One of the most essential business insurance products is workers' compensation insurance. Modern workers' comp insurance carries layers of federal, state and local regulations. These regulations protect both the injured worker and the employer.
Although rare, those who seek to defraud the system cast a disparaging net over those that workers' comp helps. The good news is, workers compensation insurance fraud has three general characteristics. With the right attention, you can help reduce the risk of fraud in your business.
1. Contradictory accounts of how the injury happened
It may be easy to construct a basic story of how an injury occurred. However, it is often difficult to remember the details of a story after fabrication. Filing a claim often requires the claimant to describe the details of the injury. They often have to repeat these stories several times. Contradictory details are then the tell-tale sign of a false claim.
2. Timing of the injury
An injury coinciding with an employee termination, reprimand or demotion may signal fraud. The employee may attempt fraud following unwanted changes in duty or responsibility.
Likewise, an injury that occurs first thing on Monday morning or Friday afternoon but is not reported until Monday is highly suspicious. That is not to say that genuine injuries do not occur at these under these circumstances. However, research suggests that both are red flags.
3. A lack of communication with the claimant
When physicians, caseworkers or human resource personnel have difficulty contacting the claimant, that might signal a problem. They might have moved on to a new job while claiming workers compensation benefits. A truly disabled claimant will be communicative and generally cooperative about their case.
While rare, workers compensation insurance fraud is costly for businesses and insurers. It also unfairly hurts workers who genuinely need assistance after an injury. Having a thorough claims process that allows both insurers and business owners to perform due diligence reduces the likelihood of fraud and protects everyone involved.