PCOC - Summer 2015 - (Page 22)
Stop the Madness!
Red Flags for
Workers' Comp Fraud
By Paul M. Lindsay,
Director, Senior Vice President,
EPIC Jenkins for the PCOC Insurance Program
The most common complaint I field, and the most discussed subject during claims review meetings,
centers around fraud. Whether a complete fabrication or exaggeration of an incident, nothing raises the stress
and frustration level of an insured more than fraud. Conversely, nothing frustrates the defrauder than being
caught in act - some even go to jail! With this in mind, I am diverting from "Predictions" article series to
address the immediate problem of fraud.
There is great controversy about exactly
how much workers' comp fraud costs businesses. Some industry sources, such as the
National Insurance Crime Bureau (NICB),
put the figure at more than $7 billion a
year. Nobody compiles national fraud statistics, but worker and industry sources
alike estimate 1 to 2 percent of claims are
fraudulent. In its most recent report on
the subject, the National Insurance Crime
Bureau reported that the number of "questionable" workers' compensation claims
increased between January 1, 2011 and June
30, 2013, although the total number of claims
decreased. "Questionable claims" included
claims involving claimant fraud, prior injuries unrelated to work and malingering.
No one wants to deny legitimate compensation for workers injured on the job.
But the following scenarios should raise
the suspicions of responsible managers,
helping businesses save unnecessary costs
and ensuring that legitimate claims are
The Red Flags of Fraud
1. Lack of prompt reporting: Injured
employees will generally report a claim
on a timely basis. Late reporting in and
of itself is not necessarily a cause for
alarm, but ought to be a signal to review
the claim a little more closely.
2. Sketchy details or changing stories:
Most claimants can recall the details
of their injury. If the claimant seems
to be fuzzy on the details, gives vague
responses to questions, or changes pertinent information, keep digging.
3. No witnesses: Not every claim has a
witness and the absence of a witness
should not be used solely to determine
fraud. However, if many of the other
signs are present, it will be hard to dismiss the lack of a witness.
www.pcoc.org / Summer 2015
4. New employee: Statistically, the newer
the employee is, the more likely the
claim is fraudulent, especially if other
red flags appear.
5. Monday claims: If the injury allegedly occurred on Friday, usually late in
the day, but did not get reported until
Monday, there is reason to suspect there
might be a little more going on than
meets the eye.
6. Disgruntled employee: A disgruntled
employee is more likely to place fraudulent claims than an employee with high
7. Financial hardship at home: Workers'
compensation benefits are sometimes
seen as a way out of a tight financial
situation at home.
8. Employee is difficult to contact:
Persistent avoidance often means the
claimant has something to hide.
9. Missed medical appointments: When
employees are truly injured, they want
to get better and will make sure to
attend all necessary medical appointments. Missing appointments is another
reason to suspect fraud.
10. Employee engages in activity that is
not consistent with the injury sustained: If your employee reported a
back injury but he still turns out for
the local softball team, there is a good
reason to suspect fraud.
Table of Contents for the Digital Edition of PCOC - Summer 2015
Best Practices for Exterior Bait Stations
What Do PMPs Want from Suppliers?
Insurance Stop the Madness!
State Capitol Report Legislature Outlook: Loud and Busy
Firm Profile Green Dog Pest Service
Index to Advertisers
PCOC - Summer 2015