Did you know that workers’ compensation insurance fraud costs the industry an estimated $7.5 billion each year, making it the fastest-growing segment of insurance fraud, according to the National Insurance Crime Bureau?
What is fraud? Under state law, workers’ compensation fraud includes making false or fraudulent statements or representations in order to obtain or deny workers’ compensation benefits. Those who aid and abet in this kind of fraud may also be prosecuted. Workers’ compensation fraud may be perpetrated by a number of individuals, including physicians, attorneys, employers and injured workers.
The High Cost of Fraud
The repercussions of workers’ compensation fraud can have a ripple effect within organizations, which can impact the bottom line. These consequences may include lost productivity, increased staffing costs, decreased morale and higher insurance premiums. The damage also leads to potential losses in the billions.
Fraud: Spotting Red Flags
The most important way to stop workers’ compensation fraud is to spot it! There are five key indicators that you should be on the lookout for when assessing a workers’ compensation claim. They include:
Let’s take a closer look at each red flag. They may indicate the presence of a fraudulent workers’ compensation claim.
1. The timing of the claim and the first notification of injury is:
2. There are questions surrounding the injury such as:
3. Suspicious events occur during the claim process:
4. Medical treatment issues arise when:
5. Injured worker history:
What to Do if You Suspect Fraud
It’s important to note that most claims are not fraudulent. However, if you as an employer suspect workers’ compensation fraud, you should report any concerns you have immediately to your carrier, directly or through your carrier’s fraud hotline. You may also want to initiate an internal investigation and partner with your insurance carrier, their Special Investigation Unit or law enforcement.
By working together and learning how to spot these red flags, workers’ compensation fraud can be stopped.
Founded in 1925, CopperPoint Insurance Companies is a leading provider of workers’ compensation and commercial insurance solutions operating in six southwestern states. To learn more about our insurance products and find resources to better manage your risks, explore our website or contact your independent insurance agent.