As fraudulent claims become a bigger problem in California, companies and organizations must find new strategies to discourage them from ever being filed. All the emphasis today seems to be on finding ways to challenge and combat them; to deny benefits and trust the courts and the insurance companies to do the right thing. It’s a losing strategy.
The only effective way to minimize fraudulent claims is to prevent them from ever being filed in the first place. Since we have no way to impose our values, we must find ways to convince our workers to embrace those values; chief among them being honesty.
Just as we know that it’s the culture that has the greatest impact on behavior, and ultimately the number of injuries, we should also know that a strong culture can have the same impact on honesty. What we need to do is tie the two together. We can’t have a safety culture that doesn’t have honesty as part of that culture. And we can’t have a culture that values honesty that doesn’t value safe behavior. When we are investigating an injury we need candor and honesty from the person involved and any persons who witnessed the accident, so in every training and every meeting where we engage the workforce in the importance of safe behavior, we also need to reinforce the message that part of safe behavior is honesty. Our goal is to have the workforce take pride in their safety record, and since claims are part of that safety record, fraudulent claims inflict as much harm as legitimate injuries.
Every employee wants to know that the company values their safety, and they also want to know that they are working for a company that treats them with honesty and respect, and expects the same back from every worker. By making honesty a key component of the safety culture, you bring out the best in people, and enlist their support in encouraging others to be both safe and honest.
Whose responsibility is it to control the cost of workers’ compensation? The Safety Manager? The Human Resource Manager? The CFO? Or is it the responsibility of the Owner, General Manager, or CEO? It’s a missed opportunity if the leader of the organization doesn’t take advantage of his position to impact all the factors that affect the ultimate cost of workers’ compensation to his business. Nobody is in a better position to establish that safety is the highest priority in the company.
There’s another factor at play these days that makes it imperative that the Boss steps up: fraud. Fraudulent claims are particularly expensive, as they are often litigated. Whether the claim happened away from work but is being reported as if it happened at work, or is a phantom injury that never occurred, or is the exaggeration of a small injury, these claims have nothing to do with safety training and OSHA compliance. They have everything to do with the culture of the organization, and no one is in a better position to establish and reinforce the culture than the owner, GM, or CEO. While it may be an uncomfortable talk to give, when the highest ranking officer in the company addresses the issue of fraud with the current workforce, and with every new employee, it establishes that honesty is as important as safety, and when honesty is embraced as a company value, not only do fraudulent claims go down, but the entire culture is stronger. The result is always positive, because a stronger culture produces fewer claims and reduces workers’ compensation costs.
How much-or how little- should you tell a new employee about workers’ compensation insurance?
Some employers believe that the more an employee understands how workers’ comp works, the more likely they are to realize that fraud is easily perpetrated. The more likely they are to realize that there is an opportunity to turn an injury that happened away from work, where they will have to pay for treatment, into one that happened at work, where they pay nothing.
There is an undeniable truth to that. However, ignorance is not bliss, and it is better to provide full information on the workers’ compensation system. Informing workers on why the system exists, and how the system protects them, is an opportunity to promote your commitment to their safety, and to their health and well-being. Explaining how workers’ comp insurance protects them, also allows you the opportunity to cover the importance of honesty, of full disclosure on how an accident happened, and on the importance of reporting an injury immediately, so that medical treatment can be provided expediently.
This full discussion also affords you the opportunity to emphasize that workers’ comp fraud will not be tolerated, and that any questionable report of an injury will be investigated. Companies that have the greatest success in deterring fraudulent claims are those that set expectations immediately with every new employee. We recommend that this should be part of the on- boarding process. Discouraging even one fraudulent claim provides the company with a significant financial benefit, and is worth a thoughtful approach to how you cover this challenging subject.
As you make plans for a safer year in 2017, remember that safety has two distinct parts. The first part serves as the foundation: comprehensive safety training for every employee, and full OSHA compliance.
The second part is the greater determinant of injuries and claims: BEHAVIOR.
A company can do everything right in making the workplace safe and ensuring that everyone is well-trained, but still suffer too many injuries. The attitude of the workforce towards safety, honesty, and integrity is what makes the difference. An acceptance of careless accidents, or occasional risk-taking, produces a different result than an attitude where the workforce takes pride in doing their job the right way and staying injury free. To create a sense of pride, find a way to get workers fully engaged in your safety program. Engaging the workforce, and turning it into their safety program creates a sense of ownership, and ownership is the ultimate key to safety.
Not for the first time, OSHA has it absolutely backwards with their new policy on drug testing in the workplace. Their emphasis on reporting injuries supersedes what should be their priority, preventing injuries.
OSHA no longer permits mandatory drug testing after an accident. Here’s what OSHA’s commentary on May 12, 2016 says about an employer’s right to have a policy that requires drug testing after a workplace accident: Although drug testing of employees may be a reasonable workplace policy, it is often perceived as an invasion of privacy. Drug testing policies should limit post incident testing to situations in which employee drug use is likely to have contributed to the incident and for which the drug test can accurately identify impairment caused by drug use. Employers who continue to have a policy of mandatory drug testing after an accident will face penalties and additional enforcement scrutiny.
OSHA has the legitimate goal of having all incidents and injuries reported. Employers already want to do this because treating an injury as soon as it happens often minimizes the pain and suffering, and can keep a minor injury from getting much worse. Think of treating a cut immediately as opposed to ignoring it and running the risk of an infection. In their zeal to remove all potential deterrents to the reporting of an injury, they have unwittingly opened the door to more injuries.
Common sense and experience tell us that when a workforce knows that there is no mandatory drug testing, there is a greater likelihood of drug use. Knowing that the company has a policy of drug testing after every accident acts as a legitimate deterrent, for the good of everyone. A workplace depends on safe behavior, and it is far more likely that unsafe decisions will be made when reasoning and concentration are impaired. A high percentage of accidents happen due to carelessness and workers not paying attention to the tasks at hand. Again, this is far more likely when drugs are involved. Accidents are not limited to the person whose unsafe behavior is the cause; serious accidents often involve more than one person so the safety of others in the workforce is at risk when there is no deterrent to drug use.
Here is the bottom line: Instead of protecting employers and the people who work for them, OSHA’s new directive protects drug users. Establishing a policy of mandatory drug testing serves the interest of everyone in the company. Limiting the company’s ability to drug test protects only the offenders, at the expense of everyone else.
Workers’ compensation fraud has changed from an annoyance to a problem, to a cancer. A combination of factors have paved the way for this change.
One of the most disturbing of these factors relates to the culture in today’s American society. Surveys indicate that a majority of people think that it is acceptable to cheat an insurance company; it’s impersonal and nobody really loses except that big, faceless Corporation. Applicant attorneys and their cappers reinforce this notion by telling the injured worker that it’s not his employer that will be penalized, but only the insurance company. This is, of course, false.
How does the company prevent workers’ compensation fraud?
Begin by addressing the problem outlined above. Tell your workforce who pays for their insurance. Start by making sure they understand that when they are injured at work you pay 100% of their medical expenses, including follow up visits and then any recommended treatments. That’s not only your obligation but also something you want to do because you value their safety above everything else. Then, let them know that the workers’ compensation insurance used to treat their injuries works very similar to automobile insurance; every injury increases the rates and you ultimately pay more than dollar for dollar with every medical treatment. Reinforce the notion that you are glad to do this whenever there is an injury, but your goal (and the goal of everyone who works for you) is to have an injury-free workplace, where safety is the highest priority. Employee fraud prevention starts with an understanding of how the workers’ compensation system works.
A good fraud prevention program reinforces the importance of honesty as an equal partner to safety. When an injury occurs, there needs to be full disclosure of exactly how it happened so that this type of injury is more easily prevented in the future. The injured worker must be honest, as do any workers who were witness to the injury. Employee hotlines have proven to be effective in discouraging the filing of a fraudulent claim. Planting the seeds of doubt in the mind of a potential fraudulent claim filer, can be a very effective deterrent.
Where To Begin?
The first place to stop workers’ compensation fraud is in the on-boarding process. Very few companies address the situation with new employees, and it is a missed opportunity. Let the new worker know what the company’s priorities and core values are. Safety and honesty serve as the foundation to a successful safety culture, and that should be stressed to every new employee. Some companies use customized videos to deliver the message that fraud will not be tolerated. Videos can be effective when covering a subject that might be uncomfortable for human resources.
Finally, to prevent workers’ compensation fraud, make your position visible. Discuss the importance of honesty in meetings and with signs and posters. Celebrate injury free months, and discuss openly all reported injuries. Shining a spotlight on all injuries lets everyone know that a fraudulent claim will not go unnoticed.