It is time to reconsider

It is with some interest that I recently read the following in a journal on workers compensation. My interest is in the fact that the document is published from a source in North America yet the parallels with our problems are obvious.  The highlighted text is mine.
I            General
Workers compensation insurance covers the cost of medical care and rehabilitation for workers injured on the job. It also compensates them for lost wages and provides death benefits for their dependents if they are killed in work-related accidents, including terrorist attacks. The workers compensation system is the “exclusive remedy” for on-the-job injuries suffered by employees. As part of the social contract embedded in law, the employee gives up the right to sue the employer for injuries caused by the employer’s negligence and in return receives workers compensation benefits regardless of who or what caused the accident, as long as it happened in the workplace as a result of and in the course of workplace activities.

II            Red Flags for Workers’ Compensation Fraud
There is no sure-fire way to identify fraud (i.e. employees pretending to be ill) without proof, but there are red flags. Employers should call their carriers (in the USA, workers compensation cover is offered by competing insurance carriers) offered immediately if they identify two or more of these flags.

Disgruntled employee. The employee has a motive to fabricate the claim. Perhaps he or she was denied vacation time, demoted or fired.
• Employee is hard to contact. The employee may be working another job while collecting benefits. This practice, called “double-dipping,” constitutes fraud.
• New employee. Statistically, the newer the employee is, the more likely the claim is fraudulent, especially if other red flags appear.
• No witnesses. Make note of alleged accidents with no witnesses, especially if the employee’s duties rarely call for him or her to work alone.
• Varying accounts of accident. The injured worker may describe the accident differently to the employer and the doctor, or witnesses’ accounts may differ from the injured worker’s account.
Accidents on Fridays or Mondays. Accidents that occur on Fridays or Mondays should raise suspicion, especially if other red flags appear.

III            Rise in Costs
Mushrooming compensation costs are a silent but deadly liability, eroding profits and productivity. The runaway costs of workers’ compensation appear to be an unavoidable problem for many businesses. Consider its almost regular appearance in the editorial pages of the country’s top business magazines and newspapers. The average workers’ compensation claim for most companies was ….; today it has skyrocketed to an average of……, an increase of almost 400 percent. Despite this dramatic increase and its potential adverse effects on a company’s financial health, CEO’s often give the issue a wide berth. While we believe in our insurance companies’, human resources’, or workers’ compensation departments’ ability to handle workers’ compensation issues, new developments in medical benefits, indemnity payments, legislation, and rehabilitation expenses make our old approaches ineffective. It is time for a drastic overhaul: CEOs must step in and provide guidance on this complicated issue, possibly with the help of a third-party adviser.

IV            Conclusion
You have heard all this before so why do I repeat what everybody knows?  Well the fact of the matter is that I am not repeating myself. The fact that these quotes could have come from South African sources is not irrelevant. Workers’ compensation is progressively being regarded as a milch cow not only locally but world-wide where similar principles are in place. The reasons for this may vary but it has become evident that a serious rethink of the system has become necessary.

Last month I discussed the alleged comment by the Compensation Commissioner as published in the daily press regarding fraud. The comment related to fraud supposedly committed by employers and specifically in relation to the declaration of incorrect risks in which their businesses are involved. I could not find any website in the USA blaming fraud on employers, only employees, as the above testifies to. I must, however, warn about this, there are many fraudulent claims reported, perhaps not through the fault of the employer but through a lack of good administration. For interest sake, the American reports on the rise in cost are blaming one specific group of medical service providers for being the big culprits.  For the sake of peace I will not name them; also to avoid possible lawsuits.

I personally think that the time is ripe for an investigation into the present system, by outside specialists, not internal staff members. Interest or expertise in workers compensation expertise in South Africa has never been phenomenal and the situation isn’t getting any better. In fact, many would argue that it’s worsening. One of the reasons is that people do not stay long enough in the office of the Compensation Commissioner; the competition with private sector with far better salaries are just too unfair so as to train people sufficiently.

Till next month.


Par I is from Insurance Information Institute, New York
Par II is from part of The New York Times Ltd
Par III is from The Free Library by Farlex; Inc