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Defining soft fraud

The following scenario has been relayed to us here at Sacks and Zolonz LLP several times before: an employee slips and falls at work, resulting in knee injury. After a while, word comes out that he or she is also experiencing neck and back pain due to the accident, and suddenly needs more money to cover medical expenses and compensate for time off of work. If this describes the same situation you are currently having with an employee, you may be facing a bit of a conundrum: On the one hand, you may feel sympathetic to his or her suffering and simply want him or her to improve. On the other, you may be wondering how one single incident could produce so many health issues.

If your employee is indeed embellishing his or her injury situation, he or she may be attempting what the Insurance Information Institute defines as “soft fraud.” Most soft fraud cases do stem from legitimate claims. However, ultimately people end up exaggerating the extent of either damages or injuries in an attempt to collect for money or benefits. It’s estimated that millions is lost to cases of soft fraud every year.

Yet why should you care? If your workers’ compensation plan is covering the cast, what concern is it of yours? Consider the intended consequences of embellished insurance claims. The provider pays out more than is anticipated, and thus has to recoup those costs in other ways. Typically, that’s done by raising premiums. Thus, your employee misrepresenting the extent of his or her work-related injuries could end up costing you more in your monthly insurance payments.

More information on understanding the different types of employee fraud can be found on our site. 

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