In workers’ compensation, the “Repeat Offender” is considered an employee who has a history of filing numerous claims. During the claim handling process, identifying and conducting an extensive investigation with this individual assists the employer with not only managing their claims but their overall insurance costs as well.
Workers’ compensation fraud in the United States costs tens of billions of dollars in false claims and unpaid premiums per year. There are three types of workers’ compensation fraud:
Employer (Premium) Fraud
In this article, we will focus on Employee/Claimant fraud as the “Repeat Offender.” Employee/Claimant fraud is defined as:
Claims for injuries that did not occur on the job
Collecting WC benefits while working other jobs
Exaggerated or false injury claims
Best Practices for Aggressively Handling Fraudulent Claims by the Repeat Offender
When a repeat offender is recognized by an insurance company or TPA, typically the claim will be assigned with a “red flag” to notify the adjuster that this individual has a history of filing workers’ compensation claims. Common workers’ comp “red flags” for a repeat offender are:
The injury occurred soon after the claimant was hired
The FROI was reported after the claimant was terminated
The claimant was a temporary or seasonal worker when the injury occurred
There were no witnesses when the injury occurred, or the claimant’s account of the injury is inconsistent
There was a delay by the claimant reporting the injury
The claimant visited multiple physicians for the same injury
The claimant immediately hired an attorney after the injury
When one or more of these red flags are identified, the claims adjuster should take the appropriate steps to handle this claim aggressively.
Below are 6 best practices to follow when handling these types of claims:
#1 Three-point Contacts
It is essential at the onset to gather pertinent information from three contacts. The employee, employer, and treating physician should be contacted promptly to put together all relevant information regarding the accident.
#2 Timely identification of Witnesses
If any witnesses are identified, statements should be obtained quickly. Determine if there are any witnesses and how many. Then promptly obtain a statement from each.
#3 Recorded Statement
Whenever possible, a recorded statement should be taken from the claimant, especially when handling a claim for a claimant who may be a repeat offender.
Be certain to ask the claimant about their outside hobbies and activities. This is important especially if the claim is reported on a Monday morning following a weekend away from the office.
Determine if the claimant has health insurance. Sometimes you will find that an employee will file workers’ compensation claims for unrelated injuries, as they have no other coverage.
Determine if the claimant has other employment and if this plays a factor in their alleged injury/claim.
Obtain complete medical history. This information may be requested from their physician, if necessary.
Often, it may be prudent to place the claimant under surveillance to determine the extent of their alleged injury and to assist with potential fraud.
#5 Order an FCE
Have the treating physician order an FCE (Functional Capacity Evaluation) to determine what level of work capacity the claimant can perform following the alleged incident.
Compose a detailed, accurate job description and share this with the adjuster. The adjuster can then forward this to the treating physician to determine if the claimant is physically able to perform their current duties and, if not, the description can then be modified to fit the employee’s restrictions.
Without a job description, an employer will not have an opportunity to state that the employee is unable to perform the essential duties of their job.
#6 Run an ISO ClaimSearch®
ISO ClaimSearch is a comprehensive system that claims and investigations professionals use to research prior loss histories, identify claims patterns, and detect fraud. When an adjuster enters a claim, it's compared to more than 1 billion other claims. If there's a match, the adjuster gets an alert with details.
Whether or not the report turns up any matches, have loss prevention inspect the area to avoid future incidents.
We all have a role in identifying the “repeat offender” and preventing them from further alleged injuries/claims. Beyond the claims investigation from the adjuster, the employer and loss prevention team need to work together as well. An experienced adjuster can spot the tell-tale signs or red flags during the claim handling process, and determine if an additional investigation is required to rule out the repeat offender.