Mistake: Accepting Every Workers’ Compensation Claim

Many companies operate under an unwritten rule: accept every workers’ compensation claim, no questions asked. While this may seem like the easiest path, it’s a costly and misguided approach that invites fraud, abuse, and a culture of entitlement. A well-managed workers’ compensation program should pay 100% of legitimate claims—and 0% of the claims that aren’t.

The fear of denying claims often stems from a company’s desire to avoid legal challenges, administrative burdens, or employee dissatisfaction. However, this approach sets the wrong expectations. Employees come to believe that every claim will be accepted, regardless of the circumstances. This opens the door to exaggerated injuries, unrelated medical issues being attributed to work, and even outright fraudulent claims.

To run an effective workers’ compensation program, companies must take control of the claims process rather than defaulting to automatic acceptance. Here’s how:

Establish a Clear Injury Investigation Process

Not all injuries that occur at work are work-related, and not all reported injuries are legitimate. Employers must have a structured approach for evaluating claims. Every injury should be documented thoroughly, and supervisors should be trained to conduct immediate post-injury investigations. Key steps include:

• Employee Statement: Have the employee provide a detailed written statement about how the injury occurred.
• Witness Reports: Gather accounts from coworkers who may have seen the incident.
• Security Footage Review: If available, review video footage to verify the incident details.
• Medical Evaluation: Require injured employees to be examined by a preferred occupational medical provider to assess the injury’s cause and severity.
• Red Flag Identification: Be on the lookout for fraud indicators, such as late-reported injuries, conflicting accounts, or a history of frequent claims.

An effective injury investigation ensures that only valid claims proceed, protecting both the company and legitimate injured workers.

Set Clear Expectations with Employees

A well-defined claims process prevents misunderstandings and discourages abuse. Employees should know upfront that all claims will be reviewed, and only legitimate injuries will be covered. Transparency is key, and that starts with communication.

• Pre-Injury Education: Train employees on workplace safety, injury prevention, and the importance of reporting incidents immediately.
• Claims Reporting Policy: Require employees to report injuries within a specific timeframe (e.g., within 24 hours) unless there are extenuating circumstances.
• Return-to-Work Focus: Emphasize that the goal is to help employees recover and return to work as soon as medically appropriate.

When employees understand that workers’ compensation is not a blank check, they are less likely to attempt questionable claims.

Fight Fraud and Exaggerated Claims

Workplace injury fraud is a significant cost driver in workers’ compensation. Fraudulent claims increase insurance premiums, lead to higher experience modification factors, and put additional strain on legitimate claims management. Employers should:

• Use Surveillance When Necessary: If an injury claim seems suspicious, professional surveillance may be warranted.
• Leverage Independent Medical Evaluations (IMEs): A second medical opinion can help verify the extent and legitimacy of an injury.
• Conduct Regular Claims Reviews: Work closely with your insurance carrier or third-party administrator (TPA) to review open claims and identify inconsistencies.
• Implement Injury Triage Services: Using a nurse triage service at the time of injury can help determine if an employee needs medical care or if the issue can be managed with self-care.

Work Closely with Your Adjuster and Medical Providers

Insurance adjusters play a critical role in claim evaluations. Ensure your adjuster understands your company’s approach to claims management. Provide them with detailed information about your workplace, job descriptions, and return-to-work programs.

• Preferred Medical Providers: Establish relationships with occupational health providers who understand the importance of return-to-work and can accurately assess work-related injuries.
• Proactive Case Management: Stay involved in the claim’s progress, rather than taking a hands-off approach. Follow up on medical evaluations, recommended treatments, and return-to-work plans.

The Bottom Line: A High-Integrity Claims Process

A best-in-class workers’ compensation program is built on care and accountability. The company’s responsibility is to ensure employees receive proper medical care for legitimate injuries while preventing unnecessary payouts on illegitimate claims. Accepting every claim without scrutiny is not an act of generosity—it’s a mistake that encourages fraud, increases costs, and weakens the integrity of the program.

By implementing strong injury management practices, companies can reduce workers’ compensation costs while fostering a culture of accountability and fairness in the workplace.

Michael Stack, CEO of Amaxx LLC, is an expert in workers’ compensation cost containment systems and provides education, training, and consulting to help employers reduce their workers’ compensation costs by 20% to 50%. He is co-author of the #1 selling comprehensive training guide “Your Ultimate Guide to Mastering Workers’ Comp Costs: Reduce Costs 20% to 50%.” Stack is the creator of Injury Management Results (IMR) software and founder of Amaxx Workers’ Comp Training Center. WC Mastery Training teaching injury management best practices such as return to work, communication, claims best practices, medical management, and working with vendors. IMR software simplifies the implementation of these best practices for employers and ties results to a Critical Metrics Dashboard.

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Injury Management Results (IMR) Software: https://imrsoftware.com/

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