According to the Coalition Against Insurance Fraud, worker’s compensation costs have not only been rising steadily – and steeply – each year, they’re also riddled with billions of dollars worth of fraud. This makes preventing workers' compensation cases, and the injuries from which they result, a priority. So how can companies prevent the most common workers' compensation frauds? For starters, identify those employees most likely to file a claim – legitimate or not – before they’re hired.
How Common is Workers' Compensation Claims Fraud?
The vast majority of employees use the workers compensation system appropriately and most claims filed are legitimate. In fact, the overall number of claims has been declining – but the number of "questionable" claims has been growing quickly. (1) While abuse accounts for only about 3% percent of all workers' compensation claims, estimates on the cost of fraud run as high as $7.2 billion a year. Fraud increases workers' compensation premiums, which affects the profitability of business; this, in turn, leads to losses for honest workers in the form of lower salaries and fewer benefits.
What are the Most Common Types of Claims Fraud?
According to the Coalition Against Insurance Fraud, the 5 most common types of fraudulent workers' compensation claims are:
- Claims for injuries that did not occur in the workplace – This type of fraud occurs as employees misrepresent an off-time injury as a work-related one.
- Exaggerated injury claims – Workers experience a legitimate injury, but exaggerate its severity to collect more benefits and gain more paid, off-the-job time.
- Bogus injury claims – Employees claim injuries that never occurred.
- Claiming old injuries – Workers file claims on old injuries as if they were current ones.
- Malingering – Workers downplay recovery to stay off the job and collect benefits longer than necessary.
How Can Physical Abilities Testing Help?
Pre employment physical abilities testing is a great place to start in preventing workers' compensation fraud. Testing has been shown to reduce workplace injuries in general and workers' compensation costs specifically.
Before beginning an actual physical abilities test, the evaluator must ask questions regarding relevant medical conditions that might make testing unsafe for the job applicant. If the medical history is positive for previous injuries or diseases that affect muscles, joints, ligaments, or bones, the evaluator will take baseline measurements of those particular body parts. This information and these measurements provide a baseline for comparison should the applicant pass the test and go on to get injured post-hire. In some states, this "apportionment" limits employer liability to only that impairment caused by the new injury, excluding that caused by any pre-existing condition or injury. Employers don’t "buy" the impairment that was already present at the time of hire. Additionally, if the applicant does not disclose a particular piece of medical history, that omission could become the basis for a fraud claim.
In addition to minimizing the effects of fraud, multiple case studies show that these testing programs can reduce direct workers' compensation costs by as much as 60 percent within a year or two of their implementation in the workplace.
Physical abilities testing providers can also conduct post-injury testing and treatment programs. These "return to work" programs help get injured employees back on the job sooner and more safely, reducing the risk of re-injury and subsequent workers’ compensation claims. These programs take the guesswork out of back to work decisions via thorough, evidence-based, job-specific evaluations of a worker's level of recovery and demonstrated physical ability. Furthermore, the close follow-up these programs offer discourages one of the most common forms of claims fraud: malingering. If an employee claims to be so injured that return to work is impossible, objective post-injury testing can determine if these claims are true or not.
Benefits of Post Hire Testing
Finally, post hire testing can be invaluable in helping companies evaluate transitioning employees as they move to different positions. If accommodations need to be made, ergonomic assessments can identify issues that are challenging for the employee so that changes can be made. Employee injury avoidance training teaches body mechanics and safe lifting techniques so that both injured and non-injured employees alike can stay safe. All of these programs aid in reducing injures, leading to fewer workers compensation claims – which means fewer opportunities for claims fraud.
No matter what precautions we take, none will eliminate fraud entirely. However, knowing the most common types of workers' compensation fraud and taking preventive measures against them can greatly reduce their incidence in your workplace.
Are you interested in learning how you can prevent worker's comp from destroying your bottom line?