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Identifying and Approaching Workers’ Comp Fraud

Identifying and Approaching Workers’ Comp FraudWherever there are systems for obtaining compensation, there are parties who will attempt to manipulate those systems for their own personal gain. When it comes to the insurance world, workers’ compensation is believed to be one of the lines that is most vulnerable to fraud.

Workers’ compensation insurance is designed to protect both employers and employees when an injury or illness occurs at work. Each state has its own specific rules and regulations, but for the most part, workers’ compensation claim benefits include weekly payments in place of the employee’s regular wages, as well as the payment of related medical and rehabilitation expenses. Most workers’ compensation claims are very straightforward, relating to an accident that occurred in the workplace while other employees were around. However, not all claims are as easily backed up by witnesses, making it harder to prove whether they’re genuine or fraudulent.

Statistics show that about one in every four insurance fraud claims in the United States is related to workers’ compensation. Claim-related workers’ compensation fraud typically occurs when an employee falsely claims an injury or illness at work, or exaggerates an existing injury or illness in an attempt to collect workers’ compensation benefits from their employer. Employees who commit workers’ compensation fraud typically feel like it’s a victimless crime, not realizing the impact their fraudulent claims have on their employers’ experience modification rate (EMR) and future workers’ compensation premiums.

Identifying Workers’ Comp Claim Fraud

Agents can help to be proactive with workers’ compensation insurance claims by educating their clients on some of the indicators associated with fraudulent claims, including:

  • Claims history. It’s not uncommon for an employee to have repeat workers’ compensation claims. According to a public health report, approximately 37% of persons with an initial workers’ compensation claim lodged a second one. Secondary injuries were more common in cases where employers did not make changes to working conditions. However, in cases where employers do make significant changes to working conditions after an on-the-job injury, subsequent worker injuries may be suspect and should be looked into.
  • Lack of witnesses. Unobserved accidents are certainly not an indicator of fraud on their own, but there are situations that may seem unusual. An employee who is attempting to make a fraudulent claim will likely choose a moment when no one else is nearby to have an accident, so if they’re rarely alone on the job it may be a indication of misrepresentation of injury.
  • Time of injury. An opportunistic employee may become injured outside of work but try to claim a work injury to receive the benefits. It’s important for employers to obtain information about an injured employee’s behavior and appearance prior to their claim as part of the investigation; it may be a telling sign.

Approaching Workers’ Comp Claim Fraud

Employers and agents have to take care when approaching a possible fraudulent workers’ compensation claim. Placing injured employees on a “fraud list” or using the word “fraud” in file notes can get a company into trouble. Employers and agents can instead describe a suspect claim as a “possible misrepresentation” before having it investigated, to avoid falsely accusing a worker of fraud, which could have other costly repercussions.

About ASIA Workers’ Compensation

Associated Specialty Insurance Agency, Inc. has been “The Workers’ Compensation Specialist for Brokers and Agents” for the past two decades and is committed to providing brokers and insurance agents across the East Coast with expertise and services to develop a Workers’ Compensation policy. For more information about how we can assist you with claims management, anti-fraud measures, and more call (610) 543-5510 to speak with one of our professionals.

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