Was That Worker's Injury Real or Fake?
While most claims filed by workers for on-the-job injuries are legitimate, a small number are fraudulent. Unscrupulous workers take advantage of the workers compensation system, faking injuries to collect workers compensation benefits. To them, the system is a money-making opportunity. Some even start a business or work at another job while collecting disability payments.
Faked injuries are a type of workers compensation fraud. When workers commit fraud to collect benefits they aren't entitled to, employers pay higher premiums for workers compensation insurance. Fortunately, employers can help curb fraud if they know the signs that an employee may have filed a false workers compensation claim.
Faked Claim Scenario
The following example demonstrates how a worker might fake an injury to collect workers compensation benefits. Fred is employed as a cook at a high-end restaurant called Fancy Foods. Fred has been off work for several months due to an alleged back injury. He claims that he fell in a walk-in refrigerator early on a Monday morning when no one else was in the kitchen. Fred filed a workers compensation claim the following day. He has been receiving benefits for a temporary total disability.
Five months after Fred's accident, a workers compensation adjuster phones Fred's boss. The adjuster reports that Fred has been committing insurance fraud. It seems that an investigator observed Fred operating a landscaping business during his "disability." He also saw Fred working at another restaurant. Fred is subsequently convicted of fraud. He is ordered to reimburse Fancy Foods' workers compensation insurer for the money he received in disability payments.
Other Types of Worker Fraud
In the previous example, Fred has reported an injury that never occurred. Other workers may use a different tactic, like exaggerating a minor injury. For instance, a worker bumps her head on a machine and then fabricates symptoms, such as severe headaches and dizziness. Other workers become malingerers. Their initial injury is legitimate but they claim they are still injured weeks or months after the injury has healed.
Some employees file workers compensation claims for injuries they sustained off the job. Workers may file claims for non-occupational injuries if they lack health insurance or are covered under a policy that includes a large deductible.
When Providers Are Involved
Workers don't always commit fraud alone. Some work in cahoots with dishonest physicians, chiropractors, and other medical practitioners. A crooked provider may submit a claim for treatment that the worker never received. Alternatively, he or she may provide unnecessary treatment or inflate the cost of the treatment provided. The practitioner may then pay kickbacks to the worker in exchange for faking an injury.
Some providers join forces with crooked attorneys to operate "claim mills." Attorneys recruit workers to submit fraudulent claims. They then refer the workers to providers who falsely diagnose them with injuries. The providers' goal is to keep employees out of work as long as possible to maximize disability payments. A claim mill can generate millions of dollars in fake claims.
Impact on Your Business
Any fraudulent claim can have a significant impact on your small business. For one thing, a worker who fakes a disability is not doing his or her job. You may have to pay overtime wages to other employees or hire a temporary worker to perform the work. The extra costs may make your company less productive.
A fraudulent claim may also adversely affect your company's loss history. If your firm is subject to experience rating, payments your insurer makes on the worker's behalf may increase your firm's experience modifier. If your modifier goes up, the premium you pay for your workers compensation policy may go up as well.
You can help prevent workers compensation fraud by taking the following steps:
- Promote a positive atmosphere in the workplace. Satisfied workers are less likely than disgruntled ones to commit fraud.
- Conduct a thorough background check on prospective employees so you can weed out those who have committed fraud in the past.
- Make workplace safety a priority. Create and implement a comprehensive safety plan.
- Establish formal procedures for reporting accidents, responding to injuries, and filing claims. Train your supervisors how to respond when an accident occurs.
- Educate your employees on the workers compensation system. Explain that workers compensation insurance costs money, and that benefits are intended for bona fide injuries.
- Implement a return-to-work program for injured employees.
- Inform workers that your company does not tolerate fraudulent behavior. Create a mechanism whereby workers who become aware of fraud can report it anonymously.
Signs of Fake Injuries
While employers can't eliminate all fraud from the workplace, they can help stop illicit acts committed by employees. The following behaviors may indicate an employee has committed workers compensation fraud. If you believe an employee of yours may have faked an injury, contact your workers compensation insurer.
- The injury occurred either at the end of the day on a Friday or on a Monday. The worker may actually have sustained an injury over the weekend.
- There were no witnesses to the injury. This can be a red flag if the employee normally works with other workers, and the injury occurred during a narrow time frame when the employee was alone.
- The employee keeps changing his or her story about what happened. For instance, Fred (the restaurant cook) first alleges that he slipped and fell in a walk-in refrigerator. Later, he says he tripped over a mat in the food prep area.
- The worker has delayed reporting the injury. For example, a worker reports an injury that allegedly occurred three months ago.
- The worker is unhappy, has behavioral problems or is involved in a labor dispute. An employee who is dissatisfied, has behavioral issues, or is involved in a work-related conflict may fake an injury to get a "vacation" from his job.
- The worker has filed previous claims. A worker who has received significant payments in the past or has filed a lawsuit may be seeking a financial gain.
- The worker refuses diagnostic tests. For example, an employee declines an MRI that could confirm the existence of a knee injury.
- The worker is difficult to reach. A worker may refuse to return phone calls or emails.
- The worker refuses to consider light-duty work. He or she may also refuse to take part in your company's return to work program.