3 Ways Employees Might Engage in Workers’ Compensation Fraud

RLPSA Blog April 10, 2016

3 Ways Employees Might Engage in Workers’ Compensation Fraud

Workers’ Compensation insurance provides necessary medical coverage for workers who are injured while doing their jobs. However, this safety net for employees is a significant expense for employers.

Although Workers’ Compensation insurance rates vary state to state, the requisite premiums can be considerable for businesses, especially those that hire many employees to cover 24/7 operations, and the costs continue to rise.

What does workers’ compensation fraud look like?

As with other types of insurance, Workers’ Compensation insurance is often a victim of abuse and fraud. Some states consider insurance fraud a felony and violators are subject to prison time, fines, legal expenses, and court fees. Employers should be on the lookout for Workers’ Compensation fraud perpetrated by their employees.

3 Ways Employees Engage with Workers’ Compensation Fraud

  1. Faking an injury.
    This false claim reports that a hurt back, strained muscle, or some other injury that can’t be “seen” occurred while working when no such injury was sustained. It can even include a self-inflicted injury that would qualify a worker for disability payments.
  2. Exaggerating an injury.
    Employees may be tempted to make his/her injury seem worse than it is, perhaps to either get more time off or the benefit of a free doctor visit for another, non-related injury. A California case involved a woman who allegedly used whiteout to alter her incident report (an injured knee while carrying boxes) to extend her claim of total disability.
  3. Giving false details.
    This claim could include reporting that the injury occurred on the job site or while performing work-related activities, when it did not. Other false details might make the owner seem negligible when he/she has not been. Perhaps standard safety measures were not followed or conditions of the floor or mats were reported differently than what was actually the case, etc.

Employers try to keep Workers’ Compensation claims to a minimum while being attentive to the coverage of their employees. Safer workplaces though are the quickest way to lower claims, which ultimately lowers insurance rates.

6 Action Steps to Make Workplace Safety a Reality

  1. Develop a plan that makes safety a “value”, rather than a “priority.” Priorities change, but a company value remains part of the everyday company culture. Put the plan and the company’s values regarding safety in writing. Communicate the plan and company values to all employees.
  2. Formulate a policy that holds employees accountable for following safety procedures, as per the official company plan. For example, some companies have a policy that states, “Working safely is a condition of employment.”
  3. Outline a disciplinary program that clearly explains the actions to be followed if an employee breaks the rules or files a false claim.
  4. Create incentives/rewards for employees who follow safety procedures, and create a hotline number where employees can anonymously report dishonest or unsafe employees.
  5. Make it clear that upper management fully endorses the safety plan and the subsequent penalties and rewards.
  6. Plan regular safety meetings or discussion forums to cover specific safety issues with employees.

8 Steps to a Legitimate Claim

Accidents happen, and employers and employees will always strive to prevent them. If an accident does happen though, here are some steps to take to make sure the claim is legitimate.

  1. Complete the accident report as soon as possible
  2. Include as much detail in the report as possible
  3. Take photos of the scene, employee, and injury.
  4. Interview and record the explanations/descriptions of anyone who witnessed the incident.
  5. Require a drug test of the employee claiming the injury.
  6. Check to see if the claimant is a repeat offender.
  7. Review the Workers’ Compensation claim for accuracy, deductible amounts, and associated costs pertaining to the injury.
  8. Consolidate the tracking of the case so that several entities, such as human resources, safety managers, and supervisors of the claimant, can view the details of the incident, the problem that needs to be fixed, or the duration of care/time off of work for the employee.

5 Common Ways Employers Commit Insurance Fraud

Employees are not the only ones to commit insurance fraud. Employer fraud is also very serious. Five ways employers might commit insurance fraud to evade Workers’ Compensation laws are:

  1. Underestimating payroll numbers to reduce premiums.
  2. Classifying employers as independent contractors when they are not.
  3. Skewing job descriptions to qualify for lower premiums.
  4. Hiring undocumented workers to avoid Workers’ Compensation premiums.
  5. Failing to carry Workers’ Compensation insurance for qualified employees.

Workers’ compensation insurance fraud is serious. False reporting of an injury is also a serious issue. The Solution? Focus on workplace safety and remain aware of ways employees and employers alike can commit workers’ compensation insurance fraud.