Protect Your Company From Fraudulent Claims
Posted on Wednesday, March 29, 2017
Workers' compensation is designed to help people who have been hurt on the job get back on their feet. However, it's also an area that is ripe for potential abuse.
Five Red Flags
Fraudulent workers' comp schemes often have signs that can alert you to potential cheating such as:
Monday syndrome - An employee who reports an accident shortly after arriving at work on Monday may actually be suffering from an injury that resulted from some weekend activity.
Revenge - A disgruntled employee or one who is about to be laid off may file a fake claim as a way of getting even.
Refused care - Injured workers may refuse treatment from a doctor or physical therapist in an effort to hide a phony injury.
Prolonged time off - Employees with legitimate injuries prolong the claims by not coming back to work even though their doctors have cleared them to return.
Making an old injury new - Employees may have long-term injuries that never healed properly. Suddenly, they claim the injuries just occurred and are work-related.
No matter what form it takes, workers' comp fraud hurts everyone. Insurers pay an estimated $5 billion a year in fake claims. Businesses pay an estimated $6.5 billion a year in higher insurance premiums and incur other costs such as:
Extra pay for employees working longer hours,
Employees suffer if they must put in longer hours or if companies reduce annual raises because of higher insurance premiums. Even consumers pay because higher costs are likely to translate into higher prices.
For all these reasons, it's important to be on the lookout for workers' comp fraud at your company.
The most common scheme is the phony workplace injury that's later discovered when the employee is caught doing heavy lifting at home or seen working for another employer while collecting benefits.
While it is important to be alert to possible fraudulent claims, it is far more important to prevent them from happening in the first place. Let employees know that in most states, workers' compensation claim fraud is a crime. Punishment varies from state to state but can include prison time and fines. According to the Coalition Against Insurance Fraud, there are several other ways to help combat workers' comp fraud at your company:
Verify carefully the references and background information of potential hires.
Publicize your company's workers' compensation policy to all your employees, and provide them with updates at least once a year.
Educate supervisors on how injuries decrease productivity and how workers' comp costs affect the bottom line.
Display fraud awareness posters and the National Insurance Crime Bureau's hotline number, along with any hotline mechanisms from your state.
Work with your insurer to set up a safety-management program that can help eliminate safety problems.
Contact your insurer's special investigation crimes unit immediately if you suspect a fraudulent claim and you have evidence or witnesses to back up your suspicion.
Pay attention to employee complaints and concerns about their working conditions. The strongest predictor of fraud is a chronically disgruntled work force.
Posted in Fraud & Forensics Group
Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.