Work-related injury or illness can come as a shock to businesses of all sizes. When an employee is injured on the job, it can be difficult to determine if the injury is work-related and therefore covered by worker’s compensation.
If you’re like most business owners, you’ve probably spot-checked a work comp claim for accuracy at some point. But what if you’re not sure if the claim is legit?
Workers’ compensation is crucial to protecting employees, but it is often a source of contention among employers because it comes with considerable gray areas. Carefully evaluating workers’ compensation claims is crucial in helping your company save money and prevent fraud. (Depending on the state of residence, it may also give compensation for disabilities sustained or cover rehabilitation costs so the employee can return to the workplace quickly and smoothly.)
So when is a claim compensable? How do we identify a fraudulent claim? How do we report a claim, and should we report all workplace injuries no matter how serious?
Here are five ways to tell if a claim is legit and compensable — in other words, whether it will be covered by your workers' compensation insurance policy. Plus, we offer some tips on how to spot a fraudulent one.
Requirements for Acceptable Work Comp Claims
The claim must meet all five of these requirements in order to be compensable by your insurance carrier:
1. Happened to One of Your Employees
Only employees can file a workers' compensation claim, not an independent contractor or vendor who works for themselves or a third party. Even if the incident occurs on your property, unless it is someone who works directly for you, the claim is not compensable.
Unsure whether the worker would be classified as an employee or independent contractor? Here's how to determine worker status and stay in compliance.
2. Resulted in an Injury or Illness
Injury is not the only thing that can potentially be covered by workers’ compensation. Illnesses could also qualify as compensable claims, but only if they are related directly to the job. The illness also must be caused directly by the working conditions to be covered in a workers’ compensation policy.
For example, a miner’s contraction of black lung would be compensable in all states. However, an employee in an office with a co-worker who smokes would not be eligible for workers’ compensation for treatment of illness due to secondhand smoke.
3. Arose Out of Employment
There must be a direct connection between the injury and the employer’s business. If the employer benefits in some way, whether monetarily or otherwise, from the employee’s activity, then the claim meets this qualification.
4. Occurred in the Course and Scope of Employment
The employee must be at work when the injury occurs. This includes any place or location mandated or expected by the employer.
If an employee gets injured at their work site, they have to prove the injury occurred while they were working. There is a special provision called the “coming and going rule,” which maintains that benefits are denied for injuries received when traveling to or from work.
However, injuries arising out of transit from one work site to another, for instance when traveling to visit clients, are compensable.
5. Resulted in Impairment and/or Lost Wages
The injury or illness in question must cause the employee to be impaired in some way and lose wages from not being able to complete his or her tasks completely. It is also a compensable incident if the injury or illness results in impairment but without lost wages, or vice versa.
How to Spot a Fraudulent Workers' Comp Claim
Studies commonly show that roughly 90% of all workers’ compensation claims filed are legitimate. However, it is still important as an employer to watch for these red flags that may indicate a fraudulent claim:
- Filing multiple claims
- Longer absences than anticipated by the employee, combined with an unwillingness to return to work
- Unwillingness to be assigned to other, lighter jobs within the company or to complete partial duties
- Constantly missing medical appointments
- Employee will not provide date, time or location of the incident that caused injury
- Employee has no recollection of services provided for related medical bills
- Lack of witnesses to an accident or incident
- Employee cannot produce specific information about the nature of the injury
- Employee has a history of short-term employment
If any of these red flags occur, it by no means makes the claim automatically fraudulent.
These are simply guidelines to keep employers proactively evaluating the legitimacy of a workers’ compensation claim.
And remember: Employers are obligated to report all employee injuries to be compliant with state workers' compensation laws. Have a claim and your coverage is with WorkCompOne? Here's what to do next.