The idea that workers deserve to be compensated for work-related injuries developed in Europe and spread to the United States during the early 20th century. Since that time, workers' compensation has grown into a $100-billion-a-year industry. The program has grown so unwieldy it has been determined that up to 30 percent of payroll expense is derived from workers' compensation costs. One of the primary reasons for the out-of-control skyrocketing of these costs and the burden they place on employers is fraud.
It has been reported that up to 37 percent of workers' compensation cases are fraudulent, so much so that it has earned the names "workers' con-and-blue-collar lottery." Workers' compensation fraud has the attention of federal, state and local governments who are all actively working to reform the program.
A significant problem confronting employers seeking to control costs is the fact that many employees believe that committing fraud is perfectly acceptable. An estimated 25 percent of the general population knows someone who has committed workers' compensation fraud. The Insurance Research Council reports that approximately one in 12 adults in the United States believes that it is acceptable for a person injured while at home to claim that his or her injury is work-related in order to collect workers' compensation benefits.
Effects contagiousIn the same study, 17 percent of the individuals interviewed said it is acceptable to stay out of work longer than medically necessary following an injury or illness. To compound the problem, during times of economic downturn, more employees will claim on-the-job injuries rather than take the chance of being laid off and receiving unemployment benefits.
There is a tremendous trickle-down effect associated with workers' compensation fraud. Insurance companies pass on the costs of fraud to employers as higher premiums. These employers then pass on the costs to consumers for goods and services. Employers who can't afford the costs are sometimes forced to move to a state with lower compensation premiums.
The trickle-down effect continues when employers neglect to carry workers' compensation coverage in order to operate their businesses with a lower overhead. In addition, healthcare providers falsify their bills to insurers to offset the decrease in their profitability as a result of the pressures of managed care. The problem is compounded by disreputable attorneys, who seek to benefit from the deep well of workers' compensation litigation fees and by insurance agents who simply neglect to send premiums to insurers and instead pocket the money.
What can be done? The following steps provide important safeguards that employers can take to minimize the risk of workers' compensation abuse:
Make your work environment as safe and risk-free as possible.
The federal government mandates that employers have up-to-date job descriptions for every worker employed. However, many employers think of job descriptions as employee training tools. An accurate job description can be your best tool to improve the safety of your work environment. Update your job descriptions and have each job description analyzed for safety. Modern technology allows computerized manipulation of parameters of the critical demands of each job analyzed. Through this analysis, the critical demands of a job can be altered to bring it within recommended safety parameters. Biomechanic and ergonomic safety training programs can then be implemented based upon the analyzed data. This result is a job-specific, non-generic safety training program for employees. A safer job and workplace significantly reduces on-the-job injuries that have the potential to develop into chronic disability cases. The cost of disability and the resulting litigation involved has been determined to be approximately three to four times the cost of the claim costs incurred as a result of on the job injuries.
Institute a program of post-offer functional capacity evaluations.
Once they have updated their job descriptions, employers can ensure that they hire qualified workers by implementing compliant post-offer screenings compliant with the Americans with Disabilities Act. These screenings, which objectively assess a potential hire's ability to perform the critical demands of the job, ensure that only those workers who can perform the physical demands of the job are hired. Employers may legally revoke an offer of employment based upon the failure of ADA-compliant post-offer testing.
Establishing a baseline study of an employee's ability to function prior to an on-the-job injury is an additional benefit of implementing post-offer testing. This baseline study provides a benchmark against which a post-injury study can be compared after the injured employee undergoes a program of rehabilitation. This benchmarking significantly reduces an employer's exposure to the risk of litigation by objectifying permanent impairment, and by limiting settlement to the impairment causally related to the on-the-job injury.
Educate your employees about the workers' compensation system.
Instituting a program of objective analysis and documentation of claims of worker's injuries results in a decrease in nuisance claims. When employees understand that when they make a claim, they must pass a series of objective examinations that assess their ability to perform the demands of their employment, they are less likely to make false claims of injury. The knowledge alone that they must pass through a "gauntlet" of objective examinations to document their claim decreases the incidence of attempted fraud.
Effectively manage cases when employees are legitimately injured.
While fraud committed by injured workers is one component of the workers' compensation problem, fraud perpetrated by healthcare providers also plays a role. The management of a workers' compensation claim must be proactive. Employers should demand that healthcare providers submit objective documentation on a timely basis of an injured employee's progress under care.
This documentation should include specific outcomes assessment tools, which measure the patient's ability to perform the demands of their employment. It should also include computerized objective measurement of the patient's physical capabilities including muscle strength, range of motion, grip, pinch, lift and any other critical demands of the job. It's not enough for employers to submit claims to their insurance carrier and to then lose interest in the outcome. Employers must remain involved in the entire process from injury to return to gainful employment.
Offer employees temporary modified duty whenever possible.
The goal is to get injured employees who are medically able back to work as soon as possible. Research shows that the longer an employee is out of work, the greater the likelihood that he or she will never return to work. Seventy-five percent of all workers' compensation costs are spent on only 7 percent of injured employees--those out of work six months or longer.
The most effective program for controlling workers' compensation costs is to return injured employees to gainful employment as rapidly as possible. The average length of time an injured worker was out of work was 59 days in 1980 and by 1991 that average had increased to 87 days out of work. An early-return-to-work program, in which employees are returned to a modified job function, has been shown to combat the psychological barrier injured workers encounter after a prolonged period out of work. When a worker's ability to function is objectively monitored by qualified healthcare providers, a modified job description can be custom-tailored to suit the rehabilitating worker's abilities, thus ensuring a safe and speedy return to work. In addition to reducing loss costs for lost workdays, returning the injured worker to gainful employment increases company productivity.
Learn to recognize the "red flag" indicators of potential fraud.
Employers should suspect fraud when the employee's claim information is vague. Employers should determine if it was possible for the accident to have occurred the way the employee described it, and if it concurs with any witnesses' account of the accident. Claims of injury made in the absence of any witnesses should undergo intense scrutiny. The greater the length of time between the purported on-the-job injury and the time the employee files his or her report of injury, the greater the possibility of fraud. Spot-checking of suspect employees by a fraud investigator can confirm if an employee is home or at the doctor's office when he or she is supposed to be there.
The documentation provided by the treating physician must objectively support the type of injury the employee is claiming. The physician's diagnosis, medical history and accident history should be consistent with the mechanism of injury reported by the employee. The treating physician should be attuned to symptom magnification on the part of a claimant. Does the employee report an exaggerated extent of disability as it relates to the injury reported? Employers should receive regular updates from the healthcare provider concerning the injured employee's compliance to the doctor's treatment and rehabilitation plan. Particular attention should be paid to employees who "doctor hop," frequently changing healthcare providers. The frequent change of healthcare provider may indicate an employee who is seeking a sympathetic provider to collaborate his or her fabrications.
Employers should review information regarding the employee's past work performance. Employers should become suspect when there is a history of filing workers' compensation claims or disciplinary notices. Is the employee showing signs of job dissatisfaction? Are the conditions of the workplace physically or psychologically stressful? Many times a fraudulent injury is the result of a disgruntled employee.
Detect fraud early to control associated costs.
Some employees seek workers' compensation for injuries incurred at home on the weekend. This type of scam is called "Monday morning syndrome." However, fraud can occur on any day of the week. The most common type of fraud occurs when an employee is injured on the job, receives workers' compensation benefits, and stays out of work longer than medically necessary.
In these instances, a relationship with a healthcare provider who is familiar with the battery of computerized objective functional capacity tests available today is a necessity in order to separate those employees who suffer from a bona fide prolonged disability from those seeking to abuse the system.
Through establishing relationships with qualified industrial and occupational medicine specialists and by implementing the strategies reviewed above, employers can minimize their exposure to the risk of workers' compensation abuse and bolster their bottom line.