Fraud or abuse that might not reach the legal requirements for criminal sanctions happens in all aspects of the Workers' Comp system. There's employee fraud, employer fraud, health provider fraud, attorney fraud, and even insurer and claims adjuster fraud. The good news is that technology is making it easier to detect and many states have strengthened their laws to prevent fraud. In this article, we'll look at employee fraud and health provider fraud.
Employee fraud
It's important to recognize that only 1 - 2% of employee injuries are considered fraudulent and that injured employees can be scared and overwhelmed by the system and need the support and guidance of the employer to navigate to a quick recovery. But when fraud or abuse occurs it can be hard to detect and lead to unnecessary costs.
The most common types of employee fraud are faking injury claims, exaggerating injury or illness, claims for injuries incurred outside of work, failing to report earned wages while receiving temporary disability benefits, and prescription fraud, especially related to opioids. Malingering can also complicate an already complex claim and postemployment claims such as those involving cumulative trauma (CT) can be difficult for the employer to control.
Two recent phenomenon driving employees to cheat the system are expensive health care and long-term unemployment. While the evidence is anecdotal, high deductible health insurance plans, the ever-increasing costs of co-pays, and the growing uncertainty of coverage can incentivize the use of workers' comp. In most cases, workers will have all medical costs covered and receive indemnity payments. Despite continued job growth and low unemployment, long-term unemployment persists among certain workers, and those having a tough time finding jobs that match their skill set or pay well may look to postemployment comp claims for much needed income.
There are many "red flags" that can help employers identify questionable claims and these should immediately be shared with the claims adjuster. However, proving that an injured worker is engaged in personal physical activities inconsistent with the alleged disability can be difficult. Today, a combination of the traditional approaches to fraud detection and technology make it easier and more affordable.
Here are eight things that employers can do:
Physician fraud
For the dishonest physician, workers' comp is fertile ground. Common examples of fraud include: submitting claims for services not provided, duplicate billing, upcoding or submitting claims for services with higher rates, unbundling or submitting claims for several services that should have been one claim, ordering excessive treatment or supplies, dispensing drugs for personal gain, receiving kickbacks in exchange for directing patients to other service providers, and operating "medical mills" with others who lack required credentials.
Some states such as California have enacted laws to aggressively pursue fraud. Since A.B. 1244, which requires the division's administrative director to suspend any medical provider, physician or practitioner from participating in the workers' comp system in cases that involve criminal activity or inability to perform duties safely, among other requirements went into effect Jan. 1, 2017, over 170 providers have been suspended.
To combat physician fraud, employers can: