How Can Businesses Prevent and Detect Workers Compensation Fraud?

It’s an unfortunate fact that most businesses have to contend with workplace fraud of one kind or another. One of the most common types of fraud occurs when an employee fakes an injury so that they can collect workers compensation benefits.

Dishonest workers know that they can work a second job, pursue personal goals or go on holiday, all while being paid — all they have to do is fake it.

Often, the injury is real — but the claim is fraudulent. Typically, this would occur when a worker suffers an injury offsite but then claims they suffered the injury in a workplace scenario. The worker is injured, but the business is wrongfully held responsible. Another common fraud is to stay home at the company’s expense longer than is necessary to heal.

Sometimes, the injury itself is fake. This wouldn’t work for a broken wrist or a bad cut — but a strained neck or back is another matter. By faking injuries that are hard to disprove, claims are hard to ignore.

How Can Businesses Detect a Fraudulent Claim?

A clever fraudster won’t make it easy for businesses to catch them. Employers must watch out for red flags that indicate a claim might be risky; the more red flags, the riskier the claim. One of these alone might mean nothing, but seeing several will make it clear that the claim deserves greater scrutiny.

Here are a few common red flags:

  • The worker knows the compensation system better than you do — this is unusual in most non-fraudulent claims.
  • The worker is hard to contact when they are off sick — they may be working another job.
  • There is no witness to the injury taking place, or the description by a witness differs from the claimants own report.
  • The claimant refuses treatments or procedures that could confirm or deny the extent of their injuries.
  • The worker is unhappy in their role and frequently complains. Personal problems, such as a failing marriage or financial problems, are another risk factor.
  • The worker is eager to agree on a settlement as quickly as possible. They may also be very quick to call a lawyer even when it is not certain one if necessary.
  • The claimant has made several suspicious claims in the past or is injured considerably more frequently than the average employee.
  • The claimant is new to the business; newer workers are more likely to lodge fraudulent claims.

How Can Businesses Reduce Workers Comp Fraud?

Losing money to fraud isn’t inevitable; there are steps businesses can take to reduce the risk of fraud ever occurring. Coupled with good detection, these measures can considerably decrease a business’s exposure to workers compensation fraud.

Firstly, reducing fraud begins during the hiring process; better workers with great references are less likely to commit fraud. Most fraudsters are serial offenders, and a background check will often reveal clues about their past behavior. Businesses may want to consider paying employees more to increase competition for places, attract better workers and increase loyalty.

Secondly, improving workplace morale can considerably reduce the risk of fraud. Workers who are satisfied with their salary, the business’s culture, and their overall workload are much less likely to make a fraudulent claim.

Finally, establish procedures that reduce the risk of both injury and fraud. For example, safety procedures that ensure no one does work identified as risky alone will make it hard for workers to make a claim. Additionally, clearly established procedures for reporting accidents make it harder still.