The Cost of Workers’ Compensation Fraud affects everyone.
In March of 2021, the Coalition Against Insurance Fraud formed a task force to examine Workers’ Compensation (WC) Fraud including determining the annual cost of comp fraud in America. This report, published in July 2022, states, “there is approximately $34 Billion of WC fraud.”
This estimate includes WC fraud related to…
- Agent/Broker Fraud
- Claimant Fraud
- Employer/Premium Fraud
- Underreporting Payroll
- Experience Modification Evasion
- Provider Fraud – Medial and Legal
- Billing for Services Not Performed
- Double Billing
- Billing for Medical Unnecessary Testing
- DNA Testing (billing for non-covered services as covered services.)
- Kickbacks, Capping and Steering
- Overutilization of Services
WC Claimant Fraud – Estimated at $9 Billion a year!
Unchecked claimant fraud has a critical impact on insurers, employers, and policyholders as it increases premiums for everyone. According to the Coalition’s report, “The five major types of claimant fraud involve false statements regarding the “alleged work injury” as follows:
- Injury was a non-work injury.
- Injury was fake.
- Claim includes an exaggerated work injury.
- Claimant denies prior injury to the same body part.
- Claimant lies about working while out on workers’ compensation.
As a remedy to mitigate the risk of fraud, the report suggests being on the lookout for this updated list of red flags:
- Number of days worked, and the amount of salary are inconsistent with occupation.
- Cross-outs, white-outs and erasures on documents.
- Injured workers file for benefits in a state other than principle location of the alleged industrial injury or occupational disease.
- Injured worker-listed occupation is inconsistent with the employer’s sated business.
- Injured worker cannot be reached because he or she is never home or is sleeping and cannot be disturbed.
- Injured worker is seen with calluses on hands, grease under fingernails.
- Injured workers move out of state of country shortly after filing a claim.
- Injured workers are in line for early retirement.
- Performs seasonal work that is about to end when they file a claim.
Thorough investigations can play a crucial role in mitigating the risk of workers’ compensation fraud. By conducting a comprehensive investigation, employers and insurance companies can verify the legitimacy of a claim and identify any red flags or inconsistencies that may indicate fraud. This may involve reviewing medical records, conducting interviews with witnesses and claimants, and analyzing surveillance footage or social media activity. With a rigorous investigation process in place, employers and insurers can deter fraudulent activity, save on unnecessary payouts, and ultimately create a safer workplace for employees.
To read the full Coalition Against Insurance Fraud report including “Top 10 Ideas to Reduce Workers’ Compensation Fraud, click here:
For more information contact Alliance Risk Group: https://allianceriskgroup.com/contact/