Posted on July 16th, 2018
Fraudulent Workers Comp Claim: What to Do if Your Employee Files a Bogus Claim
You know your employee has filed a fraudulent workers comp claim. But now the question is, what do you do about it?
Read on to learn how to handle workers’ comp fraud.
Every year, crooked workers steal via fraudulent workers comp claims around $30 billion in the United States.
In California alone, its estimated they swipe between One and Three Billion. Ouch!
It’s a hefty price tag, for the state and especially we the business owners of California. Workers’ comp fraud skyrockets our insurance premiums, wastes our time and resources and makes our companies less productive overall.
You lose time, money, and trust in your employees that you may never get back.
So what can you do about it?
If you know your employee’s filed a bogus claim, you’ve come to the right place.
We’re going to show you how to handle fraud and what you can do to prevent it.
Having a Plan in Place
Planning will allow you to take direct action in case of fraud. It’s also the law.
OSHA requires you, the employer, to create a safe work environment. A detailed safety plan should identify potential hazards in your workplace and how to avoid them.
It should also provide reporting procedures for an injury and the consequences of fraud.
Have the plan displayed prominently, in the break room or other area your staff tend to spend their time. Make sure employees understand the consequences. An extra but key step would be to have them sign a document showing their understanding.
When you make a new hire, go over worker’s comp procedures. Inform them of their rights and the resources available to them.
Keep diligent records. Gather any eyewitness testimony and pictures right away in the event something is reported. All of these documents provide you with evidence to use in litigation.
Moreover, if the employee makes a fraudulent claim, knowingly violating your worker’s comp rules, you can and should fire them.
Take Legal Action
In addition to outright termination, you can take legal action against fraudulent claims. The False and Fraudulent Claims Act makes it a crime under California law.
Violators can receive up to a year in prison for a misdemeanor offense, two to five for a felony. They can also face stiff fines, up to $150,000 or double their claim. The court may also make them pay restitution, to you and the insurance company.
California also makes it possible to file a civil suit against fraudulent employees. You can slap them with a fine of triple their medical expenses or $4-$10,000 per false claim. A criminal conviction will also increase any civil fines.
That said, California (as you probably know) is so pro employee that you have to make sure your ducks are aligned before you even think about going to court. Check your compliance with OSHA’s laws. Report all payroll and classify workers into the right category.
Know the state requirements. California’s laws will differ from Missouri’s. Research what they are and at least learn the basics..
Prevent Future Fraudulent Workers Comp Claim
In these cases, prevention offers the best solution. We already talked about planning and pursuing legal action. They help as deterrents but knowing the signs and being proactive will help prevent fraud in the future.
Knowing the Signs
The most common types of fraudulent injuries include:
- Remote injuries
- Inflated injuries
- Fake injuries
- Old injuries
- Lingering injuries
Remote injuries occur when no one’s around. They can also happen outside of the workplace. The employee may claim it as a work injury due to little or no personal health insurance.
Inflated injuries tend to minor injuries exaggerated to get benefits. The employee may want to collect more money or not work.
Fake Injuries:
Fake injuries are relatively self-explanatory. They never happened. Usually, they take the form of back and muscle aches, since those are the easiest to fake.
Old Injuries:
Old injuries tend to happen when an employee fails to report the initial cause. They’ll wait a few months or so, then say it was recent to collect benefits. Often, these are injuries that haven’t healed properly and require additional medical care.
Lingering Injuries:
Lingering injuries happen when an employee lies about the status of the injury. Often the reason is to stay away from work longer, despite the injury healing.
These signs should raise your suspicions, but they don’t prove fraud. If you spot one or multiple red flags, you can hire an investigator and dig deeper.
Being Proactive
Whether a claim is false or not, you should always be proactive when an employee reports an injury. Check in with the employee. Monitor their social media. If they’ve got pictures of a weekend getaway or they’re working another job, it can be another sign of fraud.
You should also be proactive when you suspect a false claim. Contact your insurance adjuster first. They will absorb the cost of investigating and legal action.
Next, gather your evidence–your records, witness statements, doctor’s reports, the employee’s history. Have it ready to back up your claim denial and for any court proceedings.
Final Thoughts
Workers’ comp exists to help injured employees recover and get back to work. But because employees don’t have to prove fault, workers’ comp fraud has become an all too common problem.
The cost of premiums and lost time can send operations costs soaring. To combat false claims, employers have to take a hands-on approach.
Recognize the signs of fraud, be proactive, and take direct action should you find evidence of fraud. Employees should understand your worker’s comp policies and the possible consequences should they violate them.
Lastly, never fear exercising your rights as an employer. If you need support in this area, Defend My Biz can help you.
We cater exclusively to California employers, fighting for your rights and giving you the information you need to seek justice.
Our blog is also full of helpful resources for every workplace legal problem including a fraudulent workers comp claim.
If you need a FREE consultation, call us at 323-285-0916.
Or book an appointment to get started right away.
