Terminating an employee for a fraudulent work comp claim?

If you are in the insurance business, it doesn’t take long until you discuss “fraudulent claims” with a client. Several times a year I field this issue with a client and it certainly is a delicate issue.

Before discussing procedure, understand that this is as much of an emotional issue as it is procedural.  Business owners feel violated in this situation. Below is what I hear from clients in this situation.

  1. They feel as if they are being stolen from (time, money).
  2. They resent having to keep this person employed while on the claim.
  3. They are afraid and unsure of how to proceed. Someone who would file a fraudulent claim would certainly file a fraudulent lawsuit if they are fired.

These feelings of anger and fear are understandable and warranted. Let’s discuss how to proceed before any rash moves are made.

First, report any such suspicion of fraud to your workers’ comp carrier. The carrier will investigate the claim and make a determination. Technically, it is their money being stolen and they are the ones with the ability to determine if a claim is fraudulent.

Second, if the claim is found to be fraudulent, you should be in the clear to terminate the employee. This is where having a solid brewery employee handbook comes into play.  When you have an honesty clause or a fraud clause in your handbook that the employee signed at the onset of employment, it is rather cut-and-dry and termination is simple.

Now, if the worker’s comp claim is not found to be fraudulent, but you still believe that it is, you and I both know that this turns into a bit of a quagmire. Under worker’s compensation law, when an employee has exercised his or her right to file a work comp claim an employer cannot retaliate against the employee. Also, there are ADA regulations that might be violated if the employer terminates the employee.  If the worker’s comp claim is not considered to be fraudulent, hiring a HR professional is necessary, and an employment practice attorney should also be consulted.

About the Author

John Hoefer is the founder of the Brewery Insurance Program. Having insured breweries and food manufacturers for many years John excels at providing the right coverage unique to those that manufacture consumable and perishable goods.

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