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How to Thwart False Workers' Compensation Claims

Say that an employee submits a workers' compensation claim. Because the claim will often be covered by insurance, you might consider this to be a relatively minor nuisance. But it may turn into a nightmare if the claim is fraudulent.

Despite some recent improvements, this current system has enabled unscrupulous employees to fake injuries. Furthermore, because money paid under workers' compensation acts is exempt from federal income tax, there is even greater incentive for fraud. That is one of the reasons why the cost of workers' compensation insurance has significantly escalated for some companies in recent years.

How can you protect your company from fraudulent claims? Here are a few general suggestions.

*Start by taking an active interest in the claims that are made. Investigate all reports of injury thoroughly. Talk to co-workers who may have witnessed the incident. Don't hesitate to ask questions.

*If your investigations show a pattern ofinjuries in a particular place at particular times involving particular employees, look for ways to improve working conditions.

*Scrutinize all medical bills. The most common method of fraud in this area is double billing. Be sure that all bills have dates of treatment and specific descriptions of services rendered.

*Ask the insurance company to investigate the employee's past medical history and any prior claims. For instance, an employee's driving record often will reveal past accidents that may have permanently injured the employee.

*Similarly, you might have the insurance company or a private investigator look into whether the employee works anywhere else. Does he or she moonlight as a security guard or store clerk while claiming to be too injured to work? Some employees have even been caught collecting unemployment benefits and workers' compensation at the same time.

There are many ingenious schemes for cheating at the workers' compensation game. Undoubtedly, you can't stop them all. But if you take the cheating seriously—if you consider the money as coming out of your own pocket—you can reduce the problem and send a message to would-be cheaters.

Practical approach: If an investigation uncovers illegal acts, contact an attorney to determine whether a legal cause of action exists. Furthermore, your business advisors may be able to help you avoid unwarranted increases in your company's insurance premiums.

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