Preventing Workers’ Compensation Fraud

 

 

There are several sources of fraud involving workers’ compensation insurance, which include the employer, the employee, the insurance provider, the insurance agent, medical providers and even attorneys. The focus of this newsletter is on the employee’s opportunity to commit fraud, otherwise known as claimant fraud. This type of fraud is addressed for three reasons; it occurs more often than the other types; it is one of the largest sources of irritation regarding workers’ compensation insurance; and it is the type of fraud that is best controlled by the employer.

Claimant fraud occurs more often for a simple reason – there are so many employees and each of them is unique. Some may be dishonest from the beginning. Others may be lead into dishonesty by peers, relatives or spouses. And others may be lead into dishonesty by economic pressures in their personal lives.

Whenever an individual perceives that he or she has been deceived, in this case an employer and the bill payer for workers’ compensation premiums, the accompanying feelings are strongly emotional because the event was personal. Overtime the result is a general suspicion regarding all occupational injuries and a general dislike of workers’ compensation insurance companies. This is unfortunate because only a minor number of employees ever commit workers’ compensation fraud, which means that most occupational injuries are valid. In addition, the negative opinion of workers’ compensation insurance companies may result in the employer denying access by the loss control consultants from that company. These are the very people who can help identify workplace hazards and recommend effective control measures to prevent occupational injuries. In effect, this stereotyping of employees and insurance providers complicates the problem.

Claimant fraud is best prevented by the employer. Others, such as the insurance provider, the medical provider and the state workers’ compensation agency, may become involved but the individual who has the greatest advantage for preventing claimant fraud is the employer. There are several methods of doing so; however, the six listed below are typically the most effective.

1. Don’t let them get hurt. Identifying and controlling workplace hazards is the first step. Next, employees need to be properly trained, equipped and supervised to safely accomplish their jobs. By the way, this is what is referred to as a safety program.
   
2. Investigate all injuries. This should be done for two reasons – to find out what happened to prevent its reoccurrence, and to determine if it really happened. When employees know that all injuries will be investigated, they are less likely to fake an injury.
   
3. Surround yourself with good people. In other words, don’t hire substandard employees who may be likely to commit claimant fraud. This can be accomplished by applying due diligence hiring practices (formal applications, verification of references, criminal background checks, substance abuse screens, and even medical/physical determination if the applicant has the ability to perform the critical functions of the job). Subsequently, the workforce should be managed through supervision (counseling and performance appraisals).
   
4. Educate the workforce. Inform them about the workers’ compensation process, which includes the costs to the company and the consequences of claimant fraud. Also brief them on the company policies and procedures regarding accident investigations, etc. This precludes confusion and misperceptions regarding the situation plus it subtly sends notice to substandard employees that fraud will not be tolerated.
   
5. Communicate with your employees. This should be occur prior to any injury and definitely after any injury. Employees become experts at their jobs. Over time they know better than anyone else what and where the hazards are with their specific tasks. Listen to their comments and recommendations. You will be surprised how this improves your loss history (less number of injuries) and it improves the morale of the workforce. They will feel valued by the employer simply because the employer listened to them. If one of them does sustain an injury continue to communicate with that individual even if he or she can not immediately return to work. They will heal faster and be less likely to develop feelings of inadequacy, paranoia or even mistrust if you stay in touch with them. Of course, the individual who should do this is their immediate supervisor because employees have a closer personal relationship with their supervisor than they do with their employer.
   
6. Bring them back to work. Primarily there are two expenses associated with a workers’ compensation claim. One is the cost of medical services. The other is payment to the employee for wages lost during that period of time when he could not work because of medical restriction. Most often the motivator for fraud is to remain off of work as long as possible and receive temporary benefits while supplementing that income by working on the side for someone else. To counter this the company should establish a policy (known as early return to work, modified duty, limited duty, restricted duty or even light duty) and ensure that all employees understand the policy (see point #4 above). This deters fraud because those who might be tempted to try this tactic will be required to return to work in accordance with the medical restriction, thus reducing the cost of the claim by reducing or eliminating the amount of lost wages paid or by causing that employee to refuse to return to work. This, by the way, is a refusal to work and in most companies that constitutes a valid reason for termination. If the employee is terminated because he refused work, then the lost wages expense of that claim will most likely also be terminated by the insurance company. In this process, the company has contained the cost of claimant fraud and purged the workforce of a substandard employee.
   

As previously stated, the employer is in the best position to prevent, identify and then control claimant fraud. This requires action, but so does the prevention of fire damage, theft, burglary and larceny. It’s a loss than can and should be controlled.

 

PPE – Let’s Get it On

One of the greatest hassles for all employees is the requirement to wear items of personal protective equipment.  Excuses include such things as “it’s uncomfortable” or “it doesn’t fit” or “it makes me look stupid” or “I have difficulty performing my job with it on” or you fill in the blank “……………………………………………………………” 

Sound familiar?  And as you well know from experience, if it is that much of a hassle for them then it is even more of a hassle for supervisors – their parent figure at work!  

Unfortunately, the use of PPE is necessary for some tasks even after all other methods of hazard control have been applied.  It then is a must, have to, absolute, job requirement, etc. and if the individual employee does not accept this as his/her responsibility then the supervisor must enforce its use.  There’s the hassle. 

Regardless of the type of PPE necessary, there is one FACT that is true in all situations.  The hazard is still present and the employee is still exposed to that hazard.  The only thing protecting that employee from injury is the proper use of the appropriate PPE.  This is when your leadership skills as a supervisor are put to the test.  You must ensure that the appropriate PPE is worn appropriately! 

Before discussing some possible solutions, it’s important to understand that the best method of control is always to remove the hazard entirely. Since this may not always be possible, here are some guidelines for applying safety controls in a preferred order of priority – from most effective to least effective:

► Remove the hazard at the source – get rid of the piece of equipment, the material or work procedure that presents the hazard.

► Substitute the equipment or process with a less hazardous one.

► Isolate the hazard – relocate it away from people.

► Add safeguards – such as safety barriers or screens.

► Adopt a safer procedure. Consider improved safety training and supervision.

► If there are still risks, provide suitable PPE, and make sure it is used.     

As a supervisor you are probably saying to yourself…”Yea right, I can’t do anything on this list.  This is management’s responsibility.”  But, you occupy that KEY position in the organization that funnels information (complaints, suggestions, etc.) from the front line worker up to management.  Your employees know more about their site specific workplace hazards than anyone else.  Your responsibility is to get this information to management so corrective action can be implemented.  Now read the list above one more time and look closely at the last two bullets.  These activities occur after YOU have provided management with information regarding the workplace hazards and YOU have direct responsibility for the implementation of these actions.   

So after all has been done to eliminate or control the hazard the requirement exists for employees to wear PPE.  Now the supervisory challenge becomes getting employees to wear their PPE.  Consider these three simple recommendations – educate, involve and enforce.     

Educate

Actually, this process includes both educating employees and training employees.  They need to be educated regarding workplace hazards and how personal protective equipment will protect them from injury.  They also need to be trained on the proper use and maintenance of assigned PPE.  For example, employees may not understand the concept of flash burn from welding, or the fact that some chemicals do not have any warning properties (smell, irritation, color, etc.) or how and why hearing loss occurs.  In addition, they may not know how to conduct a positive and negative pressure check on a respirator or how to properly insert ear plugs.  Informing your employees about the workplace hazards and how to properly utilize PPE is YOUR responsibility.  Incidentally, an educated, informed employee is a better employee. 

Involve

One of the basic human needs is to feel valued.  This is true at the workplace just as it is in one’s personal life.  One effective method of validating your employees’ value is to involve them in the decision making process.  This does not mean that you are surrendering your authority and responsibility as a supervisor; instead, it means that you are incorporating more “brain power” in the process.  Most often this leads to better decisions.  But it also has a secondary benefit.  Your employees will support the decision, even if it varies from their input, simply because they felt valued when you solicited their input.  What does this have to do with PPE?  Everything!  If you don’t get them involved in the selection process, then you will spend the rest of your life trying to get them to wear their PPE. 

Enforce

This is the tough one, but that is why you get paid more.  Policies and rules are developed and written for a reason.  If employees understand the reasoning (educate) and have had the opportunity to participate in the process (involve) then they will most likely follow the rules.  However, some may not and that is when YOU enforce the rules.  Consistent and fair enforcement will result in the eventual development of a PPE culture in the organization.  Employees will internalize the fact that “this is the way we do things around here.”

By the way, have you ever known anyone who sustained hearing loss, vision impairment, severe dermatitis or any other injury as the result of not properly wearing the appropriate PPE?  Did you know their supervisor?  Was it YOU?

PPE – let’s get it on!