Pro-Actively Stop Workers’ Comp Fraud Before It Starts

Large workers’ compensation insurers will have a special investigations unit (SIU) dedicated to fighting fraud and assisting the adjusters with various aspects of an 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.

The service most often provided by the SIU is surveillance. Unfortunately, the SIU investigator will not always be able to provide documentation the claimant’s disability is not as claimed. The investigator can sometimes 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:

1. Are you using Integrity Testing?
2. Are initial background checks being performed?
3. Has the employee had any previous claims?
4. Do they tend to carry out a claim over a long period of time?
5. Do you require employment history and are you checking the references?
6. Are you doing pre-employment physical examinations?
7. Are you doing pre-employment drug testing?
8. Are you checking social media for any red flag behavior?

Review Your Injury Response:

1. Who is reporting the injury?
2. How is it being reported?
3. How much investigation, if any, has been performed at the time of injury?
4. Is there an escalation process in place?
5. When is your TPA/Carrier involved?

We recommend to not have surveillance set up unless it is certain that the employee will be moving. One of the best times for this is to coordinate with medical appointments. Another time is after bad weather that will cause the employee to move outside to fix damages from snowstorms, windstorms, ice storms, etc.

When an employee maintains they are unable to return to work due to the severity of their injury, the adjuster will request the SIU to do surveillance on the employee. Surveillance is normally done covertly, that is without the employee knowing he/she is being watched. The surveillance is usually done by one investigator, but if the location is complicated or the neighborhood is crowded, multiple investigators may be employed at the same time. Both video surveillance and still photographs are taken whenever the claimant is visible.

Examples of Successful Surveillance:

1. The claimant maintains he is unable to walk and must use a wheelchair. The investigator obtains video of the claimant using a push lawnmower to mow the yard.
2. The claimant maintains he is unable to lift more than five pounds. The investigator obtains video of the claimant hand loading concrete blocks on his truck.
3. The claimant maintains he is unable to work (for any number of reasons). The investigator obtains video of the claimant working full duty for another employer while drawing disability benefits.

Unfortunately, the SIU investigator will not always be able to provide documentation the claimant’s disability is not as claimed. However, there are enough successfully completed surveillance cases that surveillance is standard procedure when there becomes a question in regards to the claimant’s need to be off work.

While surveillance is the most frequent service provided by SIU companies, there are numerous other services SIU companies provide, including:

• On-site investigations of severe injuries
  • Injured employee’s statement
  • Employee’s supervisor statement
  • Co-worker’s statements
  • Witness’ statements
  • Pictures of the accident scene
• Medical records searches
  • Identifying all medical providers within a specific radius of the claimant’s residence who have treated the claimant prior to the date of the alleged injury
• Fraud
  • Developing a fraud prevention plan
  • Fraud procedures manual
  • Identification of “red flags”
• New hire assistance
  • Integrity testing
  • Background checks including criminal records, liens, and judgments, social security number verification, licenses, assets check
  • Prior injury history
  • Social media checks – Facebook, LinkedIn, Twitter, etc.
  • Drug screening assistance
• Locating people
  • Prior employees who are no longer employed
  • Independent witnesses
  • Skip tracing
• Process Service
• Alive and Well Verifications (confirming long term total disability claimants and spousal benefit claimants are still alive and entitled to the benefits they are receiving)

The proper use of SIU will reduce or eliminate leakage on many workers’ compensation claims.

Author Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is a 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 .

Contact: [email protected].

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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.