Work Comp Fraud Control, Barn Door Style
Thursday, June 4, 2015 | 0
A recent edition of 20/20 – Who’s Freeloading – deals with insurance. The first 12 or 13 minutes focuses on flagrant workers comp fraudsters caught in the act. The episode shows a worker with an alleged injured foot strutting the beauty pageant walkways; a worker incapacitated with a shoulder injury break dancing in a commercial; a “disabled” worker competing in extreme wrestling. While one might think someone deceiving their employer would have the street smarts to keep a low profile, this is often not the case. Many clueless fraudsters are caught in very public activities: See Caught on The Price is Right.
These cases are egregious and infuriating, particularly because the claimants are so brazen.
It’s worth noting that workers comp fraud comes in many flavors, and individual claimant fraud may be the tip of the iceberg: doctor mills, employer premium fraud and attorney fraud add up to much more in terms of sheer costs to the system.
Still, that can be cold comfort to an employer who deals with a fraudulent claim. It can feel very personal to to be duped and swindled by an employee.
We encourage employers who suspect fraud to work with their insurers to ferret it out – it should be a zero tolerance approach. But chasing down fraud after it occurs is still a case of “closing the barn door” style of management — the horse has already escaped. In the Coalition Against Insurance Fraud’s Emerging Issues, Professor Malcolm Sparrow, a pre-eminent fraud expert from the JFK School of Government at Harvard University says it better:
There is widespread misplaced emphasis on detecting and investigating committed crimes, rather than on controlling, neutralizing, and deterring future crime. Despite some progress, the probability of detection and of criminal prosecution is still extremely small. The risk/reward ratio is still very attractive in insurance fraud — small risk with high reward. There is great potential in shifting the investment balance from heavily weighted identification of already committed crime — the “pay and chase” model — to more investment in detecting attempted fraud and defeating it.
We believe that vigilant employers can nip most fraud in the bud with a tight workers comp management program that focuses on preventing injury, treating employers fairly and compassionately when injuries do occur and closely monitoring the recovery process until return-to-work on full or transitional duty. By actively demonstrating vigilance repeatedly, opportunistic fraudsters may think twice and sophisticated fraudsters may choose an easier target. Here are some best practices:
- Zero tolerance message. Educate employees about their rights and responsibilities under workers comp, and be clear that your intention is to care for anyone who is injured on the job, but that you aggressively prosecute fraud as a crime.
- Publicize your return-to-work program. Establish and reinforce a goal of recovery and return-to-work for any work-related injuries.
- Train supervisors. Your supervisors should understand workers comp and their role in the process. They should understand the employer/employee rights and responsibilities and what to do if an injury occurs. They should be alert for red flags.
- Aim for same-day injury reporting. Train employees to report injuries immediately when they occur.
- Conduct accident analyses. As soon as possible after a work injury or near miss, gather facts and witnesses while things are fresh. This will also set the stage for getting to the root cause and taking any remedial actions to prevent future occurrences.
- Set the tone at point of injury. Escort an injured worker to the treating physician in your network. Remind them of rights / responsibilities and that you will be monitoring their recovery.
- Keep in close touch with out-of-work injured employees. Let the employee know how important they are to the team. Have transitional work available that conforms with any restrictions and establish a return to work date.
- Work with your insurer. Be familiar with “red flags” and report any suspicious activity immediately.
Fraud resources
10 “Red Flag” Warning Signs of Workers’ Compensation Fraud
10 ways for employers to fight workers’ comp fraud
Seven Steps You Can Take to Stop Workers’ Compensation Fraud
National Insurance Crime Bureau
Coalition Against Insurance Fraud
Julie Ferguson is a marketing consultant for Lynch Ryan & Associates, a Massachusetts-based employer consulting firm. This column was reprinted with permission from the firm's Workers' Comp Insider blog.
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