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Recognizing and Preventing Workers Compensation Fraud

Types of workers compensation fraud

There are three types of workers compensation frauds and they can be done by anyone in the system. Also, there can be many levels of fraud stemming from them. It is therefore important to know the workers comp scams and how to avoid them. They include:

Medical provider fraud – Johnny Chapman, Gek Law, “This is a complicated subject. It occurs when medical providers deliberately submit fraudulent bills that are more expensive services than the ones provided.”

Claimant fraud – This happens when an employee exaggerates or fakes an injury on the job.

Premium fraud – This happens when dishonest employer do not pay for state-mandated workers compensation insurance or pays less.

Workers compensation is a very big and common crime in America nowadays. Every year, tens of billions of dollars are stolen every year in false dollar claims and unpaid premiums. This in turn costs drainage of business profits and the large costs of fraud are passed onto all consumers.

Workers compensation is a class E felony which is punishable by fine or even prison time. Research by Insurance Research Council states that about 36 percent of all Americans think that it is okay to pad an insurance claim to make up for past premiums. According to the Journal of American Medical Association, for every three physicians, more than one admits that they have been asked by patients to deceive third-party payers in helping them obtain medical services coverage. New statistics show that nearly 25 percent of all the money that is spent on workers compensation is fraudulent or exaggerated.

Preventing employee fraud

According to the National Insurance Crime Bureau (NICB), workers compensation fraud costs shareholders, employers, workers, and even consumers in America about $72 billion every year. Therefore, workers compensation not only affects your company directly but also you and by stopping it you will also save money.

The New York State Workers’ Compensation Board works to root out fraud and reduce system costs. Here are some of the steps you can take to prevent workers compensation fraud:

Carefully screening job applicants – You should include an application with a personal interview and reference checks. Those who are likely to commit this crime often have a history of suspicious injury claims or a criminal background.

Educate your employees – It has been found that employees who are educated on the purpose of the workers compensation system are less likely to commit this fraud.

Document accident response procedures – There should be documented procedures to follow in the event of an injury. These include preserving the accident scene, reporting the accident, documenting investigation, and ensuring the injured employee receives proper medical attention.

Make it easy to notify the management – You should build partnership with employees and establish an easy fraud reporting system that will allow them to report suspected fraud.