An increase in the number of ‘questionable’ workers comp claims could spell bad news for producers, as they could be held liable for fraudulent workers’ comp claims.
According to a September report from the National Insurance Crime Bureau (NICB), the number of questionable workers’ comp claims is rising even as total claims are dropping. Over the past two-and-a-half years, the number of workers filing questionable claims rose from 3,474 to 4,460—a 28% increase. The NICB is expecting the number to increase again at the end of the year.
A claim is deemed questionable when NICB member insurance companies refer it for further review. According to Mike Tolland, a workers’ comp veteran of 35 years, a producers should make sure employers recognize when workers are trying to cut corners.
That level of diligence is particularly important as courts are hearing more cases against brokers sued for common law negligence and breach of fiduciary duty. As early as 1961, courts have held that brokers can be considered “professionals” and therefore assume heightened duties and responsibilities to clients.
In addition, “insurance carriers will conduct premium audits and call them on it,” adds Tolland.
“Most accounts aren’t going to have someone who’s well-versed in workers’ comp law, so they’re going to be pretty reliant on the broker to…intervene in claims situations,” said Tolland. “The most common way a broker can help is to make sure every claim is properly investigated. Teach the employer to look closely at claims, particularly ones in which the employer doesn’t think the accident was job-related or in the scope of employment. It’s the broker’s responsibility to make sure employers don’t play that game”
Brokers in Delaware and Maine should be particularly careful, as the NICB reported these two states ranked highest in number of fraudulent claims filed per 100,000 residents. Among cities, Chicago had the highest number of questionable claims in 2011, while Los Angeles took the dubious honor in 2012 and the first half of 2013.
The most common questionable workers’ comp claims over the two-and-a-half-year period included workers faking or exaggerating injuries, or filing for previous injuries or those that didn’t take place at work, the NICB said. Workers frequently claimed multiple benefits from different employers during this period as well.
