Don’t Be a Victim of Insurance Fraud

Between 2000 and 2003, Sharon and David Watkins allegedly set several fires to their own home to collect $400,000 in insurance money. They were caught in the scam when the last fire killed their own daughter and her friend.

Recently, James Lee Graff got in the hot seat for reportedly selling fake health insurance to thousands of small-business owners — for a grand total of $42 million in stolen premiums and unpaid medical bills.

Insurance fraud: It’s one of the largest white-collar crimes in the United States, the cost of which totals $40 billion per year, according to the FBI. Business owners in particular are susceptible to one of the most common insurance scams: worker’s compensation fraud. Here, we look at several ways to identify fraudulent claims and how to protect yourself.

The most common type of worker’s compensation fraud is claimant fraud. This occurs when a worker lies about or exaggerates an accident or injury to collect benefits or he or she double-dips, means he or she continues to work while collecting benefits.

Spotting Scams

Employers should have solid evidence before accusing a worker of fraud, but contact your insurance company immediately if you spot the following suspicious circumstances:

No witnesses. Consider it a red flag if the employee rarely works in an isolated environment, but sustains an injury with no one around to witness it.

Revenge. Was the employee discontented about something, such as a demotion or denial of time off, previous to filing the injury claim? This could qualify as motivation, but should be considered in context with other suspicious behavior.

Employee disappears. If your employee is nowhere to be found soon after benefits begin, he or she could be working another job or avoiding answering questions.

Shifting versions.. If you can’t get a straight story from the employee, or you hear varying versions from witnesses, the worker or doctors, this is a big red flag.

An Ounce of Prevention is Worth a Pound of Cure

It can be incredibly difficult and time consuming to prove worker’s compensation fraud, but it is possible to prevent it – and all injuries – from occurring in the first place.

• Have a safety program in place, and stick to it.
• Be an example of safety — as the boss, you set the standard for all to follow.
• Involve employees in the safety process, and stress a team effort with statements such as: “Injuries and fraudulent claims hurt everyone in the company; they can cause increases in premiums, decreases in benefits and even bankrupt companies.”
• Do background checks on potential new hires and verify references. Oftentimes fraudulent claimers are serial offenders.

For more information on insurance fraud or how to report it, visit the FBI’s Web site at www.fbi.gov/publications/fraud/insurance_fraud.htm,  or check to see if your state has its own fraud bureau.

Fraud Education Web Sites

National Insurance Crime Bureau (NICB)
800.835.6422
www.nicb.org
The NICB is a nonprofit organization that partners with insurance companies and law enforcement agencies to help identify, detect and prosecute insurance criminals.

Coalition Against Insurance Fraud (CAIF)
www.insurancefraud.org
The CAIF is a national alliance of consumer groups, public interest organizations, government agencies and insurers dedicated to preventing insurance fraud. National Association of Insurance Commissioners (NAIC)

National Association of Insurance Commissioners (NAIC)
www.naic.org
The NAIC assists state insurance regulators in serving the public interest and achieving regulatory goals.

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