NJM Blog

The Truth About Workers' Compensation Claims

The Truth about Fraudulent Claims in Healthcare

According to OSHA, the healthcare industry sees more worker injuries than any other industry in the United States. Unfortunately, a high injury rate often means a higher risk of fraudulent workers’ compensation claims. In fact, industry professionals estimate workers’ compensation to be an area most vulnerable to fraud, with fraudulent claims accounting for almost 10% of claims payouts each year.

For impacted organizations, fraudulent claims can raise premiums, negatively impacting the bottom line. For high-injury industries like healthcare, fraud detection is a crucial element of an insurance program.

According to OSHA, the healthcare industry sees more worker injuries than any other industry in the United States. Unfortunately, a high injury rate often means a higher risk of fraudulent workers’ compensation claims. In fact, industry professionals estimate workers’ compensation to be an area most vulnerable to fraud, with fraudulent claims accounting for almost 10% of claims payouts each year.

For impacted organizations, fraudulent claims can raise premiums, negatively impacting the bottom line. For high-injury industries like healthcare, fraud detection is a crucial element of an insurance program.

What qualifies as a fraudulent claim?

Workers’ compensation fraud occurs when a person intentionally makes a false claim to obtain benefits or otherwise profit. Common types of workers’ compensation fraud include:

  • Claims for injuries that didn’t occur in the workplace,

  • Exaggerated injury claims,

  • False claims,

  • Claiming old injuries, and

  • Downplaying recovery to collect benefits longer than necessary.

Employers can also commit fraud by reporting an inaccurate number of employees, or stating that they’ve implemented a workplace safety program when they haven’t.

What are the red flags of a fraudulent claim?

Watch out for the red flags that could signify a fraudulent claim:

  • The claimant:

    • Has a history of suspicious claims

    • Refuses a diagnostic procedure that could confirm the nature or extent of the injury

    • Doesn’t report injuries until a later date with no valid explanation for the delay

    • Refuses treatment or has received conflicting diagnoses.

    • Is difficult to reach while on leave

    • Immediately hired an attorney or is pushing for a quick settlement

    • There were no witnesses to the incident.

  • The medical providers or legal consultants used have a history of handling suspicious claims.

  • The employee’s story seems unlikely or is inconsistent with the medical report.

  • There is evidence the employee is performing activities that would be impossible with their injuries.

How can my organization address the risk of fraudulent claims?

Educate all employees about what workers’ compensation is, what it covers, and what it does not cover. Create a strong safety culture in your organization to reduce the risk of injury.

Educate yourself and key stakeholders on the risk of fraudulent workers’ compensation claims and how to address them. Monitor for the signs of fraud, and address potential problems as they arise.

Finally, work with your insurance partner to ensure your organization has adequate coverage and to report red flags. With vigilance, you can reduce your organization’s risk of fraudulent workers’ compensation claims.

NJM is a leading property and casualty insurer in the Mid-Atlantic region. Learn more about NJM’s efforts to prevent workers’ compensation fraud. For more information on NJM’s business insurance products, contact your broker or call 1-800-232-6600.