How Employers Can Legally Contest Fraudulent TDI Claims in Hawaii
To legally contest a fraudulent Temporary Disability Insurance (TDI) claim in Hawaii, an employer must promptly notify their insurance carrier and can demand an Independent Medical Examination (IME). Appeals are handled through the Disability Compensation Division, and businesses have strict deadlines to challenge suspicious medical documentation.
Understanding TDI Fraud in Hawaii
In Hawaii, the Temporary Disability Insurance (TDI) law requires employers to provide partial wage replacement for employees who suffer from a non-work-related illness or injury. While the vast majority of claims filed in Honolulu, Hilo, or Lihue are legitimate, some employees may attempt to abuse the system to secure paid time off. Fraudulent claims cost businesses and insurance carriers thousands of dollars annually in inflated premiums and lost productivity. When an employer suspects that an employee is exaggerating an illness, faking an injury, or working another job while collecting benefits, they have the legal right to fight back. Navigating this process requires strict adherence to state procedures, and utilizing our directory to find a Hawaii employment lawyer can help you protect your business from fraudulent claims.
Steps for Contesting Suspicious TDI Claims
Employers cannot simply cancel an employee's benefits based on a hunch. Employers must generally rely on objective medical evidence and formal state procedures governed by the Hawaii Department of Labor and Industrial Relations (DLIR).
Demanding Independent Medical Examinations (IMEs)
Under Haw. Rev. Stat. § 392-26, an employee is required to remain under the care of a licensed physician (or APRN/PA) and provide certified proof of disability within seven working days of an examination. If an employee submits a suspicious diagnosis or an extended recovery period on Form TDI-45, Hawaii, Department of Labor and Industrial Relations, Claim for Disability Benefits, the employer's insurance carrier has the right to evaluate the claim. While the right to require an Independent Medical Examination (IME) is established under the DLIR-approved TDI plan policy, any formal claim denial must comply with Haw. Rev. Stat. § 392-44.5, which mandates issuing Form TDI-46, Hawaii, Department of Labor and Industrial Relations, Denial of Claim for Disability Benefits. An IME is performed by a neutral, state-approved doctor who evaluates whether the employee is genuinely disabled. If the employee unreasonably refuses to attend the IME, or if the IME doctor determines the employee is fit to work, TDI benefits can be legally denied or terminated.
Investigating Employees Caught Working a Second Job
A common form of TDI fraud occurs when an employee claims they are too sick to perform their duties but is discovered working a second job or running a side business. Under Hawaii law, an employee generally cannot collect TDI benefits if they are performing work for remuneration. If you suspect this is happening, you should immediately gather evidence-such as social media posts, witness statements, or timecards from the second employer. Present this evidence to your TDI insurance carrier. The carrier will initiate a fraud investigation and can immediately suspend payments while the claim is reviewed.
The Appeals Process Through the DLIR
If your insurance carrier denies the claim based on the IME or fraud evidence, the employee has the right to appeal. The appeal must generally be filed within 20 days of the denial notice. These appeals are heard by a referee at the Disability Compensation Division, Honolulu (or regional offices like the Disability Compensation Division, Wailuku). During the hearing, both the employee and the employer (usually represented by the insurance carrier's attorney) will present evidence. It is highly recommended that employers maintain detailed, organized files of all medical certificates, email correspondence, and attendance records to support the denial during this hearing.
Timelines for Employer Responses
Time is critical in TDI disputes. When an employee gives you their portion of the TDI claim form, the employer typically has only a few days to complete their section and forward it to the insurance carrier. If fraud is suspected, employers typically should notify their carrier promptly upon submission. Failing to notify the carrier promptly can result in benefits being paid out automatically, making it much harder to claw the money back later.
Costs Associated with Contesting a Claim
Fighting a fraudulent claim involves some costs, though many are handled by your insurance carrier.
| Action | Estimated Cost in Hawaii |
|---|---|
| Independent Medical Exam (IME) | $800 to $2,500+ (Paid by the insurance carrier) |
| Private Investigator (for surveillance) | $75 to $150 per hour |
| Employer Defense Attorney | $250 to $450+ per hour |
Frequently Asked Questions (FAQ)
Can I fire an employee for filing a fake TDI claim?
If you have definitive, documented proof that an employee committed fraud (such as working another physical job while claiming total disability), you generally have grounds for termination. However, you must consult with an employment attorney to ensure you do not violate retaliation laws.
Who pays the employee while the claim is being investigated?
If a claim is immediately flagged and denied by the insurance carrier pending an IME or investigation, TDI benefits are not paid. If the employee wins the appeal, they will be paid retroactively.
Does workers' compensation cover TDI fraud?
No. Workers' compensation is for injuries that happen on the job. TDI is strictly for off-the-job injuries and illnesses. They are handled by different insurance policies and different state rules.
Can an employee use their own doctor for the IME?
No. By definition, an Independent Medical Examination must be conducted by a neutral, third-party physician selected by the insurance carrier or the state, not the employee's personal treating physician.
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