What if you were being exploited by an employee and didn’t even know it?
Workers compensation is an important tool to help workers who have been wronged by their employees. However, workers comp fraud allows employees to take advantage of you and your insurance plan.
Want to make sure no employee is stealing your money? Keep reading to learn everything you need to know about workers comp fraud.
How Does Workers Compensation Work?
We’ve prepared a guide to how you can identify and prevent workers compensation fraud. First, though, it’s important to define exactly how workers compensation works.
This is a special form of insurance intended to pay out to employees who become injured or sick on the job. And the insurance helps to make sure they still receive money while being unable to work.
Whether an employee can receive this compensation depends on a few factors. For example, whether they injured themselves on purpose or violating your policies in a way that put them in danger.
Generally, the “rules” of this compensation are pretty clear. Nonetheless, some people abuse these rules and participate in fraud.
What Is Workers Comp Fraud?
Generally speaking, workers comp fraud is easy to define. This is anytime that an employee, employer, or provided lies in order to receive some financial reward.
The exact form of the fraud can vary dramatically (see some of our examples below). But it all amounts to someone getting money they do not deserve based on a lie.
You can potentially save money and root out corrupt employees when you bust someone for this fraud. However, the hard part may be actually identifying said fraud.
Kinds of Fraud
To a large degree, workers comp fraud is limited only by the worker’s imagination. That means there are countless different kinds of fraud you must watch out for.
One of the most basic examples is faking illness or injury. Someone may falsely claim vision problems or hearing issues so they can stay home and rack up some money for nothing.
Another example may be tougher to spot: exaggerated problems. This is when an employee has a genuine on-the-job injury such as a sprained hand that they then try to pretend is something more serious like a broken hand.
Perhaps the most insidious kind of fraud is when employees are injured offsite and falsely claim they were injured onsite. This is textbook fraud, but it may be difficult to detect when the employee is sporting actual injuries that can be verified by a doctor.
Not Just Employees
So far, we have focused on the kinds of compensation fraud that employees use to get easy money. However, employers and even healthcare providers are capable of engaging in such fraud.
Employers, for instance, may falsely claim an environment is safe in order to pay less on their insurance premiums. Or they may deliberately misclassify an employee as contractors in order to further drive costs down.
Healthcare employees may sometimes be in on the fraud and help your employees fake injuries and illnesses. In some cases, they may misrepresent the medical needs of an employee in order to get repeat business.
No one is incapable of committing fraud. All we can do is make sure we identify fraud early on and fight back whenever possible.
How To Spot the Fraud
How do you go about detecting a fraudulent claim? In a very real way, this all comes down to trusting your gut.
An employee cannot file their claim without writing up what happened to them. You can read this report and talk to them about what happened. Like a good lawyer, your job is to see if anything doesn’t quite add up.
And like in a court case, a genuine claim usually has some compelling evidence. If the employee is making a wild claim that cannot be verified by witnesses or recordings, then it may be a false claim.
During their alleged injury, stay in regular contact with these employees. Even if nothing stood out to you when you first spoke to them, you may discover some red flags through additional conversations.
Fighting Back
Unfortunately, fighting back against false claims is a delicate balance. If you falsely accuse someone of faking an illness, you could open yourself up to potential legal action. But if you do nothing at all, you’re letting an employee get away with robbing you and your company.
All you can really do is report your suspicions to the state. They will also need to identify information such as the worker’s name, address, and description.
Remember, this is your one real shot to have the state investigate someone. Take the time and present your evidence in a clear and compelling way so that any fraudulent employees may be brought to justice.
What Happens to Defrauders?
Let’s say that your suspicions are correct and someone is busted for fraud. What happens to them at this point?
At this point, it’s up to the court. The person will pay a fine and possibly spend time in jail over the fraud.
Instead of (or on top of) jail time, employees may be forced to pay back the money they owe. In some cases, this amount is high enough to discourage any future fraud.
Why This Is So Important
This brings us to the final question. Why is it so important for you to detect and fight back against employee fraud?
First, you must discourage such behavior. Making an example out of one employee because of their fraud helps discourage other employees from trying something similar.
Second, you must be able to trust your employees. Someone getting away with fraud may be emboldened to later harm the company in other ways.
Third, you may not have the money to spare. Few small businesses can afford to have their premiums go up thanks to fraudulent employee claims!
The Next Steps
Now you know more about detecting and disrupting workers comp fraud. But do you know who can help with other worker’s comp issues?
We specialize in modern compensation solutions for modern companies. To see how we can take the headache out of workers comp, contact us today.