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Today we continue our exploration of workers’ compensation and how to protect your company against false claims from employees. See our post about identifying fraudulent claims.

Experts say current workers’ compensation laws favor the employee, not the employer. The insurance provides income to an injured employee to replace lost wages, medical benefits, vocational rehabilitation, and other benefits.

That is good for an injured employee, but the problem is that not everyone who claims an injury has a legitimate claim. There is a high chance of fraud that can cost an employer a lot of money if not discovered early enough or investigated quickly enough.

Of course, it isn’t possible to wave a wand and suddenly make the laws fair for employers, but by knowing the rights businesses have, you can combat fraud within your own company and minimize the damage it could cause.

The Cost Of Workers’ Comp Fraud

The money a company can lose in a fraudulent case is staggering. Earlier this year, ABC reported on a man who reportedly collected $774,000 in fraudulent benefits over a ten-year period. His wife claimed he had a progressive mental ailment that gave him the mental capacity of a five-year-old. Police arrested him on a golf course—functioning fully, of course—for workers’ compensation fraud and grand theft. The couple was taped while in the police car and ended up being placed on 15-year probation and ordered to repay the money awarded.

So what can you do to protect your company against fraudulent claims?

Here are some simple first steps.

1. Investigate Any Claim Immediately

It is vital that you get information concerning any claim quickly. This can help you learn how to avoid similar injuries in the future. If you think the claim may involve fraud, gather the facts and discuss the case with your insurance agent.

Consider hiring an investigator to obtain additional information. If you find fraud, turn over the facts to your local district attorney’s fraud unit. There have been many cases throughout the United States of employees making a claim, only to be photographed living a carefree life without a sign of their alleged injury.

2. Train Your Supervisors On How To Handle Injuries

A manager or immediate supervisor is the key contact person after an injury. A supervisor usually knows the people he or she works around better than anybody. The supervisor should go with the injured employee to a medical facility. He or she should also be involved in contacting the employee later to express concern and let the employee know he or she is missed and wanted back at work when possible.

This lets the employee know the company cares and may lessen the chances of his or her being away from work longer than necessary and help avoid a lawsuit.

3. Report Any Injuries To Your Insurance Agent Immediately

Realize that the cost of any possible fraud comes out of your pocket, not out of the pocket of your insurance company. The insurance company may advance you the money to pay a claim, but your Experience Modification Factor goes up. You will then be charged an additional premium for a period of three years.

You will be hurt financially even worse for fraudulent claims. Once again, your Experience Mod goes up, and your premiums will rise accordingly for three years.

Help Your Employees Understand Workers’ Compensation

Educating them can help lessen the chances of fraud. Stress that compensation is a benefit, just like health care insurance. One protects them when they are sick, the other after an injury. Point out that any kind of fraud, including workers’ compensation fraud, is a crime. Let them know any fraud will be reported to the authorities.

Conduct A Pre-Employment Background Checks

Obtain workers’ compensation records, credit records, driving records, educational records, Social Security numbers before hiring an employee. Such a background check is worth the money it will cost you. If you avoid just one likely fraudulent claim this way, it will be worth the time and money spent.

For more information about workers’ compensation for small businesses, download our free ebook, The Ultimate Guide To Worker’s Compensation For Small Business!