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R-E-S-P-E-C-T May Help Prevent Fraud and Malingering

Just a little bit of respect motivates workers to get back to work.

Perhaps the best strategy for preventing malingering is also the simplest: treat your
employees with respect. According to Kirk Hansen, a workers’ compensation specialist
with the Alliance of American Insurers, an attitude of respect towards employees may do
more to prevent malingering than a phalanx of fraud investigators.

“One of the biggest errors employers make,” Hansen stated, “is to assume that employees
are dishonest. That can become a self-fulfilling prophecy when someone is treated as a
malingerer from the outset. That may create an employee with a bad attitude.”

For that reason, he cautioned employers against harassing employees who file workers’
comp claims. While employers need to be vigilant to spot fraud and malingering, there is
a difference between a vigilant attitude and an antagonistic or confrontational attitude.

The difference of course is but is only the foundation. As Hansen pointed out, the
employer must adopt specific policies in its workers’ compensation program to
effectively discourage fraud and malingering. What follows is an outline of some of the
policies he recommended.

1. Screen employees before hiring. “The employer should know as much as it can
before hiring,” Hansen stated. This policy should include checking references and
verifying the information on employment applications.

2. Standardize accident reporting. Employers should establish a standard accident

reporting procedure. All employees should sign a form acknowledging their obligation to
report any injuries immediately and informing employees of whom to notify in case of an

3. Investigate all accidents. Should the employer conduct a separate investigation, apart
from its insurer? Absolutely, said Hansen. “Insurance companies do the best job they can
with the resources they have,” he stated. “But no insurance company would not
appreciate or benefit from an investigation by the insured.” He noted that the employer
has unique opportunities that the insurer lacks-such as the potential to be at the accident
scene within minutes after an incident.

The employer should also designate a person in advance to be responsible for

investigations. Hansen noted that the decision depends on the particular employer. If an
HR person has expertise in this area, then the employer might want that person to conduct
the investigations. Whoever is chosen, the responsibilities should be set out in the
person’s job description, and proper training should be provided.
As a practical matter, Hansen advised that the internal investigator take photos of the
accident scene and diagram how the accident was caused. “With fraud, the worker’s
version of the accident tends to evolve,” he noted. For that reason, it is also important to
have the employee sign an accident report form that lays out the facts in detail, and the
form should be prepared and signed as soon as possible after the accident. The employer
could record the statement (notifying the employee in advance, of course), but it is
important to also put any statement in writing. Hansen cautioned against letting the
employee tell the story in narrative form (“They’ll say very little”); it is preferable to ask
a series of specific questions aimed at “yes” or “no” answers.

4. Direct the worker to a good physician. In many states, employers have the right to
select the initial physician, but they fail to exercise that right. Hansen urged employers to
direct the employee to a good physician who understands the goal of return to work.

Even if the employer doesn’t have that prerogative, the employer should still offer to help
the employee choose a physician. This gesture not only shows that the employer is
concerned about the employee’s welfare, but also ensures that the employee sees a doctor
who understands the return-to-work process. Hansen also recommended driving the
employee to the physician after the accident. “Employees want to be taken care of,” he
stated. “Take the opportunity to send them to a good physician.”

5. Have workers pick up benefits checks. Many employers fail to take advantage of a
golden opportunity: electing to have the insurer send the benefits checks to the employer
for re-distribution to the worker. Why would an employer want to do that?... to limit
opportunities to malinger or commit fraud.

As Hansen explained, when workers are obligated to come in to the workplace to pick up
their checks, the employer accomplishes two important objectives: It prevents employees
from becoming alienated from the workplace and limits opportunities to work second
jobs during their disability.

If the employee makes excuses and won’t come to the office, the employer should
consider that a “red flag” for fraud. Also, when the employee does come in, the employer
should pay attention to detail. Does the worker have grease on his hands? Is he having
trouble walking? Maybe he is limping while inside the office, but walking normally on
the way back to his car.

6. Conduct surveillance when appropriate. In most instances, the insurance company

would handle any investigation. But if the employer were self-insured, it should pay
particular attention to the red flags. If two or three red flags are raised by the claimant’s
behavior, then the self-insured employer should consider surveillance.

Hansen noted that employers should be aggressive in this area, even if 9 out of 10
attempts at surveillance fail. “The tenth try makes it worth it,” he remarked.

7. Get the word out on fraud. Hansen stated that people tend to tolerate workers’
compensation fraud more than other types of criminal behavior because they often fail to
recognize who pays for the fraud. Many people see it as a victimless crime, assuming that
the insurance company absorbs the cost of the fraud. The fact is, the insurance company
doesn’t absorb the cost; it passes it right back to the employer through higher premiums,
and the employer passes it back to the consumer through higher prices.

“The word is getting out,” Hansen stated. “Insurers have made progress in educating the
public that fraud doesn’t just hurt insurers, but everyone. When that word gets out, then
neighbors and other individuals won’t look the other way. They know that that person is
cheating society as a whole.”

While all of the above strategies should help minimize the incidence of fraud and
malingering, the most important is the element of respect. “Ninety-nine percent of
employees are honest,” Hansen emphasized. “They are not submitting a fraudulent claim.
Most want to get back to the workplace.”