Storm & Security

the employer is concerned that the employee has a complete recovery from his injury. An additional benefit might be the employee not sitting at home watching advertisements from attorneys offering to sue the employer because of the job-related injury. Fraud Workers' compensation claim fraud includes instances in which employees falsify or misrepresent workplace injuries to collect benefits for which they are not entitled. Fraud may be in the form of a completely false injury, a legitimate hurt sustained while away from the job, "Monday Morning Effect", or a legitimate injury sustained at work but embellished or expanded to avoid returning to work. In 1989, a study on work-related injuries report- ed by the employee documented what is commonly referred to as the "Monday Morning Effect." The study observed that sprains and strains were more likely to occur on Mondays while more visible injuries with clearer causation were no more likely to occur on Mondays than on other days of the week. This evidence suggests that workers might suffer strains or sprains during the weekend, but report them on Mondays in order to receive workers' compensation benefits. Workers' compensation claim fraud remains one of the insurance industry's biggest problems. During fiscal year 2008-2009, the California Department of Insurance identified and reported 5,174 suspected fraudulent workers' compensation claims, assigned 539 new cases, made 218 arrests and referred 327 sub- missions to prosecuting authorities. According to the department, the potential loss amounted to more than $205 million during that timeframe in California alone. The Coalition Against Insurance Fraud (CAIF) estimates that workers' compensation insurance fraud costs insurers and employers $6 billion a year. The National Insurance Crime Bureau (NICB) estimates that 10 percent, or $1 out of every $10, of the money spent on premiums to cover legitimate work-related injuries is lost due to workers' compensation fraud. Many insurance consultants recommend that businesses use the following steps to help contest workers' compensation fraud: • Examine an employment candidate's work history, background and references carefully. Look for, question and verify gaps in employment or frequent job changes. • Educate your employees about the cost and impact of workers' compensation insurance on the business. • Educate managers and supervisor on accident procedures and claim policies. • Take complaints from your employees about working conditions seriously and do what you can to address them. Disgruntled employees are a major source of workers' compensation fraud. Involve employees in the implementation of safety management and loss control programs. • Lastly, report injuries promptly. Multiple studies have shown that the longer an employee's injury goes unaddressed, the more likely the employee will become agitated or adversarial. If an employ- ee feels as if his or her wound isn't being taken seriously, there is a strong chance he will seek an attorney, which will increase the cost of a claim. In 2009, 83 percent of all claims in excess of $10,000 resulted in lost time payments to the employee. Why is this significant? In Florida, anytime an employee misses more than seven days of work your worker's compensation insurance begins making lost wage payments. Ultimately, these payments, regardless of the cost, negatively impact future insurance premiums for years to come. Don Leggett Jr., AAI, is a nationally accredited advisor on insurance. He is Managing Partner of Advanced Risk Management. Inc., an insurance consulting firm based in Tampa FL. PEOPLE IN THE KNOW 2014 / STORM & SECURITY PROTECTION 17

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