4 Steps
to Limiting Workers’
Comp Fraud
ESTABLISHING CLEAR AND SOUND
WC POLICIES CAN HELP ABATE
QUESTIONABLE CLAIMS
BY JOSEPH J. ABRIOLA
Workers’ Compensation is a no-fault system that benefits both employees and employers; how- ever, when fraud is involved, fault then attaches.
If an employee-claimant willfully makes a false statement or conceals information in order to receive Workers’
Comp benefits, fraud has occurred. Similarly, if an employer or provider willfully prevents an employee from receiving benefits to which he or she may be entitled, that’s also
fraud—although this type of offense is more rare.
There's also premium fraud, a complex issue that spans all
industries supported by insurance providers. This type of fraud
exists when an employer knowingly misrepresents information pertaining to its business (for example, under-reporting the
payroll information) to obtain insurance for a lower cost.
Claimant fraud—which occurs when employees knowingly lie to collect benefits—is the type of fraud that employers are in the best position to uncover. This includes
claiming an injury was work-related when it wasn’t,
exaggerating an injury or secretly continuing to work while
collecting benefits.
In August 2011, the National Insurance Crime Bureau
(NICB) reported that the number of questionable claims
(those that have one or more indicators of possible fraud)
in the first half of 2011 rose 4. 5 percent compared to
2010. Between 2009 and 2011, total questionable claims
increased 18. 3 percent. In Workers’ Compensation, inflated
medical billing and duplicate billing accounted for a combined 445 percent increase in questionable-claim referrals
between the first half of 2010 and 2011.
Although addressing Workers’ Compensation fraud is a
global issue, employee fraud is one that employers can proactively work to prevent. And, since it is easier to prevent
WC fraud than it is to prove it, the following are a few tips
to address claimant fraud in the workplace.
Joseph J. Abriola, AIC, is the senior vice president of claims and managed care for Key Risk, a member company of W. R. Berkley Corp. With
more than 25 years in the insurance industry, Abriola has held various
management positions focused on Workers’ Compensation-claim and
managed-care operations. Contact him at jabriola@keyrisk.com.
01 ESTABLISH A SOUND HIRING POLICY
Creating a sound hiring policy is the best place to begin a policy of fraud
prevention. Hire wisely, conduct background checks on all applicants
and monitor new workers until a level of confidence is reached that they
have the skills, character, and work ethic that fit the organization.
Some states have created legislation to support hiring practices that
protect the employer as well as the employee. For example, the 2011
Workers’ Comp Reform Act in North Carolina introduced a provision
that no compensation is allowed under the Act if the employer can
prove the employee made a false representation of a physical condition.
02KEEP SAFETY TOP OF MIND
Maintaining a safe workplace reduces the chance of accidents
and limits the opportunity for someone to fake an injury. Also,
develop a transitional duty or return-to-work policy and let job
candidates know that if they are injured on the job, the company
will work with them and their doctor to help them return to work
as soon as is medically reasonable.
