November 24, 2008

Keeping Even with the Comp Fraudsters

By Paul Bieber

So, you think Joe the Glazier’s workers comp claim in fraudulent. What do you do?

1.Say the heck with it, you can’t be bothered, and anyway it is the insurance company that pays

2.You’ve complained before, and nothing happens, and you say the heck with it

3.You want to fight back, but you don’t know what to do

4.You call your favorite consultant, Mr. Jack Daniels, and discuss your options

Let’s work on number 3, unless you just want to keep paying and paying.

Joe the Glazier had an accident. Insist that any accident in your company be reported to you immediately, and that a preliminary written report be given within one hour. I know one major national glass company that requires all accidents, from anywhere in the country, be reported to the CEO. Get everyone in your company on the program that all accidents must be reported immediately and paperwork filled out. You can really key in on the accidents where the employee files a late report…usually as some sort of retribution for an actual or perceived slight. You can quiz Joe why he didn’t tell his supervisor at the accident time. One company I know fires any employee who doesn’t report an accident promptly. They feel that a late claim is fraudulent, and they don’t want the employee around. You will get more notices of “I strained my shoulder” and “I twisted my ankle”. That’s OK. Write down what happened, that there is no need for medical attention, and go on about your day. The moral of this story…have an accident reporting policy in place and strongly enforce it. Also, have a witness program in place, where any one in the vicinity of the accident writes a short report. This will also place a crimp in fraud.

Most fraud begins only after a small, insignificant accident, but then Joe sits home and watches the commercials for 1-800 call a lawyer. Be sure to get Joe back to work, part-time, light duty, or whatever. Let him file papers, and then dump them out, and file them again. Keep Joe working, and you will reduce your follow-up fraud.

If you suspect fraud, call your insurance carrier’s fraud department. Private carriers are the most responsive and state funds are the least responsive. Safety groups are in the middle. First step, contact your agent or company representative to see who to talk with in the fraud division. When you get through, you need more than just a hunch to get them mobilized. After all, just about every employer thinks that just about every comp case has some element of malingering about it. The carrier may ask you to fill out a form. Have them fax or e-mail to you, fill out promptly and return promptly. If they see you dragging your feet, so will they. Show them this is important to you. You should have specific information, such as a report that Joe was seen working at another company or that he was doing heavy work around his home. Give them the time and place that Joe was working.

If Joe milks his claim, staying home for a couple of extra weeks, that is fraud. There is no way you are going to prove this. There is no way your carrier will investigate this. If you complain about Joe for this, you are waisting your time and the carrier’s time. When you get a real fraud case, they will not be as attentive because of the ‘chicken little’ (the sky is falling) concept.

Only discuss Joe’s case, or your feelings about fraud, with your personnel department, or with senior management. If you are a smaller company, keep this to yourself and the insurance carrier. But, you can listen. In fact, this is the best way to gain information. Listen to your other employees–don’t comment and don’t ask leading questions. Most fraudsters like to brag about how they are putting one over on the company. You will hear this from your loyal employees.

After you hear a rumor about Joe’s fraud, don’t have a company meeting and say you’ve heard there is fraud going on, and that you will prosecute. You are setting yourself up for a libel situation. Twice a year, you should be having a company meeting about many topics. Include safety. Strongly mention here that fraud will not be tolerated, will be investigated, and if found, the results will be given to authorities. You can’t threaten your staff with a police investigation, only the police or district attorney can do that, but you can place a serious tone on your feelings relating to workers comp fraud.

If your carrier does agree to further investigate your claim, and in my experience they investigate a very few, don’t brag about this yourself. You should tell no one in your company, unless absolutely necessary. If the investigation is successful, talk all you want. If it isn’t, and most are not, you don’t want your company to know that you thought someone committed fraud and you couldn’t do anything about it. Some people think you should tell your company when pursuing an investigation, that it shows everyone you are serious about fraud. I feel that if you are not sure you will succeed, don’t broadcast what may not be successful. To me, this only emboldens others to be fraudulent.

Here is how the insurance companies think. A fraud investigation costs about $1,000 per day, and usually takes 3-5 days. They need to be pushed to spend that amount of money to save $400 a week in worker’s comp costs. If Joe is putting in for a lot of medical visits, then they will be interested.

Next week we will discuss how to hire and work with your own investigator for workers comp fraud.

The Midwest Glass Show is next week in Chicago. I hope that anyone nearby creates some time to attend. There are great seminars, exhibitors who want to teach you about their products and you will have the chance to meet other glaziers from around the country. I’ll see you there and personally autograph copies of my latest blog. (Do you think we will need extra security to keep our loyal readers in line while they wait for the autograph?)