Workers’ compensation is designed to help people who have been hurt on the job get back on their feet. However, it’s also an area that is ripe for potential abuse.
No matter what form it takes, workers’ comp fraud hurts everyone. Insurers pay billions of dollars a year in fake claims. Businesses also pay an higher insurance premiums and incur other costs such as:
- Production delays,
- Extra pay for employees working longer hours,
- Retraining, and
- Replacing equipment.
Employees suffer if they must put in longer hours or if companies reduce annual raises because of higher insurance premiums. Even consumers pay because higher costs are likely to translate into higher prices.
For all these reasons, it’s important to be on the lookout for workers’ comp fraud at your company.
The most common scheme is the phony workplace injury that’s later discovered when the employee is caught doing heavy lifting at home or seen working for another employer while collecting benefits.
While it is important to be alert to possible fraudulent claims, it is far more important to prevent them from happening in the first place. Let employees know that in most states, workers’ compensation claim fraud is a crime. Punishment varies from state to state but can include prison time and fines. According to the Coalition Against Insurance Fraud, there are several other ways to help combat workers’ comp fraud at your company:
- Verify carefully the references and background information of potential hires.
- Publicize your company’s workers’ compensation policy to all your employees, and provide them with updates at least once a year.
- Educate supervisors on how injuries decrease productivity and how workers’ comp costs affect the bottom line.
- Display fraud awareness posters and the National Insurance Crime Bureau’s hotline number, along with any hotline mechanisms from your state.
- Work with your insurer to set up a safety-management program that can help eliminate safety problems.
- Contact your insurer’s special investigation crimes unit immediately if you suspect a fraudulent claim and you have evidence or witnesses to back up your suspicion.
- Pay attention to employee complaints and concerns about their working conditions. The strongest predictor of fraud is a chronically disgruntled work force.