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Insurance companies mobilize to identify comp frauds in an attempt to stop the increase in suspicious claims



Fraud investigations are triggered by red flags in a workers’ compensation claim, and the examples span the entire scale.

No witnesses to the employee’s alleged injury; the time of reporting the claim, for example immediately after the weekend; an employee who has frequent or repeated injuries; inconsistent medical treatment or injury claims; or the place where the incident occurred, are just a few examples of what can arouse suspicion.

Fraud experts say employers and their insurers have cause for concern: Workers paying for fraud cost insurers and employers more than $ 1 billion annually, and that figure is expected to rise, according to the National Insurance Crime Bureau.

Although many companies are moving to teleworking due to the covid-1

9 pandemic, the NICB said it has seen an increase in the number of employee referrals to fraud over the past two years.

The agency noted that the increase may be an indication of the opportunistic nature of workers’ allegations of fraud and the state of the economy. Workers who have been laid off due to the pandemic have hired lawyers and filed dubious workers for injuries not previously reported to their employers, or workers who have succeeded in previous claims could become “recidivists,” the NICB said.

“Compensation for employees is one of the many layers of fraud that exist, resulting in increased costs for insurers, increased costs for premiums and inadvertent exposure of honest employees to risks,” said NICB President and CEO David Glawe.

Insurance companies invest significant resources each year, both in internal and external personnel and technology, to identify and investigate fraudulent employees’ claims for damages.

Fraudulent claims by workers, which are the most common types of compensation fraud, usually involve employees with an existing injury claiming benefits, these inaccurate facts about a claim, false or exaggerated injuries, false loss reports, fictitious losses and individuals still working or earning income while claiming compensatory benefits.

Jennifer Langan, Vice President and Head of Liability for Missouri Employers Mutual Insurance Co. in Columbia, Missouri, said the company is investigating every claim on workers before determining that a loss should be compensated to exclude potential fraudulent activities.

In Missouri, about 10% of workers’ claims turn out to be fraudulent, she said.

If a damage investigation reveals any suspicious allegations, Langan said the company’s special investigation unit will be brought in to investigate further.

“Obviously, fraud affects everyone and it drives up the total claim cost, so we really try to make sure we do our due diligence for our policyholders and our agencies,” she said.

Bill Byington, MEM’s senior specialist investigation unit specialist, oversees workers’ fraud investigations for the company and, where applicable, refers his investigations to the state prosecutor’s office for further action.

The cost of investigating allegations of fraud by workers varies widely, he said, as there may be different components involved in each investigation, such as surveillance, lawsuits, deposits, medical reviews and legal reviews. Some allegations can easily be proven to be fraudulent and denied at no great cost. Other allegations may be “partially fraudulent,” he said. Byington, for example when an employee is injured at work and receives compensation benefits but then also earns income from a side job.

“If it is clear at an early stage that we can prove beyond a reasonable doubt that this was a fraudulent file and proceed with the rejection as soon as possible, it is the best result we can hope for from a fraudulent aspect,” said Mr. Byington.

If a claim is judged to be fraudulent, MEM cooperates with the employer to prevent the problem from occurring in the future, Langan said.

Tony Natale III, supervisor of Philadelphia-based law firm Marshall Dennehey’s Workers ‘Compensation Division, has spent more than 30 years defending insurers and employers in work injury compensation cases, with a variety of cases that have included a variety of federal and workers’ cases for NHL and NBA.

In 99% of the cases referred to him by insurance companies, there is an element of fraud, said Mr. Natale, whether it is an employee who exaggerated his injury or a claim for an injury that did not occur at work.

Mr Natale said insurance companies had been more proactive in investigating fraud claims over the past 10 years, but were more hesitant to take further legal action when fraud was involved. It can be challenging and expensive to prosecute fraud claims because it must be proven that the plaintiff acted with intent to defraud, he said. Companies often decide that it is more cost-effective to decide the case and close the case.

“You have to look at the whole picture – even if we can prove (there are scams), we will pay benefits for several years before we get this person out of insurance, in exchange for me being content with one year of benefits today,” he said. sa. “(But) just because we decided this case to stop the bleeding does not mean that fraud is not there.”

Mr Natale said the industry should work with lawyers to take a stand and fight fraud as it will make a difference in the number of overall fraud allegations.

Technology companies offer products to identify workers as scams.

Klear.ai in Cypress, California, has developed predictive analytics software that uses artificial intelligence to scan for potentially problematic claims.

Klear.ai said its model’s algorithm lists more than 40 red flags indicating potential fraud, including demographic and employment details, salaries, number of claims filed over the past three years and other behavioral markers. Adjusters can then examine the identified claims.

Anand Shirur, vice president of product development for Klear.ai, said that the company mainly works with the insurance companies’ claims team. The growing sophistication of fraud systems and the industry’s talent gap, which will make it harder to find experienced adjusters skilled in detecting fraud, will increase the need for fraud techniques, he said.

“We have every reason to believe that technology will play an even more important role in the future in identifying and detecting fraud,” he said.


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