Insurance data shows jump in fraudulent claims linked to recession

The economic downturn is driving companies and employees to commit workers' compensation insurance fraud, according to a report.

While there has been considerable speculation within the insurance industry that money woes have led some businesses and employees to break the law, experts said that there has been no solid statistical evidence to back up that belief. However, new data from the National Insurance Crime Bureau uncovered an increase in the number of questionable claims related to possible cases of insurance fraud during the past year as the economy continued its downward spiral.

An analysis of questionable claims submitted by more than 1,000 NICB member companies in the first quarter of 2009 found that cases of workers' comp premium fraud increased 71 percent from reported incidents during the first quarter of last year. Researchers also found that questionable claims related to disability have risen 47 percent and incidents of injured employees working other jobs while collecting comp benefits have jumped 41 percent.

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"The NICB's report is in line with much of the data andanecdotal information we've gathered from our insurer members and other sources," said Dennis Jay, executive director of the Coalition Against Insurance Fraud. "The poor economy may be driving normally good people to do bad things. Hard-core insurance criminals also have more opportunity to entice normally honest people into their fraudulent schemes."

According to insurance experts, some employees who fear losing their jobs may see collecting workers' comp benefits as a desirable alternative to receiving unemployment benefits.

"Desperate times sometimes cause people to take desperate measures," said Joe Wehrle, president and CEO of the NICB. "Unfortunately, committing insurance fraud is not the solution to anyone's problems -- it only leads to more problems if you're caught."

Look for red flags. Businesses should closely examine reports of injuries during these turbulent economic times. According to the Ohio Bureau of Workers' Compensation, employers should look for the following fraud red flags:

Accident/incident occurs immediately prior to strike, layoff, plant closing, job termination or job completion.
Injured worker is in line for early retirement.
Injured worker refuses or delays multiple times diagnostic procedures to confirm injury.
Conflicting descriptions of the accident/incident between employer's report and initial medical evaluation.
Injury is not consistent with nature of business.
Date, time and place of accident are unknown.
Injured worker cannot recall specific details about the injury.
Report of injury not timely and immediate.
No witnesses to accident.

May 21, 2009

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