Workers Comp Fraud

Workers’ Compensation Fraud, and How to Prevent It

Workers’ compensation fraud can end up costing employers in the United States more than $7.2 billion every year, according to the National Insurance Crime Bureau (NCIB). This startling number is born out of employees’ efforts to game the system, finding ways to seek out loopholes and take advantage of the system altogether.

One major type of workers’ compensation fraud is employee fraud, which includes employees who receive benefits under false pretenses. Whether they’re working full-time for a corporation or have found contract or temporary work through a staffing firm, these dishonest employees are taking days off of work while garnering wages.

As a staffing agency, there are steps that you can take in order to help cut down on the potential for workers’ compensation fraud. First, it’s important to see the different types of fraud there are to better understand what to look out for.

What to Watch For

First, businesses should be apt to spot false claims through investigation and follow-up. Even if the employee’s story is true, and certain things are a little suspicious, it still helps to do your due diligence. Look for exaggerations to claims, such as when an employee really did have an accident, but they go on to overstate the extremity of their injuries in order to get even more benefits.

Also, be wary of off the job injuries in which someone is hurt away from work but claims they received their injury while on the clock. In situations like these where the story is a little more elaborate, the employee may recruit some accomplices to cover for them. Encouraging and covering up any fraudulent activities also counts as fraud.

Workers’ compensation may still be difficult to detect, even with this knowledge, but there are some signs that should help to elevate your suspicions.

  • The employee has a history of multiple claims
  • The injury isn’t reported immediately
  • The reported injury happened immediately after employment changes, such as being laid off or a contract ending
  • The employee is difficult to get in contact with
  • The employee has changed jobs frequently in the past
  • There are no witnesses

It’s important to note that you should never directly accuse an employee of fraud as, for the most part, the employee is being honest. It is only a small number of employees who are committing fraud. And even though that small percentage can take advantage of more than $7 billion annually, it doesn’t help to add to more of that loss with legal issues related to unfounded claims. If fraud is suspected, it’s important to contact your staffing firm insurance carrier immediately.

Preventing Fraud from Employees

Some companies may feel that employee fraud isn’t something that can be prevented. Instead, they may feel that it’s something that needs to be factored into their budgets. However, employee workers’ compensation fraud can end up raising the cost of running a business.

Companies should screen applicants more carefully and look for predictors of fraud, such as criminal backgrounds and a history of suspicious injury claims.

Here are some other ways in which you can help limit fraud in your company:

  • Stay in frequent contact with the employee as this will help someone who’s injured feel valued. It can also help encourage them to return to work earlier than expected.
  • Establish consistent procedures and use this same process for reporting and investigating all accidents. All injuries should be reported and interviews should be conducted with the employee in question.
  • Educate your employees on workers’ compensation benefits as well as fraud. They should be aware of what constitutes fraud and how it is handled if discovered.
  • Establish a fraud-reporting process that lets employees and supervisors report any suspected fraud. Accusations shouldn’t be made, but suspicions should be taken seriously.

About Monarch Partners Group, LLC

For more than 30 years, Monarch Partners Group (MPG) and affiliate Nationwide Employer Services LLC have focused on providing Workers’ Compensation insurance solutions for distressed risks and industries. Our long-term history and expertise in the space and market sources enable us to find solutions for business owners and brokers that they may otherwise not have access to. We write Workers’ Compensation coverage for all types of risks in all states with solutions that Employer Organization (PEO), Employer Of Record (EOR) and Captive Insurance programs. To learn more about our products and services, contact us today at (855) 435-5153.

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