Friday, January 12, 2007

Workers Compensation Claims Question

"Bill" submits this question:

I am doing a sub contract job for a Private Investigator who has a client who is a business owner and has hired this P.I. to investigate some of his employee's workers compensation claims that the insurance company will not do. The goal is to get enough evidence for a criminal filing for insurance fraud if enough evidence can be found. The Private eye has been asked to act as a safety consultant" in order to have a pretext to talk to these employees about their cases. This PI has asked me for advice.

Although I told him I didn't feel this sounded either legal or ethical I've been in the business only a couple of years and there may be some information out there I'm not aware of. I'm not asking for legal advice but was hoping someone out there may have had a similar situation and could pass on some information.

Any advice or past experiences would be appreciated.

Here are some answers which were provided:

I don't know the legalities of it; but ethically it is the employer that gets the hit on his disability premium when the employees go out. It seems to me he has the right to get them checked out himself. If all else fails as "Safety Consultant", if your friend finds some blatant safety problems for the owner of the business and it helps him reduce the hazards all the better. -D.H.

You may want to have your friend read what the California Labor Code says about this. Insurance companies have an obligation to investigate fraudulent claims. The problem is that when an examiner has 800 open cases (that's not an exaggeration) sitting on his desk, the only way he learns of the fraud many times is when he gets a tip from the employer. Each insurance company is different. Some may take the information obtained from the employer and run with it. Others will not touch it because the chain of custody may be tainted. The insurance company is supposed to be looking out for the employer but everyone knows that in the end,....they're looking out for themselves and their exposure. Evidence obtained by the employer (or employer's PI) and given to a good worker's comp defense attorney will go a long way in getting the insurance carrier to step up to the plate and do the right thing. When looking at a large exposure, this may be well worth the effort. A few years ago a study was conducted that found for every $1.00 spent on investigations, $38.00 was saved on fraudulent/exaggerated workers' compensation insurance benefits. -B. V.

There wouldn't be a problem, unless the Claimants are represented by legal counsel. Your friend would also have to follow the insurance laws in your state; I would suggest he talk to a couple of local adjustors and risk managers. -S.H.


Anonymous said...

Hello. More on Worker's Comp fraud. We have a person who had worked only 12 hours (6 one day, and 6 the day she got "hurt"). We would not have hired her (commercial painters) as she could not do the job, she was on a "trial" all new people understand. However, we were on a job site, and she went into a dark bathroom when she was told not to...witnesses heard the boss say "Don't go in there, there isn't any light. I'll go get a light for you." The power was off in this room, we knew that as when she "fell" off the 2 step stepstool, we ran into the room and tried to turn on the lights...they were off (of course, we told her that). She claims that she was on the step stool painting (in the dark) and she was touched by a wire that was coming out of the wall (new construction...wires for the bathroom mirror lights) and she was "electrocuted" which startled her and she fell. The others checked this story out...and there wasn't any power to the bathroom. She fractured her ankle. We actually didn't hire her with signature until the next week with the W-2...and the boss paid her (in cash) for the week she was out...being told that it would be only a short term thing. It has escalated the neck, the shoulder, and into mental stress. It has been a year. She is receiving worker's comp. funds and our insurance went up 35% for this bogus claim. She has a record of having done this in North Carolina the last time she worked (the very last time she worked); she goes dancing and carrys groceries, walks the dogs, all of it...and meanwhile we are paying for someone that worked 12 hours and we weren't even going to hire her anyway. Because she was on our contract job...our worker's comp said we needed to claim her. They also acknowledge that she is a fraud, they know it, but they can't prove it...we are paying.
#1 - Is there something in NY State that excludes claims because of "willful misconduct," and if so, why isn't our WC company paying attention to this. 2 - If we drop our employees and drop the WC, is the company liable for anything since this bogus claim is still open? Sorry so long.

Anonymous said...

This claim is not bogus. The bottom line here is it was your responsibility as an employer / proper mgmt to have followed her to the work area to make sure it was safe.