Knowledge Corner

Workers’ compensation insurance is valuable for any construction company as it helps cover expensive medical costs and other expenses. However, workers’ comp fraud can occur when a false statement is made or key information is withheld in a claim. Such actions can result in the denial of certain benefits from your workers’ compensation policy, which could leave your company at risk to pay costly claims directly. 

Here are some steps your construction company can take to identify potential workers’ compensation fraud, before false claims cost you.

Examples of workers’ comp fraud

How can an employee can commit workers’ compensation fraud?

• Claiming an off-site injury occurred on the job site
• Attempting to work while already injured
• Submitting a false claim

An employer can commit fraud as well. Some scenarios include:

• Not properly classifying employees
• Not providing the proper coverage to employees
• Deducting a premium from an employee’s pay

Prevent fraud with investigation policies and recognize evidence

If the details of a claim are vague and missing information, it is likely a false statement. Having thorough information about any incident is critical. You can engage in the assistance of insurance agencies and/or a law enforcement expert to perform investigations at a job site to uncover potential fraud. 

Keep records of employees and witnesses involved in any incident. Ask specific questions and gain an understanding of why the claim is being made. A claim may be fraudulent if:

• The report isn’t made in a timely manner
• There were no witnesses present
• Inconsistent documentation was given by the employee
• An employee with a history of changing jobs 

Proper Claim Procedures will help

The following are standard procedures that will help combat fraudulent activities.

• Report any claims to the insurance carrier or Third Party Administrator (TPA) asap
• Engage with the insurance adjuster and provide evidence in a timely fashion
• Cooperate with the investigation
• If you do suspect fraud, notify the adjuster so that resources can be deployed expeditiously and action plans can be scheduled.

Educate your employees on fraud detection and prevention so they can be equally knowledgeable on the subject as you are. Download your free ebook to learn how you can stop paying more for your workers' compensation insurance. 

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