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The Hidden Cost of Workers’ Comp Fraud
Workers’ compensation is essential for any business—no matter how many employees you have. Workers’ comp insurance covers medical expenses, rehabilitation costs, and lost wages during recovery, and is imperative for protecting your employees financially if an accident happens at work. If you’re a business owner, it helps protect both you and your company from having to pay out-of-pocket in the event an employee gets injured on the job.
The necessity of workers’ compensation insurance also makes it vulnerable to exploitation. Workers’ comp fraud can have a negative impact on businesses without those companies even realizing they’ve been affected. Let’s take a closer look at workers’ compensation fraud, the common types of fraud and the impact they have, and how professional employer organizations (PEOs) can help detect and prevent fraud.
Common Types of Workers’ Comp Fraud and Their Impact
Workers’ compensation fraud typically involves either employees, employers, or providers intentionally lying for financial gain.
1. Employee Fraud
False-injury claims are some of the most common types of fraud seen within workers’ compensation. An employee might lie about an injury altogether, or they may claim that they were hurt at work when they actually got injured elsewhere. They may also simply exaggerate the severity of the injury so that they receive more time off and a higher reimbursement check.
2. Employer Fraud
Insurance premiums can be steep, and some employers may commit fraud in an attempt to reduce those costs. Intentionally misclassifying workers, underreporting payroll, and misrepresenting workplace safety records are just a few ways employers may try to cheat the system and reduce their insurance premiums.
3. Provider Fraud
Provider fraud involves medical professionals inflating bills by overcharging for treatments or charging for services that were never provided. In even more extreme cases, healthcare professionals may provide and bill for unnecessary treatments.
Workers’ compensation fraud—no matter the type—can have a massive financial impact on company resources and erode reputation and trust.
How PEOs Help Detect and Prevent Workers’ Comp Fraud
PEOs specialize in human resource management. They step in to handle the administrative tasks of a business—like payroll, workers’ compensation, compliance, and risk management. Another important facet of what a great PEO offers is workers’ comp fraud monitoring and prevention.
1. Workers’ Comp Claims Management
When you partner with a PEO, they manage your workers’ compensation claims processes. Because PEOs are managing these claims every step of the way, they have the ability to monitor discrepancies in time-tracking, medical claims, and injury reports.
PEOs can also coordinate workers’ compensation investigations to verify the details of the accident. These investigations may be as thorough as speaking with witnesses and looking back at video footage from the incident.
2. Education and Training
One of the best ways to prevent workers’ comp fraud is to begin with education and training around it. Offering training programs for your management team is crucial for helping them recognize red flags or suspicious activity. It can also be a great way for your workers to get clear on proper injury reporting procedures.
3. Compliance Support
While workers’ comp insurance is legally required in most states, each state tends to have its own specific workers’ comp regulations. These laws are ever-changing, and they can be challenging to keep up with. PEOs specialize in staying updated on both state and federal regulations, helping prevent businesses from unintentionally committing fraud.
4. Injury Prevention and Safety Programs
Ultimately, the only thing that can truly ensure fraud never occurs is by preventing workplace injuries from happening in the first place. PEOs implement safety training programs—not only as a part of the onboarding process for new employees—but also as refresher training for existing team members.
Safeguard Your Business with PEO Risk Management
Workers’ compensation fraud can have a huge negative impact on your business. When you recognize the potential red flags of fraud early enough, it’s possible to do damage control before the situation escalates.
Partnering with a PEO gives your company the ability to detect and prevent workers’ comp fraud, protecting your business both financially and in terms of reputation. Reach out to a trusted PEO to get the support you need in safeguarding your business today.
Contact us today to get the coverage and support you need!
