Inappropriate claims are one the biggest driving costs of workers compensation increases. Up to 25 percent of all filings may have some form of fraud. There are many possible causes, including misunderstandings, miscommunication, cost shifting from a non-occupational health care plan, employee resentment, non-efficient service providers, and outright fraud. The National Insurance Crime Bureau estimates that workers’ compensation fraud costs alone are in the billions. So in return, this cost is billed back to the employers in the form of billion dollar premiums.
Workers’ compensation laws are working against the employers. The laws are creating insensible incentives. The longer an injured employee is out of work, the more likely they will ride it out for a cash settlement. Even the small injuries that should only have the worker out for two or three days can be stretched into two or three weeks, or even more! Every workers’ compensation guideline has a waiting period. Typically, it runs about three to seven days before an injured employee becomes entitled to indemnification for lost wages. It can often be done on a retroactive basis to day one of the claim. For many low paid workers the “tax free” wage alternative is an acceptable lifestyle.
Health care providers are also helping pave the way for fraud and inappropriate claims. Workers’ compensation started as an agreement between employers and employees. This agreement was to help the courts not be weighed down with claim upon claim. But now it has become a three party triangle. California has had an adverse impact due to the third party involvement. It is not the amount paid per visit; it is the number of visits per claim. Overusing medical services causes the employer to foot the bill, but employees suffer as well. The longer they stay out of work there are several psychological changes that start to develop. They start to perceive themselves as disabled and it becomes harder for them to re-establish the discipline of going to work every day for eight hours. Ultimately, employees could have to take lower wages due to employers’ increased work comp costs.
Staying involved in all of your cases may be difficult. But, the rewards of developing a safety plan, Health and Wellness Rooms, early return to work programs and an aggressive approach towards work comp fraud can help save your company money during these rough economic times.