Worker’s Compensation Fraud and How to Limit the Exposure

Employees can commit workers’ compensation fraud in several ways, including misrepresenting an injury that had nothing to do with their employment as a work-related injury, exaggerating an injury, faking an injury, and returning to work for a different employer while continuing to collect workers’ compensation benefits.

Strategies to Discourage Workers’ Compensation Fraud

Companies should consider these strategies to discourage fraudulent behavior as it relates to workers’ compensation:

• Before the hire, make sure a candidate would be physically able to perform their job duties. Pre-employment assessments can help clarify the physical demands of the job up front.
• Educate employees about workers’ compensation fraud and its legal consequences. Promote awareness about the economic impact of fraud on the company and coworkers.
• Encourage employees to report suspicious activity or concerns. Promptly investigate all claims thoroughly. Use surveillance and data analytics where appropriate to detect inconsistencies.
• Invest in proactive safety training and hazard prevention to reduce injuries.
• Enforce strict disciplinary measures, including termination and prosecution of anyone found committing fraud.
• Employee Assistance Programs provide support for employees dealing with financial or personal stress, which can reduce the temptation to commit fraud.

What to do if a legitimate injury occurs

When a legitimate injury occurs, there are things an employer can do to reduce the injured worker’s anxiety. By taking the following actions, employers can alleviate employee concerns, reduce anxiety about the injury and the claims process, and foster a supportive environment that promotes recovery and a successful return to work.

• Be compassionate and show concern for the employee’s injury and well-being. Make sure the employee receives prompt medical treatment and appropriate ongoing care.
• Keep the lines of communication open. Let the employee know you care about them.
• Make sure the insurance carrier is promptly making payments and scheduling treatment for the employee. Delays on the carrier side can cause a frustrated employee to seek counsel.
• Provide return-to-work support. A modified duty position and a supportive environment encourages cooperation and reduces adversarial feelings that might lead to legal action.
• Demonstrate fairness and compliance by following all legal and regulatory requirements related to workers’ compensation. Treat the employee with consistent fairness.

Other types of workers’ compensation fraud

Healthcare provider fraud

• Billing for treatments or tests that were never performed
• Intentionally upcoding or charging for more expensive procedures
• Recommending or providing treatments that are not medically necessary to increase billing
• Paying kickbacks to parties who refer patients under workers’ compensation

Employer fraud

• Classifying workers as independent contractors to reduce premium costs.
• Failing to report workplace injuries or pressuring employees not to file claims to keep premiums low.
• Exaggerating payroll or misrepresenting job duties to qualify for lower premium rates.

In Summary

By working together and staying vigilant, everyone can help reduce workers’ compensation fraud, protecting the system for those who genuinely need it.

Most carriers have fraud hotlines that allow individuals to anonymously report suspected workers’ compensation fraud. These hotlines encourage employees, employers, and the public to report suspicious activity without fear of retaliation or exposure.