Slip & Fraud: What Employers Should Know about Workers’ Compensation Claims
“Slip & fall, make the call and someone will pay the bills!” So goes the thinking of the majority of employees making fraudulent workers’ compensation claims. Fraudulent claims are on the rise in California and we know who will be picking up the tab…Yes, that’s right, their employer! Investigating potentially fraudulent workers’ comp claims in California has always had its difficulties. Continuously increasing operating costs for employers and the powerful enforcement and appeals system known as the Workers’ Compensation Appeals Board (WCAB) have created an atmosphere that is difficult for employers to traverse. The WCAB’s major function is to review the petitions for reconsideration of those decisions made by workers’ compensation administrative law judges.
Now, a little history…
The Roseberry Act of 1911 was the first legislative protection for employers in the United States. It was enacted to provide employee injury protection, a rising trend due to the explosion of the industrial revolution.
It was voluntary for employers to participate; unfortunately, few employers bought into this new legislation, the precursor for stronger state and federal laws to come. In 1913, the Boynton Act was created and became mandatory for employers. There were very few exceptions where employers could opt out of providing benefits to employees who had sustained injuries on the job. This became the foundation for workers’ compensation in California and developed into the Workers’ Compensation Insurance & Safety Act of 1913 (1913 Cal 176).
According to the U.S. Bureau of Labor Statistics, the top ten occupations with the largest number of injuries, including illnesses in 2006, include clerks and order fillers, employees working in retail, nursing, maintenance and machinery repair, carpentry and construction, while non-construction laborers hold the undesirable title of “occupation with the most injuries”.
Somewhere in the mix of all these injury-prone occupations is every other occupation, such as law enforcement (see the California Dept. of Insurance news release chronicling a March 11, 2008 arrest of a correctional officer for workers’ comp fraud) and white collar professionals, filing all manner of fraudulent worker’s compensation claims.
Interestingly, in studies conducted by the Insurance Research Council, approximately ten percent of adults feel it is acceptable to have sustained an accident at their home but claim the injury occurred at work. Another seventeen percent believe it is acceptable to cooperate with doctors, attorneys and others in the medical field to file false claims so the employee can collect benefits.
In the end, the employer, consumers and insurance companies are the recipients of the pass-through costs associated with investigating fraudulent claims. The National Insurance Crime Bureau (NICB) estimated that fraudulent claims cost the industry over five billion dollars annually.
Now on to the employer: Johnny the employee was sent to a medical clinic for a work-related injury and has been at home and out of work for over a month. An anonymous letter is sent to his employer stating that Johnny is working for another company. During the fact finding process, the employer learns from a current employee that Johnny is working every day and shows no signs of his injury, as claimed. What does the employer do at this juncture? What should an employer look for in situations of potentially fraudulent workers’ compensation claims?
Workers Compensation Fraud – TOP 10 TIPS FOR EMPLOYERS
By Kent Perkins, Managing Partner
We believe you should be well equipped to evaluate Workers’ Comp claims and, in concert with legal counsel, your insurance carrier, and a competent investigator specializing in such claims, closely examine any workplace injury allegation which includes one or more of the 10 most frequent clues of potential fraud which we have provided below:
1. Not home when you call: When you attempted to reach the claimant at home, all you got was voice-mail, or a spouse who said, “He’s asleep right now; can I have him call you back later?” If repeated attempts to call your claimant at home always result in your inability to reach the employee, you should become very suspicious.
2. Bad home address on file: You discover the address on file for your employee is not a residence, but actually a postal service. Some people plan false Workers’ Comp claims weeks or months in advance and deliberately become difficult to find for surveillance.
3. Identification problems: The employee has used more than one Social Security number, or date of birth, or has given varying name spellings on applications or forms. Workers who have made numerous or fraudulent Workers’ Comp claims sometimes hide their true identity to avoid detection by prospective employers.
4. Failure to complete a doctor’s recovery regimen, such as physical therapy sessions having been missed. When people fake injuries, they’re not really interested in recovering; after all, they aren’t really hurt. Logically, people who fail to make medical appointments are less likely to truly be in need of medical treatment, particularly “soft tissue damage” injuries which are very difficult for doctors to accurately diagnose
5. First thing Monday morning reports should receive extra scrutiny, even if there is an obviously apparent injury such as a swollen ankle, because employees are sometimes injured during weekend sports activities and simply go to work and make fake claims so the resultant time off is compensated and, as a bonus, the Workers’ Comp insurance carrier picks up the medical expenses.
6. Incident occurred immediately before a likely interruption in workdue to disciplinary action, layoff or proposed strike. Many false claims of injury are made as a preemptive measure to ward off discipline, or to help claimants financially survive an imminent loss of income.
7. Lack of witnesses: When your employee makes an injury claim of an accident with no witnesses, especially in a busy work force, immediately raise your “false claim antennae.” As we showed in the fraud case presented above, our claimant had no witnesses.
8. The incident happened where the worker isn’t normally supposed to be. That may be because the accident was staged in an area which lends itself to such a claim, such as a remote stairway or a place where the floor is conveniently wet or oily.
9. The worker retains an attorney and demands a fast settlementunder threat of legal action.
10. Employee is overly familiar with the terminology and legal issues related to Workers’ Comp claims; experienced fraudsters study their trade and become experts on the subject.
Workers compensation fraud is considered a felony in the State of California. For further information and penalties for persons making false or fraudulent written or oral statements, refer to the insurance code Section 1871.4 for a full list.