Workers Compensation Fraud Research Paper

Warning Signs of Workers’ Compensation Fraud

Recognizing the red flags can save your company time and money

Worker’s compensation fraud is a multi-billion dollar problem that can be countered by watching for common warning signs. Occurring when someone knowingly or willfully makes a false claim or withholds information in order to receive workers’ compensation benefits or to prevent others from receiving benefits to which they are entitled, fraud can be perpetrated by employees, employers, and healthcare providers. Workers’ compensation is meant to provide a safety net for injured workers and their employers, and abuse of the system can have a serious impact on everyone that participates in the system.

Claimant Fraud

Claimant fraud occurs

New employees are also statistically more likely to commit workers’ compensation fraud than longer term employees.

Be cautious of reports filed on Monday mornings or late on Friday afternoons, particularly if your employees work a typical 5-day work week. Other warning signs include an injury or accident that occurs without witnesses and inconsistencies in the employee’s report of how the injury occurred. If an employee refuses treatment or the injury conflicts with the diagnosis of the medical provider, these may also be signs of fraud.

Additionally, employers should be cautious when an employee has a history of making workers’ compensation claims. If a worker waits to report an injury without a valid explanation for the delay or performs physical activities outside of work that should be impossible given their injury, employers may have reason for

Employer fraud occurs when a business knowingly falsifies records to avoid paying appropriate premiums or prevent employees from receiving workers’ compensation benefits to which they are entitled.

The most flagrant sign of fraud is when an employer willingly and knowingly refuses to purchase workers’ compensation insurance. Another warning sign is an employer who only pays premiums in cash. Employees should be wary of employers who deny valid claims of injured workers, misclassify their job types, or require employees to perform duties that are incongruent with which their job title.

Additionally, employees who underreport the number of employees or payroll totals are also committing workers’ compensation fraud. A final warning sign may be an employer reports an unusually high number of clerical to non-clerical employees in relation to the type of business, such as a trucking company that lists a large number of employees as clerical.

Medical or Healthcare Provider Fraud

Medical and healthcare providers are often the perpetrators of workers’ compensation fraud. This type of fraud is not only a violation of state and federal law, but can also cost a provider their license to practice