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Every state battles fraud and abuse of its Workers Compensation system. Even though you use Worker Comp to protect your employees and keep your premises safe, you might well end up paying higher premiums because other firms, employees, and medical providers have no compunction about cheating the system through fraud and abuse.

Workers Comp fraud involves such criminal acts as workers falsifying claims, employers misclassifying high-risk workers with less dangerous jobs to lower their premiums, and physicians exaggerating injuries and their treatment and overbilling insurance companies for expensive services never rendered. Fraud has led a number of states to pass legislation simplifying the prosecution of offenders. On the judicial front, some states provide insurance companies with immunity from lawsuits if they report Workers Comp violators. On the downside, insurers need to tread cautiously because a firm wrongfully accused of fraud has legal recourse after a false report or misleading statement.

Unlike fraud, Workers Comp abuse isn’t a felony, although it also increases premiums for everybody. Usually, this misuse of benefits involves a worker who uses unnecessary medical services, remains away from work after their injury has healed, or reports an off-hours injury as happening on the job.

According to a recent Insurance Research Council survey, more than one in four workers (28%) believe that padding Comp claims is justified to recover the policy premium, which they aren’t even responsible for paying! Insurance companies have trouble detecting this common abuse, especially when they’re up against a stress or soft-tissue injury, because there are few if any physical symptoms. This attitude among workers might be an extension of the belief that claims-padding on policyholders’ Personal insurance coverages (Auto or Homeowners) is simply a way of getting their money’s worth from their premium.

As a business owner or manager, you can help curb Workers Comp fraud and abuse and keep your premiums under control by:

• Screening out potential abuses when you recruit employees and assign jobs.
• Developing close, mutually respectful relationships with your workers to minimize any grudges against management that might encourage abuse.
• Keeping close tabs on potential abuses of the system.

We’d be happy to work with you in reaching these goals. Just give us a call.

Any business owner knows that sound risk management provides a foundation on which to base all other operation strategies — and a great way to reduce accidents and injuries and lower its Comp premiums.

Because this is such an important topic, here are the seven essential benefits of a risk management program, as detailed by The National Alliance for Insurance Education & Research:

1. Reduced cost of accidents
2. Providing adequate protection
3. Economy of operations
4. Integration of safety plans
5. Reduced risk of criminal liability
6. Ability to plan and budget more effectively
7. A clearer focus on the big picture

If you hire someone to oversee risk management within your company, the Alliance recommends that they: Develop and communicate risk-management policies; prepare recommendations and reports; conduct risk-identification surveys; analyze and measure exposures; review leases and contracts; coordinate compliance with regulations; implement risk-control programs; investigate accidents; manage claims and litigation; arrange risk financing (including insurance); establish retention programs; determine and allocate cost of risk; and monitor results.

This is only one perspective on risk management. We’d like to review your company’s risk management program, as well as your Workers Comp coverage, at your earliest convenience.

Safety was a major reason for the development of an Employee Assistance Program (EAP) at Chamberlain, a paving contractor in Laurel, MD that specializes in parking lot maintenance. During a three-year period, the company’s increases in Workers Compensation and Commercial General Liability exceeded 100%. By implementing a Safety Awareness Program, the company saw an immediate and significant decrease in the frequency of Workers Comp claims and vehicular accidents.

Because Chamberlain’s heavy equipment and trucks travel daily on interstate highways around metropolitan Washington D.C., the owners implemented an alcohol and drug policy. A local consulting firm helped develop this policy by working with the company’s human resource advisory group. The process included meetings with workers to explain the rationale for the new policy and provide an opportunity for employee input.

During these meetings, it became clear that designing an alcohol and drug policy would not magically solve all the negative effects associated with these behaviors. Employees needed a mechanism to deal with personal problems so that they could find help, take a leave of absence to deal with their problems, and then return to the company and improve their productivity.

The consultant recommended that Chamberlain use a qualified provider to implement and manage an Employee Assistance Program (EAP). This firm leads quarterly training sessions for all employees and counseling on family, financial, and other problems, in addition to those related to alcohol and drugs. Each year, a significant percentage of the Chamberlain’s work force seeks help from the EAP counselor, which shows the confidence of employees in this program.

The company supplements its EAP with a drug testing program managed by a separate organization that does drug testing before employment, after accidents, when there’s probable cause, and on a random monthly basis.

Since implementing the EAP and the drug testing program, the company has enjoyed a significant decrease in job-related injuries and accidents, absenteeism, and tardiness — while reducing its Workers Comp premiums by some $50,000 a year. Chamberlain is also benefiting from an improved quality of workmanship, greater customer satisfaction, and higher employee morale. What’s not to like?