Your Claims Questions Answered – What do I do if I suspect workers’ comp fraud?

Workers’ compensation fraud hurts business owners by causing higher premiums. That’s why we take fraud seriously at Texas Mutual and have a team dedicated to investigating these concerns. In 2016, Texas Mutual investigated more than 1,600 referrals and discovered more than $1 million in claimant fraud.

In our next video in the Your Claims Questions Answered series, we talk about what you should do if you suspect fraud. Watch the video below and take a look at our top three tips to remember when it comes to fraud.

Always contact Texas Mutual first when you suspect fraud.
If you suspect someone at your workplace is committing fraud, the first step is to contact Texas Mutual. We have a dedicated team of licensed professionals that will investigate your referral. Don’t confront the employee, but instead trust the professionals to investigate. To report suspected fraud, call (800) 488-4488 or email

Maintain a good relationship with the injured worker.
It’s important to maintain a positive relationship with the injured worker throughout the recovery process. Instead of jumping to conclusions, voice your concerns to Texas Mutual. There could be many reasons why an employee is not home on bed rest and making accusations to an injured worker could lead to more problems for your business.

Put a return-to-work program in place.
Focus on a return-to-work plan with the injured worker. If they are unable to perform the job duties they did before their injury, then determine what modified job duties they can do that will help them contribute to the team. Injured workers out six months or more have only a 50 percent chance of ever returning to work. Getting an injured worker back on the job will prevent you from being in the middle of a fraud investigation. We recently covered how to create a return-to-work program. Remember, it’s never too early to get started.

You can watch the full Your Claims Questions Answered series here. Visit for FraudStoppers posters, red flags of fraud, and more information on reporting fraud.

Fighting fraud for Texas employers

Fraud-Meaning-and-Definition-What-is-Fraud.jpgTexas Mutual is committed to fighting workers’ compensation fraud because it ultimately hurts business owners in the form of higher premiums. 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.

Last year our fraud team received 1,698 fraud referrals and followed up on each one. Read about two of those recent cases below:

Humble, Texas man sentenced on workers’ comp fraud

A Travis County district court sentenced Michael Thomas of Humble, Texas on workers’ compensation fraud-related charges. The court sentenced Thomas to two years deferred adjudication, 50 hours of community service, and to pay Texas Mutual $2,630 in restitution. Thomas reported a job-related injury while working as a commercial truck driver for Casual Leasing Services, Inc. of Houston. He claimed he was unable to work as a result of the injury, and Texas Mutual began paying him income benefits. Texas Mutual uncovered evidence that Thomas was working as a commercial truck driver for another company while receiving income benefits due to his alleged disability.

Investigators call this type of scam double-dipping because the claimant collects benefits for being too injured to work when he or she is, in fact, gainfully employed. Texas law requires claimants to contact their workers’ comp carrier when they return to work.

Truck stop owner indicted for filing fraudulent claim

A Travis County grand jury indicted James Russell Williams of George West, Texas on workers’ compensation fraud-related charges. Texas Mutual insured Williams’ company, George West Truck Stop. Texas Mutual’s investigation alleged that in April of 2014, Williams reported a workers’ compensation claim for a person who was not an employee and therefore, not covered by Texas Mutual’s policy. The person was seriously injured while changing a tire at Williams’ shop. Texas Mutual paid the claim based on Williams’ misrepresentations about the injured person’s status.

Note: A grand jury indictment is a formal accusation – not a conviction – of criminal conduct.

For resources on fighting workers’ compensation fraud, visit

3 tips for controlling your workers’ comp costs

Workers’ compensation is just one of many costs employers have to juggle. Fortunately, you can take small steps throughout the life of your policy to control your premiums. Follow these three tips to help make workers’ comp a smaller piece of your budget.

Prevent workplace accidents

Workplace accidents carry direct and indirect costs. Your insurance carrier covers direct costs, but indirect costs come out of your pocket.

Workplace accidents carry direct and indirect costs. Your insurance carrier covers direct costs, but indirect costs come out of your pocket.

The best way to manage costs is to prevent accidents. The Occupational Safety and Health Administration estimates that for every dollar you invest in safety, you could get up to $6 return in return. You should tailor your safety program to the unique hazards your employees face, but be sure to include these core elements:

  • Get management commitment and employee buy-in.
  • Identify the hazards associated with each job task.
  • Put control measures in place for each hazard.
  • Train employees on the safety program and the safest way to do each task.
  • Continuously evaluate and improve the safety program to ensure it meets your evolving needs.

Commit to return-to-work

Accidents happen, even in the safest workplaces. When they do, they carry human and monetary costs.

Injured workers tend to suffer stress, depression and financial hardship. Meanwhile, employers have to find a way to make up for lost productivity. That could include hiring extra help or paying overtime to current employees. Ultimately, the cost of replacing an experienced worker can be 50 to 150 percent of their salary.

A return-to-work program helps control the costs associated with workplace accidents. The goal is to get injured workers well and back on the job as soon as medically reasonable. Follow this five-step process to launch a return-to-work program:

  • Put the program in writing. Your written program should explain the steps the company will follow from the time the injury happens to the time the employee comes back to work.
  • Assess job tasks. Write down the separate activities or tasks that make up each job. Include physical demands (lifting, typing, standing), environmental conditions (noise, heat, vibration) and the time spent on each task.
  • Identify modified duties. Use your task list to match available work to injured employees’ work restrictions. Modified duties should be meaningful tasks that contribute to productivity.
  • Communicate with injured workers. Make sure injured workers receive company newsletters and other announcements. Call them regularly and ask if they need extra help with their recovery. By maintaining contact, you send the message that you care about injured workers and you want them back on the team.
  • Make a bona fide offer of employment. When you are ready to bring the injured worker back to the job, make a written, bona fide offer of employment that meets the requirements in Texas Department of Insurance, Division of Workers’ Compensation Rule 129.6.

Fight workers’ comp fraud

Anyone who has a stake in the workers' comp system, including claimants, employers and health care providers, can commit fraud.

Anyone who has a stake in the workers’ comp system, including claimants, employers and health care providers, can commit fraud.

Fraud costs the insurance industry about $80 billion each year. Those costs trickle down to everyone in the form of higher premiums. If you suspect an employee is committing workers’ comp fraud, you should remember three things:

Trust your workforce. Most claims are legitimate, and most injured workers want to get well and back to the team. It’s easy to jump to conclusions if you feel taken advantage of, but remember to keep an open mind.

Trust your instincts. Your employees deserve the benefit of the doubt, but you should trust your instincts if you recognize two or more red flags for fraud.

Trust the system. Insurance carriers and regulatory agencies work hard to stop fraud and protect your premium dollars. If you suspect fraud, contact your workers’ comp carrier or the Texas Department of Insurance fraud unit, and let your investigator take it from there.

More information

The Texas Department of Insurance hosts free workers’ comp seminars across the state for employers and injured workers. In addition, Texas Mutual invites the public to visit our Work Safe, Texas website for free workplace safety resources.



Your RX for health care fraud

Imagine visiting a clinic for a work-related injury and being treated by a foreign medical student who is not authorized to practice medicine in the United States. That’s what happened to patients at Rose’s Houston Healthcare Clinic.

Rosemary Phelan, the clinic’s owner, pleaded guilty to insurance fraud-related charges in the wake of a joint investigation between Texas Mutual Insurance Company and the Texas Department of Insurance.

“Fraudulent behavior not only harms the individual company but also places an unnecessary financial burden on all participants in the workers’ compensation system.” Tim Riley, vice president of special investigation at Texas Mutual

Phelan was sentenced to seven years’ deferred adjudication and ordered to pay $88,000 in restitution. But the fallout from fraud can be far-reaching and far more serious than any penalty levied by a court.

Most importantly, Phelan jeopardized patients’ health by staffing her clinic with unlicensed physicians. And then there are the monetary costs of fraud, which affect everyone in the form of higher premiums.

State regulators and insurance carriers are working hard to stop health care fraud. In fact, Texas Mutual maintains a team of investigators who specialize in protecting our policyholders’ premium dollars from the trickle down effects of health care fraud. You can do the same for your business if you learn what to look for and how to respond.

Common schemes
The National Health Care Anti-Fraud Association estimates the financial losses due to health care fraud are in the tens of billions of dollars each year. Here are some common fraud schemes Texas Mutual investigators have seen:

  • Up-coding involves submitting bills for more serious or expensive diagnoses or procedures than were actually performed.
  • Unbundling means marketing or charging for items or services separately rather than as a package.
  • Prescription drug diversion is increasingly common in the midst of America’s opioid epidemic. Diversion means abusing or illegally distributing prescription drugs, or using them for purposes not intended by the prescriber.
  • Unnecessary treatment, supplies and tests, also known as overuse, is particularly egregious because it also affects patients’ health. The Lowe Institute estimates overuse accounts for between 10-30 percent of U.S. health care spending.

Red flags
Employers can help fight fraud if they know what to look for. Here are some common red flags for health care fraud:

  • The employer receives a notice that a claimant has changed his/her treating doctor and is then taken off work after receiving a release to return to modified or full duty. Usually, the claimant also seeks attorney representation.

    Employers who commit premium fraud get an unfair advantage over honest competitors.

    The Coalition Against Insurance Fraud estimates health care fraud steals tens of billions across all lines of insurance annually.

  • The treating doctor extends off-work status without treating the claimant for an extended time. For example, the doctor documents that the claimant should remain off work until the next office visit, which is scheduled one to two months after the date of service.
  • The health care provider uses templated documentation, which means using the same language on medical reports for all patients. You may notice that the report does not have the claimants’ correct name or that the gender references do not match. This is a red flag because it could signal that the physician is not truly evaluating patients or spending the amount of time they billed for.
  • The health care provider uses rubber-stamped signatures on DWC-73/office visit reports. This indicator could point to a provider billing for services he/she did not actually perform.
  • The claimant complains about the health care provider’s services or the treatment facility’s conditions. For example, the claimant might report that the office clerk performed the treatment or the clinic was dirty and did not have the appropriate therapy equipment.
  • Claimants complain that they are ready to return to work, but the doctor keeps them in an off-work status and continues to order treatment such as physical therapy.

Reporting suspected fraud
Investigators acknowledge three types of workers’ compensation fraud: claimant fraud, premium fraud and health care fraud. All steal money from the workers’ comp system and honest stakeholders. If you suspect fraud in a claim, contact your insurance carrier and/or the Texas Department of Insurance fraud unit.

Protect yourself against health care fraud

Identity theft and Social Security card

About 2.3 million Americans spent an average of 200 hours and $13,500 to resolve medical ID theft cases in 2014.

Imagine someone offering you the chance to get cutting-edge genetic tests for cancer and other serious diseases at no cost to you. For just a few hours of your time, you walk away with peace of mind and a $50 Walmart gift card.

If you’re thinking it sounds too good to be true, you’re probably right.

A large group of unsuspecting Central Texans recently fell victim to this scam. When reporters began investigating the scam, they found the “clinics” boarded up and the saliva samples discarded in a shed.

Like workers’ comp fraud, health care fraud comes in many forms. In some cases, perpetrators bill for services they never provided. In other cases, they overbill for services or provide services patients don’t need. In all cases, the costs trickle down to consumers in the form of higher premiums.

You can protect yourself from health care fraud by following these simple tips:

  • Guard your health insurance information. More than 2 million Americans fall victim to health care identity theft every year. Protect yourself by guarding your health care information the same way you guard your Social Security number, your credit card numbers and your internet passwords. Never give your medical ID card information to a stranger on the phone, in an email or on a website.
  • Review your statements. Review your bills and explanation of benefits to make sure you and your health plan were only charged for services you received. If you see errors, contact you plan’s customer service center or the provider.
  • Ask questions. Ask questions to make sure the treatment your doctor recommends is necessary. Be skeptical if a doctor recommends a new, unusual or experimental procedure.
  • Remember that nothing is free. Don’t accept offers of money or gifts in exchange for your medical ID or other personal information. While many research studies are legitimate, they should never ask for your medical ID or submit claims to your health plan.
  • Report your suspicions. If you suspect someone is trying to lure you into a health care scam, contact your plan’s customer service center, your employer’s human resources department or the Texas Department of Insurance fraud line at (800) 252-3439.

For more information on medical ID theft, visit the Texas Department of Insurance fraud unit online.

This Week in Comp, October 27-31

This Week in Comp provides an overview of workers’ compensation news from across the country.

TRIA expiration fast approaching
With TRIA set to expire at the end of the year, its renewal remains in limbo…MORE

Wellness as an injury prevention tool
The proportion of older workers (55 years and older) in the U.S. climbed from 16% in 2004 to 22% in 2013, according to the U.S. Bureau of Labor Statistics. The aging workforce presents new opportunities for safety professionals to implement wellness as an injury prevention tool…MORE

NNT in pain management: You’ve been right all along
The National Safety Council’s Dr. Don Teater, M.D. has penned a white paper that contains powerful data and interesting insights regarding the use of opioids for chronic non-cancer pain. Essentially, Dr. Teater’s research indicates that for most patients, ibuprofen and acetaminophen are safer and more effective than opioids…MORE

Distracted driving: The self-correcting nature of science
A majority of research on driver distractions has focused on cell phones. More recent studies remind us that other distractions, such as daydreaming, talking to passengers or correcting children also take our focus off the task at hand…MORE

CDC tightens PPE guidelines for health care workers
The new guidelines focus on three areas: 1. Training, including how to put on and remove PPE. 2. No skin exposure when PPE is worn. 3. Supervision by a trained monitor while putting on and removing PPE…MORE

No chief’s disease here
David DePaolo recounts a workers’ comp success story from the California Highway Patrol…MORE

Regulatory roundup
Texas Mutual’s weekly mash-up of health and safety-related regulatory news…MORE

Workers’ comp study looks at California’s reforms
Large increases in office visit fee schedule rates under SB 863 will likely lead to substantial increases in prices paid in California, as the reforms intended.  However, the reimbursement rule change regarding reports, record review, and consultation codes may moderate the potential increase in payments, according to a recent study released by the Workers’ Compensation Research Institute…MORE

Consequences of failing to report & respond to work injuries
Even for the best employers following workplace safety guidelines, accidents happen. When they do, it is important to follow recognized procedures when responding to work injuries. Failure to properly report and respond to the injury can have significant adverse consequences…MORE

Links to and from this blog do not reflect any affiliation between Texas Mutual Insurance Company and third parties, and are not an endorsement by Texas Mutual Insurance Company of the linked sites (or their owners or operators) or of any content located there. Texas Mutual Insurance Company does not vouch for the availability or accuracy of any information contained on linked sites. Read more of this post

This Week in Comp, October 13 – 17

This Week in Comp provides an overview of workers’ compensation news from across the country.

Ohio man fakes workplace injury, employer discovers it on security video
The employer’s security video revealed that the employee  stomped a hole in a wooden floor the night before he said he was injured and on the following day, lowered his foot into the floor and laid down on the platform…MORE

Click the image above for a Centers for Disease Control and Prevention podcast on driving safety.

Click the image above for a Centers for Disease Control and Prevention podcast on driving safety.

Ebola: Call for preparedness
At this time, Ebola is not a major workplace health hazard for most workplaces in the United States. Nevertheless, being prepared for any infectious disease event should be a priority for every employer…MORE

Test your driving IQ in the Oct. edition of TDI’s newsletter
The Oct. edition of “Safety and Health Update” includes a short quiz on driving laws, eye safety tips and the benefits of return-to-work…MORE 

Study compares medical costs across 16 states, including Texas 
The Workers’ Compensation Research Institute study provides a baseline of current medical costs and trends for policymakers and other stakeholders by documenting how medical payments per claim and their cost components compare over time with other states….MORE

OSHA releases Oct. 15 edition of QuickTakes
The edition features OSHA alliances with the Association of Energy Service Companies and the Federal Communications Commission. The alliances’ goal is to reduce workplace injuries among cell phone tower and oil field workers, respectively…MORE

Regulatory roundup
Texas Mutual’s weekly mash-up of health and safety-related regulatory news…MORE

OSHA: proposed fines up, inspections down for FY 2014
OSHA initiated 30,679 inspections and cited 55,163 alleged violations during the first 10 months of the current fiscal year, compared to 39,228 inspections and 78,196 alleged violations in FY 2013…MORE

Links to and from this blog do not reflect any affiliation between Texas Mutual Insurance Company and third parties, and are not an endorsement by Texas Mutual Insurance Company of the linked sites (or their owners or operators) or of any content located there. Texas Mutual Insurance Company does not vouch for the availability or accuracy of any information contained on linked sites. Read more of this post

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