Members of the claim management team face many challenges that include stopping fraud, waste, and abuse in workers’ compensation claims. It is important to be aware of these issues and investigate claims when certain red flags are raised. An experienced claim handler will understand when there is a reasonable suspicion of abuse in the system and use the necessary means to locate it and stop it.
What is Fraud, Waste, and Abuse?
The terms fraud, waste, and abuse are often used in workers’ compensation. Often this is not necessarily the case. The critical challenge is to know what it is and use these terms correctly.
- Fraud occurs when someone makes a “material misrepresentation” that intends to deceive another to receive workers’ compensation benefits. The classic example of fraud is when an injury does not occur, but a report is made.
- Waste occurs when someone who was injured overutilizes a service or an item for their benefit. This can happen when someone makes a full recovery but continues to use a medical service such as chiropractic care and continues to use it for everyday maintenance.
- Abuse occurs when an injured employee magnifies their symptoms for a material benefit to receive additional benefits. A typical example is when an employee misreports the symptoms that prevent them from returning to work with or without restrictions.
Claim handlers need to recognize when Workers’ Comp Fraud, Waste, and Abuse behaviors are occurring a properly investigate their claims with increased scrutiny.
Investigating Fraud, Waste, and Abuse in Workers’ Compensation
Once Workers’ Comp Fraud, Waste, and Abuse is identified in the system, the claim management team members need to conduct a reasonable investigation. Failure to do so will result in spending unnecessary money on a claim.
A private investigator and other standard surveillance methods are common tools used when determining whether there is a case of Fraud, Waste, and Abuse in a claim. This is often costly and can use scarce resources. It is vital to understand applicable state and federal laws and ensure the service provider operates ethically when using this tool. Additional considerations should include:
- Using a private investigator when you know someone will be at a particular place or location. Failing to time the services of an investigator properly will result in a great video of the employee when they are inside their home.
- You are using the resources of an investigator over consecutive days. It is usual for someone allegedly suffering from the effects of a work injury to have a “good” day when they are more active. The evidence you gather is more persuasive when you capture someone’s strict limitations in engaging in physical activities over multiple days.
There are other types of investigation that can be conducted. These include:
- Witness statements;
- Activity checks when the employee claims to be at certain events;
- Review of medical records and adequately timed independent medical exemption; and
- Review of social media to gather information on an employee’s activities. It is essential to know and understand legal and ethical rules regarding this source of information.
Insurance carriers can also work with employer representatives with on-site monitoring within the workplace. The primary tool that can be used is CCTV and use of security cameras. Employers can also use plainclothes detectives or “secret shoppers” to monitor employee performance and serve as witnesses.
Common Warning Signs of Workers’ Comp Fraud, Waste, and Abuse
Members of the claim management team need to be vigilant in monitoring their files. Common signs of Workers’ Comp Fraud, Waste, and Abuse in a claim include:
- Review of medical records that document frequent and unexplained exacerbations;
- Indications of an employee taking a long period of time to recover from an injury;
- Employees who refuse to cooperate in the injury investigation;
- Conflicting information on the First Report of Injury and other injury reports;
- Labor union conflict and the potential of a strike/walkouts;
- Indications of Waddell signs on examination – excessive pain symptoms, distractions, and discrepancies in medical records.
These are some of the many signs of Workers’ Comp Fraud, Waste, and Abuse. Claim handlers need to recognize the signs and take appropriate action.
One of the many challenges faced by the claim management team is dealing with Workers’ Comp Fraud, Waste, and Abuse. It is essential to recognize the signs and take immediate action to either deny primary liability or find opportunities to discontinue the payment of benefits. Addressing issues concerning Workers’ Comp Fraud, Waste, and Abuse can be done through a collaborative approach with employer representatives or various investigative techniques.
Stopping Workers’ Comp Fraud, Waste, and Abuse should be one of the many goals of a claim handler to reduce program costs.
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: http://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.