Worker’s Compensation fraud is the second costliest crime in America second to tax evasion. The total costs to insurers is difficult to nail down but ranges in scope from $6 billion/year (Coalition Against Insurance Fraud) to $7.2 billion /year (National Insurance Crime Bureau) and as high as $30 billion/year (Insurance Information Institute).
The most common questionable claim involves employee fraud falling into one or more of several categories:
- Remote injury- workers gets injured when they are not working, but report that the injury occurred in the course of completing their job duties.
- Exaggeration of injuries – worker receives a minor injury while working and reports a more serious injury.
- Faking injuries – workers fabricate an injury that never happened
- Old injury – worker had a previous injury that never quite healed and reports it as a new, work-related injury
- Malingering – worker has healed from the original injury but claims that injury still prevents activity
In order to assess a claim, one must determine the number and scope of Questionable Claim Indicators (QCI) present. A QCI is a red flag on a claim that could signal possible abuse. The presence of one QCI may not be of import; the presence of several would constitute employee fraud.
Questionable Claims Indicators can fall into one or more of four categories:
- Employment- These indicators relate to job duties and schedules of the employee including the timing of when worker’s compensation claims are filed.
- Behavioral – These indicators relate to how the claimant acts (actions); what the claimant says (statements)
- Medical – These indicators relate to the injury itself, treatment and recovery
- Personal/Financial – These indicators relate to the claimant’s financial status and to anything outside of the claimant’s work life; family, friends, witnesses; hobbies; other jobs
The following are common Questionable Claim Indicators to consider when reviewing a worker’s compensation claim, some of which were taken from The Insurance Fraud Casebook: They are categorized by category. Some QCIs will fall into more than one category.
- The accident/injury reportedly occurred late Friday or early Monday morning, indicating that it could have actually occurred during the weekend (during off hours).
- The claimant is a new employee, disgruntled, on probation, facing layoff, about to retire or had been passed over for a promotion
- There were no witnesses to the accident/injury
- The injury was reported only after the claimant sought medical treatment
- The claimant is injured after giving notice
- The claimant waited days or weeks before reporting the accident or injury
- The incident report and the medical evaluation contain conflicting information
- The claimant refuses or delays treatment to diagnose the injury
- The claimant misses physical therapy, occupational therapy or other doctor’s appointments
- The injury itself is subjective (soft tissue, emotional, chronic pain )
- The claimant left the country to secure medical treatment
- The claimant and other workers from the same employer use the same attorney, doctor, chiropractor or clinic
- The injury relates to a pre-existing health problem
- The claimant changes doctors frequently
- There are no witnesses to the reported accident or injury; or the only witness is someone with a close friendship or tie to the claimant.
- The claimant and witness statements offer conflicting information OR they are too similar (almost verbatim) as if rehearsed.
- The claimant has financial problems or is going through a divorce
(child custody battle)
- The claimant is “living large” on a supposed modest income; living beyond their means
- The claimants’ co-workers express doubt about whether the accident or injury actually happened
- The claimant has a part-time job that is labor intensive
- The claimant’s family knows nothing about the claim or they are overly helpful to the point of sounding rehearsed
- The claimant’s family members are on worker’s compensation or have a litigious history
- The claimant is involved in physical hobbies or sports
- The claimant is involved in home repair (DIY) or auto repair
- The claimant just had a new baby or has preschool age children