There’s no denying that workers’ compensation fraud has shown a dramatic increase recently. According to a Claims Magazine article, workers’ compensation fraud accounts for approximately $7.2 billion annually and is considered one of the fastest growing areas of fraud today.
Fraud may be committed for a variety of reasons including claimants’ financial problems or lack of medical insurance; employers’ trying to reduce premiums or underbid competitors; or a providers’ exploitation of loopholes or participation in organized crime. In California, insurers are required to have a Special Investigations Unit (SIU) to handle such cases. Most compensability issues are able to be resolved by an informal inquiry, but in other cases a referral to a licensed investigator may be appropriate.
So what can you do to protect yourself from workers’ compensation fraud?
The first key step is to evaluate the potential case. Hiring an insurance company with solid experience and training is a must when looking for potential red flags in the early stages of the investigation. Fraud indicators can include things such as the claimant threatens to see a doctor or an attorney if the claim is not settled quickly; claimed injuries are disproportionate to type of accident; and/or claimant has multiple prior claims or lawsuits.
The next step is to investigate the suspected fraud using the skills of a licensed investigator with proven expertise in workers’ comp complaints. The investigator, who works with your insurance company, will be in charge of monitoring the claimant’s activities, look over video surveillance and recorded statements, review medical conflicts, and make certain that all information, documents, and records are confirmed with authenticated documentary evidence. Once the investigation is complete it is typically sent to a district attorney and the department of insurance to determine the viability of a case and whether the situation involved abuse or fraud.
Once the decision is made to proceed, it is advisable to take a solid defense posture which calls on the insistence of accurate and complete discovery. This is part of the pre-trial litigation process during which each party requests relevant information and documents from the other side in an attempt to “discover” pertinent facts, which usually include depositions, interrogatories, requests for admissions, document production requests and requests for inspection. Keep in mind that regardless of what the outcome is in the prosecution of a fraud case, under the law the workers’ comp claim must still continue during this time.
The role of the special investigations unit working closely with your insurance provider is absolutely essential in quickly and accurately gathering crucial information early on that will impact the overall outcome of a claim. At Kompani Risk & Insurance Solutions, Inc., we are happy to assist our valued clients in managing and planning for all types of risk, including workers’ compensation fraud. To discuss in greater detail how we can help you investigate a potential workers’ compensation fraud case, please contact our CEO R. Glenn Matsen directly on his personal extension at 916-306-5902. With us, you’ll experience the exceptional service and attention to detail that you can only find with an independent insurance agency.