Large workers’ compensation insurers will have a special investigations unit (SIU) dedicated to fighting fraud and assisting the adjusters with various aspects of in-depth investigation into work comp claims. Self-insured employers and most medium and small size insurers do not have the claim volume or the expertise to have their own SIU. The self-insured employers and the medium/small insurers know the importance of defeating fraudulent claims and the importance of in-depth investigations (intelligence data) beyond what the adjuster has the expertise (or time) to do. When a need arises for SIU, these employers and insurers will outsource their questionable claims and specialized investigations to a company who can provide the SIU needed.
The SIU company will frequently provide the adjuster with an a la carte selection of services. However, it has become common for SIU companies to partner with the self-insured employer or insurer with the SIU acting as if they were just another department within the self-insured’s or insurer’s company.
Fraud Prevention Should Be More Than Surveillance
The service most often provided by the SIU is surveillance. Unfortunately, the SIU investigator will not always be able to provide documentation that supports the claimant’s disability is not as claimed. Sometimes the investigator can be looking for a needle in a haystack, all the while racking up large investigation fees. The practice of ordering surveillance by default is all too common and unnecessarily spikes the cost of claims.
A recommended approach to limiting investigation costs is to pro-actively stop fraud before it starts. The best SIU providers will offer a comprehensive approach by getting involved in the process early and showing significant workers compensation savings. Two areas to work with your SIU provider on this comprehensive approach are in the hiring process and injury response.
Review Your Hiring Process:
- Are initial background checks being performed?
- Has the employee had any previous claims?
- Do they have a tendency to carry out a claim over a long period of time?
- Do you require employment history and are you checking the references?
- Are you doing pre-employment physical examinations?
- Are you doing pre-employment drug testing?
- Are you checking social media for any red flag behavior?
Review Your Injury Response:
- Who is reporting the injury?
- How is it being reported?
- How much investigation, if any, has been performed at the time of injury?
- Is there an escalation process in place?
- When is your TPA/Carrier involved?
Surveillance is an excellent tool and an integral part of a comprehensive fraud prevention plan. We recommend using surveillance, but at the appropriate time and not as the only tool to prevent fraud. If using surveillance, one of the best times to set it up is when you are certain that the employee will be moving, such as for scheduled medical appointments. Another time is after bad weather that will cause the employee to move outside to fix damages from snow storms, windstorms, ice storms etc.
The proper use of SIU will reduce or eliminate leakage on many workers’ compensation claims. If you do not have an in-house SIU, please contact us for recommendations on SIUs available in your area.
Author Michael B. Stack, CPA, Principal, 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.
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