee, doctors or you. If you question a workers’ comp claim, make sure your claims adjustor knows your concerns and why. Give them all the documentation from you investigations. If you have a gut feeling, you are probably right. Unfortunately, this article is correct, workers’ compensation cost is the fastest growing expense in the U.S. It is up to us as companies to ensure we keep our cost down, control our claims, and prevent paying for workers’ comp fraud.
How do you handle your workers’ compensation claims? Do you think there’s a chance of workers’ comp fraud at your business?
Extra Help can provide you with affordable and hassle-free workers compensation insurance packages.
