One of the common challenges for small business owners is preventing or reducing workers’ compensation fraud.
Workers’ compensation insurance, mandated in most states, is designed to protect employees and employers against costs associated with workplace accidents and injuries. The insurance provides funding for medical bills and lost wages, and employers are protected against lawsuits from injured employees.
Unfortunately, the system can be abused by employees, employers and even medical providers. Estimates vary about the costs of workers’ comp fraud, but it’s a significant challenge for employers who face the direct costs of replacing workers on leave as well as the potential for higher insurance premiums.
Forms of Fraud
Workers’ comp fraud can come in several variations:
Signs of Fraud
While each workplace accident or injury is different, there are a few signs that a reported incident is worth examining carefully:
There are a number of proactive steps business owners can take to help reduce the potential for workers’ compensation fraud:
If You Suspect Fraud
If you think a workers’ comp claim is suspicious, pass along your concerns to your insurance company. The insurer has extensive experience with legitimate and fraudulent claims, and will have a team of investigators who can check out the incident.
Common steps include speaking with co-workers and supervisors who may have witnessed the incident; reviewing security camera footage; and checking the employee’s social media posts for signs of potential fraud. For instance, many employees with fraudulent claims have been seen participating in active recreational sports or working other jobs under the table.
By educating workers about safe practices and collaborating with your insurance company, you can reduce the risk and costs of workers’ compensation fraud significantly.