Preventing And Detecting Workers' Comp Fraud 

(Published October 21, 2008)

 

Unfortunately, there will always be a few bad apples that try to cheat the system by filing fraudulent Workers' Compensation claims. Whether employees fake or exaggerate an injury, are injured outside of work, or stay out on leave long after their injury heals, "bogus claims remain a persistent and costly problem for employers, year in and year out," said Jim Quiggle, Director of Communications for the Coalition Against Insurance Fraud, a Washington, DC-based watchdog group. "Collectively, employers lose billions of dollars to bogus injuries annually that drive up premiums and cut into company profits."

 

Preventing Workers' Comp Fraud

"An unhappy workforce is a strong predictor of fraud," warned Quiggle. "So the starting point of fraud prevention is to create a safe workplace with enlightened managers who listen to worker concerns and act swiftly on valid complaints. It sounds old-fashioned, but this timeless management principle can help create a shared buy-in to the company's goals — and reduce the odds of bogus injury claims made from greed, spite, or revenge."

 

Quiggle also suggested taking the following proactive steps to minimize the chance of WC fraud hitting, and hurting, your business.

 

Create strong safety programs and procedures that create a safe and productive workplace. "This will signal that the employer cares about worker safety," explained Quiggle. "A safe workplace also reduces the chances a dishonest employee can get away with a credible claim for bogus injuries."

 

Create a zero-tolerance policy for fraud. "Back that up with decisive action when bogus claims are detected, and stress to workers how bogus injuries cheat the company and workers alike," stated Quiggle. "Promote zero tolerance throughout the workplace, and make it part of your company's culture."

 

Require workers to report injuries right away, no matter how minor. "Take the employee to the doctor immediately to ensure prompt and thorough treatment," Quiggle added. Your company should also conduct an immediate investigation.

 

Insist that your insurer investigate suspicious claims. Your insurer can try to find out if the employee was involved in any outside activities that could have been the actual cause of the injury. Or, consider hiring an outside investigator.

 

Encourage employees to report suspicious injuries by other workers. "Consider a reward program and anonymous hotline for reporting bogus injuries," Quiggle suggested.

 

Clearly explain Workers' Comp claims procedures, and post procedures prominently throughout the workplace. "This will help workers promptly receive all benefits they're rightfully due, and help them avoid making inadvertent mistakes that cost or delay benefits," said Quiggle.

 

Detecting Workers' Comp Fraud

Quiggle provided a list of common red flags that might signal bogus injuries or malingering. Tip: While these signs taken individually do not automatically indicate Workers' Comp fraud, a cluster of signs may indicate that further investigation is warranted.

• Employee gives conflicting or vague information.
  
  
• No witnesses to the alleged incident.
  
  
• Incident happened in an area where the worker normally isn't supposed to be.
  
  
• Injury occurred during performance of a task the employee normally doesn't perform.
  
  
• Injury occurred early Monday morning. "It might've been a weekend softball injury," Quiggle proposed. Also, beware of injuries that aren't reported until weeks or months later.
  
  
• Injury occurred just before a strike, disciplinary action, or layoff.
  
  
• Employee has a history of injury claims, especially involving hard-to-prove injuries, such as soft-tissue injuries.
  
  
• Employee avoids medical treatment, misses doctor appointments.
  
  
• Worker is known to be disgruntled.
  
  
• Worker's attorney threatens legal action unless there's a quick settlement.
  
  
• Employee isn't helpful or cooperative.
  
  
• Employee is unusually familiar with WC claims, vocabulary, procedures, or laws.
  
  
• Worker can't be reached by phone while on leave; spouse repeatedly says, "He/she just stepped out."

 

Related Topic(s):

Safety & Health/Workers Comp