Builders and Contractors Exchange
Weekly Bulletin: 29 May 2006
Preventing Workers' Compensation Fraud
By: Lisa Thatch
According to some statistics, workers’ compensation fraud contributes significantly to the annual estimated $30 billion insurance fraud problem. The workers’ compensation system is designed to provide disability benefits and medical care to assist employees back to work. Fraudulent workers’ compensation claims drain time and resources that are meant to assist workers legitimately injured on the job, and cost employers in higher insurance premiums.
Though insurance fraud can be a staggering problem, there are steps employers can take to lessen the risk of suspect or bogus workers’ compensation claims.
1. Challenge the common misperception that workers’ compensation fraud is a victimless crime and educate employees on the large-scale consequences. Using posters, employee newsletters and other notices, spread the word that you and your insurance carrier will vigorously investigate suspect claims and refer employees who bring fraudulent claims to appropriate law enforcement agencies for prosecution.
2. Pay attention to the rumor mill. Following a workplace injury, and throughout the claims process, rumors often circulate among employees. Sometimes rumors are grounded in fact. Paying attention to worker scuttlebutt can help in investigating a claim’s validity.
3. Implement an efficient injury response plan and clearly communicate the proper practices to employees. Provide procedures for reporting occurrences. Designate appropriate personnel to process accidents and claims, including securing a description of the accident and injury, taking photographs and obtaining statements from the injured worker and witnesses. Promptly provide appropriate medical care and encourage employees to seek treatment.
4. Consider using video monitoring equipment in the workplace. Surveillance tactics are often utilized by insurance companies to “catch” fraudulent claimants; employers can also utilize similar tactics to deter fraud and other crimes in the workplace. Also, a visual record can help support legitimate workers’ compensation claims while weeding out bogus injuries. Although such tactics may seem intrusive, if properly conducted at times and places where there is no reasonable expectation of privacy, it is not an illegal invasion of privacy.
5. Know how your insurance carrier handles claims; they should be equipped to detect and investigate possible fraudulent claims. Keep the lines of communication open with your carrier or the attorney assigned to represent your interests in workers’ compensation claims. Be responsive to information requests and provide requested materials promptly.
Finally, keep in mind that although workers’ compensation fraud can be costly, frustrating, or even infuriating, employers should remain weary of becoming too cautious. Be very careful about accusing anyone of workers’ compensation fraud, particularly if coupled with termination of employment. If you cannot prove it, and often times you can’t, there may arise a strong inference that you acted improperly in response to a legitimate claim. Be careful not to become tainted by staggering fraud statistics and keep in mind the beneficent purpose of workers’ compensation laws.
Questions?
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This article is meant to bring awareness to this topic and is not intended to be used as legal advice.