How to Detect Workers Comp Fraud

September 02, 2021 Blog

You’ve worked so hard to build your business and you’ve taken all the right steps to insure every aspect of your operation, right? Suddenly, you get hit with a workers comp claim that seems suspect. Trust us, it happens more often than you think! In fact, it is currently reported as the fastest growing insurance fraud! While workers’ compensation coverage is incredibly useful for covering expenses that may result from employees getting ill or injured on the job, it also has the potential for fraud.

Fraudulent workers’ compensation claims can put your company in a tight spot. Workers can falsify the cause or severity of their condition, or even fake an injury altogether in order to get out of work and collect compensation without facing any repercussions, if you don’t detect the fraud. Employees who commit workers’ compensation fraud put your business at risk by increasing overall coverage costs, hindering your reputation with customers, and potentially causing financial ruin.

Business Insurance Center is in the business of protecting your most cherished asset and here we’re bringing you some vital tips on how to spot workers compensation fraud within your organization!

workers comp insurance

Examples of Employee Workers Comp Fraud

Trust between you and your employees is tantamount to your business’ success, so we know it’s difficult to imagine that this could happen to your business. Also known as workers compensation claimant fraud, workers’ comp fraud by employees usually involves falsifying at least one element of illnesses or injuries, such as exaggerating the severity or length of time spent recovering from an injury to obtain a higher payout for an extended hospital stay.

Most common workers compensation fraud:

  • Malingering. Exaggerating an injury is a common tactic that some employees use to prolong workers’ compensation benefits. For instance, if someone has a mild ankle sprain, they may claim it’s more painful or debilitating than it really was in order to extend the time allotted for recovery. Employees may even lie about the timing of when they were fully healed in order to collect more workers comp recovery funds.
  • Faking a condition for workers comp. Many workers comp fraud cases involve a completely invented work-related illness or injury. Employees may say that they developed carpal tunnel due to repetitive motions on the job when in fact, they never had such a condition.
  • Falsely attributing an ailment on a workman’s compensation claim. Sometimes employees who become ill or injured outside of work recognize this as an opportunity to make money off of a claim by committing workman’s compensation claim fraud. They would then claim that this condition occurred on the job site, or at work in order to make money off workers’ compensation coverage. For example, an employee may sprain an ankle while exercising and claim it occurred at work.

    Signs of Workman’s Compensation Fraud

    A vital part of protecting your business from workers comp fraud is knowing some common signs of employee workers comp fraud. If your employee makes a suspicious workers comp claim, assess the entire situation for possible fraud. Some warning signs of employee workers comp fraud include:

-The employee reports their injury or illness at the start of a shift
-There was no witness to the incident that caused the employee’s illness or injury (especially if the employee works near others)
-The employee does not provide a cause for their illness or injury
-The information provided by the employee of how the injury or illness occurred changes
-The employee switches medical providers during treatment for their illness or injury
-The employee is difficult to contact during the claim process
-The employee has a history of disciplinary issues
-The employee with the injury or illness claim is newly hired

Overall, it’s critical for you to be proactive in preventing and identifying employee fraud in your workers’ compensation program. Keep an eye out for these fraud warning signs to protect your business!

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