Fighting Worker's Compensation Fraud

Worker’s Compensation fraud undermines a 100-year old social system originally designed to assist injured workers and their families with medical bills and partial wage replacement for on-the-job accidents. The added strain associated with Workers Compensation fraud places substantial pressure on the system’s infrastructure. When fraudsters “cheat the system”, the results are greater losses for employers and insurers, higher insurance premiums, lower revenues and possibly fewer jobs for honest workers.


The size and scope of Worker’s Compensation fraud is difficult to determine, but The Insurance Information Institute estimates that Worker’s Comp fraud makes up about $7.2 Billion per year, or 25% of all Insurance fraud in the U.S.

There are 3 types of Worker’s Compensation fraud that occur- Employee fraud, provider fraud, and employer fraud. However, for purposes of this article, we are only going to deal with employee fraud.

Employee fraud tends to be the most highly publicized type of Workers Compensation fraud. Businesses that employ a high number of contract, temporary, or seasonal workers are particularly susceptible to this type of fraud. While all claims should be treated as legitimate, managers should be trained to look carefully for suspicious signs of possible fraud. While these red flags do not confirm fraudulent activity, they can identify claims that warrant a closer look. Common red flags include:

• The injury is reported on Monday morning or after a vacation or holiday

• The injury is reported about the same time every year

• The injury is reported late

• The claimant is a new, seasonal, or contract employee, or claimant has a history of short-term employment

• Claimant has an attorney when injury is reported

• Claimant demands quick settlement

• The Claimant is facing possible layoff or termination

• The Claimant’s description of the accident and resulting injury are not consistent

• Claimant goes to the emergency room for treatment for a non-emergency condition

• Claimant refuses diagnostic procedures to confirm treatment

• The Claimant’s address is a post office box or hotel address

• Claimant is disgruntled

• There are no witnesses to the accident

Employers, be aware of these potential signs that there may be employer fraud. Please comment if any of you have been a victim to Worker’s Compensation fraud, and what the signs were for you.

Bobby Bland PWCA, CIC
Vice President
Commercial Risk Service