Workers compensation insurance is designed to protect employees and businesses, and support those who are injured at work. Unfortunately, there are people who take advantage of a system that’s set up to help people. Workers compensation fraud impacts everyone, and it goes unreported every day. Here’s what you need to know about how to report workers compensation fraud.
What is work comp fraud?
The most common type of work comp fraud is employee claim fraud. This occurs when an employee makes a claim for benefits they know they’re not entitled to. Employers and even insurance carriers can also commit fraud. Fraud comes in many forms – here are a few common examples. The best way to prevent fraud is to educate yourself and your employees, and to encourage reporting.
Red flags that could indicate fraud
Most work comp claims involve legitimate injuries. The following warning signs don’t prove someone is committing fraud, but they may be cause for further investigation. If details seem suspicious, ask more questions so you can make an informed decision about whether to report them.
Be alert if the incident:
- Has no witnesses
- Wasn’t reported promptly
- Occurred late Friday afternoon or early Monday morning
- Occurred shortly before termination, layoff or the end of a project
Probe for more detail if the employee:
- Gives inconsistent, vague or contradictory details about the incident
- Can’t be easily reached
- Has hobbies or pre-existing conditions that could cause a similar injury
- Shows an extensive history of claims
- Has a history of absences or short-term employment
- Works another job where the incident could’ve happened
- Is new to the company
What to do if you suspect fraud
You should conduct a thorough incident investigation after every workplace injury. This best practice helps uncover suspicious details around an incident. It also helps you prevent similar incidents from happening in the future by identifying the root cause.
If you do notice details that just don’t add up during your incident investigation or otherwise, you should report it right away. You should not attempt to conduct surveillance on your own – leave that to the professionals.
After reporting suspected fraud, business owners should consult their legal counsel and insurance carrier before taking any action against the employee. In general, terminating an employee before an investigation can expose you to more risk. It’s in your best interest to let fraud professionals do their jobs. You’ve done your part simply by reporting suspicious activity.
How to report workers compensation fraud
Anyone can report suspected fraud, whether they’re the policyholder, an employee or even an acquaintance of the suspect. If you believe you have information that someone is not complying with work comp laws, please report it. Often, this is the only way investigators find out about suspicious activity.
You can report suspected fraud anonymously. However, if you feel comfortable, you should provide your contact information for investigators to follow up with you. You have the option to report through several channels.
Report it to your manager or work comp policy administrator
If you’re unsure whether the information you have is suspicious or warrants further investigation, you might prefer to speak with a colleague who is closer to your company’s work comp policy. This defers the reporting decision to someone else within your organization.
Report it to your state’s Department of Labor
Most states’ Department of Labor websites have a fraud report form – you can find Missouri’s here. Government authorities keep all investigations confidential.
Report it to your insurance carrier
Your work comp carrier should have a special investigative unit (SIU) to investigate possible fraud cases. Most carriers would encourage you to report suspicious activity directly to them – that’s why they have an SIU. Even if your tip turns out to be nothing, your carrier would rather have their own professionals quickly investigate it than risk fraud going undetected.
If, after investigating, your carrier’s SIU believes someone has committed fraud, it will send a referral to your state’s DOL for further investigation. Regardless of how you choose to report suspicious information, the outcome will be the same if investigators discover fraud. Your state’s Fraud and Noncompliance Unit may refer the case to the Attorney General for prosecution. In the end, any fines resulting from prosecution go to the Workers’ Compensation Fund, which covers the administrative expenses of work comp law.
Help us fight fraud
The best defense against work comp fraud is to prevent it, rather than prosecute it once it’s already happened. As an employer, you can prevent fraud by screening job applicants, encouraging employee reporting, conducting incident investigations, and staying in communication with injured workers. Learn more in this blog post, Prevent Workers Compensation Fraud with These 4 Tips.