November 15, 2008

Fraud and Workers Comp Costs

By Paul Bieber

A recent survey found that 35% of workers comp claims have some element of fraud involved…from the simple taking of a few extra weeks, to the extreme of false medical bills running into hundreds of thousands of dollars. When this fraud occurs, you pay. Your employment modification rate is impacted, and you pay more for your insurance. Here are some steps to help you in this problem.

First, as we have said before, prevent the accident. Safety pays in so many ways in your shop, most of which you can not quantify in advance. I promise you, that a safety program is less expensive than a worker’s comp program, and returns better dividends to you.

Joe comes to you and says he hurt his back. It is Monday morning around 8:30 am. He was lifting a lite of glass and felt a pop. Sure. Odds are he is redoing his basement or working a weekend job, and that is where the pain occurred. He waited to get to work so he can claim it. How do you prevent?

On Monday morning make a standard practice of being in the shop as the crew comes in. If someone is limping, is walking slowly or looks out of sorts, ask questions. See how they move and before they go to work, make a decision if that worker is fit to work. Not easy, I know, but this is the second leading cause of fraud…the accident that occurred at home…or at the part-time job. How to prevent? This is going to sound corny…but it works…have each foreperson lead five minutes of stretching before each shift. This will not only help people to prevent injuries, but will spot the worker who you should be asking questions of.

Here are some of the many flags to look for to help you think about fraud on Joe the glazier.

•Joe has a history of subjective injuries, like sprains or muscle pulls

•Joe reports the accident on Monday morning, just after arriving

•Joe gives only a vague description of the accident’s cause

•Joe was recently passed over for a job promotion

•Joe is up for early or regular retirement, and wants to get started early

•Joe changes his address to a PO Box or sends his mail to a relative’s address after the accident

•Joe moves out of state after the accident, so he cannot accept light duty or part-time work

•Joe’s accident happens just after he was reprimanded for something at work

•There were no witnesses to the accident

•Joe’s injury cannot be seen medically, like a claim for stress or emotional trauma

•Joe’s accident is only reported after a run-in with his supervisor

•Your first notice of the accident is from an attorney or medical provider

•Medical providers have two very different opinions of the injury

•Joe is claiming a longer recovery period than is normal to the type of injury reported

•Joe has his accident during the lunch hour

•Joe changes his doctor two or three times to get an opinion that fits his needs, or to extend the case

•Joe skips a couple of his doctor’s appointments

•Joe’s attorney says he/she is in charge of the case and not to speak to Joe

•You know that this attorney is known for worker’s comp fraud cases

•You know that Joe’s medical provider is known for milking comp cases

•You receive an attorney’s letter within 24 hours of the accident

•You receive a tip from other employees that Joe is working at another job

•Joe’s injury comes at a time when he is working on his house, and needs time to finish his at-home projects

•You are about to announce a lay-off, and Joe’s claim starts a day before

•Joe is never available for a phone call, especially during work hours

•Joe has a grudge against the company

•Joe comes into your office and has grease under his fingernails, or is wearing work clothes

•The bills for Joe’s medical services and prescriptions are huge

•Joe visits his doctor two or three times per week, with your insurance paying the bill

•Joe doesn’t get better after a couple of weeks of intense treatments

•Joe travels a long distance to his medical appointments

What is the most reliable flag here? To me, it is the tip from other workers. In most companies, most workers care about their jobs and their company. When they see someone, who may be a friend, attempt to defraud their company, someone will let you know. And you will see that all the Joes trying to collect like to brag and show off a little. They may come by the company on a Friday afternoon, and buy a six pack for their working buddies. One of those buddies, will realize they will be better off if Joe does not drain the company.

Another point, most fraud cases come from employees with under two years of work history with you. Another good reason to retain employees and reduce turnover.

There sure are a lot of flags here…can there be an honest claim? In fact, most claims are honest, and Joe may be out of work for a very short time. The fraud cases, though, are the big bucks. One or two heavy fraud cases in a year will make your workers comp insurance rates go through the sky.

We’ll discuss more about these flags and what you can do when you feel there is fraud in next week’s blog.