It may be hard to believe that an employee or trusted executive would file a fraudulent workers' compensation claim to collect some funds. It happens, and knowing how to protect yourself and your company from fraudulent claims is just good protocol.
An independent insurance agent has seen a thing or two and can help you in identifying fraudulent claims and how to recognize them. With an independent insurance agent on your side, you're bound to make the right call when it comes to insurance claims.
Workers' Compensation Fraud Facts
As a business owner, a general concern is employees stealing workers' compensation coverage for a false claim. In fact, over one in ten employers worry about this from their employees. This has caused one in four business owners to install surveillance cameras to keep an eye on employees while on the job.
Workers' Compensation Claims Employee Red Flags
- The injury or illness coincides with a change in employment status
- No witnesses to the incident
- Has a history of claims
- Didn't report injury or illness in a timely manner
What Is a Fraudulent Workers' Compensation Claim?
A fraudulent workers' compensation claim can occur pretty easily if you don't have the proper safety and claim filing protocols in place with your employees. Storytime is the best time, so discussing when most fraudulent claims are reported in the below scenario makes for a colorful story.
Fraudulent Workers' Compensation Claim Story:
Employee B was tooling around their home and slipped and fell right into a jigsaw. They had a nice little cut on "Bs" rear end. "B" knew there was a high deductible on their health insurance that would need to be paid out of pocket and didn't have the extra funds to cover that expense. So "B" was on the way to work anyway and knew that there was the same jigsaw on the jobsite. If "B" could get there before anyone else was able to see "B" get injured, then there was a shot at filing the claim as a work-related injury. "B" thought having the employer's workers' compensation policy shell out for the medical expenses was a good idea. After all, "B" didn't really care for the employer and thought it was a legitimate claim because it very well could have occurred at work.
The above story is a very real scenario that happens on a daily basis, and if you're not careful it can happen to you. Getting with your independent insurance agent can help to make sure these things don't take place in your business.
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How to Avoid a Fraudulent Workers' Compensation Claim
While you can't be manning your employees every second of the day to make sure they're not trying to file a fraudulent injury, you can set up certain requirements that better expose a fraudulent claim and keep them from occurring.
Some safety and filing protocols to practice:
1.) First, make sure all the proper safety guidelines are followed and set in place to avoid injury from happening
2.) Second, hold mandatory regular safety meetings to ensure each employee follows suit
3.) Third, appoint a safety officer in your organization who can implement the safety practices discussed in your meetings
4.) Have cameras throughout your company so you can see when and how an injury may occur
5.) Set regular hours so there is no room for fraudulent mishaps to occur when no one is looking
Following some of these steps and more is the road to safety and fewer fraudulent claims being filed.
Penalties of Workers' Compensation
Insurance fraud is a big deal. Filing a claim that isn't real or has been manipulated all in an effort to get a large payout from the insurance company should be taken very seriously mainly because it lacks integrity, but also because the consequences could be dire to you, your employee, and your business.
Some insurance fraud consequences:
- Penalties and fines ranging from hundreds to thousands of dollars
- Jail time from one year to thirty years
The result of filing a faulty workers' compensation claim and being caught isn't worth the risk. An employee can file a false claim wanting a payout for an injury or exaggerated illness. An employer can misclassify an employee to avoid them filing a claim in the first place, and a healthcare provider can extend the injury or illness to continue getting payment from an insurance company. As the employer, you set the stage. And by setting up proper safety practices and a clean claims reporting process, you can help curb the chances of false claims being filed.
What Happens if You Suspect Fraud?
Leave that up to the experts. You don't want to have a disgruntled employee suing you for false accusations. So when you file the claim with your independent insurance agent, address your concerns and then leave it up to the adjuster and insurance company to determine after their fact-checking if the story adds up. If the insurance company finds the claim to be legitimate then they will pay it out, if they suspect fraud then they will deny the claim and may press charges on the employee or parties involved.
Benefits of an Independent Insurance Agent
The benefits of an independent insurance agent when it comes to fraudulent workers' compensation claims are many. From helping you set up precautions to advising when a potentially fraudulent claim occurs, their input and knowledge are pretty invaluable. They are working for you and will fight to get you the right coverage and pricing but to also help you stay protected from fraudulent activity when it comes to insurance.
All in all, a good independent insurance agent is priceless to have by your side. You never know how you're going to need them.
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