How to spot the signs of workers’ compensation fraud

Security cameras in a company cafeteria recently captured a brazen attempt to fake a workers’ compensation injury. The video shows that the man dumped a cup of ice onto the floor, disposed of the cup and then laid down on the floor as though he slipped on the ice. Prosecutors have charged the man with insurance fraud and theft by deception.

In this case, the fraud was well documented. Most employers don’t have cameras in their lunch rooms or other areas of their workplaces. It can be difficult to prove someone has faked an injury in the workplace without cameras catching them in the act. But the consequences of undetected workers’ compensation fraud are enormous. Fraud is a costly financial burden to employers and taxpayers, and it interferes with providing benefits to the vast majority of injured workers with legitimate claims.

Related: The keys to successful workers’ comp claim outcomes

If an employer suspects an employee has attempted to create a fake injury or fraudulent claim, there are several steps to follow up on right away:

• Identify and interview any witnesses to the injury.
• Did you notice anything unusual in the area the injury occurred (items on the floor, wet floor, torn carpet)? If the injured worker is alleging they tripped on something, secure the evidence and take pictures of the site.
• Was there anything unusual about the injured worker prior to the injury (limping or favoring any body parts)? It could indicate an attempt to reframe an existing non-occupational injury as a workers’ compensation claim.
• Check to see if they are on social media and review for any physical activities.
• Obtain an Insurance Services Office claims report to see if the injured worker has a history of claims.
• Take several statements from the injured worker, and look for conflicting information.
• Assign surveillance to determine whether the injured worker is participating in activities inconsistent with the reported injury or has taken alternative employment during the disability.

Dishonest doctors and lawyers

Faked injuries may also be an indication of fraud perpetrated by dishonest medical providers or attorneys who operate “claim mills.” These fraud schemes recruit workers to submit fraudulent claims, can generate millions of dollars of undeserved benefits and impact employer loss experience resulting in higher workers’ compensation premiums. It’s important that claimants understand that their participation in reporting fraudulent claims exposes them to prosecution and severe penalties.

The following are several red flags that could be indications of a faked workers’ compensation injury:

• There are no witnesses to the injury. Was it unusual that the employee would be alone or out of place at the time the injury?
• The injury occurs at the end of the day on a Friday or on a Monday morning. The worker may have sustained a non-occupational injury over the weekend.
• The employee changes the story about what happened. Their statement to a treating doctor is different from what they reported to the emergency room or on the initial report of injury.
• The worker has a history of previous claims. Someone who has received significant workers’ compensation payments previously may try to go to the same well again.
• There’s a delay reporting the injury. If a worker reports an injury months after it allegedly occurred, it could indicate the possibility the claimant was recruited by a claims mill.
• The worker is disgruntled, on disciplinary action, or involved in a labor dispute. Employees may use a workers’ compensation claim to retaliate against their employer, or delay termination.
• The worker (or a medical provider) refuses certain diagnostic tests or imaging. Avoidance of examinations that could confirm the existence of the reported injury is a key fraud indicator.
• The injured worker has significant financial problems. The claimant may be trying to find a way to gain additional funds through a fraudulent claim.
• The injured worker is hard to reach during their disability. A worker who does not return phone calls or emails could be avoiding requests for additional information or could be employed elsewhere.
• The worker refuses modified-duty work or other return-to-work protocols. It could be an attempt to prolong their disability and could be a tactic of unscrupulous medical providers to get additional money.

Employers who suspect a faked occupational injury or other workers’ compensation fraud or abuse should seek assistance from their insurer or claims administrator. Potentially fraudulent claims are referred to the Special Investigation Unit (SIU), and cases with enough evidence are sent to the District Attorney for prosecution.

Stacey Gunn (sgunn@keenan.com), assistant vice president, is responsible for leading Keenan’s SIU/Fraud Unit, training and development, and vendor management. She has more than 20 years of experience and is certified by the Insurance Educational Association, Workers’ Compensation Claims Professionals Association and California Office of Self Insurance Plans.

Read more: 

• The connection between high deductibles and workers’ comp claims
• Expanding paid-leave regulations make workers’ comp more complicated
• 7 tips to protect your business from employee fraud