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As a responsible business owner, you must have a comprehensive insurance policy that covers all possible liabilities that your company can encounter. Among these possibilities is worker’s insurance for any injuries and illnesses sustained while working for you.
If you get professional liability coverage that covers worker’s insurance, the policy will not only cover all the possible legal and medical fees that stem from any liabilities, but it will also cover the costs of salaries while the employee is unable to work.
Read – 7 Tips for Securing Self-Employed Health Insurance
While most worker’s compensation claims will be legitimate, there is still the chance that you will encounter some bad actors who will try to scam you in order to benefit from a fake claim. While these instances are quite rare, even just one bad claim can have a significant negative effect on your bottom line.
Here are some of the most common scams that are used by unscrupulous employees and how you can stop them.
#1. Unclear Description of Events
When an employee files a compensation claim, all the salient details should be clear in the mind. No matter how many times you ask or however you ask, these details, such as how, where, and when the incident occurred, will always remain consistent.
At times, there would be unclear parts of the story, but even these parts should be corroborated by a medical checkup of your employee (i.e., their injuries should be consistent with the events).
If there are glaring inconsistencies with your employee’s story, ask them to write down their version of the events so that you will have a written reference. It will be easier to find mistakes or inconsistencies if you can reference this written account.
#2. Questionable Witnesses
For a worker’s compensation claim to be valid, there must be witnesses to the incident. What’s more, the accounts of the witnesses should be consistent with the account of the employee.
However, some major red flags would be if there are inconsistencies between the accounts, or if the supposed witnesses are close friends with the employee making a claim.
If you are having doubts about the veracity of witness accounts, you should question these witnesses alone and away from each other. Focus on small, seemingly insignificant details that might not have been in their initial report, such as where they were when the incident occurred, what they were doing, and what their immediate reaction was following the incident.
As an additional safeguard, you can also get a signed written account from these employees; if they are honest, they will have nothing to hide.
This also helps you keep a proper record of the event, if there is an insurance investigation. If you get professional liability insurance with workers’ compensation benefits, all legitimate injury claims should be covered.
#3. Questionable Reporting Times
If your employees work regular hours, most work-related accidents should happen on the clock. Therefore, any claims that supposedly happen during off-hours (very early in the morning, after office hours, or even during the weekends) need to be justified.
Read – How Much Is Your Lawsuit Worth? Your Personal Injury Calculator
However, if your business does have shifting hours, it can be difficult to keep track of possible incident windows that occur outside of regular office hours. In order to prevent this, you might want to consider investing in a 24/7 monitoring system. The goal of the system is not to compromise employee security, but rather protect the company from possible liability issues.
#4. History of Difficult Relationship with the Employee
From the moment an employee files a worker’s compensation claim, the first thing that you must do after taking down their account is to check with your company’s human resources department. Consulting with your HR personnel can give you valuable insight into the employee’s history with the company.
If their history with the company shows a happy and productive employee who has had a spot of bad luck, their claim is most likely legitimate. However, if their history shows a troubled employee who is known to have trouble fitting in with the company culture, it could be a red flag.
If you don’t have an HR department, even talking with the employee’s direct manager or co-workers can help you understand their history better.
#5. Employees Struggling with Their Finances
Money has always been a huge motivating factor for people to try and cheat their companies, and insurance fraud is one of the most popular ways to do so.
In general, insurance payouts come in the form of a one-time lump sum payment and it can provide breathing room for people who are going through significant financial upheaval.
You can check if your employee is undergoing some sort of big problem that can be solved by money, such as their home being in danger of foreclosure or if they are going through a divorce. If you find cases like these, you should immediately be put on alert for possible worker’s compensation fraud.
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