Preventing Workers’ Comp Fraud

The majority of workers’ comp claims filed in Texas and other states stem from real instances of on-the-job injuries. Unfortunately, the people who cheat the system drive up costs for employers, consumers and insurers.

As a corporate executive once noted, if workers’ comp fraud were a legitimate business in the United States, it would rank among the Fortune 500 companies. Indeed, according to the National Insurance Crime Bureau, workers’ comp fraud totals $7.2 billion a year. The Texas Department of Insurance notes that insurance fraud is the second most profitable crime after drug trafficking.

Fraud is

Fraud is lying for financial gain. Claimant fraud is the most common type of fraud. Claimant fraud happens when workers:

  • Fake or exaggerate injuries
  • Collect benefits for injuries that were not work-related
  • Double-dip, or continue to collect benefits after returning to work
  • Engage in activities that are inconsistent with their injuries

Fraud is not

Delayed recovery. Some injured workers take longer than expected to recover and return to work. This is not fraud. Injured workers do not have to return to the job until their treating doctor releases them.

Recreational activities. Injured workers can participate in recreational activities that are consistent with their medical restrictions.

Suspicion without evidence. To prove fraud, a carrier must have evidence that the injured worker knowingly collected benefits he or she was not entitled to. Evidence includes medical records, witness testimony, business records and surveillance video.

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Texas Mutual Pays Combined $690K to Four Safety Groups

Texas Mutual Insurance Company announced today that four workers’ compensation safety groups have earned a combined $690,036 in dividends: Texas Recreation Group, $278,353; Texas Construction Supply, $200,752; Texas Green Industry, $133,453; AgriComp, $77,478.

The dividends were based largely on each group’s overall loss ratio.

In 2011, Texas Mutual will pay approximately $15 million in safety group dividends. Group dividends are separate from the $155 million in individual policyholder dividends the company distributed this year. Many group members qualified for individual and group dividends.

Texas Mutual notes that past dividends are not a guarantee of future dividends. The Texas Department of Insurance must approve all dividends.

For more information about safety groups, visit texasmutual.com/agents/group.shtm.

‘Tis the Season for Workplace Safety

The holiday season can be one of the most prosperous times of year for many businesses, and increased activity in the workplace often means hiring temporary, seasonal employees. While this added workforce is an invaluable asset during such a busy time, it is important for companies to implement and enforce holiday-safety measures, as well as educate temporary employees about workplace hazards and their safeguards. 

Companies employ temporary workers throughout the year, but that number greatly increases during the holidays. The U.S. Bureau of Labor Statistics reports that temporary workers have increased over the past four months, averaging 18,000 workers per month from July to October in 2011. According to a news report by the Minneapolis Star Tribune, last year in the retail industry alone, employment grew by nearly 630,000 jobs nationwide from October to December.

Temporary Employees Are New Employees

  • Even though time with the company may be brief, seasonal workers should receive the same level of training that new employees receive when they first start the job.
  • Start training the first day on the job to develop safe work behaviors in temporary employees. The more they know about proper equipment and procedures, the safer they will be.
  • Provide a clear and concise safety policy to temporary employees. They should know that doing the job safely is just as important as doing it correctly.
  • Ensure that temporary employees are comfortable with their managers and supervisors. They should always feel that they can approach management, no matter what question they may have.

Whether at work or at home, the holiday season provides increased opportunities for accidents and injuries. Employers should protect one of their greatest assets, their employees, by educating them about special holiday hazards. The following precautions will help businesses of all types keep regular and seasonal employees out of harm’s way during the holidays.

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Texas Mutual Board of Directors Elects New Officers

The Board of Directors of Texas Mutual Insurance Company, the state’s leading provider of workers’ compensation insurance, recently elected two new officers—Linda Foster-Smith of Georgetown and Jay Eisen of Beaumont. These officers were elected on Wednesday, December 14 at the company’s December board meeting.

Foster-Smith has been appointed as Texas Mutual’s Board of Directors’ new vice chair. She was also appointed to Texas Mutual’s Board of Directors in 2008. Foster-Smith is retired from AT&T, where she worked for 37 years, the last 15 years as director of external affairs for the Permian Basin. She is a former member of the Board of Trustees for the Midland Independent School District, a former member and chairwoman of the Midland Chamber of Commerce, and former board chairwoman and campaign chairwoman for the United Way of Midland.

Eisen has been re-appointed as secretary of Texas Mutual’s Board of Directors. He has been a board member since 2008. He is president of Sampson Steel Corporation in Beaumont and a longtime Texas Mutual policyholder. Eisen is also a member of the Political Advisory Committee for the Texas Association of Business, a former member of the association’s statewide board and former chairman of the association’s southeast chapter. 

 

NFIB, Texas Mutual Partnership Pays $819K Dividend

Texas Mutual Insurance Company announced today an $819,218 dividend to the National Federation of Independent Business (NFIB) safety group for manufacturers. The dividend was based largely on the group’s overall loss ratio. Bob Barnes, chair of Texas Mutual’s board of directors, and Ron Wright, Texas Mutual president, presented the check to NFIB/Texas Executive Director Will Newton this afternoon at Texas Mutual’s headquarters in Austin.

Bob Barnes, Ron Wright, Will Newton

(L-R) Bob Barnes, chair of Texas Mutual's board of directors, and Ron Wright, Texas Mutual president, present an $819,218 dividend check to Will Newton, NFIB/Texas executive director. The check will be distributed among members of the NFIB workers' compensation safety group for manufacturers.

“Entrepreneurs are the backbone of our economy,” said Barnes. “As an independent business owner, I am proud of the partnership Texas Mutual has forged with the NFIB. Anytime we have the opportunity to invest in Texas entrepreneurs, we consider it money well spent.”

Members of the NFIB manufacturing safety group have shared in $2 million in group dividends since 2007.

“We at NFIB are very proud of our members for pulling together with Texas Mutual Insurance Company’s loss prevention team and achieving such a significant group dividend,” said Newton. “We are looking forward to more of the same in 2012.”

Unlike publicly traded insurance companies, mutual companies are owned by their policyholders. Dividends allow Texas Mutual to share its financial success with its policyholder owners.

Safety group dividends are separate from the $155 million in individual policyholder dividends Texas Mutual distributed this year. Since 2000, the company has injected more than $1 billion into the Texas economy through its group and individual dividend programs.

In addition to potential dividends, NFIB safety group members get discounts on their workers’ compensation premiums. They also have access to workplace safety materials designed for their operations.

Texas Mutual notes that past dividends are not a guarantee of future dividends, and the Texas Department of Insurance must approve all dividends.

Work and Substance Abuse Don’t Mix

Substance abuse is an addiction that does not abruptly stop during work hours. If someone has a drug or alcohol problem, it is likely to continue in the workplace, whether it comes in the form of abusing drugs or alcohol on the job, a reduction in productivity or absenteeism from work.

In recent years, according to the Occupational Safety & Health Administration (OSHA) program, of the 17.4 million illicit drug users, 75 percent of them were employed with either full-time or part-time work. Research also shows that between 10 and 20 percent of the nation’s workers who die on the job test positive for alcohol or other drugs.

Substance abuse can greatly impair reaction time—increasing the risk for workplace accidents. A drug-free workplace can increase productivity, make workplaces safer, and encourage people with alcohol and drug problems to seek help.

Prevention

Employers should be proactive about substance abuse issues in the workplace. The most important part of prevention is to institute a workplace policy on the matter. Employees should be clear on the rules and consequences. From their first day, employees should know that substance abuse will not be tolerated at work.

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