If you’re a business owner, it’s vital to maintain insurance coverage for your employees in case of an accident. It’s equally important, however, that you know how to keep your workplace out of the mire of worker’s compensation fraud. Fraudulent claims not only lead to increasingly high insurance premiums, but you could pay heavy penalties as well.
Why You Need Worker’s Compensation
Worker’s compensation is insurance that covers you in case of workplace accidents or injuries. If an employee gets hurt on the job, they can file for worker’s compensation. They’ll receive payouts from your insurance company instead of from you.
When employees file a claim, they need to prove their injury or illness is directly related to their job. For example, if they hurt their back while lifting a box that they were asked to move on their own, they can file a claim. Insurance will cover monetary losses for your employee such as:
- Wages while unable to work
- Medical expenses related to the claim
Worker Compensation Fraud Explained
Workers comp fraud works in a few ways. Either the employee lies and misrepresents the extent or severity of the injury, or the employer lies to avoid paying for insurance. If a health provider exaggerates the severity of injury or illness so the employee can receive more money, this also constitutes fraud.
How Can an Employee Make a Fraudulent Claim?
There are several ways employees may try to defraud the system.
- Making Up Injury or Illness: Your employee is healthy but made up an illness to get time off and insurance payments.
- Exaggerating Injury or Illness: Your employee got a papercut but claimed they could no longer use the finger where the cut occurred and are no longer able to work.
- Claiming Injury or Illness Which Occurred Off the Jobsite: Your employee hurt his back playing basketball with friends, came to work, pretends to fall, and claims the injury came from working.
How Can an Employer Commit Workers’ Comp Fraud?
Employers can also commit workers comp fraud. This comes in several forms.
- Misrepresenting Job Site Safety: Lying about workplace safety and safety precautions on the job site for lower insurance premiums.
- Misrepresenting Employee Status: If you have ten full-time employees, they must be classified as an employee of your company, not an independent contractor.
- Not Buying Worker’s Comp: If you do not purchase workers’ compensation insurance to cover your employees, this is considered fraudulent.
How Can a Healthcare Provider Commit Worker’s Comp Fraud?
In addition to an employee or employer committing workers’ comp fraud, healthcare providers can get in on the act as well. This occurs in several ways.
- False Claims: Healthcare providers claim injuries are more severe than they are.
- Increased Treatments: Healthcare providers state that an employee needs more treatment than needed due to the injury received while on the job.
What Can You Do If You Suspect Workers’ Comp Fraud?
It’s essential to know what red flags to look for if you suspect your employee or their healthcare provider is committing fraud.
- If their story doesn’t add up or it changes each time they tell it, they might be lying.
- If there are no witnesses to their story, check security footage to review their claim.
- If they have a record of filing claims and leaving workplaces, pay special attention to their claim.
If all the red flags are flying and you think you have a fraudulent claim, report the person directly to your state and include:
- Name and address of the employee.
- Details of the incident, including what you believe to be a lie.
- Any related information you believe is pertinent.
Once you submit information to the state, they will handle it and investigate into your employee’s claim. If they find the employee to have committed fraud, any penalties you were charged will be rescinded, and the employee will no longer have access to benefits.
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