Living large on workers’ comp: employee fraud

August 10th, 2006 by Julie Ferguson

Every now and again, a textbook case of blatant workers’ comp claimant fraud surfaces in the media. In today’s example, we are presented with Robert and Rosemary Bunch, a California husband and wife tag team, who had received more than $1 million in direct payments, as well as the services of a housekeeper and a chauffeur (!) before state authorities caught up with them. Rosemary had been on permanent disability since 1995, and Ralph was on temporary total disability since 1999.
The devious couple were experts in brazenly milking the system. Rosemary had been awarded the services of a full-time housekeeper due to the supposed severity of her disability, as well as the services of a chauffeured limo. This happy little arrangement came to a crashing halt when both parties were videotaped in activities which were totally inconsistent with their purported disabilities. In Roberta’s case, she even had the help of her limo driver, who obligingly carried her crutches right up to the courthouse door, where she strapped them on. This helpful fellow is also paying a fine for his complicity in the fraud.
In a settlement, both have been put on probation and fined tens of thousands of dollars. In addition, most of their personal property, including a house, has been confiscated by the state for penalties and restitution.
We’re all for throwing the book at these and other fraudsters – they hurt us all. And not the least of those harmed are all the workers who will be subject to increased mistrust and scrutiny because some employers who read this story will have misguided notions reinforced.
Self fullfilling prophecies
We particularly hate to hear about cases like this because it reinforces the notion that claimant fraud is pervasive. Many employers and industry insiders think that fraud may be as high as 25 to 30%. We disagree.
Some people are indeed larcenous. Most people aren’t. Employers who build their entire workers comp program on a foundation of fear of fraud are likely to create more problems than they solve. We ascribe to the “people live up to your expectations” school of management. If you build a program to trap the larcenous few, you will have a punitive system that imposes a toxic pall of suspicion over all. Suspicion and mistrust breeds more suspicion and more mistrust. Your strongest asset in managing your work force is mutual good will and mutual respect.
We think the best prescription for fraud is preemptive. Be a great employer. Treat your employees fairly and consistently. Set expectations about preventing injuries, but also discuss what will happen should an injury occur. Explain to your employees what workers comp is, and delineate their rights and responsibilities should an injury occur. As part of that communication, let all employees know that you will have zero tolerance for fraud, and inform them of any criminal statutes in your state.
Work diligently to having a zero-injury workplace, but if an injury does occur, analyze the heck out of it to ensure any necessary remedial actions occur so that no future injuries will happen. If a worker is injured, treat them fairly, help them get well and back to the job, and keep the lines of communication flowing during the recovery. Help resolve any temporary situational barriers that hinder return to work.
Don’t be blind to the potential for fraud – there are many warning signs that should trigger a closer look. If you suspect fraud, be sure to document things and share your concerns with your insurer or third party administrator. Most state insurance authorities also have fraud investigative resources. We advocate a hard line on fraud, but it’s been our experience that good management can ensure that fraud is the rare exception.
Coming up next: in our next post, we’ll turn the tables and talk about employer fraud.