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Avoiding Workers’ Comp Fraud
Article originally posted on www.insuranceneighbor.com(opens in new tab)
Workers’ compensation fraud can be expensive for employers. One of the most common types of workers’ comp fraud is employee fraud. This involves workers who seek to receive benefits under false pretenses.
How Do Employees Commit Workers’ Comp Fraud?
Employees have been known to commit several types of fraud to obtain workers’ compensation, including:
- Off-the-job injury: An employee is injured on his own time, but claims he was hurt at work so he can collect workers’ comp benefits.
- False claim: The reported work-related injury never actually occurred, or it might have been staged by the employee.
- Exaggerated claim: A worker who sustained an on-the-job injury exaggerates its severity in hopes of qualifying for more benefits.
- Working while collecting benefits: An employee deemed unfit to work after a job-related injury may work “under the table” for someone else while collecting workers’ comp benefits.
How Can Companies Reduce Workers’ Comp Fraud?
Employers can take the following steps to reduce the drain on their bottom line from employee workers’ comp fraud:
Hire Only Trustworthy People
It is a sound company policy to perform pre-employment background checks for new hires. Your HR team should learn to spot “red flags,” such as previous suspicious injury claims, a criminal record, or a spotty work history. The background check should include a criminal record, credit history, driving record, and educational records, in addition to a workers’ compensation claims history.
Set a Zero-Tolerance Policy for Workers’ Comp Fraud
Clearly communicate your company’s expectations regarding false claims. Provide employees with company anti-fraud policies in writing. Educate new hires on your zero-tolerance policy during orientation, and remind all employees each year. Make sure they understand that workers’ compensation fraud is illegal and will not be tolerated by your company.
Establish a Fraud-Reporting Process
Make it easy for supervisors and workers to report to management if they suspect employees of workers’ comp fraud. Make no accusations, but take these matters seriously and report suspected fraud to your insurance company right away.
Be Consistent With Procedures
Use the same procedures for reporting and investigating all workers’ comp claims. Document any reported work-related injury or illness. Interview the injured worker and any witnesses. Get written statements from witnesses of an injury. Take note of any comments or statements about the accident among employees. Meet with our agent to discuss company procedures for processing workers’ compensation claims.
What Are Some “Red Flags” for a Fraudulent Workers’ Comp Claim?
It is important to keep in mind that most workers’ comp claims are legitimate. However, these “red flags” may indicate a need for further investigation:
- An employee has a history of filing multiple claims.
- The worker’s account of the accident is vague, contradictory, or does not “hold water.”
- The reported injury occurred shortly before termination, layoff, strike, or the end of a project.
- There are no witnesses to the accident.
- The employee refuses diagnostics to confirm the nature and extent of the injury.
- The injury occurred late Friday afternoon or early Monday morning (this may indicate the injury is not work-related).
- The injured employee has participated in work or recreational activities beyond the physical limitations claimed.