Suppose that one of the employees at your organization submits a workers’ compensation claim. Since the claim will often be covered by insurance, you might consider this to be a relatively minor nuisance. But it may turn into a nightmare if the claim is fraudulent.

Despite some recent improvements, the current workers’ compensation system has enabled unscrupulous employees to fake injuries. Furthermore, the fact that money paid under workers’ compensation acts is exempt from federal income tax can create an even greater incentive for fraud. That is one of the reasons why the cost of workers’ compensation insurance has significantly escalated in recent years.

Action idea: Protect your entity from fraudulent claims. You may be able to head off potential problems with a few basic precautions.

Although every entity’s situation is somewhat different, here are several practical suggestions that will generally apply.

• Start by taking an active interest in the claims that are made. Investigate all reports of injury thoroughly. Talk to coworkers who may have witnessed the incident. Do not hesitate to ask questions.
• If your investigations show a pattern of injuries in a particular place at particular times involving particular employees, look for ways to improve working conditions.
• Scrutinize all medical bills. The most common method of fraud in this area is double billing. Be sure that all bills have dates of treatment and specific descriptions of services rendered.
• Ask the insurance company to investigate claimants’ past medical history and any prior claims. For instance, an employee’s driving record often will reveal past accidents that may have permanently injured the employee.
• Similarly, you might have the insurance company or a private investigator look into whether the employee works anywhere else. Does he or she moonlight as a security guard or store clerk while claiming to be too injured to work? Some employees have even been caught collecting unemployment benefits and workers’ compensation at the same time.

There are many ingenious schemes for cheating at the workers’ compensation game. Undoubtedly, you cannot stop them all. But if you take the cheating seriously - if you think of the money as coming out of your own pocket - you can reduce the problem and send a message to would-be cheaters.

Action idea: If an investigation uncovers illegal acts, contact an attorney to determine whether a legal cause of action exists. Furthermore, your professional advisers may be able to help you avoid unwarranted increases in your insurance premiums.

At Lewis, Hooper & Dick, LLC, we offer comprehensive services in human resources. Please contact David Lunzmann at (620)275-9267.

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