Gunn: Identifying and Dealing With Fraud in Your Comp Program
Tuesday, August 20, 2019 | 758 | 0 | min read
Workers' compensation fraud costs employers hundreds of thousands of dollars every year. Fraudulent claims create both a financial and administrative burden for employers, as well as create additional hardship for injured workers with legitimate claims.
Consequently, early identification of potential fraudulent cases, and quick, appropriate action by workers’ compensation third-party administrators can play a significant role in making sure your workers’ compensation program runs efficiently and provides needed help for injured workers.
The following are some best practices you can implement to reduce fraud, and what to do if you suspect a claim is not quite right.
Identify questionable claims
Here are some of the red flags that Keenan’s claims examiners employ in order to identify such potential fraudulent claims:
- The employee does not immediately report the injury to his/her supervisor.
- There is information that indicates the employee was injured somewhere else (auto accident, playing sports, etc.).
- The facts of the injury do not align with the type of injury or disability.
- The employee misses doctor appointments related to the claim.
Follow the process
Even if you suspect a claim could be fraudulent, you must still follow the California process to ensure it is submitted appropriately and the worker obtains medical treatment.
- The employee is still required to complete a claim form (DWC-1).
- Employer is still required to provide medical treatment within one day of notice of injury.
- The administrator has 14 days to issue a delay letter during which no temporary disability will be paid.
- The administrator then has 90 days to either accept or reject the claim, during which time he may solicit additional information.
Once a potentially fraudulent claim is identified, it is imperative that investigations are initiated. Investigations should be:
Using an outside party that specializes in workers’ compensation fraud for investigation will ensure that the case is handled in accordance with all regulations and will hold up in court if the investigation results in a trial. Remember, only a court of law can determine fraud — not the examiner or district.
Keenan utilizes investigative services conducted through our dedicated division, Regency Investigations. These investigations can include:
- Interviews with the injured worker.
- Interviews with coworkers.
- Witness interviews.
- Manager/supervisor interviews.
- Surveillance of injured worker.
In addition to these investigations, Keenan has a Special Investigations Unit (SIU). This innovative component bridges the investigative findings into a comprehensive report that includes relevant evidence that is presented to a district attorney's office. SIU continues to coordinate the communication of information to both the district attorney as well as the state Department of Insurance.
Let your employees know that fraud will not be tolerated and that there are stiff penalties for filing false claims. It also helps to provide your employees with easy ways to report potential fraud that they see.
- Post the penalties for filing false claims on your new-hire pamphlet.
- Hang a poster in the break room letting employees know how to report fraud anonymously.
- Share stories about fraud convictions to deter abuse.
Looking for resources?
Keenan has been working with school districts for more than 40 years to create safe and healthy environments for all district employees. We can work with you to implement a comprehensive strategy to curb fraud in your district. Through our prevention and investigation efforts, we have saved districts millions of dollars preventing the filing of fraudulent claims and prosecuting those that take advantage of the system.
An example of success in identifying fraudulent claims can be found in the recent conviction in San Mateo County. In this instance our claim examiner identified numerous inconsistencies in the medical reports versus the statements provided by the employee. The complaints in the medical reports did not reveal any medical evidence based upon those complaints. There were alleged migraines and double vision, but tests did not support these symptoms, and it appeared that these were exaggerated statements.
As a result, investigations were initiated, and the employee was observed participating in activities that were not consistent with any claimed injury.
The investigative evidence was forwarded to the San Mateo County District Attorney’s Office, which obtained a conviction, and the defendant was ordered to serve 60 days in the county jail and payment of $60,000 in restitution.
Stacey Gunn is assistant vice president of the SIU/Fraud Unit for Keenan and Associates' public agency property and casualty practice in Torrance, California. This entry is republished from Keenan's blog.