Cisco-Eagle Logo

7 Steps to Help You Prevent Worker Compensation Fraud

What can you do to stop false workman's comp filings?

Safety Inquiry

picking wood and boards from a warehouse rack

Duncan Prince of Material Handling Wholesaler has a short, informative piece you might appreciate on preventing workers’ compensation fraud.  In a system that costs business billions of dollars every year, there is ample opportunity — and motivation — for fraud.  Prince argues that many employers, but in particular smaller operations, take a hands-off approach to worker compensation. After all, they believe that it is just an insurance issue.

worker carrying boxesThe problem: worker compensation fraud isn’t an insurance issue at all…

When a claim is filed, the insurance company essentially advances the employer the money to pay for it. After that, the company’s Experience Modification Factor increases, and it’s charged an additional premium for 3 years. And, according to Prince, it gets worse when a claim is fraudulent. The same process is used to cover the insurance company’s costs for the fraud.

So, what can you do?

  1. Recognize who pays for worker compensation: you. Be active and aware when injuries occur, and investigate them thoroughly.
  2. Report injuries immediately to your insurance agent. Let your agent contact your insurer. The primary goal is to ensure workers receive proper care, but this process also reduces the possibility of fraud.
  3. Train supervisors on how to handle injuries. The manager is the key player here, due to his relationship with the worker. He should accompany the injured worker to any initial medical facility.
  4. Figure out if others are getting their hands into your pocket. There are leaks in the system. Everyone from employees to hospitals have found ways to defraud the system. Don’t let that happen to you.  For instance, be alert to “Monday morning accidents”, which may be cover for weekend injuries. Also, be sure your insurance agent reviews loss runs and medical bills carefully.
  5. Help employees understand Workers’ Comp. Employee education can actually help to deter fraud. Many believe that it’s the state or the insurance company paying, not their own company. Make sure it’s understood that fraud is a crime with real penalties.
  6. Investigate any incident immediately. The very first day is the right time to gather information. Facts fade quickly, and people will forget. Many district attorneys across the country have special units for Worker Compensation fraud. Utilize those resources when you believe a fraud has occurred.
  7. Always perform a pre-employment background check. This is a best hiring practice, in any case. It can help you avoid many types of undesirable hires, but in particular can help you avoid hiring a Workers Comp claim waiting to happen.

It’s theft, so treat it as such

Prince states that “Workers’ Comp fraud is personal. It’s no different than someone taking money from your bank account or stealing your equipment or inventory.” He goes on to say that “you’re the victim. Because you have the most to lose, it’s up to you to stop it.” Read the entire article here.

request an audit of your facility

Tags: , , ,

Scott Stone is Cisco-Eagle's Vice President of Marketing with more than thirty years of experience in material handling, warehousing and industrial operations. His work is published in multiple industry journals an websites on a variety of warehousing topics. He writes about automation, warehousing, safety, manufacturing and other areas of concern for industrial operations and those who operate them.

What can we help you with?


Read our customer reviews