As an employer, you must be vigilant in your efforts to protect your company from the few employees who do commit workers compensation fraud. Adjusters often refer to possible fraud in a workers comp claim as looking for “red flags.” A “red flag” is anything standing out from the ordinary.
Any one of the items on the following list of “red flag” do not prove a workers comp claim is fraudulent. However, if you have several “red flag” on a single claim, it’s a good idea to consult with both the adjuster and the SIU unit about the claim.
11 Red Flags of Workers’ Compensation Fraud
- Late Reporting
- If an employee is really injured on the job, it is unlikely the employee will wait days or weeks to report the injury.
- Accident Details
- The accident details are sketchy, vague or fuzzy.
- The employee has difficulty in recalling what happened.
- The employee changes the description of the accident when inconsistencies are pointed out.
- The nature of the injury is not consistent with the nature of the work done by the employee.
- The date, time and location of the accident is unknown or forgotten.
- The accident details are inconsistent with the employee job duties.
- More Than One Version of the Accident
- The employee gives completely different versions of the accident to the employer and the adjuster and to the doctor.
- The employee keeps modifying the story of what happened.
- The employee leaves out pertinent information.
- The accidents details vary from medical report to medical report.
- There are no witnesses to the accident and the employee normally works around other people.
- There are witnesses but their version of the accident differs from the employee’s version of the accident.
- The accident occurs at a location away from where the employee would normally be working.
- The nature of the injury is unusual for the employee’s line of work.
- The employee’s co-workers express doubt that the accident occurred.
- Unhappy Employee
- The employee is disgruntled about some aspect of his/her job requirements.
- The employee was demoted or passed over for a promotion.
- The employee is on the list to be laid-off.
- The employee is on “positive improvement needed” status and is about to be terminated.
- The employee has had numerous prior employers.
- The “accident” occurs immediately prior to a strike, plant closing or the end of seasonal employment.
- The employee is a new hire.
- Monday Morning Claims
- The employee has an early Monday morning accident before the supervisor or other employees see him on the job (accident occurred off the job over the weekend).
- Injured Worker is Never at Home
- The injured employee is not at home during the normal workday.
- The employee is always sleeping when the adjuster calls or cannot be disturbed.
- The employee’s family member is vague or noncommittal about when you can reach the employee.
- The employee is “away” but quickly returns all calls from a cell phone, not the home phone.
- The employee uses the address of friends or family members and has no definite address or uses a Post Office box as an address.
- The spouse or other family members do not know about the workers comp injury.
- Financial Reasons
- The employee’s spouse is not working and drawing workers comp indemnity benefits, social security disability payments, welfare or unemployment insurance and the employee wants the same life style.
- The employee inquires about a settlement early in the claim process.
- The employee was having prior financial problems.
- The employee is nearing retirement age.
- The employee files for benefits in a state other than where the accident occurred.
- In the states where an employee can collect workers comp indemnity benefits based on the amount of combined wages from both the workers comp employer and a second job employee.
- The failure to report other work income while drawing indemnity benefits.
- The employee took excessive time off just prior to the injury.
- The employee is in the middle of a divorce or other family disturbance.
- The social security number used by the employee belongs to someone else.
- The employee applies for Social Security benefits before the injury occurs.
- Income from workers comp, disability or other sources exceeds the employees prior after tax income.
- Medical Care
- All the injuries are subjective — pain without trauma, soft-tissue, emotional.
- The employee changes doctors frequently “doctor shopping” or changes doctors when released to return to work.
- The employee has excessive treatment for soft-tissue injuries.
- The medical treatment reported by the employee is different from the medical care stated in the medical reports.
- The nature of the medical treatment changes from one body part to another after the employee has been treating for a while.
- The employee misses medical appointments.
- The employee fails to show up for an independent medical examination.
- The employee refuses or delays diagnostic testing.
- Whiteouts, corrections, erasures on medical forms submitted by the employee.
- Exaggerated pain symptoms.
- The employee has a history of multiple workers comp claims and/or reporting subjective claims of injury.
- The injury relates to a preexisting medical condition or health problem.
- The medical reports provided by the employee appear to be second or third times photocopied.
- The length of recovery is excessive for the nature of the injury.
- Inconsistent Physical Ability
- The employee who has been off work for a while has calluses on hands or grime under the fingernails
- The medical reports reflect “muscular” “tanned” or other adjectives to reflect the employee is in good health.
- The employee is unable to work due to the injury but is seen painting his/her house, mowing the lawn, carrying heavy objects, etc.
- The employee has a high-risk hobby or does other physical exertion activities.
- Surveillance reflects physical activity greater than what is reflected in the medical reports.
- You learn the employee is working elsewhere while drawing indemnity benefits, especially where the work requirements exceed the capabilities reflected in the employee’s medical reports.
- Miscellaneous Red Flags
- The employee is unusually pushy to settle the workers comp claim
- The employee has extensive medical knowledge but no training in the medical field, or has extensive insurance terminology but no work experience in the insurance field.
- The employee was referred by a friend who name he does not know to a particular doctor or attorney.
- The employee is a part of a group of employees using the same doctor and the same attorney for their workers comp injuries.
- The attorney’s letter of representation is the same day of the injury or even dated before the “injury.”
Remember, even if the employee’s claim has every one of these “red flag,” it still does not prove fraud. However, if the work claim has more than one of these “red flag,” you definitely want to bring in a fraud investigator to delve deeper into the claim. The more fraudulent claims you identify and deny, the lower your overall cost will be for workers compensation insurance.
Author Michael Stack, CEO Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .
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