Was That Worker's Injury Real or Fake?
Dishonest Providers or Attorneys May Recruit Vulnerable Workers
According to the Coalition Against Insurance Fraud, more than one in ten small business owners worry about employees faking injuries to obtain workers compensation benefits. 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 Example
The following example demonstrates how a worker might fake an injury to collect workers compensation benefits. Sarah is employed by a solar energy company as a sales representative. She has been off work for several months due to whiplash she allegedly sustained when her company car was rear-ended by a hit-and-run vehicle. There were no witnesses to the accident, which occurred late on a Friday afternoon when Sarah was returning to the office after a sales call. Sarah filed a workers compensation claim the following Monday and has been receiving benefits for a temporary total disability.
Sarah has been on disability for five months when her boss (Jeff) receives a call from an adjuster at the solar company's workers compensation insurer. The adjuster reports that Sarah has committed insurance fraud. The adjuster learned through an anonymous tip that Sarah has been working at a high-end jewelry store throughout her "disability." She has also been observed skiing at a nearby resort. Sarah eventually admits that her alleged neck injury never occurred. She is prosecuted for fraud and convicted by the state.
Sarah is ordered to reimburse her employer's insurer for the benefits she unlawfully received.
Other Types of Worker Fraud
In the previous example, Sarah reported an injury that never happened. Other workers commit fraud by exaggerating injuries. For instance, a worker sustains a small bump on her head and then fabricates severe headaches and dizziness. Some 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.
Many workers that commit fraud have been recruited by dishonest physicians, chiropractors or other medical practitioners. A crooked provider may submit a claim for treatment the worker never received. Alternatively, he or she may inflate the cost of the treatment or provide treatment the worker doesn't need. The practitioner may pay kickbacks to the worker in exchange for faking an injury.
Some providers join forces with dishonest attorneys to operate "claim mills." Attorneys recruit workers to submit fraudulent claims and then refer them to providers who diagnose false 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. A worker who fakes a disability is not doing his or her job. You may have to pay other employees overtime or hire a temporary worker to perform the work. The extra costs make your company less productive.
A fraudulent claim may 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 increases, your workers compensation premium may rise as well.
Here are some steps you can take to help prevent workers compensation fraud:
- 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 to 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.
- Implement a return-to-work program for injured employees.
- Educate your employees on the workers compensation system. Explain that workers compensation benefits are intended for legitimate injuries.
- Instruct your workers to avoid attorneys or medical practitioners that try to solicit them after an accident. Explain that workers who take part in fraud will be subject to prosecution. Create a mechanism for workers to report fraud 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 suspect an employee has faked an injury, contact your workers compensation insurer.
- The injury occurred 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 others and the injury occurred during a narrow time frame when the employee was alone.
- The employee keeps changing his story about what happened. For instance, a restaurant worker initially states that he slipped and fell in a walk-in refrigerator. Later, he says he tripped over a mat by the dishwasher.
- The worker has delayed reporting the injury. For example, a worker reports an injury months after it allegedly occurred.
- The worker is unhappy, has behavioral problems or is involved in a labor dispute. A dissatisfied or troubled worker 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 may be looking for more.
- 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.