What You Need to Know
Workers' compensation fraud is
a big problem. The National Insurance Crime Bureau (a not-for-profit
organization that investigates and tracks insurance fraud nationally) asserts
that workers'
compensation fraud is the fastest-growing insurance scam in the country.
The NICB estimates that 10 cents out of every premium dollar is wasted on
fraud. That translates into billions of dollars lost to workers' compensation
fraud annually. Who pays the tab? We all do.
Education is one of the ways
we can combat the problem. At Eastern, we
believe the more people know about fraud, the more likely they'll be able to
recognize it and report it. One important thing to keep in mind is that
workers' compensation fraud is not just perpetrated by employees - employers
and medical providers can be guilty of fraud too.
Here are some of the red flags
to look for in each group:
Employee Workers' Compensation Fraud
Harry Smith is a welder for a
small company. Lately, Harry has received "poor performance" reviews.
He's also told some of his co-workers that he and his wife are divorcing and
that he will have to be responsible for child support. In the past, he's
complained about work stress and back problems. Now, he shows up on Monday and
tells HR that he injured his wrist late on Friday afternoon, after everyone
else had gone home.*
*Not a real case.
Poor performance reviews.
Harry's walking on thin ice at
his job and may be seeking to get whatever he can before the company dismisses
him.
Financial difficulties.
That divorce and child support
Harry mentioned to his co-workers? Harry may be signaling he needs money fast.
A suspicious prior history.
Harry claims to have had
stress and back problems. A prior history of reporting subjective injuries
should raise concerns about his claim.
Reporting a work injury on Monday that occurred
on the previous Friday.
Harry shows up on Monday,
claiming he sustained an injury on the job the previous Friday and that there
were no witnesses. Under these circumstances, Harry's injury looks highly questionable.
Other "Red Flags"
include an injured employee who:
·
Complains frequently about new job
responsibilities or about returning to work
·
Their health doesn't seem to improve
·
Inquires about a "quick settlement"
·
May be retiring, on probation, involved in a
labor dispute, disgruntled, or subject to disciplinary action
·
Stays out of work longer than the doctor
prescribed
·
Refuses medical tests or examinations to confirm
an injury
Employer Workers' Compensation Fraud
The ABC Company is a
manufacturing company with 200 workers – but they only claim 180 workers on
their payroll. They also classify 75 of those 180 as desk workers, when the
reality is only 25 employees primarily work at their desk. The company has submitted
workers' compensation claims more than 10 times in the past two years, but
they're not very cooperative – they don't respond favorably to queries from the
insurance carrier’s claim and risk management staff. Witnesses to their
on-the-job injuries are typically listed as: Senior VP, Manager, and Production
Chief.*
*Not a real case.
There are several red flags
here, but uncovering employer workers' compensation fraud is more complicated
than employee fraud. In most cases, this type of fraud is usually discovered by
a state fraud investigator.
Misrepresenting payroll.
This is a common example of
employer workers' compensation fraud. By reporting lower-than-actual payroll
numbers, the employer's premium dollars are reduced.
Misclassifying workers.
Another way employers can
fraudulently reduce their premiums is to classify their employees in a
less-hazardous class code.
Frequency of claims and lack of cooperation.
A high frequency claims rate
and a refusal to cooperate with claim and risk management staff may signal that
the employer is defrauding their insurance carrier.
Management witnesses.
Who's going to deny what the
boss says, when they are the ones submitting the claims and paying the workers'
compensation premiums? Second-guessing management isn't necessarily a standard
practice by insurance carriers.
Medical Provider & Medical Facilities Workers Comp Fraud
Dr. Megan Jones is a licensed
chiropractor. She sees many workers' compensation cases involving neck and back
complaints. Often she schedules her patients for frequent visits over a period
of three or more months – no matter how the patient is feeling or what the
original injury was. Dr. Jones also shares office space with an acupuncturist
and a massage therapist and regularly advises her patients to seek acupuncture
and massage therapy for pain and stress relief. Her office manager then bills
for all of these treatments under the codes she knows will be paid and won’t
trigger an audit and additionally bills patients for the treatments.*
*Not a real case.
Like employer workers'
compensation fraud, medical provider fraud is difficult to uncover. Sometimes,
providers who commit fraud can go undetected for years.
Excessive treatments .
This is a common act of fraud
perpetrated by medical providers to get more money from insurance carriers than
they're due.
Unnecessary
treatments.
Procedures and therapies that
may not be considered "necessary treatments" for workers'
compensation injuries are sometimes deliberately miscoded in the hope that the
insurance carrier will pay for them without question.
Double-Dipping.
This fraudulent act is when
the provider bills both the patient and the insurance carrier for the same
treatments.
