By Samuel King
The two types of workers’ compensation fraud that can directly impact convenience store businesses are claim-related fraud and policy-related fraud. Both are serious crimes and can cause significant financial harm to a business if not detected.
Workers’ compensation insurance is designed to protect employers and their employees should an on-the-job injury or illness occur. It can provide workers with the financial compensation needed for medical expenses related to an injury or illness, as well as weekly payments in place of wages for missed days from work. Unfortunately, dishonest workers may attempt to take advantage by filing fraudulent claims.
Claim-related fraud can be perpetrated by an employee, a medical provider or the policyholder. It typically occurs when an employee falsely claims a work-related injury to obtain workers’ compensation benefits.
This includes when an employee either exaggerates the severity of an injury to collect more financial benefits and stays off the job longer than necessary; works another job while still collecting benefits and an additional salary; or when the injury in question never occurred within the workplace.
A worker may falsely claim he was injured by slipping on a freshly mopped floor, when he was actually injured stepping off the curb in front of his house.
10 RED FLAGS
More than one in 10 small business owners are concerned their employees might commit workers’ compensation fraud, and one in five feel unprepared or unsure of their ability to identify the fraudulent activity, according to a survey by EMPLOYERS.
Convenience retailers can better identify and protect themselves from costly fraudulent claims by watching out for certain red flags. While none of these warning signs on their own is necessarily cause for concern, the presence of two or more may warrant a discussion with your workers’ compensation insurance carrier.
• Monday morning reports. The alleged injury occurs first thing on a Monday morning, or the injury occurs late on Friday afternoon but is not reported until Monday.
• Suspicious providers. An employee’s medical providers or legal consultants have a history of handling suspicious claims, or the same doctors and lawyers are used by groups of claimants.
• Conflicting descriptions. The employee’s description of the accident conflicts with the medical history, the first report of injury, or witness statements.
• Treatment is refused. The claimant refuses a diagnostic procedure to confirm the nature or extent of an injury.
• Claimant is hard to reach. The allegedly disabled claimant is hard to reach at home.
• Employment change. The reported accident occurs immediately before or after a strike, job termination or layoff at the end of a big project or at the conclusion of seasonal work.
• No witnesses. There are no witnesses to the accident and the employee’s own description does not logically support the cause of injury.
• History of claims. The claimant has a history of suspicious or litigated claims.
• Late reporting. The employee delays reporting the claim without a reasonable explanation.
• Changes. The claimant has a history of frequently changing physicians, addresses, or employment.
Suspicious claims should be reported immediately to the workers’ compensation insurance carrier’s claims department or local authorities. Workers’ compensation claim-related fraud can be a costly crime, but by monitoring for these warning signs and flagging any concerns, its impact can be mitigated.
Policy-related fraud is the second type of workers’ compensation fraud convenience store managers and owners should be aware of. This type of fraud can be committed when policyholders misrepresent their business in an effort to reduce the cost of their premium.
Policy-related fraud can occur when the policyholder inaccurately reports its work staff to the insurance company by paying employees off the books or misrepresenting employees as independent contractors.
It’s important for businesses to also keep their workers’ compensation carrier updated on the number of employees and changes in staff positions to maintain accurate reporting. Changes in payroll, including hiring or layoffs, or any significant changes in job titles (e.g., from stock-person to front register) should be reported to your insurance agent. Your agent can help make sure your business is compliant and properly covered.
Samuel King is vice president, fraud investigations, at EMPLOYERS, a division of Employers Insurance Co. in Nevada.