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NISA Nuzzles Vol 5 Nuzzle 29 January 27, 2021

Jan 27, 2021

NISA Nuzzles Vol 5 Nuzzle 29 January 27, 2021

The Cost of Fraudulent Workers’ Comp Claims

 Submitted by Insight Worldwide

 

While the vast majority of workers’ compensation claims are legitimate, fraudulent claims comprise a significant portion of expense by employers and their insurance companies. Different sources estimate fraudulent claims at anywhere from $6 to $7 billion of the estimated $60 billion paid out annually. Additionally, the Federal Bureau of Investigation (FBI) and Society of Human Resources Management (SHRM) have warned employers about the significant rise in claims for fraudulent unemployment benefits resulting from COVID-19. These fraudulent injury claims and employee theft cannot just be absorbed. The expense of fraud is detrimental long-term and leaders must act to positively influence controllable factors.

 

For existing employees, a strong safety program can help reduce legitimate claims. Encouraging input from employees in this regard can engage them in the business and discourage “revenge” claims. Staffing firms, too, should consistently conduct site visits to ensure safe working environments and clear communication with clients and employees about safety. Assisting staffing owners, and risk managers, in the process should be a quality insurance team or broker. A good broker who understands the industry and your business model will offer balanced consulting, coaching, and will help introduce proven solutions to avoid undesirable behavior, like fraud. However, it is your team’s responsibility to know the warning signs, and to notify your insurance company, if you believe an employee claim is fraudulent. Two or more of the below could be an indication 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 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.

 

Not all of the above signs can be difficult to determine, however, knowing if an employee frequently changes physicians or if they have a history of suspicious claims is difficult and practically impossible. To truly develop a solid defense against employee fraud, theft, or other unsafe actions should be a fair and equal hiring process which embeds the unbiased screening of applicants. Hiring ethical and safe employees doesn’t just reduce your chance of having a fraudulent claim, it makes your existing safety program and preventive measures more secure.

 

Insight Worldwide’s integrity tests are psychologically constructed, and validated, to help employers quickly screen applicants in a legal manner. The assessment tools help hiring managers and recruiters address multiple risk factors head on, even before applicants are interviewed. And, while one workers’ comp fraud claim can cost an employer a significant amount of time and money, legitimate claims also affect your business and insurance premiums. Insight’s assessments target these risks and violations in addition to tackling workers’ comp fraud predators; and as a staffing industry best practice, the solution should be considered for your firm. For more information, please contact Insight Worldwide for consultation and to determine the best hiring tools for your business.


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