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Carmoon Group Ltd. Business Insurance Hempstead New York
Floyd Arthur Insurance Expert New York
http://floydarthur.info * http://carmoongroup.com * http://floyd-arthur.com
Protect Your Business Against Fraudulent Workers’ Compensation Claims By
Floyd Arthur
If you are an employer in the United States, you pay workers’ compensation insurance
premiums to protect your employees who are hurt on the job. A benefit for both workers and
employers alike, workers’ compensation insurance covers a portion of an injured workers
income as well as medical and rehabilitation costs, and protects employers against expensive
lawsuits.
Unfortunately, the workers compensation system is far from fool proof: Unscrupulous
employers and employees often attempt to scam the system for personal gain. And though the
rate of worker’s compensation fraud by employees is actually quite low (studies indicate that it
is less than 1 percent*) employers still need to be aware of the signs that a claim may be less
than legitimate.
What Workers Compensation Insurance Covers
Worker’s compensation is government by state law. However, statutes are fairly consistent
across the United States. Typically, workers’ compensation covers any employment related
injury, including sudden accidents and injuries that occur over time, such as repetitive stress
injuries or the physical effects of exposures to toxic chemicals. It also covers injuries that occur
outside the workplace if they occur while the employee is “on the clock”.
Workers compensation typically excludes:
Injuries caused by drugs or alcohol intoxication Injuries that occur because the employee violated company policy (including safety
rules) Self-inflicted injuries Injuries that occur as a result of a physical altercation Injuries a worker suffers off the job Injuries claimed by an employee who has been fired or laid off
Types of Worker’s Fraudulent Workers Compensation Claims
According to the insurance industry, fraudulent workers’ compensation claims by employees tend to fall
into five basic categories:
Carmoon Group Ltd. Business Insurance Hempstead New York
Floyd Arthur Insurance Expert New York
http://floydarthur.info * http://carmoongroup.com * http://floyd-arthur.com
Employees who are hurt off the job and claim the injury occurred at work. For example, an
employee injures his shoulder playing softball and claims it happened on the job.
Minor injuries that the employee claims are more serious, such as reporting that a minor back
muscle strain is major sprain
Fake injuries—these are often soft-tissue injuries, which are difficult to prove or disprove.
Old injuries that the employee claims are job related, for example, a knee injury that never
completely healed that flares up after some period of time
Malingering after a job-related injury has healed.
How to Spot a Fraudulent Workers’ Compensation Claim
Even a trained physician is not always able to determine if an injury is real or when and how it occurred.
However, there are a sometimes indications that a claim of an on-the-job injury may not be quite what it
seems. These include:
Timing: Injuries reported on Monday actually may have occurred over the weekend. Similarly,
any injury reported at the beginning of the work day may have happened the night before. Ask
other employees if the injured worker displayed any signs of injury before the reported injury
occurred.
Delayed reporting: An injury reported several days after it allegedly occurred may be legitimate,
but it may not.
Witnesses: A lack of witnesses to an accidental injury is sometimes a red flag.
Repeat claims: About 35 percent of workers compensation claims involve a second injury.
However, this is not always an indicator of worker fraud. Examine the workplace environment
where the injury occurred. Are there safety hazards that have not been addressed? If so, more
repeat claims are likely to occur.
Inconsistencies in reporting: When a worker makes a claim of an on-the-job injury, always
require a written report. Later, interview the employee about the incident and compare his
verbal statement to the original document. Although a certain level of inconsistency is normal,
the employee’s statements about how and where the injury occurred should be essentially the
same.
Motive for retaliation: Employees who have recently been disciplined, demoted or had their
work hours or compensation cut may have a stronger motive to defraud the employer.
Guarding Against Workers’ Compensation Fraud
The best protection against workers compensation claims is a safe workplace. Let your employees know
that you care about their welfare and take injury prevention seriously by encouraging them to report
hazards and remedying issues promptly when they occur. Partner with key workplace leaders, including
managers, supervisors and employees, to ensure that worker safety is a high priority.
Carmoon Group Ltd. Business Insurance Hempstead New York
Floyd Arthur Insurance Expert New York
http://floydarthur.info * http://carmoongroup.com * http://floyd-arthur.com
Additionally, institute a zero-tolerance policy for behaviors that put employees at risk, such as drug or
alcohol use, intimidation, harassment or fighting. These behaviors not only endanger those who engage
in them, they put your entire workforce in harm’s way.
To decrease the potential for fraud, have a clearly defined policy for documenting workplace injuries
and treating them promptly when they occur. At minimum, the documentation should include:
An evaluation by a health care professional immediately after the injury and, if state law allows,
a blood or urine test for drugs or alcohol
Witness reports, including statements from other employees, supervisors and non-employee
witnesses.
A description of the conditions at the workplace at the time. For example, was all equipment in
working order and properly secured?
A supervisor’s statement regarding all actions taken after the event
What to Do If You Suspect a Worker’s Compensation Claim Is
Fraudulent
In many places the United States, insurance fraud is a crime. Any employer who has valid reasons for
believing an employee has filed a fraudulent workers’ compensation claim should report it to the
Department of Insurance in his or her state. Contact information for the appropriate officials and
agencies is available online at the U.S. Department of Labor’s Office Workers Compensation Programs.
Additionally, it’s important to notify your workers compensation insurance provider of any suspicious
claims and keep your coverage up to date. If you have questions or concerns, contact us at 516-292-
3780 any weekday between 9 a.m. and 6 p.m. to set up an appointment for an insurance review, or
request a free consultation online now.
* The Myth of Workers' Compensation Fraud
Tags: Workers’ compensation insurance, Workers’ compensation insurance covers, Workers’
compensation insurance premiums, Workers’ compensation claims, Workers’ compensation fraud,
Fraudulent workers’ compensation claims