One of the common challenges for small business owners is preventing or reducing workers’ compensation fraud.
Workers’ compensation insurance, mandated in most states, is designed to protect employees and employers against costs associated with workplace accidents and injuries. The insurance provides funding for medical bills and lost wages, and employers are protected against lawsuits from injured employees.
Unfortunately, the system can be abused by employees, employers and even medical providers. Estimates vary about the costs of workers’ comp fraud, but it’s a significant challenge for employers who face the direct costs of replacing workers on leave as well as the potential for higher insurance premiums.
Forms of Fraud
Workers’ comp fraud can come in several variations:
- A worker is injured outside of the workplace, but says the incident took place on the job.
- A worker with minor injuries exaggerates the pain or other effects.
- A worker with a legitimate injury claims the systems continue well after he or she has healed
Signs of Fraud
While each workplace accident or injury is different, there are a few signs that a reported incident is worth examining carefully:
- The injury occurs late on a Friday or early on a Monday. These may suggest a weekend injury.
- There are no witnesses to the incident.
- The employee’s account of the injury is inconsistent.
- The worker is unhappy or has been involved in other incidents.
There are a number of proactive steps business owners can take to help reduce the potential for workers’ compensation fraud:
- Conduct background checks on applicants to look for people who may have committed workers’ comp fraud at other companies.
- Provide training about safe work and lifting practices. Your workers’ compensation insurer will offer training materials and, in some cases, will conduct workshops.
- Explain how workers’ comp insurance works to protect employees.
- Mandate reporting of all workplace accidents or injuries.
If You Suspect Fraud
If you think a workers’ comp claim is suspicious, pass along your concerns to your insurance company. The insurer has extensive experience with legitimate and fraudulent claims, and will have a team of investigators who can check out the incident.
Common steps include speaking with co-workers and supervisors who may have witnessed the incident; reviewing security camera footage; and checking the employee’s social media posts for signs of potential fraud. For instance, many employees with fraudulent claims have been seen participating in active recreational sports or working other jobs under the table.
By educating workers about safe practices and collaborating with your insurance company, you can reduce the risk and costs of workers’ compensation fraud significantly.