Vendor scams, also known as medical and service scams, are the least known kind of workers’ compensation fraud. They can be just as costly as employee fraud, though – but harder to uncover.
Punishable as a criminal act in many states, workers’ compensation vendor fraud comes most often in the form of a claim, submitted by a healthcare provider for unnecessary medical treatment, or treatment that wasn’t actually provided.
While not as common as employee and employer workers’ compensation fraud, vendor fraud typically makes front page headlines because the perpetrator is a prominent doctor or lawyer who has provided injured workers with medical care or professional services.
Visible patterns of vendor fraud may include the following common threads:
- Unusual treatments
- Higher than typical costs
- The same doctor or attorney may treat or represent multiple injured employees
- Unnecessary treatment or testing (i.e. 20 therapy visits instead of the typical five, an unnecessary MRI)
- An unwitnessed accident
- Misrepresentation of the claim code for medical treatment provided by the physician
- Duplicate bills
- Unnecessary medical services bundled with necessary ones
As you can see, vendor fraud isn’t limited to scenarios that provide personal financial gain for the vendor only. In some cases, vendors and employees partner together to scam the employer or workers’ compensation policy carrier. While the vendor may experience financial gain, the employee may gain other benefits, including paid time off, a modified work schedule and more.
Keep workers on the job and minimize fraud
While the vast majority of workers’ compensation claims are legit, as many as 1 to 2 percent are fraudulent, costing as much as $6 to $7 billion of the estimated $60 billion in workers’ compensation paid out annually. Here are a few steps you can take to prevent workers’ compensation vendor fraud.
- Hire well. This may be easier said than done, but consider a thorough screening of each employee before hire to minimize the potential for fraud. Don’t forget to check references at prior employment.
- Pay attention. Don’t just turn over workers’ compensation claims to your carrier to deal with. Investigate the details and consider your options. Look for the red flags and visible patterns.
- Work together. Forge partnerships with fair doctors you already trust and make it easier for your injured employees to use their care. Partner with your assigned insurance adjuster to make sure the employee gets the appropriate treatment so they can return to the job sooner rather than later.
- Treat employees like members of the family. A happy worker is less likely to defraud the system. Keep honest employees honest by treating them well both before and after an injury. When out on workers’ compensation this could include: having a viable return to work program and formal post-injury management program and keeping the employee in the loop through phone calls or emails from peers and managers when out on disability.
- Partner with the right brokers and carriers. Insurance carriers are developing predictive modeling software to better identify fraud, red flags and specific claims patterns. Consider this and other ways to partner with carriers.
Contact your HUB broker and risk services specialist to ensure you’re properly covered, and that you’re taking the right steps now to prevent workers’ compensation fraud of all types, at all levels of your organization.