The Types of Workers’ Comp Fraud To Watch For

Most employers understand the benefits of workers’ compensation insurance. If an employee is injured on the job, the insurance kicks in to pay for the medical bills and at least a portion of the lost wages while the employee recovers. The employee doesn’t have to fear losing his or her livelihood after reporting the injury, so there is less incentive to keep injuries quiet.

Also, the employer doesn’t usually have to fear negligence lawsuits (except in extreme cases) for simple work injuries. In the past, these suits were the only way for an employee to get bills covered, so they were much more common—workers’ compensation is in place to reduce this issue.

But even with all these benefits of a workers’ compensation program, there can still be drawbacks. One of the biggest concerns regarding the system is fraud. Today, guest writer Bridget Miller discusses this perennially vexing issue.

Types of Workers’ Compensation Fraud

Fraudulent activity can occur at all stages of a workers’ compensation claim. Employers must be vigilant to ensure the system is being implemented and carried out consistently, taking care to not reduce benefits for legitimate claims while working to reduce or eliminate fraudulent claims or exaggerations.

All your California workers’ comp questions answered—in one convenient, fully updated reference. Learn more.

Here are some of the main ways fraud can occur during the workers’ compensation process:

• The severity of an injury can be exaggerated, even if the injury is real. For example, someone who is out on leave may claim they have not yet healed, when in fact they are already able to return —this can be especially problematic if the individual is using the opportunity to get paid by workers’ compensation while conducting other work.
• An “accident” can happen on purpose, which often may include injuries that are completely falsified.
• Employees may claim workers’ compensation either for injuries that happened in the past or for injuries that happened recently but are completely unrelated to work. Some potential red flags that may indicate this include:
  • No witnesses to the injury;
  • Injuries with medical details that don’t match up with the employee’s version of what caused the injury; and
  • Injuries that are reported on a Monday morning but don’t appear to be new.
• Medical providers can perpetrate fraud. For example, they may bill for services that are fraudulent, such as tests or services that were never performed. (While we are focusing this article on employee fraud, it’s important to remember that fraud doesn’t always happen at the hands of employees.)

Before You Jump To The Conclusion It’s Fraud, However …

• Note that sometimes it can be difficult to bounce back after an injury. It also takes a mental toll. Don’t be too quick to assume an employee is “faking”—he or she could legitimately be struggling with inability to get back into daily activities even after it seems like enough time has passed for the injury to heal. This is a fine line and employees should be treated with respect.

• Remember that performing other work is not an indication of fraud in and of itself. It’s entirely possible that the other duties were within the individual’s physical restrictions, but his or her full-time job is not.

• Some workers’ compensation laws allow for injuries that are exacerbated at work or because of work activities to qualify, even if the original injury was old or unrelated. Be careful not to dismiss such a case without checking your local regulations.

Tomorrow, we’ll look at what you as an employer can do to minimize the odds of workers’ comp fraud.

Download your copy of Training Your New Supervisors: 11 Practical Lessons today!