Nearly 25% of All Lost Time Claims Are Exaggerated
A small percentage of workers’ comp claims are fraudulent, but quite a few claims (nearly 25% of all lost-time claims) are “exaggerated.” This is calling malingering. In other words, the claim lasts longer than the medical disability. The employee has recovered enough to return to work but has not returned to work. This can be due to employee intent, medical provider lack of knowledge about the job requirements or employer disinterest, or other reasons.
Some people take advantage of the system by:
- Staging accidents
- Faking injuries
- Claiming non-work related injuries occurred on the job
- Inflating the degree of injury and the length of disability
- Claiming old injuries are a new work related injury
- Pretending they are injured more seriously than they are
These claims can be very frustrating for an employer, but methods exist to prevent or reduce the incidents of fraudulent workers’ comp claims.
$41,000 to Save $1 million dollars
I recently worked with a company that had $1,500,000 in incurred losses. When I looked at the data summary, only $100 had been spent on investigation services. Spending a mere $100 to control $1.5 million dollars of claims is not realistic. Therefore, we revamped the system and allocated more money to controlling claims. The following year, the company spent $41,000 — on investigation and medical review — and the claim costs dropped to $500,000. Thus the company spent $41,000 to save $1 million dollars!
That’s a 2,339% return on investment.
10 Ways to Reduce or Eliminate Fraudulent Workers’ Compensation Claims FOREVER!
- Pre-employment (post offer) background checks
- A strong transitional duty program
- Train supervisors and managers on fraud prevention
- Fraud tip lines & anti-fraud posters
- On-site Investigation of Injury
- Social Media Investigation
- Medical Records Search
- Covert Investigation
- Proactive use of medical providers
- Prosecute vigorously any proven fraud
Is YOUR Company using 100% of these techniques to control fraud?
Best practices of workers compensation fraud prevention:
- Spot the red flags of fraud.
- Recognize the reason(s) the employee is committing fraud.
- Ask the adjusters for the appropriate type of investigation.
- Recognize when an investigation is crucial.
- Guide the investigators on your team.
- The action to take if the adjuster is not aggressively pursuing the fraud investigation.
- Utilize your Return to Work Program to discourage and prevent fraud.
- Read and review surveillance reports, videotapes and photographs.
- Coordinate investigation results with medical advisers.
- Initiate an anti-fraud program that includes a toll-free tip line and rewards for tips that result in criminal conviction of fraud.
- How to educate the employees that fraud hurts their fellow employees as well as the employer.
- Learn the legal obstacles to investigation.
- Coordinate return to work with a doctor or nurse case manager — when a facility nurse or medical director reviews every injury, it is a huge deterrent to malingering and fraud.
- Utilize your Safety Program to discourage and prevent fraudulent claims.
- Investigate questionable claims from a medical perspective and determine non-occupational causation.
- Utilize your pre-employment, post-offer screening to eliminate hiring people with questionable ethics or inability to safely perform the job.
- Understand how even though investigation expenses are charged back to your company, there may be a disincentive for the TPA to use investigative services on your claims and how to work with the TPA as a team to defeat fraudulent claims.
- Utilize the rumor mill to identify disgruntled employees and address legitimate grips or complaints.
- How to use the ISO Indexing system to prevent fraud.