According to the National Insurance Crime Bureau, workers’ compensation fraud costs American businesses, workers, consumers and shareholders nearly $7.2 billion per year. There are several types of workers’ compensation fraud, and fraud can be committed by just about anyone.

Most companies see workers’ compensation insurance as a fixed cost of doing business. However, workers’ compensation fraud can actually raise the cost of running your business. The best way to prevent your employees from cheating the system, and increasing your premiums, is through prevention.

Not all employees are honest, and this is one reason for fraud. Here are 11 suggestions for reducing your vulnerability to comp fraud:

1) Uphold fraud-free working environment

The key to avoid the possibility of worker’s comp fraud is to uphold a fraud-free working environment and implement a strong policy against fraud. This can be effective by encouraging all employees to be vigilant and report any suspicions of fraud immediately.

2) Establish safety culture

Workers’ compensation is given to an employee who had injury. Establishing a culture of safety is a smart idea. It also requires that all employees should understand the procedures and policies that will make them safe. Ensure that they won’t get hurt by identifying the workplace hazards. See to it that the employees are well-trained, supervised and equipped so that they can accomplish their jobs safely. Implementing a safety program is essential.

3) Hold regular meetings

It’s a must to hold regular meetings to let the employees know about safety. Using signage and posters in reinforcing policies as well as giving recognition to employees helping in meeting safety goals is also recommended. Communicating constantly with the employees can prevent fraud and at the same time it improves morale. Once the employees know that the employer is concerned about their safety, then they will have second thoughts of committing false claims and betraying the company.

4) Institute sound hiring procedures

Obviously, fraud is committed by unscrupulous people. So it makes sense implementing hiring procedures to screen potential employees. This will help in avoiding the possibility of hiring individuals having fraudulent claims in the past. Pay attention on the work record and criminal record. Implement further investigation if you notice suspicions information about the applicant.

5) Stay in contact with injured employees

Having constant communication will help an injured employee feel valued and know someone they work with cares. There are additional benefits. It can also help encourage an early return to work because the employee knows his or her progress is being monitored.

6) Follow procedure

Use the same process for reporting and investigating all accidents and be sure to document all reported injuries. Interview the injured employee for details of the accident. Also, interview any and all witnesses and get written statements. Be sure to pay attention to what other employees are saying to each other about what had occurred.

7) Educate your employees

More often than not, when employees have been educated on the purpose and program benefits of the workers’ compensation system, they are less likely to commit fraud. Be sure your employees understand what fraud is and the consequences of committing fraud. Clearly state that when fraud does occur, and your premiums go up, and  raises, bonuses and other incentives suffer.

It is also important to reiterate to your employees about the company procedures and policies pertaining to accident investigations. This will pave away the misperceptions and confusions particularly to those substandard employees, thus letting them know that any form of fraud won’t be tolerated.

8) Make it easy to notify management

Establish a fraud-reporting process to allow employees and supervisors to report suspected fraud. No one in the company should ever make accusations; on the other hand, do take suspicion seriously. All cases of suspected fraud should be reported to your insurance company or the insurer’s special investigative unit immediately.

9) Use surveillance equipment

In order to easily identify potential workers’ comp fraud, the best thing to do is to install surveillance equipment within the workplace. This can help in controlling employees thinking of committing such crime.

10) Implement drug testing policy

To reduce potential workplace injuries, employers may consider implementing drug testing policy to ensure that the injured person is free from drug abuse at the time that the accident happens.

11) Look for medical provider

It is inevitable that accidents may happen in the workplace; that’s why it makes sense having medical provider that will work on workers’ compensation. Choose a credible provider that has long time experiences dealing with accidents in the workplace and injured individuals.  Be aware that there are instances that medical providers may also conduct workers’ comp fraud by charging services that weren’t performed. The medical provider should be the one to conduct diagnostic procedure in order to confirm the extent and nature of the injury.

Workers’ compensation fraud is not easy to navigate, and neither are the workers’ compensation laws. Because these laws vary from state to state, if you have any questions, talking to a workers’ compensation attorney would be a wise decision. By establishing firm policies and procedures, you can impact the occurrence of fraud in the workplace.

You should also formulate a policy requiring injured employees to go back at work, particularly those who don’t have medical restrictions. Many injured employees think of taking a leave for a longer period of time knowing that they can receive some temporary benefits. With this, consider a policy reducing the claim amount once an employee refuses returning to work even when the injury is healed. Refusal to return to work could be a reason for termination.

On the other hand, it’s also necessary to know some “red flags” in workers’ comp fraud. If the employee requesting a claim has history of changing jobs, addresses or medical providers frequently, then you have reason to suspect a fraudulent act. Another instance where the claim may be fraudulent if the injured employee is giving contradictory description of the accident, irrelevant to the cause of injury. Claims can only be requested if the accident happens during working shift of the employee. 

The main concerns of business owners are to save money and time. Fraudulent workers’ compensation claims can be costly and challenging to prove. Both the employers and the employees should be knowledgeable how to prevent workers’ comp fraud.