By some estimates, as much as 25 percent of all U.S. insurance fraud claims are related to workers’ compensation. Although small businesses are least likely able to cope with the ensuing expenses, they are the ones that are hit the hardest each year by workers’ compensation claims.
“Workers’ compensation fraud is a serious crime that can strain business operations, lead to higher insurance costs for businesses and even undermine honest workers who are legitimately injured on the job,” said Ranney Pageler, vice president of fraud investigations at EMPLOYERS.
Workers’ compensation insurance fraud ranges from the very simple to sometimes elaborate schemes. Employees may exaggerate or even fabricate their injuries, and even conspire with while white-collar criminals, including doctors and lawyers to defraud the system by creating false or exaggerated claims. The doctors may inflate the payout for the claim by over-treating and over prescribing harmful and addictive drugs. Insurance companies end up absorbing the costs and it eventually it is passed along to the policyholders, taxpayers and the general public.
There are some ways, however, to detect workers’ compensation fraud committed by the employee. Experience shows that when two or more of the following factors are present in a workers’ compensation claim, there is a chance the claim may be fraudulent.
Detecting a Fraudulent Claim.
A MONDAY MORNING REPORT OF INJURY
Did the employee file the claim on Monday morning, immediately after a day off? Did they claim the injury occurred late on Friday afternoon and chose not to report until Monday? These are leading indicators that the injury occurred on their own time and are bringing it to work to get the employer’s workers’ compensation policy to cover it.
The reported accident occurs immediately before or after a strike, job termination, layoff, end of a big project, or the conclusion of seasonal work. There is a possibility that the employee is in fear of losing income and wants to substitute it with income from an insurance claim.
Do the employee’s medical providers or legal consultants have a history of handling suspicious claims, and/or are the same doctors and lawyers are used by groups of claimants?
There are no witnesses to the accident and it occurred where there was no video surveillance. Is this an area that the employee frequents? Does the employee’s story match the circumstances in a logical narrative?
The employee’s description of the accident conflicts with the medical history or injury report. And if so, does the employee’s story change over time to fit more in line with the injury report.
HISTORY OF CLAIMS
Does the claimant have a history of suspicious litigated claims?
TREATMENT IS REFUSED
The claimant refuses a diagnostic procedure to confirm the nature or extent of an injury.
SLOW OR LATE REPORTING
The employee delays reporting the claim without a reasonable explanation.
CLAIMANT IS HARD TO REACH
The allegedly disabled claimant is hard to reach at home. Once this was a good excuse, but in this age of communication, an employee should be available to help with the investigation. If not, why?
The claimant has a history of frequently changing physicians, addresses or jobs.
Small Business Owners’ Concerns.
As part of its survey, EMPLOYERS asked small business owners to identify potential indicators of claim-related workers’ compensation insurance fraud. The activities cited by more than half of respondents included:
- The employee has a history of claims (58 percent)
- There were no witnesses to the incident (52 percent)
- The employee did not report the injury or illness in a timely manner (52 percent)
- The reported incident coincides with a change in employment status (51 percent)
Be cautious and don’t make any immediate accusations. Discovering fraud is a job for investigators and many perfectly legitimate claims are filed on Mondays—and some accidents have no witnesses.