Detecting Workers Compensation Fraud
HandelontheLaw.com Staff Writer
There are 2 basic types of workers’ compensation fraud: premium fraud and claimant fraud. Premium fraud is policyholder’s (employer’s) attempt to lower workers compensation insurance premiums by: misrepresentation of payroll; misclassification of employees; or falsification of experience. Experts note “red flags” indicating possible premium fraud, including but not limited to: the employer’s use of a mail drop or post office box as a business address; the location of the business in a state area other than the insurance producer’s location; a high number of insurance certificates issued for a relatively small policy; an unusually high number of clerical vs. non-clerical employees listed in the insurance account; avoidance of insurance audits by frequent change of insurance carriers; and reported injuries that are inconsistent with the written risk. The existence of one or more of these red flags should result in notification of the insurance carrier, particularly the carrier’s department of special/fraud investigations.
Claimant fraud is an employee’s or healthcare provider’s maneuvers to obtain insurance benefits that are partially or wholly undeserved, typically through creating or embellishing a covered injury/illness, overcharging and/or over-treating. Claimant fraud also has numerous “red flags,” including but not limited to: occurrence/report of the injury on Monday; occurrence/report right before or after a major change of employment, such as termination or layoff; the claimant’s doctors and/or lawyers are historically involved with suspicious claims; there are no witnesses to the injuring incident; the claimant’s accident description conflicts with other reports, such as medical history or accident report; the claimant has a history of bringing suspicious claims and/or suing; the claimant would not undergo a diagnostic procedure to confirm/assess the injury; the claimant has a history of changing addresses, jobs and medical providers. The existence of one or more of these red flags should result in notification of the insurance carrier, particularly the carrier’s department of special/fraud investigations.
DO’S AND DON’TS
DO watch for “red flags” of premium fraud listed above.
DO watch for “red flags” of claimant fraud listed above.
DON’T confront the possible defrauder on your own.
DO notify the insurance carrier’s department of special/fraud investigations.
By Kathy Catanzarite
Note from HandelontheLaw.com: This article is to be used as an educational guide only and should not be interpreted as a legal consultation. Readers of this article are advised to seek an attorney if a legal consultation is needed. Laws may vary by state and are subject to change, thus the accuracy of this information can not be guaranteed. Readers act on this information solely at their own risk. Neither the author, handelonthelaw.com, or any of its affiliates shall have any liability stemming from this article.
WORKERS COMPENSATION/DISABILITY DOS AND DON'TS