Spotting a Fraudulent Workers’ Compensation Claim
We may not want to believe that our employees would be dishonest, but, unfortunately, it does happen—sometimes with devastating effects. According to the National Insurance Crime Bureau, workers’ compensation fraud annually costs the system around $30 billion, and it only takes one fraudulent claim to drastically increase workers’ compensation costs.
The Truth About Workers Compensation
The majority of workers’ compensation claims are genuine; recent studies have found that only 1 to 2 percent of claims are fraudulent. However, many business owners may not know this, along with other facts about workers’ compensation claims. According to the Coalition Against Insurance Fraud:
- 10 percent of small businesses are concerned that an employee may fake an injury or a workers’ compensation claim
- 20 percent of business owners are not confident in their ability to identify workers’ compensation scams
The most important thing for business owners is to vigilantly keep an eye out for fraudulent claims while still treating their employees with respect. If employees feel as though you do not trust them and that their claims won’t be taken seriously, this could have a negative impact on your workplace’s environment and your employees’ overall satisfaction, which in turn could reduce their productivity or drive them to perform dishonest acts in the workplace.
Preventing Fraudulent Claims
The first step to decreasing workers’ compensation fraud is preventing it from happening in the first place.
- Prioritize workplace safety. The fewer safety incidents that occur, the lower the likelihood is of workers submitting fraudulent claims. Create a comprehensive, up-to-date safety plan, regularly train your employees, and establish clear procedures for reporting accidents and near-misses.
- Perform thorough background checks. Before hiring new employees, conduct background checks, and specifically keep an eye out for dishonest behavior. Prospective employees who have committed theft, fraud, or other similar crimes in the past likely would not be the best fit for your company.
- Tighten up your workers’ compensation program. A disorganized, outdated workers’ compensation process is easier to take advantage of than a tight, organized one. Establish procedures for responding to accidents, reporting, and filing claims, and create a return-to-work program for injured employees.
- Improve employee morale. An unhappy employee is more likely to commit fraud, and more likely to take extended time off after a safety incident.
Signs of a Fraudulent Claim
Rather than automatically distrusting your employees, you can familiarize yourself with the signs of a dishonest claim. Keep in mind that the following signs are not guarantees of a fraudulent claim, but their presence should make you want to take a second look at the claim in question.
- The story doesn’t add up. If the workers’ count of their accident keeps changing, this could be a sign of dishonesty.
- There are no witnesses. It is possible that the employee was alone at the time of the incident, but if he or she ordinarily works with others, this could be a potential red flag.
- The employee is dissatisfied or had performance or behavioral problems in the past. Unhappy employees and employees with a history of bad behavior are more likely to submit false claims.
- The employee is difficult. Receiving an injury at work can be a scary experience, but an employee who makes the process difficult could be hiding something. Examples include refusing diagnostic tests and not quickly returning contacts such as phone calls and emails.
About Caitlin Morgan
Caitlin Morgan specializes in providing Workers’ Compensation insurance to residential care facilities, including offering a program designed for members of the Indiana Health Care Association (IHCA), HOPE, and Leading Age Indiana associations. We can assist you in reviewing an existing Workers’ Compensation plan, securing coverage, boosting safety plans and implementing RTW programs for your nursing home clients. Please contact us at 317.575.4440.