By Thomas Laffey, AJOT The logistics community enjoys no immunity from fraudulent workers compensation claims. This has always been the case, however with a dreadful economy and massive layoffs, the incidence of fraudulent claims increases dramatically each year. We recently reviewed hundreds of workers compensation claims for a client in connection with an annual claims audit. We were startled at the reserves assigned by the insurers on a number of back cases, many of which were filed be employees who were laid off in 2008. Subsequent discussions on the subject of questionable claims with counsel who specialize in workers compensation litigation confirmed that perhaps as many as twenty percent of all low back claims may be fraudulent. Several of these experts actually estimated the percentage as being much higher perhaps in the thirty to thirty-five percent range. Its’ not so much that the herniated disc cases haven’t occurred, it’s a question of whether these injuries actually arose out of the course of employment, and were legitimately workers compensation claims. Nearly seventy-five percent of these alleged compensabilities involve disc injuries to the lower spine, (L3, L4, L5 discs). No surprises here. And it’s not surprising that most injured employees were represented by the same law firms who specialize in plaintiff recoveries. It does support ongoing suspicion that employees are informed by others just what attorney to see when a claim is being considered. Years ago, hernia cases were almost the exclusive consequences of lifting hazards common to the logistics community. Hernia cases today don’t pay nearly as well as permanent low back disabilities, consequently, they are not nearly as prevalent. Any objective assessment of loss causes inevitably leads to the conclusion that more than a few of these injuries occurred as a result of non-work related activities. They did not occur in the workplace. Does the possibility occur that the claim notice is merely the employee’s reprisal for the lay-off? Does Dorothy still live in Kansas? This week, the insurance industry’s leading publication, Business Insurance, carries an article involving the incredible extent to which some employees will go to commit workers compensation fraud. Two employees, apparently related to one another, staged a phony robbery. One of the conspirators actually shot the “robbery victim” in the leg. The insurer paid the injured employee $250,000 before the fraud was discovered. The payment was then shared by the employee and his assailant. With both conspirators now convicted, the presiding judge called the hoax “one of the dumbest things” he’s ever seen. We agree! Maybe the employee who was shot should have explored the possibility of filing a low back claim. Less dramatic of course, but less painful as well. While workers compensation claims frequency continues to decline, the severity of reported claims continues to rise. A 3.4% reduction in claims frequency for the 2008 year was reported recently by the National Council of Compensation Insurers, (NCCI). During the last five years, claims frequency declined an average of 4.7%. Obviously, we continue in the right direction. OSHA’s influence is certainly evident; its effectiveness has withstood the test of time. If you haven’t followed the status of litigation arising out of the 9/11 World Trade Center catastrophe, I urge you to do so. A single law firm is representing nearly 9000 police, firemen, and contractors who are alleging that the City of New York failed to protect then from toxic ash, which resulted when the towers collapsed. Many of these claims will be determined to be duplicitous and deceptive when litigation is concluded. But we wonder how many will be paid because of the idiosyncrasies of “mass tort” litigation. Who knows? Employers in the logistics community must work closely with their risk management consultants and claims adjustors to ferret out suspect claims. They must be prepared to offer