Every day, we speak with hundreds of business owners that have been burnt by the workers’ compensation system.
It’s not that they’re angry about what the system stands for. The majority will go the extra mile to make sure their employees are taken of. It’s not because they must spend hours of their precious time or go through seemingly endless amounts of paperwork to make sure they are insured correctly. They generally don’t even think about that. They aren’t even bothered by the fact that they practically need to go to night school to understand the insurance side of their business.
The straw that breaks the camel’s back, time and time again, is the fact that the system that they are legally required to be a part of has essentially become legal fraud.
We hear stories every day about employees who, for whatever reason, decide to file a workers’ comp claim for a not-quite-true injury that ends up lasting for months and ultimately costing the employer thousands upon thousands of dollars and more than a few nights of sleep. On top of that, the employers who attempt to fight these type of claims often feel absolutely helpless due to insurance carriers and court systems that seem indifferent at best.
But here’s the real problem: Most business owners that I speak to would say that that’s the extent of the fraud when, in reality, that’s just the tip of the iceberg.
Employees aren’t the only ones incentivized to make claims look worse than they really are. Everyone who gets involved stands to benefit. Lawyers, TPAs, brokers, and even (and this may sound odd) insurance companies walk away richer when claims costs are inflated.
Just a few days ago, an article was released by InsuranceJournal.com titled “California DIR Suspends 7 Workers’ Comp Medical Providers for Fraud” which details the abuses of several medical professionals taking advantage of the system in Southern California (For the full article click here). Their abuses range from mail fraud to referral kickback schemes which made them (and more importantly, cost employers) millions of dollars. The bright side is that the system recognizes that this can’t be allowed, but it’s important to understand that it’s much more common than anyone wants to admit.
Doctors know that workers’ comp claims can essentially be treated as a blank check. While the majority of doctors wouldn’t abuse the system for personal gain, some will, and if they do, a claim that should be small can rack up an enormous bill in no time.
Again, we’re not trying to say that your doctor or broker or employee or anyone is looking to use and abuse the system, but it’s important to be aware of what can happen.
So, why are we going through all this? Are we just trying to make you paranoid around anyone involved in insurance? Is everyone out to get you?
Well, No. At least, we hope not.
It’s never fun to get bad news, but if you don’t know the potential problems and pitfalls of the workers’ comp system, you can’t plan effectively to fix or avoid them.
Okay, then what are you supposed to do? How do you make the system work the way it was designed to?
The answer is simple: build a relationship of trust with someone who is equipped to manage your potential claims from start to finish and who doesn’t stand to gain when the claims get worse. Whether that partnership is with someone within your business or an outside arrangement (I’m talking about Whiteboard by the way *wink*wink*), it’s essential that you find a team with the appropriate time commitment and skillset to actively manage these situations. Without someone like that in place, you leave your business open to being taken advantage of.
Bottom-line: Fraud is an ever-present reality in the workers’ comp system, but you can put roadblocks in place to minimize the fall-out and protect your business.