Ways to Identify Workers’ Comp Fraud

Workers’ compensation insurance is an essential part of the modern business landscape. Most businesses are required to obtain workers’ comp policies, which are designed to provide financial assistance for employees injured on the job. In the state of California, CA workers’ compensation fraud is a growing risk; employers must be watchful for warning signs that employees are filing fraudulent claims. In this guide, we will explore some of the most common red flags that may indicate workers’ comp fraud.

How Does CA Workers’ Compensation Work?

Most California business owners are required by law to have CA workers’ compensation policies in place. These policies are typically obtained from private insurers or state-run insurance companies. If an employee is injured or made ill on the job, he or she is eligible to file a claim. As a valuable employee benefit, workers’ comp helps to cover costs associated with:

• Medical care
• Rehabilitation
• Lost wages
• Training or retraining for employees to reenter the workforce

Under most state laws, if an employee is injured in the course or scope of work, he or she is covered. Certain injuries are not covered; claims against a CA workers’ compensation policy may be denied if the injury resulted from violations of company policy, self-inflicted injuries, or injuries occurring outside the work environment.

The Risks in Workers’ Comp Fraud

Employers know that fraudulent claims against any insurance policy may result in skyrocketing premium expenses and the costs associated with managing claims. The same is true with fraudulent claims associated with workers’ comp. For California employers, the risk of CA workers’ compensation fraud looms large. The COVID-19 pandemic led to a rise in fraudulent claims, especially as state legislations made it easier for employees to file claims that they were infected by the virus in their workplaces. It is not only employees filing an increasing number of fraudulent claims; employers may engage in fraudulent practices and medical providers may also make fraudulent claims to get more money from treating injured workers. Because workers’ comp fraud costs about $7.2 billion each year, according to the National Insurance Crime Bureau, employers have a financial stake in fighting against insurance fraud.

Red Flags to Watch Out For

Bogus claims against CA workers’ compensation policies can take many forms. Typically, a claimant will:

• Fake an injury
• Claim an injury that happened outside the workplace.
• Claim an old injury that may not have healed properly.
• Claim that an injury is worse than it is.

What are the warning signs or red flags of a fraudulent claim? As with the claims themselves, the red flags vary and may include:

• No witnesses to the initial injury.
• Injured workers refusing treatment.
• Injuries that occur just before an employee is disciplined, demoted, or terminated.
• Conflicting information or changes in an injured worker’s story after an injury occurs.
• Injuries that occur just before a weekend or holiday.
• Injuries that occur just before a contract expires.
• Employees that may be difficult to contact after the injury occurs.
• Delays in reporting an injury incident.
• Delays in seeking medical care for a workplace injury.

Employee history is another potential red flag. Employees with a track record of filing CA workers’ compensation claims – even from previous employers – may continue to file fraudulent claims in order to get extra money. Employers must carefully scrutinize potential employees during the hiring and onboarding process to weed out those with excessive or spurious claims in their work histories.

Providers in the medical and legal fields may also attempt to commit fraud. Warning signs for provider-based fraud may include:

• Billing for services not rendered.
• Inflating the cost of medical care and services.
• Billing for treatment of workers who were never seen by the provider.
• Billing for services that do not make sense in relation to the claimed injury.
• Billing for medical care continues for a long time with no apparent improvement in the employee’s injuries.

CA Workers’ compensation continues to be a valuable and important benefit for employees. With careful management of claims, including evaluating claims for potential fraud, employers can minimize the risks associated with this insurance. Workers’ comp fraud harms everyone, not just the employer.

About Coastal Oak Insurance Services

At Coastal Oak Insurance Services, we strive to protect your personal and business assets from coast to coast. When you work with us, you’re family. Contact us today at (949) 519-3738 to learn more about how we can provide you with comprehensive and tailored insurance coverage.