A Clever Way to Minimize False Workers’ Compensation Claims

By Nick Del Biaggio from

For some employees, Monday morning simply can’t come soon enough. They are generally the ones who injured themselves at the gym or fixing up their house. Rather than face costly medical bills or the loss of income due to their sudden inability to perform a job, they choose to start off the week with a “work-related accident”—aka a false workers’ compensation claim. Once the “incident” is alleged—and thus eligible for workers’ compensation—they can seek medical attention and get treatment for their torn muscle or broken limb at the company’s expense.

While there are no statistics recorded for this type of false claim, they appear to be too common. The website FiveThirtyEight found about 167,000 instances of people getting hurt at work on a Monday—more than any other day of the week—during an analysis of the 2013 Bureau of Labor Statistics report on nonfatal injuries and illnesses. This was not an anomaly: Monday was the most injury prone day in all but two of the years between 2007 and 2013. The site didn’t claim to identify the percentage of phony claims, but it did suggest that the increase was not likely due to more people working on Mondays, given the number of holidays that fall on Monday, but due to weekend injuries being reported as work related. Even though this trend raises a red flag, insurers are reluctant to devote time and energy to fighting this fraud, and the burden of proof is on the employer.

Such fraudulent reports are a significant burden for Crystal & Company’s clients, especially those in a high-rate state like California.

 The onus goes beyond the single event, but can last up to three years because each incident increases the likelihood that an employer’s workers’ compensation insurance premiums will spike.

The state’s automated system for assessing those premiums—the Experience Modification System—forces companies with more claims to pay much higher rates. To help our clients offset these increases, Crystal & Company has put together an easy-to-implement and highly effective way to lower this type of false claim: offer employees accident and short-term disability policies.

Accident policies are a low-cost voluntary employee benefit policy that protect employees no matter where the incident occurs and, like the best deterrents, work on multiple levels to fight false workers’ compensation claims. For one, insurers directly pay covered employees an “indemnity benefit” for medical care received as a result of a covered accident. The amount is based on a schedule of benefits for each specific injury, say $500 for a sprained knee plus $125 for the emergency medical treatment, and $200 for the ambulance. The plans typically include additional payments for accidental death and dismemberment, hospital admission, and physical therapy.

For another, a doctor’s note is required for any payout, thus providing a written record that the injury occurred off-duty. Finally, the payouts from this policy are in addition to any other insurance, so they can be a great boost to an employee’s financial wellbeing. With more and more employers moving to Consumer Driven Health Plans (thus higher out of pockets for employees), that extra cash helps employees feel comfortable.

We’ve found that the policy is viewed as a positive addition to employee’s benefits package, regardless of whether the company pays the costs. I witnessed this firsthand at a recent benefits meeting for a client with 2,500 employees. The workers, who had been auto-enrolled into a new accident policy, were told they’d be charged about $5 extra a pay period. But the majority still opted to stay with the plan. The employer and employee both win in this situation and it creates a happier workforce.

For those really struggling with “Monday morning workers”, a short-term disability plan is a valuable supplement. Like an accident policy, this insurance pays the employee directly when they can’t earn an income due to a covered illness or injury. The plans can be tailored to fit employee needs and budgets but generally will pay a monthly benefit until they can return to work—sometimes up to 24 months.

These policies are ideal for any business employing blue-collar workers, from manufacturing plants to warehouses to security guard companies. (Monday morning false claims are less of a drain on white collar companies because weekend warriors with an office job can usually still work after an on-the-field mishap, while someone who performs physical labor may need time to recover.)

This creative workaround is the result of Crystal & Company’s one-team approach, which enables us to identify issues and devise solutions that cross the commercial and employee benefit insurance spectrum. Whatever the fix, frivolous workers’ compensation claims are a problem few companies can afford to ignore.

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