Workers' Compensation Fraud

As the economy grows tighter companies need to be alert to Workers Compensation Fraud.

With workers' compensation benefits sometimes better than unemployment and concerns of finding re-employment, many workers are opting to commit workers' compensation fraud.

Felicia Williams and insurance industry expert has some excellent tips employers can use to identify fraudulent worker's compensation claims.

Workers Compensation Fraud

Ten Tips for Detecting Fraudulent Workmens Comp Claims

Aug 11, 2007 Felicia A. Williams

Detecting Workers Compensation Fraud - Jyn Meyer

Fraudulent workers compensation claims cost. It costs the insurance company and that cost is passed onto the employer.

Unfortunately, there are those individuals who try to beat the system by filing fraudulent workers compensation claims. Being aware of some of the tell-tale signs of workers compensation claim fraud can help to weed out some of the dishonest employees and save you, the employer, from paying higher premiums as a result of fraudulent claims.

1. Lack of prompt reporting: In general, injured employees will report a claim on a timely basis. Late reporting in and of itself is not necessarily a cause for alarm, but it ought to be a signal to review the claim a little more closely than timely reported claims.
2. Sketchy details: Most claimants can recall the details of their injury. If the claimant seems to be fuzzy on the details and gives vague responses to questions, another reason to keep a close eye on the progression of the claim.
3. No Witness: Not every claim has a witness and should not be used solely to determine fraud, however, if many of the other signs are present, it will be hard to dismiss the lack of a witness.
4. Discrepancy in story: Upon further investigation, the claimant keeps changing the story and adding, removing pertinent information, a good reason to suspect it to be a fraudulent workers compensation claim.
5. First day of the week claims (Monday): If the injury allegedly occurred on Friday, usually late in the day, but did not get reported until Monday, there is reason to suspect there might be a little more going on than meets the eye.
6. Disgruntled employee: A disgruntled employee is more likely to place fraudulent claims than an employee with high job satisfaction.
7. Financial hardship at home: Workers compensation benefits are sometimes seen as a way out of a tight financial situation at home.
8. Employee never answers the phone (not home) and will call back in just a minute: If this happens once or twice, it may just be coincidental, but if it occurs every time the claimant is called, there is a possibility of fraud.
9. Misses medical appointments: If an employee is truly injured, they want to get better and will make sure to attend all necessary medical appointments. Missing appointments is another reason to suspect fraud.
10. Employee is engaged in activity that is not consistent with the injury sustained: If your employee reported a back injury and several other employees find that he is at home building a deck, there is a good reason to suspect fraud.

Any one of the above tips on their own is not enough to suspect fraud, but usually there are more than one telltale sign. If you do suspect fraud contact the workers compensation board in your state to find out how they handle fraudulent workers compensation claims.

Read more at Suite101: Workers Compensation Fraud: Ten Tips for Detecting Fraudulent Workmens Comp Claims http://www.suite101.com/content/workers-comp-fraud-a28297#ixzz10PoYgED7

Independent Contractor vs. Employee - The Debate Continues

This is a very relevant article by Robert Wood, a lawyer and author of more than 30 books,for any employer who works with independent contractors. Always a point of discussion and concern from many different fronts; workers' compensation, unemployment, taxes, liability, etc.

White House On Contractor Vs. Employee: There Will Be Blood

White House on Contractor vs. Employee:

Employers have big incentives to treat workers as independent contractors: avoid income tax withholding, Social Security taxes, workers compensation, unemployment insurance, even liabilities to third-parties. Plus, you can steer clear of liability for tax-favored pension and fringe benefit plans and a whole pile of federal and state labor and employment laws. Many companies go out of their way to classify workers as independent contractors, but such arrangements can be scrutinized and lines often blur. Classically, employees go to work at set hours while independent con tractors determine their own.

Employees follow orders, while independent contractors work in the manner they prefer. Employees receive regular paychecks while independent contractors are paid by the job. Employees work year-round, while independent contractors are temporary. Employers have control over the actions of employees, while the method, manner, and means of production are left to independent contractors.

Of course, these are archetypes. Real-life fact patterns are rarely so clear and therefore require analysis. The IRS and a variety of state and federal agencies make these determin ations. In fact, a worker can be an employee for one purpose and an independ ent contractor for another.

Apart from tax and labor law, there’s workers compensation, providing no-fault coverage to employees injured on the job. Unemployment provides benefits when employees are out of work. Both cover only employees, so there are inevitably coverage disputes. Many putative independent contractors claim unemployment or workers compensation benefits.

The stakes may seem small, but a $1,000 workers compensation dispute can lead to a $10 million tax dispute. Civil suits for tort liability involve employee status too. An independent contractor in an auto acci dent can be sued, but if he is employed while driving, his employer will be sued too. Workers themselves can sue for benefits notwithstanding their explicit independent contractor status.

President Obama has keen interest in worker misclassification, having pushed for corrective legislation even before he entered the White House. The stakes are now huge, and policy and revenue goals (for once) seem to coincide. The White House has already endorsed the latest bill introduced September 15, 2010, the Fair Playing Field Act of 2010 (H.R. 6128, S. 3786) introduced by Sen. Kerry (D-Mass) and Rep. Jim McDermott (D-Wash). This bill would end a moratorium barring the IRS from issuing misclassification guidance, and would affirmatively require the Treasury Department to issue guidance. Plus, the bill would increase penalties on employer failures to withhold.

Controversially, the bill would require companies using independent contractors to disclose to each such person in writing their federal tax obligations plus information about labor and employment issues. This type of Miranda warning for independent contractors could really smart for companies making widespread use of independent contractors. Such warnings inevitably may invite some workers themselves to start questioning just why they are at such a disadvantage.

Whether this particular bill passes, something will eventually. The White House included misclassification reform in its 2011 budget, and supported two prior bills, the Taxpayer Responsibility, Accountability and Consistency Act of 2009 (H.R. 3408) and the Employee Misclassification Prevention Act of 2010 (S. 3254). Republicans worry about costs on business, but to borrow the Oscar-winning movie title, There Will Be Blood.

Workers must be either employees or independent contractors, disputes are common, and the stakes are huge. There is now much interaction between agencies, so be careful.

For more on employee vs. independent contractor issues, see:

All Lawyers Need to Know: Independent Contractor Basics, Issue 1, Business Law News (2010), p. 15.

Ten Things GAO Has to Say About Employee Contractor Misclassification, Vol. 9, No. 195, Daily Tax Report (Oct. 13, 2009), p. J-1.

IRS Gives 10 Tips on Employees Versus Independent Contractors, Vol. 9, No. 172, Daily Tax Report (Sept. 9, 2009), p. J-1.

Ten Things IRS Wants Workers to Consider When Contractors Become Employees, Vol. 9, No. 156, Daily Tax Report (Aug. 17, 2009), p. J-1.

Ten More Consequences of Reclassifying Independent Contractors as Employees, Vol. 9, No. 140, Daily Tax Report (July 24, 2009), p. J-1.

Ten Consequences of Reclassifying Independent Contractors as Employees, Vol. 9, No. 123, Daily Tax Report (June 30, 2009), p. J-1.

Robert W. Wood practices law with Wood & Porter, in San Francisco. The author of more than 30 books, including Taxation of Damage Awards & Settlement Payments (4th Ed. 2009, Tax Institute), he can be reached at wood@woodporter.com. This discussion is not intended as legal advice, and cannot be relied upon for any purpose without the services of a qualified professional

Visible and Invisible Disabilities

In an employment world of liability and litigation, workers' compensation and disability a new thought to consider when hiring is the invisible disability. this thought provoking article will give you things to consider when hiring new employees.

Disability: Disclosure vs. Privacy

As workers with 'invisible disabilities' struggle over whether to reveal their conditions to their employers, some companies seek to promote a culture of understanding.
By Todd Henneman
Comments 3 | Recommend 24

he has fragile skin. Bruises and scars, hidden by clothing, cover her legs. And she suffers from chronic joint pain. “To meet me, you’d have no idea that I have any physical challenge,” says the Ernst & Young human resources coordinator who suffers from a connective tissue disorder. “The truth is that every day I am in pain—every day—and I just live through it.”

She is one of the scores of Americans with “invisible disabilities,” chronic health conditions that are not immediately obvious, such as diabetes and cancer, sensory impairments such as reduced vision, mental illness such as bipolar disorder and depression, and learning disabilities. The accounting and consulting firm asked that her name not be used to avoid discrimination by insurance companies or others. Those concerns underscore the challenges that employees with non-visible disabilities face when balancing privacy with disclosure.

No study has identified how many Americans have non-visible disabilities, but more than 18 percent of Americans report some level of disability, U.S. Census data show.

Ernst & Young introduced a handbook in July to provide a basic level of understanding of non-visible disabilities among employees in hopes of fostering an environment “where everybody is limited only by talent, skills and energy,” says Lori Golden, who leads AccessAbilities, Ernst & Young’s initiative to build an inclusive work environment. “We really want others to get educated about this so we can all do it better.”

The 17-page handbook defines terms such as “disability,” “non-visible disability” and “reasonable accommodation”; explores the pros and cons of disclosure; and addresses questions that employees with disabilities and their managers might have about how much information to share, how to handle questions about accommodations from co-workers, and how to deal with resentment or backlash from colleagues who perceive an accommodation as special treatment. “One of the most difficult decisions an individual with a non-obvious disability has to make is whether to inform people or not,” Golden says.

Companies might not understand why employees choose not to disclose their disabilities. “Some employers feel like, ‘Why didn’t you tell me before?’ ” says Barry Taylor, legal advocacy director at Equip for Equality, which advocates for children and adults with disabilities in Illinois. “They don’t understand that you’re not required to disclose.”

Ernst & Young’s Golden sees risk in three areas—health, safety and performance—in not disclosing non-visible disabilities after being hired. “We feel that it’s really important that people with non-obvious disabilities understand that there are risks to not informing the organization about a disability,” Golden says. “If we don’t know that there is a disability at work and we haven’t had an opportunity to develop any accommodations and that person’s performance is not up to par, the disability does not afford protection.”

A recent study for the Kessler Foundation and the National Organization on Disability provides insight into why some workers choose to share information about their disabilities. The most common reasons: It was a visible disability (32 percent), it hurt job performance (33 percent) or the employee simply felt that others should know about it (49 percent), according to the survey conducted this year by Harris Interactive. Respondents could select more than one reason, so the total exceeds 100 percent.

Securing reasonable workplace accommodations, of course, requires open communication, says Kathleen Lee, project coordinator and business outreach specialist at Cornell University’s Employment and Disability Institute. “Reasonable accommodations are actually less about the law and more about just good common sense and about ensuring that employers enable employees to be productive in the workplace and maximize their potential.”

Ernst & Young’s handbook largely avoids traditional wording such as “disclosure” and “accommodation” in favor of “inform” and “adjustment.” Golden believes that “disclosure” implies purposeful concealment and that “accommodation” connotes a favor, whereas “adjustment” suggests a slight modification in how things are done. “We’re not trying to follow the dominant thinking but to shape it in ways that will work for our people and that will open up opportunities for people with disabilities in the wider marketplace,” she says.

Martha Artiles, global chief diversity officer for temporary staffing firm Manpower Inc., likes what she calls the forward-thinking terminology. She plans to adopt the handbook and share it with clients. “When you think about the fact that most people aren’t comfortable disclosing their disability unless they have to ask for an adjustment,” Artiles says, “they exist much more than we know.”

Workforce Management, September 2010, p. 3 -- Subscribe Now!

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

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Todd Henneman is a freelance writer based in Los Angeles. E-maileditors@workforce.com to comment.

National Guard Lowers Workers' Compensation by Intensive Case Management and Return to Work Program

THE SOARING INCREASE IN workers' compensation costs is an equal opportunity plight that pervades the bottom line of government as well as private industry. The Massachusetts National Guard would at first glance seem an unlikely victim of workers' compensation difficulties. However, with over 2,000 full-time federal personnel, the majority of whom are significantly exposed to the risk of on-the-job injuries in the areas of aircraft and heavy equipment maintenance and material handling, the possibility becomes much more real. The Guard responded to its own workers' compensation cost spiral as they would to any other natural or man-made disaster: by meeting it head-on with a carefully planned three-pronged approach aimed at reducing costs.

In 1988, the Massachusetts National Guard initiated an aggressive program to control and reduce its escalating workers' compensation costs based on intensive case management, an institutionalized accident prevention program and a carefully managed return-to-work program. In turn, this program had the full commitment of a management and labor team devoted to cost reduction, accident avoidance and back-to-work goals.

To control medical care costs the Guard contracted the intensive case management of some workers' compensation cases to occupational health nurses at a hospital in Eastern Massachusetts. These particular cases required specialized knowledge and communication skills in dealing with the attending physicians and the injured workers. The cost of employing the nurses was small compared to the savings associated with assisting the injured workers in the recovery process and in their return to work.

The Guard's accident prevention program resulted in more than a 36 percent reduction in lost-time injuries over the four-year period from fiscal years 1988 through 1991. The main components of this program were setting safety standards and holding line managers and supervisors responsible for accidents or unsafe conditions in their managerial areas. Management and bargaining unit personnel were apprised that nearly 80 percent of workplace accidents are the result of human error, and that in nearly 70 percent of industrial accidents one of the contributing causes is a supervisory deficiency. This awareness rapidly changed the mind-set of both employees and supervisors who were in a position to reduce accidents.

The program also relied on the use of written safety standards, accident and performance appraisals, and quarterly safety council meetings in which accidents and unsafe practices were reviewed and corrective action taken. In addition, safety and occupational health training was promoted to assist in accident prevention.

To ensure compliance with safety standards, the Guard incorporated job safety elements in the performance evaluation and appraisal standards used to evaluate both supervisory and non-supervisory personnel. The required duties for Guard workers include support of the safety and occupational health programs and observation and compliance with all safety rules and regulations established for the facility. Responsibility and accountability were the key factors leading to the success of the accident prevention program.

A safety council, made up of personnel involved in workers' compensation issues, reviewed National Guard claims and attempted to determine causes and remedial action for each accident. In a recent analysis, the council found that workers' compensation costs stemming from back strain were three times higher than costs associated with any other injury. Consequently, the Guard purchased commercial videos and brochures on back injury prevention and instituted safe lifting programs to be used in curbing the occurrence of disabling injuries.

The return-to-work program was based on the idea that the injured employee should return to work as soon as he or she is capable of performing any position in the workplace. Getting employees back to work as soon as possible takes them off the Guard's workers' compensation rolls and saves them the cost of recruiting, hiring and training new Guardsmen and women. The concept of job hardening was applied whereby the hours, duties or expectations required of the employee are gradually resumed as physical capabilities improve. The Guard created positions that could accommodate the injured employee, even if only for a portion of the day and at a reduced task level. Aircraft and automotive mechanics, for example, were returned to sedentary positions such as parts clerks or production controllers for four hours per day to accommodate their disability. In addition, internal transfers were used if job modification or job hardening opportunities were not possible in the employee's former area.

The ability of an injured employee to return to work was based on a continuous evaluation of the disability. Letters to the workers and their attending physicians determined the current status of their disabilities. Most injured employees were anxious to return to work as soon as possible and the return-to-work program had the added effect of increasing employee goodwill, morale and loyalty.

The success of the Massachusetts National Guard programs can be measured by observing and comparing workers' compensation costs. For the Army National Guard nationwide, costs rose by over 24 percent between fiscal years 1988 and 1991. During this same period, The Massachusetts Army National Guard costs fell from $711,000 in fiscal year 1988 to $543,000 in fiscal year 1991, a decrease of nearly 24 percent. This significant reduction is even more remarkable when compared to the rapid rise in workers' compensation costs in both the private and public sectors of Massachusetts, which far exceeds the national average. Indeed, Massachusetts has the third highest average workers' compensation cost per case among the 50 states. Total workers' compensation costs in the state have increased more than 200 percent from $800 million in 1985 to $2.5 billion in 1990. During this same period, the cost of workers' compensation for the National Guard nationwide rose by more than 100 percent from $10.5 million to over $21 million.

A large portion of the overall increase in workers' compensation costs was directly due to escalating medical costs. During the 1980s, the medical portion of workers' compensation benefits rose by 240 percent compared to an 83 percent increase in the Medical Price Index. As a result, since 1980 medical payments have increased from approximately 30 percent of total workers' compensation claims to 40 percent in 1990 and are still climbing. Increases in the amounts of lost wages and legal expenses are also contributing to the escalation of workers' compensation costs.

In addition to lowering costs, the Guard programs have been successful in reducing the number of employee injuries, improving job satisfaction and quality of life of the injured workers, and developing a sense of awareness and responsibility for job accidents and safety. The programs that were initially applied in the Army National Guard have since been extended to the Air National Guard, where they have met with similar success. In addition, the workers' compensation programs are the model for other National Guard organizations across the nation.

[Colonel William Gormley III is the personnel manager for the Massachusetts Army National Guard, and Daniel Shimshak is the acting dean of the College of Management at the University of Massachusetts in Boston.]