Can You Spot the Workers Comp Fraud Red Flags?

Detecting Workers’ Compensation FraudCombating fraud in workers’ compensation claims is a skill that can prevent much frustration and save significant worker’ comp dollars.  While we can tell our readers the importance of fighting fraudulent claims and publish lists of red flag indicators of fraud, it is often difficult for the risk manager or workers’ compensation coordinator to separate the legitimate work comp claims from the bogus claims.

 

To assist you in recognizing the bogus claims, we are providing a sample claim, using the actual facts of a submitted workers’ compensation claim to see if you can recognize or spot ten red flags of a bogus claim (the name of the employee has been altered to protect the guilty).

 

 

The Claim:

 

John Doe works in an auto repair shop as a mechanic.  Upon arriving early for work on Monday morning, Mr. Doe went into the auto parts storeroom to get a part for the car he was going to work on.  While leaving the storeroom and using both hands to carry the heavy auto part in a box, he tripped over another box on the floor.  In an effort to keep from falling, he grabbed a storage shelf, twisting and injuring his shoulder as he fell to the floor.  No one saw him fall in the parts storage room as the other employees were just arriving for work.

 

Mr. Doe immediately reported the claim to the shop manager and explained to the manager how he fell over the box on the floor he did not see because of the box he was carrying with both hands.  The shop manager offered to take Mr. Doe to the nearest industrial medicine clinic, but Mr. Doe instead chose to take himself to his “family doctor”.  The family doctor took Mr. Doe off work and did not indicate when he would be able to return to work.

 

When the shop manager called Mr. Doe the next morning to see how he was doing, Mr. Doe’s wife stated he was sleeping and could be disturbed.  The shop manager waited and called Mr. Doe again that afternoon.  Per the wife, Mr. Doe had stepped out.  The shop manager asked for Mr. Doe’s cell phone number, but instead of providing the phone number, the wife promised to have Mr. Doe call the manager.  Mr. Doe almost immediately called the manager back to relay what the family doctor had said. The shop manager recorded the cell phone number of Mr. Doe.  When the shop manager called Mr. Doe’s cell phone the following week to see what the family doctor had to say after the second medical appointment, the background noises did not sound like the noise you would hear in a person’s home.

 

A second mechanic in the shop after being overworked for three weeks due to the absence of Mr. Doe advised the shop manager that he had heard through a mutual friend that Mr. Doe had injured his shoulder while rock climbing the weekend before the reported injury.

 

The claim has numerous red flags that could be a tip-off for workers’ comp fraud.  They are:

 

  1. Monday morning accident.  Almost twice as many accidents occur on Monday morning than any other morning of the week.  This is due to people claiming non-work related weekend injuries as work-related in order to not lose their source of income.

 

  1. Arriving early for work.  Unless the employee habitually arrives early for work, arrival for work early on the day of the alleged accident is an indicator the employee wanted to “have the accident” before other employees see he is injured.

 

  1. Not seeing a hazard he had just seen moments earlier. If boxes on the floor were a common occurrence, the employee would be careful about watching where he was going.  If a box on the floor was unusual, the employee would have made a mental note to avoid it.

 

  1. The mechanism of injury does not make sense.  If the employee was using both hands to carry a heavy box, how did he have a hand free to grab the storage shelf?

 

  1. The accident was not witnessed.  Bogus injury claims almost always occur where no one else will see the accident happen.

 

  1. The selection of a particular doctor over a more qualified doctor who specializes in treating injured employees.  This is normally a sign the employee wants a doctor who will accommodate his desire to be off work.

 

  1. A doctor who does not address return to work This is normally because the injured employee tells the doctor that he does not feel he will be able to meet his job requirements.

 

  1. The employee being asleep when he would normally be awake.  Unless the doctor has prescribed some very strong pain killers, the employee should be available to talk to the employer.

 

  1. The employee not being at home.  Occasionally not home is understandable, repeatedly not home/not available is usually a sign the employee has something better to do than being at home, i.e., possibly another job, either short-term or long-term.  Background noises that don’t sound like a spouse or a television often are an indicator the employee is working elsewhere.

 

  1.  Tips from co-workers.  This is probably the strongest evidence of fraud and should be investigated thoroughly.

 

None of these red flags by themselves are proof of fraud, nor is a combination of two red flags.  However, the more red flags the employer sees on a claim, the higher the probability the claim is fraudulent.  If you see multiple reasons to question the validity of a claim, the insurance adjuster and the special investigative unit of the insurer should be notified as to why you believe the claim to be questionable.

 

 

 

Michael Stack - AmaxxAuthor 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: mstack@reduceyourworkerscomp.com.

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

 

©2019 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

Pro-Actively Stop Workers’ Comp Fraud Before It Starts

stop workers comp fraudLarge 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.

 

 

 

Michael Stack - AmaxxAuthor 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: mstack@reduceyourworkerscomp.com.

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

 

©2019 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

The RED FLAGS of Workers Comp Fraud

workers compensation red flags of fraudA critical part of controlling workers’ compensation costs is to put into place solid investigation techniques.  No matter how severe or minor a workplace injury, each case needs to be reviewed to identify any fraudulent claims and take appropriate action.

 

When communicating with employees, make it clear that the company will:

 

 

  • Identify corrective measures

 

  • Watch for minor extensions of days out of work and outright fraudulent claims.

 

 

Review these Red Flags of Fraud and request an investigation if you suspect a claim is illegitimate or exaggerated.
 

 

Injured Worker Red Flags:

 

  • Injury reported late, to an attorney or to the state commission before reporting it to the employer.

 

  • Fails to attend weekly meetings.

 

 

  • Is never home when you phone, especially during regular workday hours.

 

  • Has only a postal box rather than a home address.

 

  • Misses doctor appointments.

 

  • Is known to perform seasonal activities, hobbies, or work.

 

  • Has moved out of town or out of state.

 

  • Disputes average weekly wage due to additional income.

 

  • Files for benefits in a state other than the main location.

 

  • Disputes information supplied by the employer on “First Report of Injury” notice.

 

  • Refuses to cooperate in claim investigation.

 

  • Has an unstable work history.

 

  • Has recently been terminated, demoted, or passed over for promotion.

 

  • Has a prior history of injury management or liability claims.

 

  • Makes excessive demands or is pressing for a quick settlement.

 

  • Carries little or no health insurance.

 

 

Medical Flags:

 

  • Medical reports are repetitive, indicating continuing, constant pain with conservative medical treatment

 

  • The word “disproportionate” is used in medical reports

 

  • The doctor mentions there is “facial grimacing”

 

  • Positive “Waddell Tests” (test for low back pain) are mentioned

 

 

Workplace Flags:

 

  • Employer experiencing labor difficulties (i.e., layoffs, strikes, walkouts).

 

  • Tips from fellow workers, friends, or relatives.

 

  • The insurance company wants to settle the claim for a considerable amount of money.

 

 

“Things” just don’t ADD UP! Trust your gut, and if something seems off, be sure to check it out.

 

 

Michael Stack - AmaxxAuthor 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.

 

Contact: mstack@reduceyourworkerscomp.com.

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

 

©2019 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

Surveillance in Workers’ Compensation

Surveillance in workers’ compensation plays an important role in resolving claims and detecting fraud.  Given its expenses, there are various factors members of the claim management team need to consider before hiring a service provider to conduct surveillance.  If these issues are not considered, the bottom line of a workers’ compensation claims program will suffer.

 

 

Surveillance in Workers’ Compensation Basics

 

The purpose of hiring an investigator in workers’ compensation cases is to observe and document the movements of an injured employee.  This allows the defense interests to introduce first-hand evidence into a hearing on the merits to demonstrate what someone is doing and their functional abilities – when they do not think someone is watching.

 

The first and most important step in hiring a service provider to assist with this activity is to find someone who is credible, ethical, and experienced.  Failing to take these factors into consideration can result in adverse findings.

 

 

When Should Surveillance be Used?

 

Not every case requires the use of a private investigator.  Instances where surveillance in workers’ compensation can either be helpful or have an effective impact include the following:

 

  • Instances where credible information of fraud is received and the injured employee’s movements and activities need to be closely monitored;

 

  • Cases where the employee is working an unreported second job or engaging in “cash” driven business activities. This can include employees who might be more active in certain times of the year;

 

  • Claims involving employees with a long history of work and other personal injuries. “Frequent fliers” should always be given special attention;

 

  • Employee’s who exhibit signs of malingering or are presenting at their medical appointments with conflicting pain complaints; or

 

  • Injuries that occur under unique or interesting circumstances. Examples include the “Monday morning” injury, injuries that occur before or after lay-offs, or during times of labor disputes.

 

 

 

Getting the Right Background Information

 

Background information on the injured employee’s habits is important before using an investigator for surveillance in a workers’ compensation case.  Given the cost and time involved, it is important to know when someone will be at a particular location and at what times.  Information that can be useful and collected via discovery can include:

 

  • Dates and times of doctor appointments;

 

  • The date and location of the independent medical examination or various workers’ compensation proceedings;

 

  • Places where the employee frequents such as attending religious services, social events and clubs, and restaurants or sporting events; and

 

  • Hobbies and other activities such as gardening, other yard work, or coaching a sports team.

 

 

Other Sources of Free Information

 

The advent of the Internet has created a treasure trove of free information.  This includes where they were born, lived (including specific address), and photographing or postings commonly found on social media.  Members of the claim management team who use social media for background information on an injured employee should be mindful of some simple rules:

 

  • Research on information open to the public is generally fair game when it comes to access by an adverse party. If someone does not closely lock down their security settings on platforms such as Facebook, Twitter, or Instagram, the information in the public domain can be used;

 

  • Use of a third party or “straw man” to connect to an injured employee is generally unethical and can result in information obtained from the query to be inadmissible; and

 

  • Asking for passwords from an injured employee is illegal in some states. That does not prevent defense counsel from bringing a motion to compel to obtain a court order for passwords.  Case law in this area is developing.

 

Interested stakeholders should look beyond social media and access genealogy websites.  Again, if information is published online and not obtained via mischievous means, it will likely be admissible.  Any useful information online should be printed and/or electronically stored immediately.  This is because information can be deleted, removed, or locked down just as quickly as it is posted.

 

 

Conclusions

 

Surveillance in workers’ compensation will always be a part of strong defense. When used, it should be done in an ethical and legal manner.  It must also be used in a cost-effective manner to avoid excessive spending and preserving the stability of a workers’ compensation program.

 

 

 

Michael Stack - AmaxxAuthor 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: mstack@reduceyourworkerscomp.com.

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

 

©2019 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

Responsibilities of a Workers’ Comp Claims Investigation Leader

workers comp claims leadershipCentral to successful leadership is attention to detail, solid work ethic and commitment.

 

Members of the claim management team and fully-engaged employers must exhibit these same traits when it comes to workers’ compensation claims.  All claims must be investigated promptly – by the book with no corners cut.  This process also includes the development of best practices to manage risk and control workers’ compensation program costs.

 

 

Responsibilities of a Claims Leader

 

There are several goals a good leader must undertake when developing a program.  This is something that can be done inside an insurance carrier or company.  Items to consider should include:

 

  • Develop a program to sniff out fraud. This program includes being proactive to prevent it from taking place and detecting it early on to mitigate program costs;

 

  • Update upper management within the organization on issues concerning the overall workers’ compensation program. This position should be able to effectuate and promote change;

 

  • Understand how to conduct an effective investigation. This is especially important in more complex claims or those which involved special or unique circumstances; and

 

  • Coordinate all efforts between defense counsel and the clients. This should include all interested stakeholders to promote an effective program.

 

 

Special Investigation Unit: Dealing with the Tough Claims

 

Not all workers’ compensation claims are the same.  Some claims are more difficult than others.  This can include instances where the employee sustains a severe injury, the circumstances surrounding the claim are suspect, but difficult to prove it did not occur or fraud.  Proactive claim management teams and employers can address these barriers by developing a “special investigation unit.”

 

Teamwork is key when working on special claims. It all starts with a dedicated leader who knows how to peel back the layers and get to the bottom of things.  Important characteristics of this leader should include:

 

  • Someone with law enforcement or military background. These are people who faced difficult challenges in the past and are resourceful;

 

  • A person who has a reputation for being fair and honest. Remember, all injured employees need to be treated with dignity and respect. Integrity is paramount;

 

  • Knowledge of the law and other applicable tools to complete the goal. An attorney can be considered for this role, but not necessarily required; and

 

  • A leader who can effectuate change within an organization.

 

 

Leading from the Front – Taking the Lead

 

The leader of a special investigations unit needs a strong supporting crew.  This can include assistance from the following departments:

 

  • Human Resources: This area brings an understanding of other applicable rules and regulations together to assist in claim investigation and help an organization avoid countless pitfalls;

 

  • Legal Department: An attorney can advise the unit on legal issues and provide advisory opinions, guidance and assist in the development of a legal strategy;

 

  • Medical: Having an on-call nurse or doctor who can assist in complex issues such as utilization review of medication or other procedures will drive down costs.  They can also assist in injury response; and

 

  • Management: It is important to include a representative from senior management. This person can help clarify the mission of an organization and desired results.

 

 

Conclusions

 

Workers’ compensation claims present challenges that call for special measures.  To be successful, proactive employers and insurance carriers can develop special units to tackle these matters head-on.  This includes engagement from a variety of areas within an organization to resolve claims and reduce workers’ compensation program costs.

 

 

 

Michael Stack - AmaxxAuthor 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: mstack@reduceyourworkerscomp.com.

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

 

©2019 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

10 Steps Every Adjuster Should Perform In a Workers Comp Claim Investigation

TEN Steps Every Adjuster Should Perform In a Workers Comp Claim InvestigationWhen you go online and read your adjuster’s file notes about your claims, do you know what to look for to be sure the adjuster is performing a quality claim’s investigation on your claim files? If not, read on and learn what the adjuster should be doing to be sure you are being protected from unnecessary workers compensation cost.

 

 

ONE:

The first thing the adjuster should do in the claim investigation is to verify coverage. Before the adjuster accepts the claim, the adjuster should check to be sure there is coverage. The verification of coverage should be the first adjuster’s note in the claim file notes.

 

This would include:

 

 

  1. The policy number.
  2. The policy dates to verify the policy is in enforce for the date of the accident.
  3. The state(s) covered under the given policy number and policy period.
  4. Any endorsements to the policy that would change the coverage.
  5. Any exclusions to the policy that would change the coverage (for example – a particular location of the employer is excluded from the coverage).

 

 

TWO:

Once the adjuster has confirmed there is coverage, the next step in the investigation is to begin the contacts. With workers compensation, the first contact attempt should not be the employee; it should be the employer. The reason for this is the employee will only provide information the employee considers beneficial to himself. The employer will often provide information that will assist the adjuster in the direction of the claim. The employer might advise that no one saw the accident and the claim is highly questionable, or the employer might advise that seven fellow employees saw the injury occur.

 

 

THREE:

The initial contact with the employer should be the same day the accident is reported, or at least within 24 hours of the report of the claim. The adjuster’s file notes should reflect more than “called the employer.” The contact details that should be included in the file notes include:

 

 

  1. The facts of the accident.
  2. The identification of any witnesses.
  3. A discussion of any subrogation issues.
  4. Any knowledge the employer has of a prior claim.
  5. Verification of the information on the Employer’s First Report of Injury.
  6. The disability status of the employee.
  7. A description of the employee’s job duties.
  8. The length of time the employee has worked for the employer.
  9. Confirmation of lost time if the injury was reported after the initial waiting period for indemnity benefits.
  10. The availability of modified duty for the employee.
  11. If applicable, a request by the adjuster to the employer to provide the necessary documentation of the employee’s wage history.

 

 

FOUR:

The initial contact with the employee should immediately follow the initial contact with the employer. The employee contact should also be the same day the accident is reported, or at least within 24 hours of the report of the claim. The file notes should reflect the initial contact with the employee covered:

 

 

  1. The facts of the accident.
  2. The identification of any witnesses.
  3. A discussion of any subrogation issues.
  4. Any prior injury claims of the employee (both workers comp and any other injury claims).
  5. Verification of the information on the Employer’s First Report of Injury.
  6. Any additional information not on the Employer’s First Report of Injury that would be needed to file the ISO index on the employee.
  7. The disability status of the employee including information on the nature of the injury, the treatment and the prognosis.
  8. The employee’s attitude toward the employer and returning to work.
  9. A summary of the explanation of benefits and the future course of action the adjuster will take.

 

 

FIVE:

The investigation should also include the contact of any witnesses. The initial contact with the witness(es) should be the same day the accident is reported, or at least within 24 hours of the report of the claim. The file notes on the contact with the witnesses should reflect the facts of the accident as told by the witness(es). All witnesses should be asked to identify any other witnesses.

 

 

SIX:

The first contacts part of the investigation should also include contact with the office of the medical provider. This allows the adjuster to verify the nature and scope of the injury, the diagnosis, and the prognosis, plus the adjuster can make arrangements for all medical bill and medical reports to be sent to the adjuster. This information on this part of the adjuster’s investigation should also be reflected in the file notes.

 

 

SEVEN:

If the adjuster has any reason to question the compensability of the claim, or if there is the potential for subrogation, or if the employee’s injuries are severe, the adjuster as a part of the, should obtain a recorded statement from the employee during the initial contact. The file notes should reflect a summary of this part of the investigation.

 

 

EIGHT:

The claim investigation encompasses much more than just the initial contacts with the employer, employee, medical provider, and any witnesses. The work comp claim investigation should also include:

 

 

  1. A medical authorization in those states that require one for workers comp.
  2. Obtaining the current medical records.
  3. Obtaining past medical records if the employee has a history of prior injury claims.
  4. A wage statement for the calculation of indemnity benefits.
  5. The filing of the ISO index.
  6. A police report, OSHA report of any other governmental record related to the injury.
  7. A recorded statement from the employee’s supervisor if there is a compensability question.
  8. Engineering report or other documentation to support subrogation when applicable.
  9. Information on any responsible third parties when subrogation is possible.
  10. Any other information that will have an impact on the outcome of the claim.

 

 

NINE:

If the only file notes on the investigation read something like “called employer, no questions about the claim,” the adjuster is not doing a proper investigation. Even if the injury was witnessed by a dozen co-workers, the adjuster who is doing a proper investigation would still cover all the key points noted above. Even in the most valid of claims, the adjuster should still learn the employee’s diagnosis and prognosis, and when the employee will be back on the job. If the adjuster is not asking when the employee can return to work full duty or on modified duty, the claim investigation is incomplete.

 

 

TEN:

All the information obtained during the claim investigation should be summarized in the file notes for your review. If the adjuster is not doing so, ask that the file notes are properly documented. After all, with workers compensation, you will eventually pay the cost of the employee’s claim through your insurance premiums. You should know if you are getting the proper claim investigation that you are paying for.

 

 

 

Rebecca ShaferAuthor Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the co-author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact:.

Contact: RShafer@ReduceYourWorkersComp.com.

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

 

©2019 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

 

 

 

Detecting Workers’ Compensation Fraud

Detecting Workers’ Compensation FraudWorkers’ compensation fraud continues to be a problem.  Members of the claim management team need to be aware of this problem and develop a plan for its prevention.  They also need to create a plan to remedy the situation.  By taking steps to stamp out workers’ compensation fraud, programs will become more efficient and ultimately reduce costs program-wide.

 

 

Defining the Issue – What is Workers’ Compensation Fraud?

 

Malingering or showing signs of pain magnification is not workers’ compensation fraud.  Instead, it is defined by state law, and investigated and prosecuted by a state agency.  Other civil ramifications can also apply.

 

According to Webster’s Dictionary, “fraud,” occurs “when a person knowingly or intentionally conceals, misrepresents, or makes a false statement to obtain” workers’ compensation benefits or coverage, “or otherwise profit from the deceit.”

 

Workers’ Compensation fraud is not limited to injured employees.  Employers can commit acts of fraud by:

 

  • Misrepresenting company payroll on underwriting forms;

 

  • Paying an employee cash or not accurately reporting wages;

 

  • Not accurately reporting their payroll staff; and

 

 

In sum, an employer commits fraud anytime it intentionally undertakes an action to reduce the cost of its workers’ compensation insurance premium.

 

 

Common Examples of Workers’ Compensation Fraud by Injured Employee’s

 

There are numerous examples of workers’ compensation fraud committed by an employee in the context of a claim.  Some of the more common examples include:

 

  • Filing a claim for an injury that never occurred, or occurred outside the workplace;

 

 

  • Reporting an injury that occurred during another activity, such and an employee intentionally inflicting an injury and making a claim for benefits;

 

  • Misrepresenting the nature/extent of a work injury to a medical provider; and

 

  • Making a claim related to an injury that occurred following a job termination, layoff, or end of seasonal work.

 

 

Danger Ahead – Common Red Flags of Workers’ Compensation Fraud

 

There are numerous red flags members of the claim management team should look out for when investigating a claim.  It is important to work as a team and share information to help less experienced claim handlers detect it and avoid paying unnecessarily on a claim.

 

  • Employment changes and terminations: Be mindful of claims that arise at the same time an employee changes positions within an employer or is terminated/seasonally laid off.  A complete review of whether the injury/incident was reported prior to termination or whether the employee was near the end of their unemployment benefits prior to reporting a claim is key.

 

  • Beginning of week injuries:  It is often not a coincidence an employee is injured first thing Monday morning after arriving at the workplace.  This should make anyone scrutinize a claim to determine if it in fact occurred over the weekend.

 

  • Unwitnessed incidents: This should be an area of concern when the claim is made by someone who would typically not be working in a particular area or performing a certain activity.  A review of security video should be a part of any investigation to monitor the activities of the employee immediately prior to the incident.

 

  • Experienced claimants: These are individuals with a long and well-documented history of work injuries and other insurance claims.  A review of an insurance bureau index can track claims histories of a person and be a part of an investigation.

 

Other red flags include employee’s who give differing stories, work other side jobs (often as independent contractors), or may be experiencing financial difficulties.  It is also important to understand what hobbies or recreational activities an injured employee partakes in away from the workplace.  This can include someone playing in a sports league or enjoys “extreme sports.”  Proactive claim teams should have a plan in place to identify potential fraud issues and undertake a more exacting investigation.

 

 

Conclusions

 

Members of the claim management team need to be mindful of workers’ compensation fraud in all claims.  In addressing this issue, there are many red flags a claim handler must be aware of before accepting a claim and paying benefits.  By doing this, one can ensure that all valid claims are paid in a timely and correct manner.  It can also improve program performance and efficiency.

 

 

 

Michael Stack - AmaxxAuthor 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: mstack@reduceyourworkerscomp.com.

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

 

©2019 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

Surveillance is Often Used Incorrectly

Surveillance is Often Used Incorrectly

Members of the claim management team need to be creative when investigating workers’ compensation claims and to determine issues of compensability.  This includes using claim investigation techniques that go beyond interviewing the employee, witnesses, experts, and reviewing medical records.  To be effective, proactive claim handlers and investigators need to do a deeper dive to reduce program costs.


Surveillance is Often Used Incorrectly

Over the years, defense interests in the workers’ compensation industry have become dependent on using private investigators to conduct surveillance on an injured worker.  Surveillance is a recommended and effective technique. However, it is often :

 

  • Limiting surveillance to one day: The problem is this provides only a Not obtaining of what the employee is doing and allows for them to argue you watched them on “a good day;”
  • Not obtaining complete background information on the employee: This includes not knowing the habits of an employee and what activities they might be doing when under the watchful eye of an investigator. In worst case scenarios, the employee will do nothing at all – not even coming outside their home; and

 

  • Following the rules: Many jurisdictions have specific timelines as to when and how documentary evidence from surveillance needs to be disclosed to the employee and/or their attorney.  Failure to follow these rules can have significant consequences.



Using Other Resources to Uncover Favorable Claim Information

Claim handlers need to be creative and ethical when uncovering information on a claim and developing their theory of the case.  This requires patience, persistence, and creativity.


Job Site Videos

Job site videos are useful in a number of ways when done.  For example, if an employee is claiming that a certain activity (especially those that require repetitive movements) is includes using of an injury, it allows for a medical expert to evaluate whether be effective of injury is consistent with the objective medical evidence.  It also reduces or eliminates the ability ofan employee to exaggerate movements, including the frequency at which it is performed.

When creating such videos, it is important to remember key items.  This includes having a workplace station or machine set up exactly how it was at the time of the injury. When possible, have the employee to perform the motions or movements.  If this is not possible, itis essential to have someone of a similar size perform the activity.  Failure to exactly recreate these motions in question can result in the job site video not being admitted into evidence at the hearing.


Timing and Work Schedules

Records documenting the coming and going of an employee, an employee and the number of shifts they worked can be relevant in a number of circumstances. Instances when this can be useful include the following circumstances:

  • Claims made by the employee as to their physical presence at a location at a specific time, or when other identified witnesses claim to have been present;

 

  • The number of hours or shifts worked by an employee.  This is important information to have in workplace exposure cases; and

 

  • Tracking movements of traveling employees. This can be important when trying to determine the applicability of “portal-to-portal” coverage where an employee may have made a personal deviation, which took them outside the “course and scope of” their employment

 



Social Media Investigation


While fewer Americans are using social media platforms on a consistent basis, it is still relevant to any claim investigation.  Key points to remember include checking common programs such as Facebook, Twitter, and Instagram.  Ethical considerations apply.  Do not obtain access to an employee’s account under false pretenses or by using a strawman.  Attorneys representing defense interests should also take note of case law that warned, “It should now be a matter of professional competence for attorneys to take the time to investigate social networking sites.” Griffin v. Maryland, 192 Md.App. 518, 535 (2010).


Conclusions

Running an effective workers’ compensation claim program requires hard work and creativity.  In order to be cost-effective, one needs to think outside the box and go beyond the “cookie cutter” approach to investigating and defending workers’ compensation claims.  By looking for alternative methods, members of the claim management team can make better decisions and move cases toward settlement.




Michael Stack - Amaxx

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: mstack@reduceyourworkerscomp.com

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

©2018 Amaxx LLC. All rights reserved under InternationalCopyright Law.

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

Five Clues an Injured Employee is Dragging Out Their Workers Compensation Claim

Five Clues an Injured Employee is Dragging Out a Workers Compensation ClaimNow and then one comes across a claimant who knows the twists and turns of the workers’ compensation system. The claimant could be a dependable and good worker, but the employee is dragging out their workers’ compensation claim.

 

The insurance industry calls these people “career claimants.” When a background check is done, they have a list of prior claims a mile long. Having many prior claims does not necessarily mean they are bad workers; perhaps they are injury-prone. It is very interesting, however, when claims are filed, they are sneaky enough to do just enough to keep the wheels turning and drag out their workers’ comp claim to remain out of work or on medical restrictions. Odd how that happens…

 

Adjusters can use their defensive tools to get these claimants off workers comp. Even when adjusters do IMEs, surveillance, and speak with the physicians providing the treatment, nothing seems to get this type of worker back to full duty.

 

When claimants know too much about how the system works, they drage out their workers’ comp claim by:

 

 

  1. Having the Physician on their Side 

 

Physicians usually base opinions on evidence-based medicine. Tricky claimants know what to tell and what not to tell the doctor. They use the Internet as an information source. For example, if someone sustains a back strain, acceptable symptoms are researched to report without over-exaggerating the symptomology to cause the treating physician to see red flags.

 

Limited range of motion, muscle spasm, and bringing up pain complaints tell a doctor if the person is or is not hurt. The doctor proceeds presuming the patient is reporting honesty and may keep the patient on restrictions, on continuing treatment, and off work. This is where the independent medical examination (IME) comes into play. It is always good to have another opinion just in case the treating doctor is not being proactive in moving the patient along to full duty, especially if the subjective complaints do not match the objective evidence on examination.

 

 

  1. Rescheduling Doctor and Physical Therapy Appointments

 

Everyone has a life outside of work. However, constant rescheduling of medical appointments is a red flag for the adjuster. Maybe now and then a physical therapy appointment is missed, especially when working light duty. But, it is important to remember legitimately injured workers want to get treatment, heal, return to full duty, and not drag out their workers’ comp claim.

 

A typical lumbar strain does not necessarily prevent a person from being active or running errands, but if a trend arises of constant rescheduling — THINK — what else is going on besides the injured worker’s schedule? Surveillance is a handy tool to confirm suspicions. It is especially helpful if the injured worker is caught in a lie. If the worker reports to the adjuster therapy is missed even when off work and surveillance shows the employee doing yard work instead of going to physical therapy, that is evidence to suspend the claim due to non-compliance with the treatment plan provided by the doctor.

 

Hot Tip: One therapy office has a policy of charging the patient the full amount of the missed appointment unless given 24-hour notice. They present patients with this written policy at the beginning of therapy and make them sign indicating they understand they will be charged and their insurance will not be billed.

 

 

  1. The Claimant Knows the Lingo

 

One thing jumping right into the adjuster’s face is a claimant knowledgeable about the injury in medical terms. The average person does not use words like radiculopathy, impingement, and stenosis or know what they mean.

 

Even more striking is when a worker discusses a settlement or redemption early on in the claim. This behavior should lead the adjuster to believe the worker has been down the workers’ comp claim road before. Most times, when a background check is done, it shows prior litigation experience with prior employers. These are all red flags indicating you want to keep an eye on this claimant as they may be dragging out their workers’ comp claim.

 

 

 

  1. The Claimant is Off Work and Cannot be Found

 

When a claimant has a legitimate injury and is off work for a while, it is a good idea to do surveillance to get additional information. After a few days, if the video only shows the worker poking a head out of the front door to retrieve the mail, it is always a red flag. The person may have a prior claim history, broke restrictions, and the claim was denied or suspended.

 

Or even worse, when you go to do surveillance, the worker cannot be found anywhere. The worker might be staying at another location or at another property. When you talk to the employee, excuses are made about how pain is so disabling all that can be done is to stay home and rest. However, something is awry if you go to do surveillance and the car is not in the driveway.

 

 

 

  1. The Worker Misses a Few Therapy Appointments Every Week

 

Remember, injured workers with legitimate injuries want treatment so they can heal, return to work, and not drag out their workers’ comp claim.  In a red flag claim when a person goes to some treatment, but not all and not all the time, this means they are doing just enough to keep the claim alive, but missing just enough treatments not to get better.

 

The unsaid rule in claims is the longer a person is off work, the harder it is to get them back to work. This challenge is where a light-duty work program comes in handy. Light duty forces the worker to go to work. It also forces them to go to treatment, especially if one has to leave work to go to therapy and then return to work to finish the shift.

 

Doing just enough to keep the adjuster from disputing the claim shows the claimant knows a little bit about how the claims system works. As an adjuster, if a person makes 75 percent of the medical appointments, is that going to stand up in court if you pull the trigger and file a dispute or suspension?

 

 

Summary

 

Just one of these points does not mean your employee is cheating you and trying to drag out their workers’ comp claim. But, some smart claimants know how to work the system. If, as the adjuster, you spot one of these claims, it is your role to stay on top of every aspect of the claim. Make sure if workers miss appointments they have some documentation to support absences. The more pressure you put on them, the better result you will have in defeating unethical claimants at their own game.

 

 

 

Michael Stack - AmaxxAuthor 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: mstack@reduceyourworkerscomp.com.

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

 

©2018 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

Effective Workers’ Comp Claim Investigation Techniques

Effective Workers’ Comp Claim Investigation TechniquesMembers of the claims management team are called upon to investigate claims and make determinations of primary liability and the necessity of medical care and treatment.  This requires them to perform tasks on numerous occasions quickly and effectively.  It also includes the ability to be creative while cost-efficient.  Here are some tips to consider in order to succeed at this difficult task.

 

 

Obtain the First Report of Injury

 

The FROI contains important pieces of claims information that can be useful when starting an investigation on a claim.  While the information might not be accurate, it can lead to important information on the background of a claim.  Information to obtain from the FROI include:

 

  • Body parts injured during the incident;

 

  • Names and addresses of medical providers related to the work injury;

 

  • The mechanism of injury;

 

  • Location of the injury; and

 

  • Potential witnesses.

 

While the FROI is not necessarily accurate, it can be valuable for claim development purposes.  It can also assist when it comes to understanding inconsistencies in the claimant’s recorded statement and future deposition.

 

 

Other Accident or Injury Reports

 

In many instances, there are other accident or injury reports that are generated following a work injury. This can include reports from the owner of the premises at which the injury took place, reports from law enforcement and emergency medical service providers and other interested parties.  Information obtained from these reports can move a claim investigation forward in a cost-efficient manner as they are usually free to obtain.

 

Accident reports also contain additional information that is helpful to an investigation.  This includes photographs and videos of the incident.  Information received from these reports can be priceless, especially if they contain information that contradicts allegations made by the injured worker.

 

 

Recorded Statements of the Employee

 

Most jurisdictions allow the workers’ compensation insurance carrier to take a recorded statement of the employee following a work injury.  It is important to follow the applicable statutes or rules to preserve evidence for future use.  A well recorded statement should follow a script to ensure all important questions are asked.  A seasoned member of the claim management team will also learn how to probe for information in a friendly and courteous manner.  When taking a recorded statement, listen carefully to what is being said and ask probing questions.

 

 

Authorizations for Medical and Other Records

 

Although workers’ compensation claims investigations are generally excluded from state and federal health care privacy laws, it still remains important to obtain properly executed authorizations when requesting medical, employment and other records.

 

  • Medical: It is important to obtain a complete set of medical records for an injured party.  This should go beyond what is directly related to the work injury.  Obtaining a complete set of medical records can lead to other areas of investigation and allow your independent medical examiner to have a complete and accurate background of a claimant.

 

  • Employment: These records are used for a variety of reasons.  Not only will it serve as a source to calculate the employee’s average weekly wage, but it will also allow one to understand an employee’s transferable job skills better and identify areas of vocational limitation.

 

  • Industrial Commission: Records regarding prior workers’ compensation claims are generally stored at a state’s industrial commission.  These records include not only details of prior workers’ compensation claims, but the names of former employers and medical providers.

 

 

Other Sources of Investigation

 

There are countless other areas to investigate as part of any workers’ compensation claim.  Sources of research and investigation should include:

 

  • Social media: Checking to see public activity a claimant has on social media is a must. Be cautious as ethical and legal issues can arise when claims investigation break laws to trick someone into giving you access to their accounts.

 

  • Central Index Bureau Check: This is a clearinghouse where insurers and self-insured companies file reports of claims. It allows members to later search for information on prior injury claims based on one’s name and Social Security number.  Costs may apply for these searches.

 

  • Surveillance: This is another tool that can be used. However, there can be significant costs associated with the hiring of a private investigator to research background information on a claimant and take undercover video.

 

 

Conclusions

 

The modern workers’ compensation claim handler needs to be creative when it comes to investigating a claim.  Technology has provided them with numerous resources to obtain information quickly, and in a cost-effective manner.  Performing a diligent investigation can reduce program costs and limit claims litigation.

 

 

 

Michael Stack - AmaxxAuthor 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: mstack@reduceyourworkerscomp.com.

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

 

©2018 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

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