As a business owner, you want to protect your employees and your bottom line. While workers’ compensation is intended to provide peace of mind, you always run the risk of someone trying to take advantage of the system. As we explore in more detail the red flags of workers’ compensation claims, ensure your operation is protected with a Texas Workers’ Compensation Insurance program.

Types of workers’ compensation fraud.

As a responsible employer, it’s important to be informed and precise when it comes to your employees, their roles, and how to go about workers’ compensation claims in order to prevent contributing to fraud rather than preventing it, even inadvertently. The three basic types of insurance fraud are as follows:

• Underreporting payroll – According to Property Casualty 360, this occurs when a policyholder fails to accurately report their entire work staff to the insurance company, often by paying employees off the books or presenting employees as sub-contractors or independent contractors versus actual employees of the company.
• Employee misclassification – When an employee who is considered “high-risk,” such as a construction worker, is misclassified as someone who is less risky, such as having an office job, this is considered fraud.
• Experience modification evasion – This occurs when a company closes and then attempts to re-emerge as a new company on paper in order to obtain a lower experience modification factor, but the new business is actually unchanged from the original business.

Recognizing fraud.

In our previous article, we discussed some of the common red flags to watch out for. Here are some major indicators that there might be something dishonest about your employee’s claim.

• Requesting specific providers – If your injured employee requests the aid of specific doctors or lawyers, especially those who have a history of dealing with groups of claimants, this could indicate fraud.
• Hard to reach – The injured employee is difficult to reach at home, even though they are supposed to be recovering from an injury.
• Too many changes – The employee in question has a history of changing jobs, addresses, and phone numbers frequently.

About Preferred Insurance

At Preferred Insurance, we specialize in providing quality insurance solutions that are tailored to your specific needs. We pride ourselves on working with you to give you the coverage you need at a price you can afford. For more information about our business line products and services, contact our experts today at (877) 547-4461.