By Jerry Landsman, CFE, FCLA, FCLS, Director of Fraud Operations, IWIF Workers’ Compensation Insurance, (www.iwif.com), Maryland’s largest workers’ compensation insurance carrier. He can be reached by phone at 410-264-IWIF or by email at email@example.com.
Every employer knows that a business must carry workers’ compensation insurance. But how many know that workers’ compensation fraud is the fastest-growing segment of insurance fraud in the United States today? Learn how to combat this crime by spotting the red flags of fraud. Doing so might save you money on workers’ comp insurance premiums.
Everybody pays for claimant fraud
Claimant fraud, the most common type of workers’ comp fraud, includes false claims and exaggerated claims. While the vast majority of workers’ comp claims are truthful, dishonest claimants who either exaggerate the extent of injuries or fabricate them in the first place submit billions of dollars in false claims each year to insurers.
Claimant fraud defined
The most familiar types of claimant fraud are the reporting of faked injuries, injuries not received on the job, exaggerated injuries, and claimants working while collecting benefits from an injury claim.
Fraudulent claims often involve soft-tissue symptoms, such as headache, whiplash or muscle strain, which may be difficult to disprove. Other types of fraud include “double-dipping” in order to collect weekly wages from multiple insurance companies.
What motivates an employee to commit fraud?
Some employees can be motivated to commit fraud because of greed or because they are enticed by the opportunity to receive “easy” money. The workers’ compensation system is structured to give injured workers every benefit of doubt in the processing of a claim for an on-the-job injury. Most states require 100 percent payment of medical and rehabilitation expenses for injured employees, and tax-free compensation up to 66% of a worker’s average weekly pay while they are unable to work. Consequently, the system is an attractive target for fraudsters.
What are the red flags of claimant fraud?
There are numerous red flags that a fraudulent claimant might wave. Taken individually, some might not be reason for suspicion, but none should be ignored. Watch for these red flags: The worker…
--Exhibits an unusual familiarity with the workers’ comp system
--Hires an attorney the day of the alleged injury
--Is disgruntled, on probation, facing layoff or is about to retire
--Is engaged in seasonal work that is about to end
--Has a poor attendance record
--Is new on the job
--Changes doctors when original doctor suggests return to work
--Uses false Social Security number or other false identification
--Uses post office box, hotel or motel as home address
--Cannot be reached at given home phone number
--Balks at returning to work, reports little improvement in condition
--Has problems with workplace relationships
--Has financial problems
--Was seen working at another job while collecting benefits
The circumstances surrounding the report of the accident may also offer clues, such as these:
--No one witnessed accident
--Was rumored to have been staged, to have never happened, or to have happened elsewhere
--Happened on a Friday or shortly after employee’s return to work on Monday
--Happened in an area where employee would not normally be working
--Happened at an odd time
--Happened after termination or layoff
--Employee recalls only vague or inconsistent details
The most effective way to fight fraud is to prevent it. The next best way is to detect it and discourage repetition. Also, stay in touch with your staff. Employees can be a good source of information about a co-worker collecting workers’ comp benefits, especially if they are assuming that co-worker’s job duties. By conditioning yourself and your staff to recognize these red flags, you may be building one of the most effective cost-saving initiatives for your organization this year.
If you suspect insurance fraud, report it immediately. If you are an IWIF policyholder, call the Fraud Hotline at 1-888-268-4372. If not contact the Maryland Insurance Administration’s Fraud Hotline at 1-800-846-4069.