Fraudulent Workers Compensation Claims – How to Defend Against Them
Over the course of 10 years writing workers compensation insurance, throughout the country a very common conversation I have with business owners is “that claim was fraudulent”. For the most part the explanation I am given seems correct, but the story is only one-sided. For that reason, how can I fully agree with the business owner. Fraudulent or not, workers compensation claims cause the overall cost of the coverage to increase almost immediately for the business owner.
One solution rarely thought about is requesting your company loss runs periodically throughout the year. Some business owners are so disconnected from their employees that claims are filed without the business owner knowing what really happened. I have personally insured a business that suffered a $180,000 fraudulent claim and the business owner didn’t realize the injury was serious. Certainly not serious enough to amount to $180,000 in medical costs, compensation and the attorney fees. From my perspective I have to ask: How do you not realize a fraudulent injury occurred, that has a large effect on your insurance cost, until the increase happens? As a business owner, by requesting your loss runs periodically you can monitor 2 very important things. 1. Which employee filed a claim? If the claim is fraudulent then you can catch it early enough to attempt to fight the claim being paid. 2. Has the insurance carrier properly closed the claim? When claims are “open” the insurance provider typically sets aside an amount in a reserve account. This amount is for just in-case the claim pays more. For example, if someone hurts their back, goes back to work and re-injures their back. This is what the reserve amount is for. The reserve amount counts against your claims history until it’s closed.
Another solution is having the same supervisor, foreman or key employee being responsible for handling all claims. One of the best solutions I have ever heard was a nursing home. This nursing home required all injured employees to report to their claim to one supervisor. That supervisor was required to write the report, drive the employee to the doctor’s office and listen/report the information relayed to the doctor by the injured employee. By doing this the story has been told twice with the same details and reported by the medical professional within their file. Almost all of us have smart phones that allow the supervisor and employee to take pictures or video the interview if needed.
The easiest solution to avoiding fraudulent claims is creating a safe work environment. Safety within the workplace and enforcing those requirements are the easiest way to avoid claims. A great first step is to have the business owner, supervisors and key employees almost always present when the employees are working. As the business owner you need to show the employees you care and appreciate them. Reward employees for long periods of time where 0 claims occur. If at all possible, develop a return to work program. By creating a return to work position, with light duty the employee is motivated to return to work quicker and reduces the overall cost of the claim. Your workers compensation provider can assist with setting up a return to work program. Ask them for assistance and documentation for setting up a program, make sure you input into your employee handbook.