Workers’ compensation fraud affects everyone and can be committed by any party in the workers’ comp system. The single most common type of fraud, known as claimant fraud, occurs when an employee knowingly makes a fraudulent claim. Since workers may commit fraud for any number of reasons, workers’ comp fraud can be difficult to identify. However, identifying the warning signs and taking proactive steps can help reduce the number of fraudulent claims from your employees.
The cost of fraud
According to a report by the National Insurance Crime Bureau (NICB), the fastest-growing type of insurance fraud is workers’ compensation fraud. Estimated at approximately $7.2 billion per year, workers’ comp fraud affects everyone. Just a few of the wide-ranging and long-term monetary costs of workers’ comp fraud include:
- Workers’ comp premiums are increased for the employer.
- To cover the increased premium rates, businesses raise prices for customers.
- Employers are less likely to offer pay raises and bonuses due to increased workers’ comp rates.
- Employers may cut jobs to cover the costs of increased premiums.
Be mindful of fraud
It’s important for business owners and managers to understand that the vast majority of all workers’ comp claims are legitimate and result from an on-site sudden injury or repetitive stress injury. However, fraud can and does have a destructive impact on workers’ compensation and on the health of businesses.
Identifying suspicious claims
When a workplace injury occurs, the employer’s first duty is to ensure the health and safety of the injured worker. However, employers must also be mindful of the financial health and safety of their company and the remaining workforce. Since workers’ comp fraud can cause serious financial ramifications for employers, it’s critical for employers and their TPA partners to review all claims for potential fraud. Warning signs of a suspicious claim include:
- The employee was alone at the time of the incident.
- There are conflicting diagnoses or the employee refuses treatment.
- There was a significant delay in reporting the incident.
- The employee’s story about the incident is inconsistent or suspicious.
- The employee has a history of workers’ comp claims.
- The employee frequently changes jobs or medical providers.
- The incident occurred just before or after a weekend or holiday.
- The employee was nearing the end of an assignment or contract.
- The employee may be working a side job after the incident.
- The employee becomes difficult to reach while on leave.
- The employee hired an attorney immediately after the injury.
- The employee is seeking a quick settlement for their claim.
Fraud Prevention Tip #1: Select a reputable TPA partner
Employers who work with a high-quality third party administrator (TPA) partner are better equipped to identify fraudulent claims. Your TPA will work with your company to monitor and review all claims for signs of potential fraud.
In addition to this review, your TPA will ensure that your management and safety team members understand and can identify the signs of workers’ comp fraud. Read 5 Reasons You Need a TPA in Your Corner for even more reasons why you should consider talking to a TPA representative today.
Fraud Prevention Tip #2: Security Cameras
Security cameras that are actively monitored or reviewed are a good idea for most workplaces. Not only can these cameras help protect your company from theft or property damage, they can also protect your company from fraudulent workers’ comp claims.
When employees know that the workplace is being actively monitored, they are less likely to report false workers’ comp claims. If a fraudulent report is made, the footage can be submitted to the BWC as proof that the claim is false. Additionally, if an employee is injured while alone, the cameras can provide proof of the worker’s claim.
Security cameras can also make the workplace safer. While injury mapping in the workplace can help prevent future injuries, security cameras can help prevent them altogether. Employees often don’t report near misses like slips, trips, and falls or other issues that they consider minor. Reviewing security camera footage allows employers to identify potentially hazardous areas and make necessary safety improvements to prevent an incident.
Fraud Prevention Tip #3: Say something
The Ohio BWC relies heavily on members of the public, including workers, employers, and medical providers, to report suspected fraud. The BWC offers an anonymous online Fraud Allegation Form for those wishing to report suspected fraud. When reporting suspected fraud, the BWC asks that reporters please provide as much information as possible, including:
- Name and address of the person being reported;
- Details about the suspected improper or fraudulent activity;
- Other general information about the suspected fraudulent activity.
This information allows the BWC to conduct an investigation that is thorough, fair and objective.
Advocating for you
When it comes to helping you combat workers’ compensation fraud, your TPA is an invaluable partner. Not only can your TPA help you identify and prevent fraudulent claims, but they can also give you access to cost-saving opportunities, lower your risk, and give you access to programs to help make your workplace safer.
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