While it’s true that only a very small percentage of worker’s compensation claims are fraudulent, even these few can have a significant impact on businesses both large and small. For that reason, it’s important to be able to recognize the warning signs of a fraudulent claim and know what to do to protect yourself and your company.
How Much Fraud Is There?
Experts estimate that between 1% and 2% of the total worker’s compensation claims filed in the United States every year are fraudulent. That’s a tiny fraction, but because thousands of claims are filed each year across nearly all industries, that small percentage can actually account for a significant dollar amount paid out.
Worker’s compensation insurance covers both medical expenses for the injured worker, as well as compensatory pay for time lost. As fraudulent claims can tend to run longer, this also makes them more expensive, adding to the financial burden they put on your company, and by extension, your other employees.
Types of Fraud
There are four major categories of fraud when it comes to worker’s compensation claims. These include:
- Off-site Injuries: these involve real injuries that occurred away from the worksite, but that the employee will try to claim as work-related.
- Staged Accident: these may or may not involve real injuries, but because those injuries resulted from a staged or planned accident, they should not qualify for worker’s comp.
- Malingering: in these cases, a real injury, whether legitimately work-related or not, is dragged out to keep payments coming for longer than is medically necessary.
- Second Job: these cases may also involve real injuries, but while the worker is claiming they are unable to work and are still collecting worker’s comp benefits, they have secretly taken a second job.
Understanding these different situations and the ways in which fraud can occur will help you protect yourself from illegitimate claims and the costs associated with them.
Once you know what to look for, there are several concrete steps you can take to help ensure any worker’s comp claims you do pay are legitimate. These include:
- Having an established process for reporting and investigating accidents when they occur
- Educating managers and supervisors about possible red flags of fraud
- Designating a contact person to keep lines of communication open between the injured employee, their medical provider, the insurance company, and your business until the employee returns to work
- Setting up a specific return to work plan for that employee
- Educating all employees on how the worker’s compensation system works and what their rights are
- Making safety and proper training a priority throughout your company to minimize the risk of accidents
If you’d like to learn more about the ways we can help you protect yourself from worker’s comp fraud, as well as the wide range of business insurance policies we offer, contact our offices today.