Workers’ compensation fraud is a costly issue, burdening the insurance industry with an annual estimated cost of $5 billion, as reported by the National Insurance Crime Bureau. While the exact proportion of overall workers’ compensation expenses due to fraud varies, experts believe it could account for as much as 10%. Typically associated with employees feigning injuries to claim compensation and, at times, additional time off work, fraudulent claims present a challenge for both employers and insurers. The risk of such fraud may rise during economic downturns when layoffs become more common. To help employers and insurers identify potential fraudulent claims, we’ve compiled a list of 15 warning signs. While no single indicator definitively proves fraud, the presence of multiple signs should raise suspicions.
- Delayed Reporting: Authentic workplace injuries are generally reported promptly. Late reporting, without valid reasons, should trigger suspicion, especially when the injury supposedly occurred days earlier.
- Monday Morning Claims: Claims alleging Friday injuries but only reported on Monday may suggest an attempt to attribute a weekend injury to the workplace, potentially avoiding personal medical expenses or health insurance deductibles.
- Lack of Witnesses: In most workplaces, there are colleagues who could potentially witness accidents. However, the absence of witnesses should not, by itself, indicate fraud.
- Inconsistent or Contradictory Details: Claimants should be able to provide consistent and specific information about their injury. Vague or inconsistent accounts, or changing stories during investigations, are warning signs.
- Disgruntled Employee: Workers with low job satisfaction may be more inclined to file fraudulent claims, either as an act of retaliation or to alleviate personal grievances.
- Financial Hardship: Workers’ compensation benefits can be viewed as a financial lifeline during tough times. Some individuals may exploit this by taking on extra work while supposedly recovering from an injury.
- Difficulty in Contact: Frequent unavailability or evasion when contacted could indicate potential fraud, especially in conjunction with other warning signs.
- Missed Medical Appointments: A genuinely injured employee typically prioritizes medical appointments. Frequent missed appointments without valid explanations are suspicious.
- Inconsistent Activities: If the claimant engages in activities inconsistent with the reported injury, such as playing sports or undertaking strenuous tasks, further investigation is warranted.
- Timing of Employment: Claims filed just before or after layoffs, contract job terminations, or seasonal work endings should be closely scrutinized.
- Post-Termination Claims: Claims filed after an employee’s layoff or termination should raise suspicions.
- Frequent Changes: Claimants frequently changing doctors, addresses, or jobs may be attempting to cover their tracks.
- Previous Suspicious Claims: Individuals with a history of filing dubious or litigated claims should be treated with caution.
- Refusal of Treatment: A genuinely injured worker would likely not refuse necessary diagnostic procedures to confirm the nature and extent of their injury.
- Risky Hobbies: If the claimant’s recreational activities could result in injuries similar to the reported work injury, further investigation may be necessary.
In cases of suspected workers’ compensation fraud, it is vital to promptly inform your broker or the insurance company’s claims representative. Insurance companies are mandated to investigate fraud claims through their special investigation units, benefiting both employers and insurers. Detecting fraud early helps uphold the integrity of workers’ compensation systems and ensures that genuine claims receive the necessary support.
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