According to the National Insurance Crime Bureau, workers’ compensation fraud costs employers $30 billion annually and is the fastest growing segment of insurance fraud. While this is especially detrimental to businesses and can cause premiums to rise for all employers, these fraudulent claims can have other wide-reaching consequences, as well. Any amount of fraud increases scrutiny to the workers’ compensation industry as a whole and makes it more difficult for legitimately injured employees to get the care they need.
In order to combat the issue, you need to first understand how to identify potentially fraudulent behavior. These are some of the most common types of workers’ compensation fraud:
- False claims, when an injury did not occur or was otherwise staged to let the worker collect benefits.
- Exaggerated claims, when an injury occurred, but to a lesser degree than is recorded.
- Off-site Injuries, when the worker is injured somewhere other than their worksite, but claims that it occured at work to receive benefits.
- Collecting benefits while working, which happens when the employee works a second job, typically paid under the table, while collecting workers’ compensation from their primary job. This is often the most common form.
You can also pay special attention to cases that show certain red flag behavior that has been associated with fraud in the past. While these alone aren’t enough to confirm whether someone is lying about their case, they should be used to indicate further investigation may be necessary.
- The employee has several workers’ compensation claims on file.
- The employee has a history of changing jobs or doctors.
- The employee is difficult to contact on the phone.
- The employee’s report of the incident is vague, contradictory, or otherwise suspicious.
- The injury supposedly occurred late Friday or early Monday morning, or near a change in management or other hectic time.
- No one else was around to witness the accident.
- The injury was not reported immediately without sufficient explanation.
- The injured employee refuses to take a diagnostic procedure to confirm the extent of the injury.
- The injured employee refuses the chance to return to work on modified or light duty, despite doctor approval.
- The injured employee is found engaging in activities that are inconsistent with the limitations of the injury or not approved by their physician.
Minimizing Employee Claimant Fraud
Workers’ compensation fraud is daunting to prevent. As an employer, it can be difficult to separate your personal feelings from the demands of managing your employees and you do not want to assume the worst of a person or make false accusations. It is important to explicitly define the guidelines around handling workplace injuries, so your employees have clear expectations for the process of submitting a claim. Some further ways to minimize your risk are:
- Carefully screening job applicants. Criminal backgrounds can be a predictor of fraud and this allows you to check for previous insurance claims.
- Listening to your employees. Pay close attention to complaints about working conditions and the morale of your workforce.
- Communicating with injured employees. This works twofold by showing your employees that they are valued and encouraging a quick return to work. It is also a subtle reminder that their claim is being monitored.
- Establishing a Return to Work program. This is beneficial for reducing overall costs and encouraging a quick recovery.
- Following consistent procedures. Emphasize the importance of quick reporting and document each claim. Interview both the employee involved in the incident and any witnesses on the record.
- Explaining your policies. Educate new hires, and then remind all workers annually. Simple reminders about what constitutes fraud is often all the deterrent necessary. Studies have shown that employees who understand the purpose and benefits of their workers’ compensation system are also less likely to commit fraud.
- Making it easy to notify management. Establish an anonymous reporting process to allow employees and supervisors to report suspected fraud. Take these reports seriously and send them to your third party administrator.
It can also be helpful to invest in surveillance equipment. Besides the obvious benefit of theft protection, this is useful in your investigations of workplace injuries and can prevent liability suits. Another good policy is implementing drug testing in the event of an accident.
Johns Eastern’s Impact
In the past fiscal year, Johns Eastern Company has partnered with our Special Investigations Unit, Command Investigations, to account for 7.1% of Florida’s Employee Claimant arrests. These results are accomplished through our focus on efficient claim handling and fraud identification and reporting. Command Investigation also equips the Johns Eastern team with senior on-site SIU resources who assist in qualifying potential referrals and offer real-time guidance for all compliance matters.
Our goal is to provide the highest quality product to our clients and maintain the highest standards of ethics and integrity. If you have any concerns about fraud prevention, don’t hesitate to contact your account manager.
