Protect Yourself Against Fraud

Insurance fraud occurs every day across the United States. While most workers’ compensation claims filed in Texas and other states stem from real instances of on-the-job injuries, there are, unfortunately, people who cheat the system. Consequently, fraud drives up costs for employers, consumers and insurers.

According to the Texas Department of Insurance, insurance fraud is one of the most costly white-collar crimes in the United States, ranking second only to tax evasion. 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—likely in the top 25. 

Fraud is lying for financial gain—with claimant fraud being the most common type. Claimant fraud happens when employees:

  •  Fake or exaggerate injuries.
  • Collect benefits for injuries that were not work-related.
  • Continue to collect benefits after returning to work.

 The National Insurance Crime Bureau estimates that workers’ compensation fraud costs insurers $7.2 billion a year—approximately 25 percent of the $30 billion that fraud costs insurers annually. 

 Companies need to pay close attention to red flags that help detect possible workers’ compensation fraud. If you identify two or more of these situations, you should contact your insurer.

 A tip from a credible source, such as an employee of your company

  • An injury to a new or disgruntled worker
  • There is no witness to an alleged injury
  • Inconsistent or illogical descriptions of how an injury occurred
  • Difficulty in contacting an injured worker
  • An injured worker who’s upset when he or she is contacted
  • A suspicious injury occurring on a Monday or Friday
  • An injury not reported until a week or more after it allegedly occurred
  • An injured worker engages in activities that are inconsistent with his/her injuries

Red flags do not necessarily translate into proof of the offense, but they are indicators that the situation should be examined further. Workers’ compensation fraud occurs in simple and complex schemes that require investigation and proof. Remember what it takes to prove criminal fraud, and always ask yourself these questions when you suspect fraud:

What was the lie?

  • Was it knowingly or intentionally made?
  • Was it made for the purpose obtaining benefits?

Some insurance carriers write off workers’ comp fraud as merely a cost of doing business. Other companies, such as Texas Mutual, take a zero tolerance approach to combating fraud. Texas Mutual employs three teams of experienced, full-time investigators who take fraud claims with the utmost seriousness.

It’s also important for employers to educate their employees on the consequences of workers’ compensation fraud, including the trickle-down impact it can have on bonuses, raises and other company-involved benefits. Fraud is not only against company policy, but it is also against the law and affects everyone in the workplace. Workers’ comp fraud can be curtailed if employers, insurers and others are vigilant about this type of crime.

For more information about workers’ comp fraud, visit www.texasmutual.com/fraud/fightfraud.shtm.

About the author

This article was written by Tim Riley, vice president for special investigations at Texas Mutual. In 2011, Riley and his three teams of investigators saved, identified or recovered $5 million through their zero tolerance for fraud program.

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