According to the Coalition Against Insurance Fraud, fraudulent workers compensation claims cost employers $6 billion a year and is a significant part of the $30 billion a year insurance fraud problem. Per one estimate, 25 percent of all workers compensation claims entail some element of fraud. Workers compensation fraud runs the gamut from the totally bogus claim to the employee who extends his time off work “a few extra days” to take care of personal errands or other personal issues. Workers compensation insurance fraud is any intentional act of falsifying or exaggerating a work place accident for the purpose of obtaining medical and/or indemnity benefits that would not otherwise be owed.
Most larger workers compensation insurers will have a “special investigation unit” (SIU) whose purpose is to defeat the totally bogus claims and to stop the work comp claims that have a significant element of fraud. Many smaller insurers will have membership in groups like the National Insurance Crime Bureau (NICB) whose purpose is to identify and prosecute fraud and will utilize the NICB as their SIU. There are also SIU companies that sell their services to insurers, third party administrators, and self-insured employers.
The SIU goal is to reduce the amount of losses due to workers compensation insurance fraud and to prosecute the employees who commit work comp fraud. To achieve these goals, SIU units have become “high tech.” The days of SIU being “Jim Rockford” or “Magnum PI” have been replaced by the use of technology and data mining to identify fraudulent aspects of each work comp fraud. Most SIU investigators either have a law degree, a forensic accounting background or have worked in law enforcement before joining the SIU.
Handling each fraud is different. The SIU, upon learning of a potential fraudulent or a definitely fraudulent, claim can take one or several actions including:
5 Ways SIUs Investigate Fraud
- In-depth analysis of the claim.
- Extensive interviews.
- Field investigation.
- Background investigation.
- Work with the state and local law enforcement agencies.
The question employers often ask is, “When should a claim be turned over to a SIU for further investigation?” The answer is simple – any time the employer suspects a work comp claim is not what it is claimed to be.
There are also some “red flags” that should tell the employer it is time to request SIU involvement in the claim including:
8 Red Flags of Fraud – Time for SIU
- Excessive medical treatment for a minor injury.
- Attorneys who refer all their clients to the same doctor.
- Medical billing errors – for example, two medical providers in different locations seeing the employee at the same time, or medical providers seeing the employee when the employee’s time card shows he or she was at work.
- Rumor or documentation that the employee is working somewhere else while drawing indemnity benefits.
- Co-workers give a different version of the accident than the employee provides.
- Co-workers advise the accident happened away from work and it is not work related.
- The employee’s version of the accident reported to you differs from the employee’s version of the accident given to the doctor.
- The employee was having serious financial difficulties prior to the injury.
If you do not initiate the SIU involvement in a workers compensation claim, but are contacted about a work comp claim by an SIU investigator, cooperate fully with the investigator and provide any information or documentation the SIU investigator request. The failure to assist the SIU will allow the employee to defraud the insurance company or your company if you are self-insured. Also, fraud is contagious. Many employees who would not normally consider fraud will be embolden to try it if they see your company as lax in your handling.
There are proactive measures the employer can take to assist the SIU to reduce their case load. To eliminate many of the fraudulent claims (and the legitimate work comp claims, too), have a strong safety program that reduces the employee’s options for creating a fraudulent claim scenario. Also, when confronted with a documented work comp fraud, prosecute fully. Employees who know that fraud is not tolerated and will be prosecuted are less likely to consider committing work comp fraud.
If your insurer does not have a SIU, ask why not. Your insurer should be as committed to fighting work comp fraud as you are. If your insurer has a SIU, know they are committed to protecting your company from the cost of workers’ compensation fraud.
Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing, publishing, pharmaceuticals, retail, hospitality, and manufacturing. See www.LowerWC.com for more information. Contact: RShafer@ReduceYourWorkersComp.com.
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