A comprehensive study of injuries and illnesses in retail several years ago surprised researchers at the National Institute for Occupational Safety and Health (NIOSH). They said that despite the perception of retail work being non-risky, they found that retail workers account for 20 percent of reported injuries and illnesses while comprising only 15 percent of the workforce.
Of course, not all of those injuries are legitimate. Fraudulent workers’ compensation claims now total an estimated $7.2 billion per year, according to the National Insurance Crime Bureau. Fraudulent claims can translate into high premiums and the issue takes on added significance when retailers self-insure and pay claims directly rather than pay premiums for workers’ compensation insurance.
In California alone, more than 600,000 retail employees work for self-insured employers, accounting for 30 percent of employees of all self-insurers in the state, according to a March 2017 study by Insurance Journal. Big-name retailers with self-insured workers’ comp programs include Target, Macy’s, Costco, Safeway, Home Depot, and Victoria’s Secret.
News reports routinely describe employee fraud schemes that haven been uncovered. Last month, for example, a retail worker in Jefferson County, NY—claiming to be physically unable to work—was found powerlifting at a nearby gym. And a video went viral last month of a sprinkler head landing on the desk of a Florida woman. After scanning the room to make sure no one was watching, the video showed her picking up the sprinkler head and whacking herself in the forehead with it.
Injuries and false claims of injuries need to be a focus for loss prevention, just like organized retail crime and theft, suggests Bill McParland, former director of loss prevention for Kirkland’s home décor stores. “Ten internal theft cases don’t even approach the financial loss possibility of one severe workers’ comp claim,” he said in an interview with LP Magazine.
Employee workers’ compensation fraud—malingering, making a claim for a non-work related injury, or working elsewhere while receiving workers’ comp benefits—has proven to be a stubborn enemy that leaves a long trail of victims, including the employers whose workers’ comp premium increases because workers submit false claims. In response, there are two important points for LP to consider:
- Is he or she faking? (see below)
- Is an employee investigation worth it?
Accidents need an investigation to identify root causes and prevent future accidents, but what about investigating possible employee fraud through surveillance?
It’s costly to let a worker get away with a fake claim, including because it seems to lead to other workers doing the same. A single case of employee fraud that slips through can often turn into three or four.
It’s also important to remember that a false compensation claim has wide-reaching effects, including on the coworkers of a fraud perpetrator. They may be pressed to work more to make up for the lost productivity or receive less of a raise to make up for an increase in insurance premiums.
On the other hand, the surveillance that might be necessary to prove that a claimant’s alleged injuries are not real, or are exaggerated, is expensive. You can hire an outside firm, but qualified investigators can cost more than $150 an hour. Even using qualified internal personnel to investigate can start to seem wasteful as they wait for hours or days for a claimant to emerge from his house in the hopes he will do something that suggests their injury claim was false.
It is also usually necessary for surveillance to capture more than one day of activity inconsistent with an injury to prove a fraud. An injured employee, confronted with video showing them carrying shopping bags around a mall, may concoct another story as cover. She might claim she had accidentally taken an overdose of her pain medicine, so she went to the mall to get the things she needed before the pain came back, explained Rebecca Shafer, and advisor at Amaxx Risk Solutions and a workers’ compensation consultant.
Shafer identified when she believes it is most appropriate to use surveillance.
- When the employee claims to be so badly injured that he or she is unable to do anything.
- When there is a strong reason to believe the limitations of the injury are not as stated.
- When it is learned the employee is working elsewhere.
- When the claim has the potential to become catastrophic.
- When there is a need to stop a claim that all the coworkers know is fraudulent.
Social media can make investigations easier. For example, information from posts can potentially reveal evidence of an individual being involved in an activity that should be precluded by his or her injury. It can help identify patterns of travel to help target physical surveillance and make it more cost-effective. And photos may contain metadata that provides details on a person’s location or that dates an activity.
Surveillance is also more cost-effective in some specific instances, says Shafer.
- If the employer knows the claimant’s off-work routine and can plan the surveillance for a time when it is believed the employee will be active.
- If there is a tip that the “injured” employee is working for a competitor or in an unrelated business. “This is an excellent time to use surveillance as the workers compensation claim can be brought to a quick conclusion with video of the employee working at another job,” said Shafer.
- If the employee is seriously injured with the potential to be designated as a total permanent disabled person, “surveillance should be used to verify the limitations of the employee,” says Shafer.
- When an employee has told coworkers he is going to ‘take a vacation on workers’ comp’, he or she has to be caught. “If the employee does not even care it is known that the claim is highly questionable, the failure to stop it will set the company up for many more bogus workers’ comp claims,” warns Shafer.
29 Signs You May Have a Faker on Your Hands
As with any type of employee fraud, a single indicator—or even a few—may not indicate that a workers’ compensation case is fraudulent. But it can suggest that the odds are greater.
Employee indicators
Newly hired
History of short-term employment
History of claims or injuries
History of disgruntlement
Recent disputes, such as being denied vacation or a promotion
Lied on original job application
Facing financial pressures
Anticipated disruption in pay due to an impending strike, closure, termination, retirement, end of seasonal work
Protests modified employment assignment
Poor job performance and/or subject to disciplinary action
Overly familiar with workers’ compensation system/process/language
Inquires about a quick claim statement
Immediate retention of legal representation
Incident indicators
No witnesses
Occurring Friday afternoon or Monday morning
Incident and/or location unrelated to job duties
Occurring in a remote, rarely frequented location
Happens outside of the employee’s normal working hours
Not reported in a timely manner
Injury inconsistent with facts of incident
Inconsistent stories describing accident or vague details about how the injury occurred
Stories change regarding the accident
Rumors exist regarding legitimacy of the accident
Unseen injuries which can’t be proven by diagnostic or medical evidence
Changing symptoms of pain or soft tissue injuries
Injured worker observed with signs suggesting continuing activity inconsistent with injury, such as calluses on hands or grease/dirt under fingernails
Refuses medical tests to confirm an injury
Changes doctors several times during treatment
Injured employee is difficult to contact
