2/9/2015 8:00 AM

What You Don't Want to Hear About Workers Compensation Fraud

When employees are hurt at work, traditionally, workers' compensation insurance will protect them. WC pays for lost wages, medical bills and any other related expenses the worker can incur while recovering. The vast majority of employees are honest about getting hurt at work, but there are scams out there. One of the checks and balances in the system is requiring a doctor assessment. If an employee were not really hurt, a doctor may be able to identify a false claim. There are, however, unscrupulous people that slip through the cracks. Even though percentage wise the number of fraud claims is relatively small, the damage they cause is significant enough that it costs policy holders and insurance companies billions of dollars every year. In addition to this, some employers try to lower premiums by paying employees off the books or misclassify them. Both offenses are considered workers' comp fraud.

When dishonest employees make bogus claims about injuries, their motives vary. One of the most common motives is free money. In many cases, the workers claiming to be injured might have other jobs or secret businesses they use for additional income. Another motive is to get time off. Some workers want to collect money and have time off to enjoy traveling, or other hobbies.

Types of Bogus Claims:
Here are the different ways workers can make claims and get away with it:

  • Exaggerated Injuries
    If a worker is using this method, he or she might have only a minor injury. This is by far the most popular type of fraud in Workers Compensation claims. It may be a slight pain in the back, wrist or any other location. However, he or she will embellish the injury's severity enough to take time off of work. After taking time off, the worker will usually claim that it is taking a long time to recover in order to collect more money. Lower back claims are the most difficult to disprove. If you see this type of injury it should definitely be a red flag.

  • Off-The job Injuries
    People who get hurt while they were playing football at their class reunion may wait until they return to work to file a claim. They may fake an incident that would result in the same injury they sustained while away from work.

  • Fake Injuries
    In some cases, workers may fabricate the details of a nonexistent injury. Again, you may see those soft tissue damage claims like lower back etc. As I mentioned back and neck problems are common claims. These are very hard to disprove, and employers may have to pick up the tab for a worker's dishonesty.

  • Old Injuries:
    Some workers may use an old injury or malingering to gain money. With old injuries, workers pretend the damage is new in order to get out of work or to get paid for treating injuries they may not be able to afford to treat otherwise. Malingering is abusing the system by staying home longer than necessary.

  • Premium Reduction
    In some cases, workers' comp fraud is committed by business owners who try to reduce the premiums. Among the most popular types of employer fraud is the intentional mis-classification of an employee. Basically, they tell the insurance company that he/she is doing a job that is less dangerous than they actually are. For example a roofing contractor may classify an employee as clerical rather than working on a roof. The roof rate is much higher than an office worker. Paying an employee “off the books” is another popular employer scam. In this case the payroll is not used and the Workers Comp premium is much lower.

Although the number of bogus claims made each year exceeds the number of premium scams, the scams have a much larger financial impact. One scam alone can cost hundreds of thousands of dollars. If a scam lasts for several years, the total may reach into the millions.

Whether businesses are avoiding paying premiums, lying about the number of workers on the payroll or lying about workplace safety, workers comp fraud is a serious offense. Lying claimants and crooked doctors also face serious consequences if they are caught. Employers can fight back by being insured properly, making the workplace safer and making the environment at work a happy place for employees. To learn more about this type of fraud and how to prevent it, give us a call or check out our website at www.brookswaterburn.com

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