Workers’ compensation fraud is a frequent news topic and favorite subject at seminars where workers’ compensation coordinators gather. How prevalent is workers’ compensation fraud? The answer is simple: it depends on whom you ask.
Many vendors make their living because fraud exists: attorneys, surveillance vendors, insurance investigators and surveillance teams. A Google search will provide many fraud statistics. I will not attempt to rehash them here. While it is true insurance industry professionals see many fraudulent injuries, we probably should take most workers’ compensation fraud statistics with a grain of salt. Insurance vendors have vested interests in hyping fraud. The more fraud is alleged, the more referrals vendors receive and the more insurance carriers can argue for higher rates. On the other hand, organizations like the National Organization of Injured Workers will argue that workers’ compensation fraud accounts for only one percent of all fraud. I’ll sum it up by saying that fraud indicators may be misstated and a bit overblown, but that fraud is a real problem in the workers’ compensation arena.
There are two types of workers’ comp fraud. First, there is outright fraud, for example, “I said I got hurt at work but I didn’t; I got hurt at home and reported it at work.”
Next is the less in-your-face fraud. Employees injured at work don’t always set out to commit fraud. Deception often occurs when overburdened claims adjusters, struggling to keep up with unrealistic caseloads, lose track of the employee’s treatment or work status. Once an employee feels ignored, they may take advantage of this void. When this occurs, employees vacation at the insurance carrier’s, and ultimately employer’s, expense. With subtle fraud, employees learn how the system works then exploit it to their advantage. This may include over treating, magnifying symptoms, manipulating medical providers to receive more time off work or even scheduling appointments to miss the most work possible. Organizations must address both outright and subtle fraud to keep insurance premiums as low as possible.
How can an employer prevent fraud? Here are some tips that reduce fraudulent claims and keep employees from “working the system” to extend their disability.
- All claims should start with “three-point contact.” This means that once you report a claim, the adjuster contacts the employee, the supervisor and the treating physician. This ensures the adjuster explains the process to the employee and revisits the injury details with the employee. Contact with the supervisor is critical because the employer often fails to inform the insurance carrier of suspicious circumstances. For example, if the injured employee is a discipline problem, the adjuster knows there is a greater likelihood the claim will be difficult to settle or that a rigorous investigation should occur.
- Communicate frequently with your insurance carrier and adjuster throughout the life of the claim, because circumstances change. A once happy employee can become a disciplinary problem at any point or there may be return-to-work issues to resolve. Request the same team of adjusters handle your organization’s claims and get to know your adjusters. This will help prevent communication breakdowns.
- Once a claim has been open for a short time, coworkers often know when the injured employee is working or playing outside his or her physical restrictions. Surveillance teams frequently find injured employees playing sports, hunting or at spending hours at a casino. Often, these tips come from coworkers who tire of carrying an extra work burden while their coworkers stay home. Prosecuting fraud when it occurs sends a message: “We will not tolerate fraud.” This may stop the next person who considers filing a fictitious claim.
- Develop a stay-at-work mindset to help injured employees continue to work in some capacity as they heal. If they stay home, they often become depressed and find risky ways to manage their depression. Ask your carrier to assign a surveillance team if you suspect employees work or play against medical advice.
- On stalled or serious injuries, assigning nurse case management saves a great deal of money and frustration. When needed, a vocational rehabilitation specialist can help get claims resolved, as well.
- Above all, your company should set the tone among injured employees that says, “We care that you were hurt, but we want to make sure your treatment is appropriate for the injury, that you follow the work restrictions and that you cooperate with your treatment protocol.”
Few workers get rich from a workers’ compensation settlement. Fraud exists, but just how much fraud there is in workers’ compensation is a matter of intense debate.However, properly managing claims from the first report of injury reduces fraud sharply. Isn’t that our goal