There is no disputing the cost that employee fraud - as it relates to the payment of workers' compensation - has on both large organizations and small businesses. To illustrate, consider a recent statistic from the National Insurance Crime Bureau: Workers' compensation fraud costs U.S. businesses of all sizes upwards of $7.2 billion a year or 20 percent of total work comp payments.
Unfortunately, smaller business seem more likely to be affected by work comp fraud than large organizations. The reason? They have smaller pools of employees and must pay higher premiums - they can scarcely afford - in the wake of job-related injuries. In addition, they often lack the resources to verify that a legitimate work injury has occurred or that a prospective employee has not committed fraudulent activity in the past.
"[Work comp fraud] does impact small businesses a lot," said Scott Doellinger, director of the National Insurance Programs for the National Federation of Independent Business. "Employees can jump from small business to small business, and the background checks and procedures for hiring aren't always in place."
Given this situation, is there anything that small business owners can do to protect themselves?
According to experts, there are four simple steps that small businesses may consider implementing to help fight work comp fraud/employee fraud.
- Create and enforce a zero-tolerance policy concerning work comp fraud: It is important to communicate to employees that fraudulent activity will not be tolerated and that all complaints will be investigated/reported to the insurance company.
- Maintain an active relationship with the insurance company: Work with the insurance company to make sure that those who commit work comp fraud are prosecuted and that any potential tips on problematic prospective employees are communicated.
- Take the time to both document and investigate any and all work injuries: Experts recommend writing down everything concerning a work injury and conducting an exhaustive investigation into the workplace accident. Don't rely on employee accounts.
- Remain vigilant in the search for fraudulent behavior: Remain on the lookout for potential indicators of work comp fraud, including accidents with no witnesses, so-called Monday morning accidents (they could have happened over the weekend), and claims by new or unhappy employees
Workers compensation fraud/employee fraud is a very serious crime. If you suspect that such a crime has been perpetrated against your organization, you should strongly consider speaking with an experienced workers' comp defense attorney.
This post was provided for informational purposes only and is not to be construed as legal advice.
Stay tuned for further developments in the area of workers' compensation defense law ...
Red flags of workers' compensation fraud (Fox Business)