workers' compensation insurance fraud 101
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Learn more about workers' compensation insurance fraud statistics, the top kinds of workers' compensation insurance fraud, and the top warning signs to look for if suspected.TRANSCRIPT
Workers’ Compensation Insurance Fraud 101
Copyright © 2014 EMPLOYERS. All rights reserved.
EMPLOYERS and America’s small business insurance specialist are registered trademarks of
Employers Insurance Company of Nevada. Employers Holdings, Inc. is a holding company with subsidiaries that are specialty providers of workers' compensation insurance and services focused on
select, small businesses engaged in low-to-medium hazard industries. The company, through its subsidiaries, operates in 30 states and the District of Columbia from 12 office locations. Insurance is
offered through Employers Insurance Company of Nevada, Employers Compensation Insurance Company, Employers Preferred Insurance Company and Employers Assurance Company, all rated A-
(Excellent) by the A.M. Best Company. Coverage is not available in all jurisdictions and varies by company. See www.employers.com for coverage availability.
of American businesses carry workers’ compensation insurance.
94%More than
Source Referenced: 1
135,000,000That covers more than
workers across the United States
Source Referenced: 1
4In 2012, there were roughly 3 million non-fatal workplace accidents.
That’s nearly
injuries for every 100full-time
employees.
Source Referenced: 2
While most claims are legitimate, studies indicate that 1 to 2% or more of all workers’ compensation insurance claims are fraudulent.
Source Referenced: 3
And claimant fraud,
committed by a worker or
provider.
Workers’ compensation fraud essentially falls into two categories
Premium fraud,
committed by businesses.
(Misrepresentation of payroll, misclassification of employees or falsely changing a businesses experience modification in order to lower premiums)
(Attempts to cheat the system in order to receive more benefits than are deserved)
Source Referenced: EMPLOYERS Anti-Fraud Department
The Four
Most Common Types of Workers’
Compensation Insurance Fraud
The injury NEVER occurred, or was knowingly misrepresented as a work-related injury. Staging an accident also falls into this category, which is a worker intentionally injuring himself to receive benefits.
The False Claim
Working While Collecting Benefits
Workers who initially sustain a legitimate injury, but exaggerate its severity to collect more money and stay off the job for a longer period of time.
The claimant says that they cannot or are not working to continue receiving workers’ compensation benefits while they are actually working at another job.
The Exaggerated Claim
Fraud from the Top
Businesses can break the law through premium fraud. The two most common types of fraud are underreporting of payroll and employee misclassification.
Source Referenced: EMPLOYERS Anti-Fraud Department
Top 10 Warning Signs of Potential Workers' Compensation Claimant Fraud
Monday Morning Reports
Suspicious Providers
Conflicting Descriptions
Treatment is Refused
Claimant is Hard to Reach
Employment Change
No Witnesses
History of Claims
Late Reporting
Other Changes, such as to Physician, Mailing or Home Address, Etc.
Experience shows that when two or more of these factors are present in a workers’ compensation insurance claim, there is a chance the claim may be fraudulent. These are simply indicators, and many perfectly legitimate claims often contain some
of these indicators.
Source Referenced: EMPLOYERS Anti-Fraud Department
Red Flag Warning Signs of Potential Premium Fraud
Policyholder uses a mail drop or post office box for a business address
The business is located in another area of the state from the producing agent’s location
An excessive number of certificates of insurance issued on a small policy
An unusual ratio of clerical to non-clerical employees listed
The business avoids audits by changing carriers frequently
Reported injuries are not consistent with the risk that was written
These are simply indicators. A legitimate claim could have some of these indicators, however further investigation may be conducted by the workers’ compensation insurance carrier.
Source Referenced: EMPLOYERS Anti-Fraud Department
$900Workers’ compensation fraud costs the average consumer
annually in reduced paychecks and bonuses.
Increased Insurance Rates
Increased Health Care Costs
Revenue Stolen from Businesses
Source Referenced: 4
Do you have more questions about workers’ compensation fraud and what you, a small business owner, can do to protect yourself against it?
EMPLOYERS Fraud Hot-line
Call us: 1-800-750-3939Email us: [email protected]
Do you want to talk to an EMPLOYERS appointed agent about fraud and workers’ compensation insurance?
Click Here to
Get Started Now!
Sources Referenced: 1) David F. Utterback and Teresa M. Schnorr, “Use of Workers’ Compensation Data for Occupational Injury & Illness Prevention,” Department of Labor, 2010, www.cdc.gov/niosh/docs/2010-152/pdfs/2010-152.pdf.2) “Workplace Injury and Illness Summary,” Bureau of Labor Statistics, October 25, 2012, www.bls.gov/news.release/osh.nr0.htm.3) Quoted in Greg Hunter, “Worker’s Comp Scams that Push the Limits,” ABC News, March 3, 2013, http://abcnews.go.com/GMA/story?id=127996.4) Quoted in Selena Maranjian, “The Real Cost of Workers’ Comp Fraud,” Daily Finance, June 21, 2011, www.dailyfinance.com/2011/07/21/the-real-cost-of-workers-comp-fraud.
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