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4. New red flags emerge in workers comp fraud probes

4. New red flags emerge in workers comp fraud probes

Employers and workers compensation insurers must monitor the emerging signs of workers comp fraud but shouldn’t ignore the traditional red flags.

Two of the new red flags revolve around the repeated participation of certain doctors and lawyers in workers comp cases so companies should utilize advancements in data analytics and track how many claims involve a certain physician, which could suggest that a claim is suspicious and should be denied, according to lawyers speaking at the Philly I-Day conference in Philadelphia in April.

However, traditional red flags are still relevant, including length of employment in terms of new hires claiming injuries or alleged injuries that occur immediately before or following a vacation, retirement or layoff. Disgruntled employees filing claims also constitutes a traditional red flag for workers comp fraud, according to the lawyers.

Employers are on the front lines of nipping one particular type of workers compensation fraud in the bud: the incident that never happened or is being exaggerated, with the first step being to gather facts with a simplified and effective reporting system and immediate documentation, according to experts speaking at the International Risk Management Institute Construction Risk Conference in Houston in November.

Witness statements are critical in such investigations and witnesses should be separated and provide accounts individually so that statements cannot be coordinated. Some employers make the mistake of not immediately gathering such evidence, which can backfire if a claim gets increasingly complicated or a large lump sum is demanded to compensate an injured worker.

Fraud involving health care professionals and pharmacies is a fast-growing segment of insurance criminal activity that costs insurers and employers billions every year, according to claims experts speaking at the CLM & Business Insurance Workers Compensation Conference in Chicago in May. Telemedicine, which is becoming an increasingly popular form of health care service delivery, could present new opportunities for fraud, with one common scheme involving a doctor soliciting an injured worker over the internet and prescribing – with the help of a pharmacist involved in the scheme – a compounding cream medication with multiple refills, but no follow-up contact.


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