Here’s how small businesses can avoid playing the fool.
“Everybody plays the fool, there’s no exception to the rule.” — The Main Ingredient (1973)
The great majority of workers’ compensation claims are valid.
So what can small businesses do to better spot claims by their workers that are fraudulent?
Workers’ compensation fraud costs the system $30 billion annually, according to The National Insurance Crime Bureau. Just one fraudulent claim can cause your workers’ compensation spend to rise dramatically. This is driving increased concern among small businesses about potential fraudulent claims.
Consider these statistics from The Coalition Against Insurance Fraud:
— One in 10 small businesses are concerned an employee will fake an injury.
— One in 5 owners feel unsure how to identify Workers’ Compensation scams.
— One in 4 owners installed video cameras to help fight fraud in the workplace.
We know that the large majority of claims are completely valid. Estimates indicate that only 1-2% of claims are fraudulent. This is something you should keep in mind when dealing with employees who have suffered injuries. In fact, most injured workers are as scared about what is going to happen to them as you are about the impact to your business.
This phenomenon is known as the “DNA” of a claim, and it gets set almost immediately. When your employee comes in to report the claim, how do you respond to that person? Do you display compassion and concern for their well-being? Do you follow up with the employee at home to make sure that they are OK?
Small, subtle steps such as these remind the injured worker that you are an employer who cares and that your employee will be welcomed back after recovering.
Of course, there are instances where the injured worker either completely fabricates or exaggerates the extent of their injury. How do you identify a fraudulent injury?
Here are six ways to identify fraudulent claims.
No. 6: Late reported claims. Claims reported more than 7 days after the injury tend to be dramatically more expensive and have a much higher litigation rate. Why did they report the claim so late? If they said that they reported their injury to a co-worker, talk to that person. This type of follow up spreads the word that you treat these matters seriously and helps stop potentially fraudulent claims from repeating throughout your business.
No. 5: Monday morning reported claims. This seems obvious, but it is amazing how often these are accepted at face value. What hobbies does the worker have? Had they mentioned anything to their co-workers on Friday about activities they were looking forward to over the weekend? Ask the injured worker straight up if they had anything happen over the weekend. If they are lying, they are probably praying that you do not ask about it. Read their body language when you ask them. What signals are they emitting?
No. 4: Unwitnessed injuries. Not every claim is unwitnessed, but most every fraudulent claim is. Get into the mechanics of the injury. Were they in an area that they were not supposed to be? Who was the first person who saw the worker after the injury? Talk to them, even if it is not a supervisor.
No. 3: Refusing diagnostic procedures. Fraudulent claimants want treatment, not answers. They are looking to get into the system and to become a statistic. They will prefer to have a chiropractor lay their hands on them versus getting an X-Ray or an MRI that will tell them exactly what is wrong. If the claimant has a soft-tissue injury such as a back or neck injury, make sure that they seek treatment at a facility that can perform immediate testing.
No. 2: Vague description of the incident. Think of this as the smell test. Ask questions and ask yourself does what they are saying make sense. What exactly was the injured worker doing when they were injured? Does the body part that they injured seem to coincide with how they said the injury occurred? We understand that you are not a detective, but who knows the specifics of your business better than you do?
No. 1: Chatter. Go to the department where the injury occurred and talk with those who are left. Explain to them how you plan to fill in during their absence. Express concern for the injured worker and read their body language. Do they roll their eyes when you express concern that they are OK? If you get signals like this, sit down with those workers and get to the bottom of the story. Be careful not to incriminate the injured worker — you are trying to get information, not disparage the injured worker.
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After going through these steps, you may have an injured worker whom you just know is trying to take advantage of the system. Every fiber in your body tells you so. What should you do at that point? First, you should remind yourself that everything about the workers’ compensation system is set up to protect the rights of the injured worker. That is the way it should be; it is what is called a “no fault” system. What that means is that many times the injured worker will get away with it. We would rather pay nine illegitimate claims than incorrectly deny one legitimate one. That doesn’t mean that you should just sit back and do nothing. Report what you know to your claims adjuster. Give them as many specifics as possible. Open up your resources and invite them to come make a recorded statement.
By paying attention to the signs, and working closely with your claims adjuster and giving them all the facts, you will have done your part to make sure that you are not playing the fool.
Matt Zender is vice president and Workers’ Compensation Product Manager for AmTrust Financial Services, one of the top three workers’ compensation insurers in the U.S. Contact him at firstname.lastname@example.org.