“Everybody plays the fool, there's no exception to therule.” — The Main Ingredient (1973)

The great majority of workers' compensation claims arevalid.

So what can small businesses do to better spot claims by theirworkers that are fraudulent?

Workers' compensation fraud costs the system $30 billionannually, according to The National Insurance Crime Bureau.Just one fraudulent claim can cause your workers'compensation spend to rise dramatically. This is drivingincreased concern among small businesses about potential fraudulentclaims.

Consider these statistics from The Coalition Against InsuranceFraud:

— One in 10 small businesses are concerned anemployee will fake an injury.

— One in 5 owners feel unsure how to identifyWorkers' Compensation scams.

— One in 4 owners installed video cameras tohelp fight fraud in the workplace.

Related: Using smart technology to combat insurancefraud

Asking the right questions

We know that the large majority of claims arecompletely valid. Estimates indicate that only 1-2% of claimsare fraudulent. This is something you should keep in mind whendealing with employees who have suffered injuries. In fact, mostinjured workers are as scared about what is going to happen to themas you are about the impact to your business.

This phenomenon is known as the “DNA” of a claim, and it getsset almost immediately. When your employee comes in to report theclaim, how do you respond to that person? Do you display compassionand concern for their well-being? Do you follow up with theemployee at home to make sure that they are OK?

Related: Tips to reduce workers' comp claims inrestaurants

Small, subtle steps such as these remind the injured worker thatyou are an employer who cares and that your employee will bewelcomed back after recovering.

One in 10 small businesses are concerned an employee willfake an injury. (Photo: iStock)

Spotting the bad apples

Of course, there are instances where the injured worker eithercompletely fabricates or exaggerates the extent of their injury.How do you identify a fraudulent injury?

Here are six ways to identify fraudulent claims.

No. 6: Late reported claims. Claimsreported more than 7 days after the injury tend to be dramaticallymore expensive and have a much higher litigation rate. Why did theyreport the claim so late? If they said that they reported theirinjury to a co-worker, talk to that person. This type of follow upspreads the word that you treat these matters seriously and helpsstop potentially fraudulent claims from repeating throughout yourbusiness.

No. 5: Monday morning reportedclaims. This seems obvious, but it is amazing howoften these are accepted at face value. What hobbies does theworker have? Had they mentioned anything to their co-workers onFriday about activities they were looking forward to over theweekend? Ask the injured worker straight up if they had anythinghappen over the weekend. If they are lying, they are probablypraying that you do not ask about it. Read their bodylanguage when you ask them. What signals are theyemitting?

No. 4: Unwitnessed injuries. Not everyclaim is unwitnessed, but most every fraudulent claim is. Get intothe mechanics of the injury. Were they in an area that they werenot supposed to be? Who was the first person who saw the workerafter the injury? Talk to them, even if it is not a supervisor.

No. 3: Refusing diagnosticprocedures. Fraudulent claimants want treatment, notanswers. They are looking to get into the system and to become astatistic. They will prefer to have a chiropractor lay their handson them versus getting an X-Ray or an MRI that will tell themexactly what is wrong. If the claimant has a soft-tissue injurysuch as a back or neck injury, make sure that they seek treatmentat a facility that can perform immediate testing.

Related: 9 best practices for return-to-workprograms

No. 2: Vague description of theincident. Think of this as the smell test. Askquestions and ask yourself does what they are saying make sense.What exactly was the injured worker doing when they were injured?Does the body part that they injured seem to coincide with how theysaid the injury occurred? We understand that you are not adetective, but who knows the specifics of your business better thanyou do?

No. 1: Chatter. Go to the department where the injury occurredand talk with those who are left. Explain to them how you plan tofill in during their absence. Express concern for the injuredworker and read their body language. Do they roll their eyes whenyou express concern that they are OK? If you get signals like this,sit down with those workers and get to the bottom of the story. Becareful not to incriminate the injured worker — you are trying toget information, not disparage the injured worker.

Related: The opioid epidemic in workers'comp

Trust your instincts

After going through these steps, you may have an injured workerwhom you just know is trying to take advantage of the system. Every fiber in your body tells you so. What should you do at thatpoint? First, you should remind yourself that everything about theworkers' compensation system is set up to protect the rights of theinjured worker. That is the way it should be; it is what is calleda “no fault” system. What that means is that many times the injuredworker will get away with it. We would rather pay nine illegitimateclaims than incorrectly deny one legitimate one. That doesn't meanthat you should just sit back and do nothing. Report what you knowto your claims adjuster. Give them as many specifics as possible.Open up your resources and invite them to come make a recordedstatement.

By paying attention to the signs, and working closely with yourclaims adjuster and giving them all the facts, you will have doneyour part to make sure that you are not playing the fool.

Matt Zender is vice president and Workers' CompensationProduct Manager for AmTrust FinancialServices, one of the top three workers' compensationinsurers in the U.S. Contact him at [email protected].

See also:

Workers' Comp 101

4 ways technology is disruptingfraud

Good news for Florida companies: Workers' comp ratedecreasing