Workers Comp Fraud: How Do Employers Detect and Prevent It?

Workers comp fraud takes many forms and costs American employers billions of dollars a year in taxes, increased cost of consumer goods, related comp increases, lost employee income, and lost business income. From corporations to professional practices to employees, workers compensation fraud is a scourge that unfortunately isn’t going anywhere. However, by recognizing the signs of this type of fraud and learning how to prevent it, employers can save themselves and taxpayers from costly fraudulent claims.



Types of Workers Comp Fraud By an Employee

Employees may use several methods to file false claims to obtain workers compensation. They include:

Being hurt away from the workplace but telling their employer they were hurt on the job

Exaggerating injuries that occurred at work to receive long-term, unwarranted workers comp

Claiming that an old injury happened at work to receive benefits

Faking injuries at work to fraudulently submit a workers comp claim

Staying at home even after they’ve recovered from their injury to continue to collect workers compensation



Detecting Workers Comp Fraud

Employers should be on the lookout for red flags that indicate an employee may be committing workers comp fraud. These warning signs include an employee:

Providing vague or conflicting information about the incident

Avoiding doctor visits or other medical treatment

Reporting an injury right before a layoff or disciplinary action

Having no witnesses to corroborate the incident

Having a record of filing multiple claims



Employers who receive suspicious workers compensation claims should take immediate action to minimize their risk. They should have their insurance adjuster contact the employee, his supervisor, and his doctor to get a clear understanding of the incident, the injury, and the prescribed treatment.



Preventing Workers Comp Fraud

Employers can be proactive to prevent workers comp fraud from happening to them. These few simple tips can save thousands of dollars lost to fraudulent claims:

Clearly display workers compensation policies and procedures throughout the workplace

Require employees to immediately report injuries and have them examined as soon as possible

Implement a safety program as part of a new employee’s orientation to educate him on how to be safe at work and what to do if he gets hurt

Setup an anonymous workers comp fraud hotline to make it easy for employees to report suspicious injuries by other employees

Send out explanation of benefits (EOBs) to employees so they know how much is spent on their claim or if someone is claiming an injury in their name



One of the best ways employers can prevent workers comp fraud is to hire a healthcare fraud expert to help develop and implement policies and procedures to safeguard their organization. Call 310.831.4400 or visit www.TheIdentityAdvocate.com for a free consultation or to schedule a "Lunch ‘n’ Learn" to teach your employees how to spot workers comp fraud.