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Dealing with Workers’ Compensation Fraud

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Workers’ compensation is a no-fault method of paying insured workers for wage losses and/or medical expenses due to injuries or illness caused while on the job. A person has committed workers’ compensation fraud when they decide to take advantage of the insurance system for their benefit. Unfortunately, “workers’ compensation claimant fraud and medical fraud are significant contributors to our nation’s annual $30 billion insurance fraud problem.”[1] For example, a type of claim-related fraud is an employee who attempts to collect workers’ compensation benefits by deceitfully stating an injury or illness was caused at work.

Here are some tips and indicators to better help your organization in detecting possible workers’ compensation fraud.

Questionable claims are often identified by one or more of the following:

  • Be wary of injuries that happen late on a Friday afternoon but is not reported until Monday
  • The employee has a pre-existing medical condition similar to that of the alleged injury or illness sustained on-the-job
  • The employee delays reporting without providing a reasonable explanation
  • If the employee’s injury or illness takes place near their need for personal time off
  • There are no witnesses to the accident/injury
  • The employee refuses treatment to confirm the extent of the injury or illness

Perform a proper investigation that encompasses all of the elements in the TIPP mnemonic:

· Thorough; Impartial; Prompt; Preventive

Let employees know that insurance fraud of any kind, including workers’ compensation insurance fraud, will not be tolerated. Additionally, there are penalties and fees for submitting or filing false claims to which the employee would be responsible. To drive these points home, consider adding false claim information in each new hire packet, hang a poster in a conspicuous location to help employees know-how and to whom they can anonymously report potential fraud, and openly communicate about previous stories of fraud convictions to help deter repeat offenses.

In many instances, it is often better to use a third-party, such as a Professional Employer Organization (PEO) or Human Resource Services (HR) and administration provider to manage workers’ compensation and risk management within the organization. The third-party is likely able to perform an unbiased investigation. However, only a court of law can legally determine fraud—not the workers’ compensation administrator or carrier.

Fraudulent workers’ compensation claims can potentially steal millions of dollars from businesses, employees, and their families—when it comes to fraud, everyone ends up paying the price. Contact Harbor America to find out more about dedicated workers’ compensation specialists who are available to help manage your company’s claims. When it comes to workers’ compensation insurance, we know providing superior coverage at an affordable rate is one of the most important aspects to our clients.


[1] National Insurance Crime Bureau: Workers’ Compensation and Medical Fraud


Making Sense of Unemployment Claims: Tips for Small Business Owners

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Unemployment claims can quickly become a drain on your business’s finances. You do your best to treat your employees fairly. Chances are if you’ve had to fire or lay off employees, it’s for a good reason. Still, if you want to be sure that you’re effectively managing unemployment claims, make sure you’re following these key tips:

Tip #1: Keep the Paperwork

You already know how important it is to document everything. Proper documentation can be the difference between a lawsuit that’s settled in your favor and one that leads to a costly payout by your company at the best of times–and unemployment is no different. When you’re dealing with your employees, make sure you keep track of everything, including:

  • Reprimands, especially those that could ultimately lead to an employee being fired
  • An employee’s resignation: simply providing proof of voluntary resignation can increase the odds of a claim being settled in your favor by 10-15%.
  • Employee complaints, including those that are seen as being unreasonable by your staff at the time.

When you keep track of employee issues, you’ll put yourself in a better position to deal with the potential for an unemployment claim and raise the odds that you’ll be able to dispute them successfully. If you don’t have that paperwork, on the other hand, your dispute may turn into a serious case of “he said, she said,” which can, in turn, decrease your odds of winning the dispute.

Tip #2: Provide All the Information

It’s easy to gloss over the reason for an employee leaving. “They quit,” you’ll say, thinking that’s the end of it. Failure to provide all of the information, however, can stall the process, making it difficult for employees who do deserve unemployment benefits to attain them or making it possible for employees who don’t deserve them to get those benefits. It’s important, therefore, that you provide all the information once your former employee files a claim. Provide that documentation you were collecting in order to ensure a more effective conversation. This will include any documentation about the reasons an employee was fired, if that’s relevant. You’ll need to prove that you had reasonable cause for firing that employee and that it wasn’t arbitrary or the result of discrimination.

Tip #3: Factor in the Possibility of Lawsuits

It’s hard enough to fire an employee in the first place–especially if it’s someone who’s been with your company for a long while or someone that you feel sorry for. Denying them unemployment once they’ve filed that claim may feel as though you’re taking away money from their family. It’s important, however, to make sure that you’re not allowing a claim to go through without reason–and not just because of its impact on your unemployment insurance. Allowing an unemployment claim to go unchallenged can also sway future attempts at a lawsuit. For this reason, it’s critical that you cover your back and deal quickly with undeserved claims for unemployment.

Tip #4: Partner with a Professional Employer Organization

Forming the right partnerships long before you have to deal with potential unemployment claims can have a big impact on your business as a whole. A PEO can help you write an effective employee handbook, properly track and document any problems with employees, and deal with unemployment claims when they do come up–all of which can have a big impact on your success if you do have to contest an unemployment claim.

If you’re dealing with an unemployment claim, especially a claim that isn’t justified, it’s important to take action quickly and effectively. The better you deal with those claims, the more you’ll reduce the expenses associated with firing employees–not to mention protecting your business from future repercussions. If you’d like the complexity of unemployment claims and related HR tasks taken completely off your to-do list and added to ours, contact us today.

3 Workers’ Comp Mistakes Small Business Owners Should Avoid

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As an employer, you never want to go through the nightmare of employees being injured at your workplace. Unfortunately, accidents sometimes happen at work and especially at construction sites. When they do occur, it’s important to handle workers’ compensation claims correctly.

Why It’s Important to Cover Your Employees with Workers’ Comp Insurance

First of all, if you have a small business, check to see if workers’ compensation insurance is a requirement in your state. If workers’ comp insurance is required, failing to carry it can result in severe consequences, such as having to pay out-of-pocket benefits to an injured employee. Furthermore, you may have to pay penalties that are levied by your state. Even worse, you could be sued by an employee and face criminal prosecution.

Here are a few common workers’ comp mistakes to avoid:

Not Obtaining All the Necessary Medical Evidence

One of the most common mistakes many small business owners make regarding workers’ comp claims is failing to collect all the necessary medical evidence involving a claim. In fact, having accurate medical records regarding injuries before a workplace injury occurred is just as essential as securing medical records following the injury.

When examining medical evidence, you’ll need to determine if medical records back up a claimant’s physical grievances pertaining to an injury at work. Another consideration is deciding if the medical records provide facts that aren’t consistent with how the injured employee looks or behaves. Check to see if the claimant has a history of changing doctors after being released to go back to work. Additionally, determine if the claimant has received treatment in the past for the injured area of his or her body.

Failing to Conduct a Thorough Investigation

A huge workers’ comp mistake is failing to do a thorough investigation or procrastinating in starting it. A methodical investigation needs to begin on a workers’ comp claim as soon as possible. The investigation should include facts, such as:

  • An employee’s full name. In the case of an injured female employee, the maiden name should also be noted.
  • Include any nicknames or previous names.
  • A current address, besides an employee’s previous address
  • All phone numbers
  • Social Security number
  • Drivers’ license number
  • Vehicle information, including make, model and year
  • The injured body part
  • Source of the injury, such as a slippery floor or a machine
  • The date and specific time of the injury, in addition to the date and time the injury was reported
  • Any witnesses to the accident, including their phone numbers, emails, and other contact information

Being Unprepared for a Hearing

Not being prepared for a possible hearing is another big mistake some small business owners make. Just because an injured employee doesn’t submit a particular form or retain legal counsel doesn’t mean there won’t be a hearing. Thus, it’s important you be prepared for a hearing. Keep in mind that a hearing officer needs detailed proof that’s reliable.

How a PEO Can Help with Workers’ Comp Claims

Having to manage and process workers’ compensation claims can be time-consuming and stressful. As a result, it can affect work productivity. However, this doesn’t have to be the case when a PEO (Personal Employee Organization) does the job. Not having to handle workers’ comp claims is only one benefit of hiring a PEO for your small business. These professionals can make running your small business easier, so you have more time to invest in your small business. Some of their many duties include:

  • Making improvements in workplace safety
  • Scheduling employees’ vacations
  • HR solutions
  • Compliance support
  • Commercial insurance
  • Handling payroll
  • Managing paperwork and performing other valuable services

You can do a better job of managing your business when you have a PEO on your team. Our Harbor America workers’ compensation specialists are there when you need them, providing efficient and quick claim services for both you and your workers, being sure they get the needed benefits and care they deserve. We serve small to mid-sized business owners in construction industries as well as other blue-collar industries. Please contact us for a free consultation.