Tips for Preventing Workers' Comp Fraud

July 25, 2001
As employers worry about rising workers' compensation premiums and workers worry about coverage, one industry leader notes that fraudulent workers' compensation claims are partly to blame for rate\r\nincreases.

As employers worry about rising workers'' compensation premiums and workers worry about coverage, one industry leader notes that fraudulent workers'' compensation claims are partly to blame for rate increases, and that some of the fraud can be prevented.

"Fraudulent workers'' compensation claims cost American businesses anywhere from $1 to $20 billion annually," said Tim Fargo, president of Omega Insurance Services Inc., a St. Petersburg, Fla.-based company than investigated individuals suspected of workers'' compensation fraud for insurance companies and private insurers.

Fargo offers businesses the following six tips for preventing fraud:

1. Learn more about the people you want to hire. Do check credentials and references, and go beyond those offered by the prospective employee. "In a tight labor market, employers tend to use a stethoscope as a hiring tool," said Fargo. "As long as he''s breathing, he''s go a job."

2. Increase your risk management. What kind of safety measures do you have in place? Do you pay attention to ergonomics? Do you use safety equipment?

3. If you have a claim, get as much information as possible -- including statements from witnesses -- and contact your insurance carrier within minutes. Fargo noted that too many business owners worry that calling the insurer will cause premiums to go up. In fact, the longer companies wait to call, the more problems they are likely to have with the claim.

4. Maintain a positive relationship with the injured worker. "Even if you''re suspicious, your job is to make the employee feel nurtured and cared for," Fargo cautioned. Employers run into problems, he said, when they establish adversarial relationships with claimants.

5. Pay attention to any information you receive that indicates the injury might be bogus or non work-related. If you have information that suggest the claim is bad, push your insurance company to investigate it.

6. When investigating a claim, give your insurance company as much information as possible about the claimant. Investigators need a description of the claimant''s physical appearance and an accurate residential address, but they also like to know as much as possible about behavior patterns, disciplinary problems, arguments with supervisors and so on.

by Virginia Foran

About the Author

EHS Today Staff

EHS Today's editorial staff includes:

Dave Blanchard, Editor-in-Chief: During his career Dave has led the editorial management of many of Endeavor Business Media's best-known brands, including IndustryWeekEHS Today, Material Handling & LogisticsLogistics Today, Supply Chain Technology News, and Business Finance. In addition, he serves as senior content director of the annual Safety Leadership Conference. With over 30 years of B2B media experience, Dave literally wrote the book on supply chain management, Supply Chain Management Best Practices (John Wiley & Sons, 2021), which has been translated into several languages and is currently in its third edition. He is a frequent speaker and moderator at major trade shows and conferences, and has won numerous awards for writing and editing. He is a voting member of the jury of the Logistics Hall of Fame, and is a graduate of Northern Illinois University.

Adrienne Selko, Senior Editor: In addition to her roles with EHS Today and the Safety Leadership Conference, Adrienne is also a senior editor at IndustryWeek and has written about many topics, with her current focus on workforce development strategies. She is also a senior editor at Material Handling & Logistics. Previously she was in corporate communications at a medical manufacturing company as well as a large regional bank. She is the author of Do I Have to Wear Garlic Around My Neck?, which made the Cleveland Plain Dealer's best sellers list.

Nicole Stempak, Managing Editor:  Nicole Stempak is managing editor of EHS Today and conference content manager of the Safety Leadership Conference.

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