Whether it’s a fake injury or a crooked doctor, workers’ compensation claimant fraud and medical fraud are significant contributors to the nation’s annual $30 billion insurance fraud problem – and false claims cost everyone. Employees, employers, and even health care providers can commit workers' compensation fraud.
Because worker’s compensation insurance is a no-fault method of paying workers for medical expenses and wage losses due to on-the-job injuries, fraudulent claims are a tempting target for criminals. Here are ways to recognize and prevent fraudulent workers’ compensation claims.
Common Types of Worker’s Compensation Fraud:
- Fake or inflated injury
- Conspiracy with dishonest doctors
- Working a second job or performing activities beyond what claimed injury would allow
Four Ways to Protect Your Business from Fraudulent Workers’ Compensation Claims
1. Develop and Communicate Safety Policies
One way to protect your business from workers’ compensation fraud is to develop a strong safety program to help control claims, whether legitimate or fraudulent. The four basic elements of an effective safety program include:
- Safety and health training
- Hazard prevention and control
- Worksite analysis
- Management commitment and employee involvement
Employers should communicate safety policies regularly so that employees understand the procedures that will keep them safe. Consistent communication also improves morale and creates a safety culture where employees are more likely to be vigilant about reporting accidents or suspicions of fraudulent claims immediately.
2. Have a Clear Accident Reporting Procedure
As part of your company policy, make it clear accidents should be reported promptly, both between the employee and you and then you and your insurance company. Make easy for an injured worker to notify management when the injury occurs by outlining a reporting plan. Use a standard process for reporting and investigating all accidents and document reported injuries in detail. It’s important to interview the injured employee as well as any other worker who might have seen what happened. Collect written statements from all of those involved.
Know the Signs of Fraudulent Workers’ Compensation Claims
Neither business owners nor anyone in the company should ever make accusations about fraudulent claims, but employees and supervisors should feel comfortable reporting discrepancies in various versions of what happened. All cases of suspected fraud should be reported to your insurance company. Here are some of the warning signs of fraudulent workers’ compensation claims:
- The injury occurs following a weekend or holiday or happens first thing in the morning
- There are no witnesses
- There are rumors regarding the legitimacy of the claim
- The claimant’s memory of the event is inconsistent or hazy
- The incident occurred in an area the employee should not be working
Depending on the severity of the fraud, the person making fraudulent claims may face several potential penalties, including:
- Fines
- Jail time for misdemeanors (up to one year)
- Jail time for felonies (up to 30 years)
Stay in Contact with the Injured Employee and Focus on Return to Work
Staying in communication with an injured employee not only makes them feel cared about, it may help encourage them to return to work because they know their progress is being monitored. When employees don’t have medical restrictions, the focus should be on returning them to work. Some employers find it beneficial to create a policy reducing the claim amount if an employee refuses to return to work once the injury or illness is healed.
At FrankCrum, our workers’ compensation program offers great rates and the added features of claims management, risk management and safety management. We also offer resources to control claims costs including a nationwide network of medical providers, managed pharmacy program, return to work programs and more.
With FrankCrum, you get:
- Support to mitigate risk and liability
- Assistance managing safety
- Ability to pay-as-you-go
- Reduced cost of medical services and prescriptions
- Assistance returning employees to work
