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Don't Inherit a Claim: 5 Keys To Mitigate Workers’ Compensation Fraud and Reduce Costs

Aug. 12, 2015
Employers need to walk a fine line between providing injured workers with the support they need and preventing fraud by employees who do not have a legitimate workers' compensation claim.

Finding new ways to facilitate a safe and healthy workplace environment while preventing on-the-job injuries is an ongoing challenge for most labor-intenstive organizations. Not only are there regulations and compliance issues that have to be addressed, but there also are issues from “the unknown” that have to be managed, like the possibility of slipping incidents, falling and tripping occurrences, equipment malfunctions, chemical exposure and ergonomic injuries that can surface from repetitive motions. 

While most employers want to prevent workplace injuries and workers’ compensation claims from occurring in the first place, they also are dedicated to addressing the needs of a worker should an incident occur.  The challenge for employers is recognizing when an employee has a legitimate claim and fighting against illegitimate claims from employees who try to take advantage of the system through workers’ compensation fraud.

Fraud is a major concern because workers’ compensation already is a high-cost industry, issuing more than $60.2 billion in payments in 2011 alone, according to the most recent available data. Regrettably, adding to the high costs already associated with managing legitimate claims is the increasing cost of managing illegal claims from fraudulent activities. In fact, employee fraud is listed as one of the most costly types of workers’ compensation fraud in the marketplace.

The good news is this type of fraud is also very preventable if organizations deploy the right solutions.

Here are five innovative best practices that companies can now consider implementing to support a fraud-free workplace environment: 

Pre-work screenings: Pre-work screenings (PWS) help weed out applicants who physically cannot perform the job. A pre-employment test is initiated to identify an applicant’s ability to perform the physical demands that are specific to each job. A PWS is post-offer/pre-hire practice. Basically, the offer is extended to the applicant with the contingency that the PWS must be passed.

Drug screenings and background checks: Both drug testing and background checks allow organizations to identify the integrity of an individual prior to hiring. Drug tests determine if there is a history of drug use, and, if so, indicates the types of drugs in the system. Background checks investigate the criminal and financial records of an applicant. If any applicant shows negative incidents on a drug or background check, he or she could be a candidate for future fraudulent activity.

On-site ergonomic solutions: Utilize physical therapists or ergonomists before injuries occur (not just after occurrences) to work with employees, supervisors and management to understand workflow and all job task requirements. Physical therapists and ergonomists are able to recommend optimum positions, ergonomic strategies and physical movements required at work stations to minimize musculoskeletal impact on the employee.

Employee education: Encourage managers to educate employees on how to use workers’ compensation legitimately and how it can be used illegitimately. Information also should be shared about penalties and fines that could be incurred with fraudulent claims. By educating employees on a consistent basis, it will encourage a fraud-free workplace.

Prompt injury reporting: Train and engage employees to report any health concerns as soon as they notice any discomfort. Once these early notifications are reported to supervisors, they are able to immediately address the concern and respond with appropriate evaluations, diagnosis and/or medical care – before the issue escalates.

Reducing workers’ compensation fraud is easier than you think, given the latest solutions now available to employers. By utilizing these innovative prevention and early intervention models, costs associated with managing illegitimate claims can be reduced, and legal and medical fees significantly can be mitigated as well..

About the Author: Liz Griggs is chairman and CEO of WorkWell Prevention & Care. To learn more about some of the solutions she mentioned, visit

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