Although you want to trust your employees, unfortunately, fraud does happen. Some employees may commit fraud by staging accidents, faking injuries or pretending they are injured more seriously than they are. They might claim a non-work related injury or an old injury happened on the job. They might exaggerate the seriousness or length of a disability to stay off the job longer or increase their workers’ comp payout. The Coalition Against Insurance Fraud has estimated that workers’ compensation fraud cost employers $6 billion a year.
Fraud, abuse and malingering
You must understand the definitions of fraud, abuse and malingering:
• Fraud means an intentional deceit, usually perpetrated for profit
• Abuse means to use wrongly or improperly or misuse
• Malingering means to exaggerate or pretend a degree of illness, especially in order to avoid work or obtain narcotic pain killers
Know how to follow up on claims where you suspect fraud, abuse or malingering. This includes contacting your adjuster, your defense attorney and your state’s workers’ compensation Special Investigative Unit.
The key indicators of malingering, fraud and abuse are red flags. Notify the adjusters of claims with “red flags.” (See https://blog.reduceyourworkerscomp.com/2011/03/26-red-flags-of-medical-provider-fraud-in-workers-compensation/ ). Some of these red flags are:
• Monday morning accident
• Arriving early for work
• Not seeing a hazard they just saw moments earlier
• The mechanism of injury does not make sense
• The accident was not witnessed
• The selection of a particular doctor over a more qualified doctor who specializes in treating injured employees
• The employee being asleep when they would normally be awake
• The employee not being at home
• Tips from co-workers
Incorporate a fraud prevention unit
It is critical that you inform all employees that your company will not tolerate fraud. You must also train your management to spot abuse. See https://blog.reduceyourworkerscomp.com/category/prevent-workers-comp-losses/fraud-and-abuse/.
• Use a toll free “tip line” to encourage employees to call in to combat fraud and abuse. Let employees know that they can make a report anonymously and reward tips that lead to a fraud conviction, if allowed by law.
• Inform all employees the company is embarking on a fraud investigation program.
• Include information about your anti-fraud program in company handbooks, safety brochures and flyers posted on company billboards.
• Have a strong transitional duty program.
• Use surveillance where appropriate and allowed by law to see if an injured employee is engaging in activities they claim they cannot perform.
• Perform thorough background checks and contact all references BEFORE hiring an employee of questionable character.
• Prosecute fraud cases.
Have a medical advisor
Have a full or part-time medical professional such as a nurse, doctor or physical therapist on-site or on retainer to act as a medical advisor. In addition to enabling you to get accurate restrictions quickly, establish or disprove causation, having a medical advisor can also serve as a deterrent for employees who may be trying to malinger or exaggerate symptoms.
Functional Capacity Evaluations (FCE)
FCE is a type of testing that measures an employee’s ability to perform various physical functions such as lifting, twisting, bending, range of motion, sitting and standing. Functional capacity testing can help determine a worker’s capacity. FCEs can also help identify malingering by screening for symptom magnification. You should request that a treating physician or physical therapist complete a FCE if malingering is suspected.
Author Michael B. Stack, CPA, Director of Operations, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher. www.reduceyourworkerscomp.com. Contact: mstack@reduceyourworkerscomp.com.
Editor Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and 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. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact:RShafer@ReduceYourWorkersComp.com.
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