How Employers Can Successfully Fight Workers’ Compensation Fraud

by | Last updated on Sep 9, 2023 | Published on Dec 26, 2018 | Workers Compensation

Workers’ compensation is a valuable employee welfare program that protects employees when they are unable to work due to a workplace related injury or illness. This insurance program reimburses workers once the incapacity is established through processes such as medical chart reviews. Unfortunately, just as in other welfare programs, fraud is a stark reality in workers’ compensation as well with employees, employers and even healthcare providers taking advantage of the system. In this blog we’ll examine how employers can prevent fraud on the part of employees and thereby protect their business, and stay clear of premiums and penalties.

Types of Workers’ Compensation Fraud Employees Commit

  • Pretend injury/illness
  • Overstate injury/illness
  • Claim for an injury/illness not related to work

To prevent fraud even at the onset of a claim, employers have to be very vigilant and gather all the facts with a good incident reporting system and immediate documentation. If the facts are not collected immediately, they may not be there when you go back later to retrieve them. Witness accounts are important to detect fraud and the best thing is to ensure that the witnesses are separated and provide their accounts individually.

Steps Employers Can Take to Avoid Employee Fraud

  • Be careful when hiring: By being watchful when hiring workers, employers can avoid fraud right from the beginning. Make sure to perform a thorough background check on potential employees before hiring them. See if there are previous false claims or other types of fraud convictions on their records. Don’t hesitate to ask any questions you may have regarding anything you find suspicious.
  • Eliminate misconceptions employees may have: Clearly explain to your employees what workers’ compensation is, how it works, and that you are zero-tolerant about fraud. Distribute employee newsletters and display posters to highlight workers’ compensation fraud as a serious crime. Encourage workers to report fraud anonymously by providing a secure email or a phone number they can call.
  • Perform drug testing if required: Drug users in your team are unsafe and these people are more likely to indulge in fraud. In case of suspicious behavior on their part, perform a spot test for drug or alcohol use.
  • Consider video monitoring: You can monitor employee activities on closed circuit TVs, which will deter workers from committing fraud as well as other workplace crimes.
  • Have a good plan in place to use if a worker is injured: To maintain a safe workplace, you must be prepared. Designate a responsible team member to be in charge in the event of an injury. Make sure that
    • Your predetermined medical provider’s contact details are readily available
    • The injury is reported straightaway to your administrator
    • A detailed description of the accident and injury are obtained
    • The evidence regarding the workplace injury is undisturbed
    • All witnesses’ names are obtained
  • Make workplace safety a priority: When the workplace is absolutely safe, it is difficult for employees to pretend they are injured or ill. Your workers should understand how important workplace safety is to you. Arrange regular safety meetings and use several methods such as flyers, posters and newsletters to emphasize safety procedures. You can also reward employees who meet safety milestones, which will act as an effective incentive.
  • Ensure open and clear communication with your employees: Listen to your employees and address their concerns. If you hear about any safety issues, correct them soon and inform employees about what you are doing about their complaints. If a claim is fraudulent, rumors of foul play may be circulating among the rest of your workers. Take this as a cue to investigate that claim more thoroughly. There is no doubt that you can create a productive and loyal workforce by demonstrating that you care about good working conditions.
  • Watch out for red flags: Some alerts employers can look out for are:
    • Extensive criminal record
    • A child support lien
    • Vague work history
    • Blown-up details about incident/symptoms
    • Scepticism on the part of co-workers
  • Have in place a formal return-to-work plan: This will be a great comfort to workers and convey to them that you will make every attempt to get injured or ill employees back to work. Ensure that the return-to-work plan is flexible and includes temporary or alternative duties.

When a workers’ compensation claim arises, attorneys handling the case will have to conduct medical chart reviews to validate the claim once all the medical records are obtained via medical record retrieval services. Attorneys can advise employers regarding the legal importance of workplace safety and how they can ensure a safe job environment. Proper planning, documentation and partnership with employees can help create a safe and supportive workplace. A very important thing is to alert your insurer regarding any workers’ compensation claims. The insurer is your partner and will provide the assistance necessary to investigate suspicious claims. Though employers may not be able to control their employees’ actions, they can be in charge of who they hire, what actions they take and how they respond to suspected workers’ compensation fraud.

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