Workers’ compensation fraud costs the average consumer $900 annually in reduced paychecks and bonuses. Also with increased insurance rates, increased health care, and revenue stolen from businesses. While most claims are legitimate, studies indicate that 1 to 2% or more of all workers’ compensation insurance claims are fraudulent. These claims cost the most! From my point of view as a field case manager the numbers are higher. Providers are also adding to the problem with unfocused assessments and treatment, by not managing their patient’s cases appropriately.
The Four Most Common Types of Workers’ Compensation Insurance Fraud: 1) The False Claim: The injury never occurred. 2) Working an unreported job while collecting income benefits. 3) Exaggerated claim by workers who initially sustain a legitimate injury, but exaggerate its severity to collect more money and stay off the job longer. 4) Businesses commit fraud through premium fraud, underreporting of payroll and employee misclassification.
Top 10 Warning Signs of Potential Workers’ Compensation Claimant Fraud – Experience shows that when two or more of these factors are present in a workers’ compensation insurance claim, there is a chance the claim may be fraudulent: 1) Monday morning reports 2) Suspicious Providers 3) Conflicting descriptions 4) Treatment is refused 5) Claimant is hard to reach 6) Employment change 7) No witnesses 8) History of claims 9) Late reporting 10) Other changes, such as to Physician, mailing or home address.
Red Flag Warning Signs of Potential Premium Fraud: These are simply indicators. A legitimate claim could have some of these indicators, however further investigation may be conducted by the workers’ compensation insurance carrier. 1) Policyholder uses a mail drop or post office box for a business address 2) The business is located in another area of the state from the producing agent’s location 3) An excessive number of certificates of insurance issued on a small policy 4) An unusual ratio of clerical to non-clerical employees listed 5) The business avoids audits by changing carriers frequently 6) Reported injuries are not consistent with the risk that was written.
References: EMPLOYERS Anti-Fraud Department, Employers Workers’ Compensation Insurance Fraud 101.