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.
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.
This is a common example of employer workers' compensation fraud. By reporting lower-than-actual payroll numbers, the employer's premium dollars are reduced.
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.
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.
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.
This fraudulent act is when the provider bills both the patient and the insurance carrier for the same treatments.