Workers' Comp Fraud: Alert for Small Business

Workers' compensation fraud ranks No. 2 (behind identity theft) as the second most costly type of white-collar fraud in the United States today, according to the Insurance Information Institute.

Ironically, workers' comp fraud can be easy to spot if you know what to look for. Insurance companies have found that certain behaviors and patterns are characteristic of suspicious claims.

Below are red flags which everyone working in human resources and the workers' comp field should be aware when processing workers' comp claims.

IN GENERAL
-- Accident occurs just prior to a strike or immediately prior to job termination, strike, layoff, or retirement, or at the end of seasonal work
-- Accident occurs just following worker's return from leave or vacation
-- Accident is unwitnessed

EMPLOYERS AND CLAIMS ADJUSTERS
Employers and claims adjusters should be aware of the possibility of fraud in cases where:
-- Employee has received poor performance evaluations or is known to be a poor performer
-- Has frequent absences prior to injury
-- Has been disgruntled
-- Is a new employee or has been a frequent job-changer
-- Has been having financial problems
-- Participates in dangerous hobbies or sports
-- Is moonlighting or taking night courses or receiving other types of off-the-job training
-- Has family members receiving workers' comp benefits
-- Has a history of frequent accidents or illnesses, particularly involving subjective symptoms that are difficult to diagnose or treat (e.g., psychological problems, insomnia, etc).
-- Is seldom at home or reachable by phone
-- Frequently changes doctors
-- Has recently purchased a disability policy
-- Insists on quick settlement of claims
-- Is reluctant to cooperate with investigators
-- Has an unusual degree of familiarity with workers' comp insurance

MEDICAL RED FLAGS
The following are indicators that may show up in the course of the worker's medical treatment:
-- Subjective injuries which are very difficult to confirm by diagnosis (chronic pain, sleep disorders, etc.)
-- Worker resists attempts to confirm injury by diagnostic procedures
-- Worker submits a physician's or lab report very similar or identical to physician's or lab reports submitted by other workers who previously claimed injuries
-- Worker submits photocopies of medical bills rather than originals
-- Worker asks that reimbursement payments be made directly to him/her rather than to physician or lab
-- Physician, lab or other health care provider submits bills with implausible treatment dates, such as on weekends or holidays.
-- Attorney representing worker submits representation letter dated same or next day after accident occurred
-- Attorney representing worker pressures employer or insurer for a quick settlement or charges excessive fees or fees for services which were unnecessary or not performed.

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