While the vast majority of workers’ compensation claims are legitimate, fraudulent claims comprise a significant portion of payments made by insurance companies when it comes to cost. Different sources estimate fraudulent claims at anywhere from $6 to $7 billion of the estimated $60 billion paid out every year. Of course, this isn’t something insurance companies just absorb as a cost of doing business; false claims directly affect the premiums you pay. This is all in addition to the costs of replacing an employee for the time they’re off work, for training, overtime, and for reduced employee morale and productivity due to longer hours or more stressful environment due to overwork. Thankfully, there are many controllable factors that you, as an employer, can influence.
For existing employees, a strong safety program can help reduce legitimate claims, and encouraging input from your employees in this regard can engage them in the business, discouraging “revenge” claims, where employees fake injuries – even small ones that only result in a couple days off work. Know the warning signs of false claims, and involve your insurance company if you believe a claim is fraudulent. Two or more of these could be a sign that a claim deserves closer attention:
Monday morning reports, or injuries that allegedly happened on a Friday but aren’t reported until Monday morning.
When the injury is timed around an employment change – immediately before or after a strike, termination, layoff, end of a big project, or the conclusion of seasonal work.
If the medical providers or legal consultants used have a history of handling suspicious claims, or if they are used by groups of claimants.
If there are no witnesses to the incidents, or if the employee’s story of what happened doesn’t logically support what happened.
If the employee’s description of the incident is inconsistent with the medical report of the injury.
If the employee has a history of suspicious litigated claims.
If the employee refuses a diagnostic procedure that could confirm the nature or extent of the injury.
Delays in reporting the claim that can’t be reasonably explained.
A claimant who is difficult to reach at home.
If the employee has a history of frequently changing doctors, addresses, or jobs.
Some of these factors, though, can be difficult to determine – knowing whether an employee frequently changes physicians or if they have a history of suspicious claims can be difficult or impossible to tell from a standard pre-hire interview or even a background check. The best defense against these claims is to keep employees prone to filing them out of your hiring pool in the first place; this doesn’t just reduce your chances of having a fraudulent claim filed against your policy, it also makes your existing safety programs and preventive measures more secure and effective since you’ll be working with employees who aren’t inclined to violate them. Insight’s integrity tests are psychologically designed to help you screen your applicants in a methodical and legal manner. Our assessments are a tool that can help you address several of the above risk factors head on, before you even interview your applicants. And while one workers’ comp fraud claim could cost you a significant amount of time and money, legitimate claims also affect your productivity, employee morale, and premiums, so Insight’s assessments target those at risk for safety violations in addition to tackling workers’ comp fraud predators. For more information, contact us to determine the best solution for your business.