Statistics from the National Insurance Crime Bureau, a group of nearly 1,100 insurance companies and self-insured employers, show that insurance fraud costs over $30 billion per year. Fraud increases the cost of doing business for employers, whether it is the totally bogus claim to obtain medical treatment for a preexisting condition or the employee who exaggerates the amount of pain to obtain narcotics. It increases the cost of all products and services.
Special Investigation Units Detect, Investigate, and Defeat Workers Comp Fraud
Many insurers and self-insured employers take the cost of workers’ compensation fraud seriously and are fighting back. Special Investigation Units (SIU), whose purposes are to detect, investigate and defeat fraud, have been established at many insurance companies, third-party administrators, and self-insured employers. The SIU is normally staffed by individuals who have a law degree or forensic accounting background or have both extensive law enforcement experience and insurance knowledge.
The SIUs fight fraud in several ways, including:
• Investigating suspected fraudulent claims
• Examining dubious claims for evidence of fraud
• Educating claim adjuster on how to identify fraud
• Coordinating with law enforcement agencies to achieve criminal prosecution of employees who submit fraudulent work comp claims
• Coordinating with the National Insurance Crime Bureau to identify participants in organized crime rings
• Coordinating with the fraud division of the state department of insurance
Most investigations completed by an SIU result from a questionable workers’ compensation claim being referred to them by the adjuster or by the employer. Upon receiving a newly assigned claim, the SIU will give a fraud investigator to the claim.
The SIU investigator’s investigation will include:
• Completion of a detailed analysis of the initial claim information provided to them
• Extensive interviews with the adjuster, employer, medical provider(s), and the employee
• A field investigation to visit the accident location and interview witnesses
• A background investigation of the employee
• A compilation of prior medical history on employees who may be claiming preexisting medical conditions
• Sharing and obtaining any information available from law enforcement agencies and the National Insurance Crime Bureau
Employers Should Ask Adjuster If Suspected Claim Referred to SIU
Employers who suspect fraud should ask their adjuster if the suspected claim has been referred to the SIU. If not, the employer should ask to make a direct referral to the SIU.
Employers are sometimes reluctant to refer a claim to the SIU as they are concerned about the employee alleging retaliation by the employer for the employee making a workers’ compensation claim. Employers do not need to be overly worried about this possibility as the SIU investigators are trained to have an unbiased approach toward obtaining the facts and pursuing only fraudulent claims that can be proven. (There will be highly suspicious claims that the adjuster, employer, and SIU investigator all believe are dishonest and will not be pursued as the SIU investigator and the law enforcement agency cannot obtain enough evidence to prove fraud).
The SIU of an insurance company cannot bring criminal charges or prosecute an employee who files a fraudulent work comp claim. The SIU will present the evidence they have developed to the appropriate law enforcement agency for their consideration. The employee will be prosecuted for criminal fraud only if the law enforcement agency is in agreement with the SIU that the employee is attempting to commit fraud or has committed fraud.
Nothing Breeds Fraud Faster Than Failure To Prosecute
If you are aware of a possible fraudulent claim, it is to your benefit to have the SIU fully investigate the claim. Nothing breeds fraud faster than the failure to prosecute a known fraud. If employees see a fellow employee getting away with fraud and being compensated for doing so, it will be seen as a green light for other dishonest employees to cash in. When employees know that fraud will definitely be prosecuted, few are willing to attempt it.
For more information on fighting insurance fraud, please contact us.
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 the founder & lead trainer of Amaxx Workers’ Comp Training Center, which offers the Certified Master of Workers’ Compensation national designation.
Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/
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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.