Keeping Even With The Comp Fraudsters

So, you think Joe the Glazier's workers comp claim in fraudulent. What do you do?

1. Say the heck with it, you can't be bothered, and anyway it is the insurance company that pays
2. You've complained before, and nothing happens, and you say the heck with it
3. You want to fight back, but you don't know what to do
4. You call your favorite consultant, Mr. Jack Daniels, and discuss your options

Let's work on number 3, unless you just want to keep paying and paying.

Joe the Glazier had an accident. Insist that any accident in your company be reported to you immediately, and that a preliminary written report be given within one hour. I know one major national glass company that requires all accidents, from anywhere in the country, be reported to the CEO. Get everyone in your company on the program that all accidents must be reported immediately and paperwork filled out. You can really key in on the accidents where the employee files a late report...usually as some sort of retribution for an actual or perceived slight. You can quiz Joe why he didn't tell his supervisor at the accident time. One company I know fires any employee who doesn't report an accident promptly. They feel that a late claim is fraudulent, and they don't want the employee around. You will get more notices of "I strained my shoulder" and "I twisted my ankle". That's OK. Write down what happened, that there is no need for medical attention, and go on about your day. The moral of this story...have an accident reporting policy in place and strongly enforce it. Also, have a witness program in place, where any one in the vicinity of the accident writes a short report. This will also place a crimp in fraud.

Most fraud begins only after a small, insignificant accident, but then Joe sits home and watches the commercials for 1-800 call a lawyer. Be sure to get Joe back to work, part-time, light duty, or whatever. Let him file papers, and then dump them out, and file them again. Keep Joe working, and you will reduce your follow-up fraud.

If you suspect fraud, call your insurance carrier's fraud department. Private carriers are the most responsive and state funds are the least responsive. Safety groups are in the middle. First step, contact your agent or company representative to see who to talk with in the fraud division. When you get through, you need more than just a hunch to get them mobilized. After all, just about every employer thinks that just about every comp case has some element of malingering about it. The carrier may ask you to fill out a form. Have them fax or e-mail to you, fill out promptly and return promptly. If they see you dragging your feet, so will they. Show them this is important to you. You should have specific information, such as a report that Joe was seen working at another company or that he was doing heavy work around his home. Give them the time and place that Joe was working.

If Joe milks his claim, staying home for a couple of extra weeks, that is fraud. There is no way you are going to prove this. There is no way your carrier will investigate this. If you complain about Joe for this, you are waisting your time and the carrier's time. When you get a real fraud case, they will not be as attentive because of the 'chicken little' (the sky is falling) concept.

Only discuss Joe's case, or your feelings about fraud, with your personnel department, or with senior management. If you are a smaller company, keep this to yourself and the insurance carrier. But, you can listen. In fact, this is the best way to gain information. Listen to your other employees--don't comment and don't ask leading questions. Most fraudsters like to brag about how they are putting one over on the company. You will hear this from your loyal employees.

After you hear a rumor about Joe's fraud, don't have a company meeting and say you've heard there is fraud going on, and that you will prosecute. You are setting yourself up for a libel situation. Twice a year, you should be having a company meeting about many topics. Include safety. Strongly mention here that fraud will not be tolerated, will be investigated, and if found, the results will be given to authorities. You can't threaten your staff with a police investigation, only the police or district attorney can do that, but you can place a serious tone on your feelings relating to workers comp fraud.

If your carrier does agree to further investigate your claim, and in my experience they investigate a very few, don't brag about this yourself. You should tell no one in your company, unless absolutely necessary. If the investigation is successful, talk all you want. If it isn't, and most are not, you don't want your company to know that you thought someone committed fraud and you couldn't do anything about it. Some people think you should tell your company when pursuing an investigation, that it shows everyone you are serious about fraud. I feel that if you are not sure you will succeed, don't broadcast what may not be successful. To me, this only emboldens others to be fraudulent.

Here is how the insurance companies think. A fraud investigation costs about $1,000 per day, and usually takes 3-5 days. They need to be pushed to spend that amount of money to save $400 a week in worker's comp costs. If Joe is putting in for a lot of medical visits, then they will be interested.

Next week we will discuss how to hire and work with your own investigator for workers comp fraud.

The Midwest Glass Show is next week in Chicago. I hope that anyone nearby creates some time to attend. There are great seminars, exhibitors who want to teach you about their products and you will have the chance to meet other glaziers from around the country. I'll see you there and personally autograph copies of my latest blog. (Do you think we will need extra security to keep our loyal readers in line while they wait for the autograph?)

Fraud and Workers Comp Costs

A recent survey found that 35% of workers comp claims have some element of fraud involved...from the simple taking of a few extra weeks, to the extreme of false medical bills running into hundreds of thousands of dollars. When this fraud occurs, you pay. Your employment modification rate is impacted, and you pay more for your insurance. Here are some steps to help you in this problem.

First, as we have said before, prevent the accident. Safety pays in so many ways in your shop, most of which you can not quantify in advance. I promise you, that a safety program is less expensive than a worker's comp program, and returns better dividends to you.

Joe comes to you and says he hurt his back. It is Monday morning around 8:30 am. He was lifting a lite of glass and felt a pop. Sure. Odds are he is redoing his basement or working a weekend job, and that is where the pain occurred. He waited to get to work so he can claim it. How do you prevent?

On Monday morning make a standard practice of being in the shop as the crew comes in. If someone is limping, is walking slowly or looks out of sorts, ask questions. See how they move and before they go to work, make a decision if that worker is fit to work. Not easy, I know, but this is the second leading cause of fraud...the accident that occurred at home...or at the part-time job. How to prevent? This is going to sound corny...but it works...have each foreperson lead five minutes of stretching before each shift. This will not only help people to prevent injuries, but will spot the worker who you should be asking questions of.

Here are some of the many flags to look for to help you think about fraud on Joe the glazier.

• Joe has a history of subjective injuries, like sprains or muscle pulls
• Joe reports the accident on Monday morning, just after arriving
• Joe gives only a vague description of the accident's cause
• Joe was recently passed over for a job promotion
• Joe is up for early or regular retirement, and wants to get started early
• Joe changes his address to a PO Box or sends his mail to a relative's address after the accident
• Joe moves out of state after the accident, so he cannot accept light duty or part-time work
• Joe's accident happens just after he was reprimanded for something at work
• There were no witnesses to the accident
• Joe's injury cannot be seen medically, like a claim for stress or emotional trauma
• Joe's accident is only reported after a run-in with his supervisor
• Your first notice of the accident is from an attorney or medical provider
• Medical providers have two very different opinions of the injury
• Joe is claiming a longer recovery period than is normal to the type of injury reported
• Joe has his accident during the lunch hour
• Joe changes his doctor two or three times to get an opinion that fits his needs, or to extend the case
• Joe skips a couple of his doctor's appointments
• Joe's attorney says he/she is in charge of the case and not to speak to Joe
• You know that this attorney is known for worker's comp fraud cases
• You know that Joe's medical provider is known for milking comp cases
• You receive an attorney's letter within 24 hours of the accident
• You receive a tip from other employees that Joe is working at another job
• Joe's injury comes at a time when he is working on his house, and needs time to finish his at-home projects
• You are about to announce a lay-off, and Joe's claim starts a day before
• Joe is never available for a phone call, especially during work hours
• Joe has a grudge against the company
• Joe comes into your office and has grease under his fingernails, or is wearing work clothes
• The bills for Joe's medical services and prescriptions are huge
• Joe visits his doctor two or three times per week, with your insurance paying the bill
• Joe doesn't get better after a couple of weeks of intense treatments
• Joe travels a long distance to his medical appointments

What is the most reliable flag here? To me, it is the tip from other workers. In most companies, most workers care about their jobs and their company. When they see someone, who may be a friend, attempt to defraud their company, someone will let you know. And you will see that all the Joes trying to collect like to brag and show off a little. They may come by the company on a Friday afternoon, and buy a six pack for their working buddies. One of those buddies, will realize they will be better off if Joe does not drain the company.

Another point, most fraud cases come from employees with under two years of work history with you. Another good reason to retain employees and reduce turnover.

There sure are a lot of flags here...can there be an honest claim? In fact, most claims are honest, and Joe may be out of work for a very short time. The fraud cases, though, are the big bucks. One or two heavy fraud cases in a year will make your workers comp insurance rates go through the sky.

We'll discuss more about these flags and what you can do when you feel there is fraud in next week's blog.

Controlling Worker's Comp Costs

The best way to control worker's comp costs is to prevent accidents. Safety pays dividends in every aspect of a glass business. But, the alleged accident has just occurred, or has just been reported. What can we do from here to control the costs for Joe the Glazier.

Two broad areas need to be addressed:

1. Reducing the costs of a legitimate claim


2. Reducing and eliminating the fake claims

Joe dislocated his shoulder and was cut when a lite broke that he was carrying on his shoulder. Yes, he should have worn arm guards, but that's not for now. How do we control the costs?

Two things will help...reduce his medical bills, and get him back to work ASAP. Ask Joe for permission to review his medical bills relating to the accident. Without his written permission, you won't get anywhere. Assuming Joe gives you the permission, go over the bills with your worker's comp carrier. Have them explain what you do not understand. If there are bills for specialists that you don't understand, ask. Many times a dishonest medical group will send patients for referrals, when they know it is a comp claim. Look for unneeded items, like orthopedic inserts after this shoulder injury. Or maybe a eye exam that was requested. Look to see if Joe is making his appointments. A missed doctor's visit pushes Joe's return to work out another couple of weeks in most cases.

See if Joe is going to physical therapy two-to-three times per week. If he isn't, either he is ready to go to work or the injury wasn't as bad as first perceived. Are all of Joe's appointments in the evening? Is he working somewhere off the books during the day? Is Joe keeping in touch with you or his supervisor from your company? If you haven't heard from Joe for a couple of weeks, call him to say hello. He should be either at therapy, the doctor's, or home. See how long it takes to call you back when you leave a message. Did Joe take a mini-vacation for five days?

Look at the worker's comp payouts for his wages. Do they have the correct wages? Did Joe include his overtime or holiday bonus in his base earnings he reported to the insurance company. When you get a request to verify his wages, and are too busy to answer, then Joe's numbers will be used by the insurance carrier.

Joe is basically an honest person but sitting home watching day-time TV can turn anyone dishonest. Every third ad is for a worker's comp attorney. So, one day Joe gets interested and suddenly he sees all new doctors, and his scheduled return to work has been extended by three months.

Enough already...Joe's accident was unavoidable, and he will return to work as soon as he can...you say. Congratulations, you are now entered into the naive-business-leader-of-the-year-contest. Every accident is avoidable. The question is do you want to spend the training time, invest in the correct equipment, and discipline yourself and your team to work safely?

Every worker says they want to get right back to work, but studies have shown that a worker out longer than three weeks, has a much lower return to work rate. Get Joe back to work, away from the TV and the doctors, and you come out ahead.

Set-up a light duty work program for all employees. It may not be their same old job, but you should have work available for all comp cases. Maybe sweeping the floor, or filing in the office. This is the number one way to get employees back to full-time productive work. Pay Joe his normal wage, even if he were a glazier, pay that wage as he sweeps the floor. Get him back involved in your company, and he will want to go back to his regular job!

Create a menu of every job that can be done by someone on light duty. Every company can come up with dozens of items:

• Taking your trucks to the fleet wash


• Doing inventory


• Sweeping the plant


• Painting


• Teaching other employees


• Learn how to use your computers


• Learn another language


• Doing simple work like putting logos on tempered glass or operating a spacer bender


• Audits of parts and supplies room


• Filing


• Following up on old quotes


• Answering the phone

You are paying Joe's salary while he is on comp, so you might as well get some work out of it. Even if it is only a half-day, that is good. Keep people in the habit of coming to work. Even someone can only work for twenty minutes, have them work twenty on, and twenty off. It is still better than paying them to stay home and watch the commercials from the ambulance chasers.

Other things to look out for:

• Joe changes his doctor's a couple of times. All this does is continue to delay a finding that he could come back to work.


• Joe goes for an Independent Medical Examination (IME) and gets a different report than by going to his own doctor. Or, Joe cancels more than one appointment with for the IME...this shows he doesn't want to be seen by the impartial doctor.


• Watch for a claim of disability that doesn't fit the injury. In Joe's case he has a bad shoulder, and puts in for disability on his shoulder and knee.


• Watch out for the time that Joe says he wants to come back to work, but suddenly you get a lawyer's letter asking for more info. Joe watched too much TV.


• You ask Joe to come into the office for a follow-up, and he is wearing work clothes, or has grease on his hands or fresh mud on his shoes, or if you can see his car or truck, and there is a tool box.

Next week we will discuss employee surveillance, working with your insurance carriers fraud unit, your own investigator and other warning signs of fraud.

A Vacation Week

Hello to the thousands who faithfully read this blog...you get a week off from reading, as I am taking a week off from writing. We will pick up next week with some thoughts on worker's comp fraud.

My Interview with Joe Biden

The phone rang and the caller ID said 'Joe Biden'. I answered and Joe said, "Great interview with Sarah--now it is my turn. Let's get going so I can tell America, and the world, how important the glass industry is to the Democratic party, and to my hometown of Scranton, PA." It looked like this would be an easy interview after all. Joe wanted to talk about glass...it can't get much better.

I thanked Joe for being on the blog and threw my first question at him.

Paul: "Senator, tell me how the glass business is different in Delaware compared to Scranton."

Joe: "Paul, that is a great question for a glass guy. Oh, not that a glass guy can't ask a good question. I expected a question on Low-e glass, not on geography. Let me think for a minute and I will answer your question. (Pause...Pause...) OK, you see the party has asked me to count to thirty before I answer any question that I don't know the answer to, hoping I will come up with the right answer. But, all that I do is count to thirty, and don't think of answers."

"Oh well, the glass industry in Delaware is different from Scranton. You see Delaware is a full state, and Scranton is just a small city in Pennsylvania. In Delaware the glass shops can cover the whole state from one location. You can't do that in Scranton. Why it takes a full day just to get to Pittsburgh, and then after you measure the job, you have to drive a full day back to the shop to get the glass you need."

"That's the biggest difference between Scranton and Delaware in the glass biz."

Paul: "Joe, thanks for clearing that up. Our next question is about Low-e glass. Last week, Sarah said hard-coat was better than soft-coat. What is your opinion?"

Joe: "I am definitely a soft-coat guy. Our winters in Delaware are mild, you know, and we hardly ever get snow, so a soft-coat is just perfect for me and my family whenever we need coats. In Scranton, up in the mountains, you probably need a hard-coat to stop all of the freezing rain and sleet."

Paul: (With a quizzical look on my face) "Joe, I think I meant which coat gives better thermal performance?"

Joe: A soft duck-down coat is best, whether you are in Delaware or Alaska."

Paul: "Let's move on. Who do you think is the best fabricator in the United States?"

Joe: "Paul, that is not a fair question...I didn't do my homework on the whole country, just in the Scranton and Delaware areas. The best fabricator is Northeast Laminated Glass. These guys are true Democrats. They have hired laid-off workers, have fought the big guys, and they don't make enough profit to qualify for the McCain tax cuts. The co-owner, a loyal Democrat named Tom Zaccone, works so hard that he doesn't take a day off, other than to campaign for me...but wait, that isn't the reason they are the best fabricator...there is not any politics in my answer...oh...what is the next question?"

Paul: "What other fabricators are there in Scranton or Delaware for you to compare to?"

Joe: "I looked at that Oldcastle Glass company and at Arch, and they don't have a company in Scranton, so they can't be very smart to miss out on the best city in America. Of course, Wilmington, Delaware is also a great city, and...you guessed it, no fabricators there make the big time. That is what makes Scranton the best city in America."

Paul: "Joe, if Barack and you are elected, what will your program be to help the glass industry?"

Joe: "Why, that is another great question for a glass guy...Did you rehearse with Lyle Hill, the wise guy from US Glass? We would hold a hearing in the Senate to ask this very question of plumbers and glaziers named Joe (just like my name!). I am sure we will find that the employees in glass companies need better health benefits, need relief on their home mortgages, and need glass gloves that don't smell like old sardines after a day's work!"

"I think we will have to limit imports of glass from China and make every piece of glass in America into Solar glass that will make electricity. Why, if every picture frame in America could make energy, our problems would be solved!"

Paul: "Joe, solar glass only works in glass that gets sunlight. How would you make that work in picture frames?"

Joe, "That's simple...we pass an environmental law that says every picture frame in America has to be hung in a window, and we have solved the entire energy future of America."

Paul: "Thank you Joe for your time today. By the way that is a nice suit you have on. Did you buy that in Scranton or in Delaware? Joe...wait, don't leave, just answer this one last question...Joe...oh well, he is gone.

Well, to all of you out there in Blogland, you now have the insight into our two Veep candidates so that you can make the decision who to cast your vote for. Keep thinking about this right up to the moment you pull that election lever...vote for the candidate that you feel will help the glass industry!!!

My Interview With Sarah Palin

So, I was watching the debates and the news. I learned that Joe the Plumber isn’t exactly what the news director had ordered. It was then that I realized that neither candidate had taken a position on the glass industry and our questions---soft coat vs. hard coat, union vs. non-union labor, Viracon vs. Oldcastle Glass vs. Arch.


I sent an immediate e-mail to both campaigns asking for guidance on these key issues. An hour later, the phone rang. The Dems said to check in with them next week, but the Republicans needed every plug they could get. They sent the investigators and discovered I was not part of the liberal eastern media, and thought it would be a great chance for Governor Palin.

Here is the transcript of my interview with Governor Sarah Palin about the current state of the glass industry.

Paul: Welcome Governor Palin. It is an honor to have you visit my office in New Hampshire to discuss the glass industry.

Sarah: It is an honor to be here in a New Hampshire, which is a border state, just like my state of Alaska. Can you see Canada from your home here?

Paul: Almost—it’s only 153 miles to the border with Quebec. Sarah, what was it like when you first saw Russia? Were you looking through float glass or sheet glass up there in Alaska?

Sarah: Oh, it was a sheet of glass. In fact, it might have been one of these sheets with the vacuum in it. You know the vacuum glass that saves energy. It was a vacuum glass because there was no dust in it.

Paul: You mean insulating glass?

Sarah: Oh no, there were no pink fibers in the center, there was no insulation in the middle.

Paul: I see. Governor Palin, do you think the future is in soft-coat or hard coat low-e glass?

Sarah: Paul, I am glad you asked this question and not another question about which newspapers I read. You see, I have studied this in preparation for this interview. Moreover, as a mother and almost as a grandmother, you have to be hard with your children. You have to teach them about the hard decisions there are to make, as citizens, and that people will always be trying to trip them up. So, while I know soft-coat may give better insulation, I think we need hard coat. Everything in life will be hard and we have to teach that to our kids. Of course, we have enough oil in Alaska to make up for all of the energy wasted. If only John were to become President, then we could drill-baby-drill right in my backyard.

Paul: Uh, Governor, what is your stance on union labor requirements in the glass industry?

Sarah: I am all for the union. 150 years ago the South tried to break up the union, and I, for one, am glad they didn’t succeed. The union is very important to us in Alaska. We weren’t a state during that war, but if we were, we would have been for the union. If there is another war about the union, count on me to send the Alaska National Guard.

Paul: Governor, I meant union labor on construction work in the glass industry. Should it be required?

Sarah: Now I get it. Thanks for explaining the question. I believe every union worker should work; so should all of the regular Americans who want to work. Working is the cure for our economy. John wants to cut taxes on the rich and on my oil companies so they can spend more and hire your union workers. Of course, we will trickle our money down to all workers, and I sure hope that those union workers vote for me because I work hard too.

Paul: I see. (Pause) Now, Governor, Do you think Viracon, Oldcastle or Arch is the premier glass fabricator in the United States?

Sarah: Thanks for this question Paul. I studied this on the drive here to New Hampshire, knowing you would ask it. On my way here, I looked out the window of my armored Suburban and saw all the pretty colors of the leaves. The reds and yellows and the oranges. In fact the oranges reminded me about pumpkins, and Halloween is coming next week, and I think all of the little ghosts and goblins coming to your door should get candy. None of this healthy stuff…this is the night for candy. If you give out what you grow, then the workers at Hershey can’t make any more chocolate bars, and they are important workers in our economy. In these tough economic times, spending money on chocolate is important. When I grew up we never had chocolate melt in our pockets…it was way too cold…but when I was thirty years old I finally came to the lower states and had my first melted chocolate bar, and it was gooey and it tasted good. If you don’t support these workers making American chocolate you are hurting our country.

Oh, where were we?

Paul: I asked you about Viracon, Oldcastle and Arch.

Sarah: Oh yeah, I studied them on the way up here. And you know what, they are all confused. One of them has only three branches, and the others have way too many. Is there really that much glass business in the Chicago area that there are so many fabricators? When I become the Veep, I will call for a summit meeting of the Chicago fabricators and help them carve up the territory so that all companies can be profitable and pay less taxes under the McCain economic plan. Then I thought why Chicago? Should there be more in New York, or Los Angeles? Or Cleveland? Of course there should. So, I agree that Arch does have the shortest name.

Paul: Sarah, you have left me speechless. Thanks for visiting me and for being on our blog, where next week we will meet Joe Biden and learn about the state of the glass industry in Scranton. After that we will go back to fraud in workers comp.

You Should Be Afraid of Fraud

Fraud Happens. Never in your business. Always in someone else's. You watch things too closely. You know what is going on. And, you trust your people. They would never steal from you. And by the way, be sure to leave your list for Santa; Christmas is only 72 days away.

You get a call to give a quote and it looks like a home-run. All you have to do is send in a small deposit to get the plans. Just give your AMEX number and the plans will be overnighted. You think anyone would know this is a rip-off, but thousands of contractors, in many fields, fell for this one last year. IF IT SOUNDS LIKE IT IS TOO GOOD TO BE TRUE--it is. No one picks you out of the yellow pages to give you a guaranteed hit. Never give your credit card number to someone you don't know. If you are interested, call them back at their office. Google the name. Are they in the Yellow Pages? Will they give references? If they want the cash or your card number now, run in the other direction. Any legit business relationship can stand a day's wait while you check it out. If they won't wait...don't do the deal. If someone calls your company asking for bank or credit info, instruct your staff that this type of call goes directly to senior management. Teach your crew that all company information is confidential and cannot be given out except by management.

Most fraud is done by employees. According to one survey in the late 90's, 58% of fraud was committed by ordinary workers, 30% by managers, and 12% by executives. Look at all aspects of your organization. Also, men were responsible for four times as many frauds as women, but women had a higher average take than men.

Checking your credit for identity theft is advertised on TV every day. Did you ever check your company's history with the credit bureaus? A company is easier to scam than an individual! At least twice a year you should get your profile. Always check your credit card bills, demand receipts from each employee who has a card, and match them to your monthly statements.

Employees who have committed fraud have been interviewed. One of the most common reasons given is: They saw the boss do it, so it was OK for them to do it. If you handle cash in your company, put every cent on the books, and let your people know you do this. You set the tone of the ethics of your business. No one else. If employees see you pocket cash, they will too. And if you catch someone doing it, they can easily blackmail you on your own creative accounting.

Are you checking the references and backgrounds on potential employees? Most of you are not. I've seen too many companies that hire anyone who comes in the door, and wait a couple of weeks to see if they can cut it in their company. If some one is a part-timer, or a temp employee, they can do as much damage as a full-time employee--in fraud as well as worker's comp problems. Look for gaps in employment of longer than a month. Run their driver's license through your insurance agent to check for suspensions. Call their previous employers and get valid references. I do not accept the excuse that it will delay the hiring a couple of days, and you might loose a good employee who wants to work right away. You are paying dues to the short-run devil at the expense of the long-term health of your company.

Another common scam is the office supply scam, where a company calls you, saying they are your supplier of copier paper, and it is time for a re-order. You might just sat yes to a reorder too easily. Many do as this is one of the most profitable scammers games there is. Confirm that this is indeed your vendor, ask for their address, for your account number from them, the brand of paper they sell. If you just give them a verbal yes, you will get a delivery at a higher price than you expected, and you will receive lesser quality than you paid for. The tip-off is the delivery is COD. Never, ever, give COD for basic products that you buy in your community, to a company you don't know. If they want to visit you, and have you fill out a company credit application that is OK; they will never show up and you will be ahead of the game.

If it walks like a duck, quacks like a duck, flies like a duck, it is not a diamond in the rough waiting just for you. Don't be naive in business. The people who create and implement these scams are pros at it. Be careful and you will avoid their duck droppings!

Next week we will discuss fraud in worker's compensation--the biggest single extra cost to small and medium sized businesses in the US.