There are, however, some useful guidelines that can helpemployers -- and HR managers in particular -- understand the claimsthat are submitted by their employees. In addition, ProfessionalEmployer Organizations (PEOs) that work directly with brokers toprovide insurance options to businesses can help alleviate theadministrative burden by assuming the key responsibility ofadministering claims and providing useful employee communicationtools and expert advice and counsel. One of the most frustratingparts of workers' compensation insurance, aside from the paperwork,is the concern about fraud that all too often accompanies a claim.While the majority of claims are valid and submitted byhard-working employees who have encountered unfortunate injuries onthe job, anecdotal and statistical evidence shows that fraudremains widespread. The Insurance Information Institute estimatesthat all property/casualty insurance fraud costs about $30 billiona year in the United States; the National Insurance Crime Bureau(NICB) suggests that approximately $7 billion of this can beattributed to workers' compensation scams in various forms. Facingdifficult economic times and growing financial pressures, employersare quite aware of the impact of workers' compensation insurance ontheir balance sheets, and they are increasingly mindful of theconnection between fabricated claims and rising insurancecosts.

While there is a growing desire to root out fraud, doing so is achallenging task. Some experts suggest that fraudulent claims maybe on the rise, as employees themselves face mounting financialproblems in the wake of the economic downturn.

Detecting and substantiating workers' compensation fraud can bea lengthy and complex process. While states normally havedesignated fraud divisions, employers should know some key signs ofpotential fraud. These red flags include:

• The late report of an injury: If an employeesubmits a claim and reports an injury well after it allegedlyoccurred, the employer should determine the cause of the delay,while reminding the employee of the proper guidelines for reportinginjuries.
• Injuries reported early on a Monday or after timeoff: In some cases, injuries that occurred off the jobover the weekend may be fraudulently reported as work-relatedincidents. The employer can ask the employee about his weekendactivities, and report those findings to the insuranceadjustor.
• Cumulative problems: A combination ofoff-the-job injuries may lead to conditions incorrectly attributedto work-related incidents. In cases of generalized trauma, theemployer should determine the date of the onset of symptoms, andask the employee if there was any delay in reporting.
• News of outside activity: Employers should payclose attention to reports of employees who have filed claims, yetremain active while off the job.
• Report of injury following a disciplinaryaction: Employers should pay extra attention when anemployee who is facing disciplinary action files a claim.
• New employees who have declined medicalbenefits: In some cases, employees may turn to workers'compensation to take care of medical issues not related towork.
• Inconsistencies in injury reports and medicalreports: Injury reports should be checked to make sure thereports match any verbal accounts of the incidents. Inconsistencieswarrant further investigation.
• Injured employee cannot be reached at home:When an employee is off the job because of an injury and collectingworkers' compensation, he should be recuperating and reachable byphone.

While these red flags can help to detect suspicious cases, theyare not in and of themselves evidence of fraud. Employers should becareful not to make unjust assumptions before a thoroughinvestigation is carried out.