Willow Tree

With the number of women-owned firms contining to grow at twice the rate of all U.S. firms (23 percent vs. 9 percent). There are an estimated 10 million women-owned, privately-held U.S. businesses.   Women business owners must makes sure they have a good handle on risk management exposures that could potentially create unnecessary exposures and unforeseen loss of profits.

As a result, the Dallas Women in the Workplace Examiner will be posting a series of articles related to risk and safety exposures that are important for woman business owners to defend thier profits and protect thier companies from unnecessary exposure to risk. 

We will  start with a series on workers’ compensation and cover Safety, Insurance, risk identification and control. 

With the number of women-owned firms contining to grow at twice the rate of all U.S. firms (23 percent vs. 9 percent). There are an estimated 10 million women-owned, privately-held U.S. businesses.   Women business owners must makes sure they have a good handle on risk management exposures that could potentially create unnecessary exposures and unforeseen loss of profits.

As a result, the Dallas Women in the Workplace Examiner will be posting a series of articles related to risk and safety exposures that are important for woman business owners to defend thier profits and protect thier companies from unnecessary exposure to risk. 

We will  start with a series on workers’ compensation and cover Safety, Insurance, risk identification and control. 

Workers’ compensation fraud shows up in many places.   According to Travelers[1], the NICB (National Insurance Crime Bureau) states that this type of fraud results in over $7.2 billion a year.  It is considered the fastest growing segment of insurance fraud in the United States.  It affects everyone, insurers, employers, workers consumers and share holders.  

 The three main drivers of workers’ comp fraud are employers, medical providers and employees.  Employers commit premium fraud by underreporting payroll records, misclassifying workers, or claiming that all workers are independent contractors.  Some employers just don’t buy insurance at all.   Medical providers commit fraud by up coding bills, over treatment, over utilization and providing and recommending massive treatment without focusing on return to work.  Many medical providers own physical therapy, pharmacy, and medical diagnostic facilities.  Injured workers simply make their way through the bureaucratic system allowing for charges at every stop along the way. 

Employee fraud occurs when accident or injuries are staged or reported as work related in order to receive benefits under the system.  Remember the workers’ compensation system was set up as a no fault insurance system to protect the work force.  The majority of the time this is a good thing.  Yet sometimes employees who are motivated to get something for nothing are willing to go through the medical maze of treatment simply to stay home receiving tax free benefits for awhile with the hope of receiving an impairment rating and “hitting the jackpot”.  Little do they know that there is no real proverbial jackpot at the end of the workers’ compensation rainbow.  Often malingering workers’ compensation system addicts’ end up unemployable, unmotivated and broke.

Stay home one afternoon from work and all you see on T.V.  Is the promise of millions from plaintiff attorney’s candidly asking if “You were injured on the job?”  The unfortunate truth to all of this is that the only ones benefitting from this game are the physician and the lawyers.  The worker ends up with the short end of the stick when they have exhausted all their benefits and they finally are cut off.

Employee fraud shows up in some specific places.  According to Travelers Insurance[2] there are several red flags that employers need to be aware of:

• Accidents and injuries reported late Friday or early Monday morning.  The injury may be from a non work related or weekend activity.
• Injured worker refuses treatment from a medical provider or other health care professional.
• The physician diagnosis is not consistent with the treatment or the worker takes off more days that what would seem reasonable.
• No witnesses to the accident or an occurrence where the employee would not be in his normal scope of work.
• Late reported accidents.
• Claims reported just before a layoff, a job ending, or a poor performer’s probationary period is coming to an end.
• Worker is known to participate in recreational activities inconsistent with the reported injury.
• Worker has a history of short term employment
• An injured worker who is on disability who can never be reached provides false numbers and addresses.
• An injured worker with small children at home who file claims that coincide with holiday breaks.

Finally the strongest predictor of fraud according to the Coalition Against Insurance Fraud is disgruntled employees. When employees with bad attitudes and performance are allowed to stay within the organization, being passed from one supervisor to another, sooner or later they will file a claim.  These employees are a cancer within the organization.  Strong, enforced HR policies acted on consistently will address this issue.

What Employers Expect from their Adjusters on Workers’ Compensation

In this economy employers simply can not afford to be stuck with fraudulent claims.  While the workers’ compensation system is set up as no fault, employers expect carriers to do everything they can to circumvent fraudulent claims when they occur.  Employers’ should never accuse an employee of falsifying a claim.  Doing so may result in a bigger mess including wrongful termination, defamation and harassment charges.  An employer must report the claim to the carrier and will expect the carrier to act quickly, diligently and swiftly  to do everything they can to mitigate the damage. 

The following is a list of steps claims adjusters must take to help employers’ combat fraud on reported claims:

• Investigate – when an employer expects fraud, they expect their carrier to take them seriously.  Relying on the “no fault” and “nothing we can do because of the system” excuses will only add fuel to an already volatile fire.  The adjuster must get out there and interview the employee and all of the witnesses or non-witnesses to fight the claim.
• File paperwork timely in order to meet state requirements.  State requirements are tough and it may require a hearing.  File for the hearing based on the facts and fight the claim.
• Attempt to limit the extent of injury.  An employee who reports an arm injury should not automatically receive treatment for a back injury.
• Utilize case management and investigative tools quickly and often.  Yes it is an expense on the file, yet it may just save money in the long run.
• Don’t be afraid to report suspected fraud to the bureau or state prosecutors. That is what they are there for.
• When a fraudulent claim is deemed compensable, make sure that the injured worker is compliant with medical care.  Diary the progression of the claim.  Authorize treatment plans timely so the employee is not off from work without medical treatment for 3 months receiving indemnity payments waiting for medical approval.  If medical is denied then stick with the decision. There is nothing more frustrating than a denied surgery that occurs anyway eighteen months later.  The cost of the claim escalates and the injured worker has no accountability for treatment or return to work. 
• Request second opinions and medical reviews on a timely basis.  If it takes three months to get a medical review request through the state system then it should not be delayed another 3 months because the adjuster never requested it.
• Remember who is paying the bill.  The idea that the “insurance will take care of it” is ridiculous.  Premiums paid will only go up later based on adjusters’ actions and decisions.  The charges will ultimately make their way back to the employer and as such the adjuster should recognize whose money they are spending.

Finally, when claims are legitimate and employees need treatment, mucking up the treatment by slow moving authorization processes only delay the recovery of the worker.  Treating others as one would wish to be treated in the same situation is the golden rule.  If someone needs surgery, authorize it, get it scheduled, help the employee and move on down the road. 

[2] 2008 Managing Workers’ Compensation Fraud, Doc# A0174   www.travelers.com/riskcontrol