Identifying Fraudulent Workers Compensation Claims
Jennifer Corso, Owner, The Law Office of Jennifer A. Corso, LLC www.jennifercorso.com and of counsel with Petronzio Schneier Co., LPA www.ps-law.com
Ohio employers are required by law to participate in Ohio’s workers’ compensation insurance program through the Bureau of Workers’ Compensation (BWC). Employers can take steps to keep their workers’ comp premiums in check through comprehensive safety programs, effective job training and safety awareness. However, even with these programs in effect, it is still possible to have a fraudulent workers’ comp claim filed, which could have a serious effect on a company’s premium.
Fraudulent claims usually appear in one of two forms: 1) a legitimate workplace injury that is then exaggerated (or “milked”) for excessive lost time and medical expenses; or 2) a claim for an injury that did not, in fact, occur (or did not occur at work). Fraudulent claims cost the employer, not only in increased premiums, but in lost time of the employee and overtime to cover that lost time. Additional time is lost by management and co-worker witnesses in investigating and contesting the claim at hearings.
Many questionable claims can be headed off by effective investigation that occurs at the earliest possible stage of the claim. First, and most important, if you feel a claim is not legitimate, do not certify the claim. Once a claim is certified by an employer, it is very difficult to later have that claim disallowed.
When a claim is filed, the following questions should be asked:
1. Has there been recent adverse employment action?
Was the employee recently disciplined or on the verge of discipline or termination? An employee who sees a layoff or termination coming may make a fraudulent claim to collect workers’ comp benefits instead of unemployment. Also be aware of other issues, such as being passed over for promotion or a negative job evaluation that may indicate a disagreement with the company.
2. Is the timing of the claim suspect?
One of the most important signs of a fraudulent claim is a delay in reporting the injury or filing the claim. While employees in Ohio have two years by statute to file a workers’ comp claim, a delay in reporting or filing should raise questions. Other questionable claim filings would be close in time to seasonal shutdown, anticipated layoff, or union strike. Also look at the employee’s personal history - does the employee get injured at the start of each summer/hunting season/opening day, or does the employee’s spouse have set time off (i.e. teacher having summer off)? Other warning signs may be a recently denied vacation, or recent child care/elder care issues.
3. Does the employee have a prior claim history?
Check with your human resources department or third party administrator (TPA) to find out if the employee has a prior claim history, including any recent past claims. The TPA can request information from BWC on any claims with previous employers dealing with the same body part. Claims should also be questioned if the employee had many small claims in a short time, or had long absences or heavy medication use for past claims.
4. Do the circumstances of the claim raise red flags?
One of the most common elements of fraudulent claims is that there were no witnesses to the alleged incident/injury. This should be a major red flag in any workers comp claim, even if no other questions arise. Likewise, extra attention should be paid to injuries that reportedly occur away from the regular work station – in the parking lot, break room, locker room, etc.
Other red flags include: no witnesses to injury or contradicting statements from witnesses; contradicting statements in different reports; different reports of the method of injury on the FROI vs. internal report forms or medical records.
5. What are the employee’s outside activities?
Does the employee have known pre-existing conditions or injuries, or participate in sports or other high risk activities? Many fraudulent claims occur when an employee is injured off the job, then claims the injury actually happened at work. Also, you should know which of your employees have secondary employment, and carefully review any suspicious claims to make sure you are not picking up another employer’s claim.
If any of the above red flags are present, you should take the following steps to protect your company against fraudulent claims:
- Carefully review the FROI and any internal reports
- Speak to any relevant people – witnesses, supervisors, etc. – before certifying claim
- Watch for discrepancies in reporting
- Use your TPA to check for prior claims on same body part
- Use your TPA or attorney to obtain medical records
- Hire a private investigator for surveillance
Employers may also contact the BWC’s fraud unit to report any suspected fraudulent claims. Do not use the BWC fraud unit as a substitute for your own investigation, though.
Jennifer Corso is the owner of The Law Office of Jennifer A. Corso, LLC, and is of counsel with Petronzio Schneier Co., LPA, an east side law firm that works with small business owners. Jennifer can assist any company with legal compliance and defense of employment claims and lawsuits.
Jennifer has almost 20 years experience representing management in labor & employment law. She is certified by the Ohio State Bar Association as a Specialist in Labor and Employment Law, and has written several articles and spoken at numerous seminars and to community business groups on employment law topics. She is a former NAWBO Board member, and currently serves on the Board for the Heights Chamber of Commerce and also on the Board of Bad Girl Ventures.