Workers' Compensation Fraud

Summary: Workers’ compensation fraud hurts an entire organization. In this article, we’ll discuss how to spot potentially fraudulent workers’ compensation claims, including what impact the COVID-19 pandemic has had on fraudulent claims, and what employers can to do guard themselves against employee workers’ comp fraud.

By Jon S. Shifflett, AVP, North American Investigations

How to Detect and Report Workers’ Comp Fraud

Workers’ compensation coverage is designed to address legitimate workplace accidents and injuries, providing benefits for an injured employee’s medical care and related costs, retraining and lost wages. The majority of workers’ compensation claims are legitimate. However, the National Insurance Crime Bureau states that workers’ compensation fraud and medical fraud are a significant contributor to the annual $30 billion insurance fraud issue throughout the United States.



Fraudulent workers’ comp claims can be filed in any type of workplace, from a manufacturing plant or restaurant to an office setting. Employees committing the fraud often claim an injury they suffered on the job is more severe than it is. Their goal is to receive generous payments for their medical expenses and lost wages while they cannot work – payments that may not be necessary.

Spotting Fraudulent Workers’ Compensation Claims

Employers can watch for certain warning signs that indicate common types of workers’ compensation fraud. AmTrust’s Special Investigations Unit created a list of guidelines to help spot a potentially fraudulent workers’ compensation claim. Here are a few of the major warning signs:

• The alleged injury occurred on a Monday or occurred late on a Friday but was not reported until the following Monday
• A substantial delay occurs in reporting the incident or filing of the First Report of Injury
• The accident occurs just before a strike, job termination, layoff, end of a project, or end of seasonal work
• The report of injury is submitted post-termination, after receipt of disciplinary action, after any adverse employment activity, or after a long period of absence
• The accident was un-witnessed
• The accident occurs in an area where an employee would not normally be working
• The accident is not the type of work that the employee should have been performing. (Example: an office worker lifting heavy objects)
• The injured worker has a history of soft tissue, workers’ compensation or subjective injury claims
• There are difficulties contacting the injured worker at home when they are allegedly unable to work
• The injured worker has family obligations such as infants or dependent parents requiring care
• A “tip” is received that the injured worker is employed elsewhere or is (or will be) engaged in activity inconsistent with the injury
• The injured worker refuses medical treatment or a diagnostic procedure to confirm an injury or condition
• The injured worker has disability policies that were recently obtained
• The injured worker’s treating physician and/or his attorney are known to be suspect
• Disability is not supported by objective medical findings
• The statement provided by the injured worker is inconsistent with statements provided by witnesses, the employer, medical provider, or lacks a credible scenario
• The injured worker frequently changes physicians, especially following a release to return to work
• A pattern of injuries is noted with the employer, or with the utilization of counsel and/or medical providers
• Documentation has been submitted that appears to have been forged or altered

Individually, these signs do not necessarily mean a workers’ compensation injury isn’t valid. However, when several of them occur simultaneously, it’s important to take a closer look at the situation and the employee’s claim.

Is COVID-19 Impacting Workers’ Compensation Fraud?

Many claims being adjusted are related to first responders and other essential workers with an increased risk of exposure to the virus on the job.

COVID-19 could impact fraudulent workers’ compensation claims not directly related to the virus itself but by increasing the potential for opportunity fraud with an uncertain economy. Individuals may encounter situations that lead to financial strain because of the current economic situation surrounding COVID-19, such as layoffs or reduced hours. Filing a workers' compensation claim directly after a change in job status could be a red flag indicating potential workers’ compensation fraud, as workers’ compensation often pays more and longer than unemployment benefits. Employers who suspect an injury claim may be fraudulent should review the above checklist and follow our suggestions below.

Provider fraud could also be an issue as the pandemic continues, with telehealth visits increasing and, subsequently, billings increasing – and risk for fraud increasing, too.

How Can Employers Combat Workers’ Compensation Fraud?

Employers must encourage honesty and education when it comes to submitting workers’ compensation claims. AmTrust’s Loss Control department offers an array of workers’ compensation fraud posters business owners can post throughout their facilities to help stress the importance of reporting any suspected cases of fraud. Workers’ compensation fraud is a felony, and fraudulent claims hurt the entire organization.

Employers can safeguard their businesses from fraud by following these four guidelines:

1. Report the claim as soon as possible. Don’t hesitate to report the injury claim immediately. File your state paperwork immediately to initiate the claim documentation process, particularly when and where the injury allegedly occurred, and send the employee to your preferred medical provider to document the injury right away.
2. Talk to witnesses. A lack of documentation increases the suspicion of a claim. Find and document witness testimony, as it’s critically important to talk to other employees who may have seen what happened firsthand. Not many people today work by themselves, so it’s likely somebody saw it.
3. Check the video. Most workplaces today have internal video surveillance systems available. If it’s an unwitnessed or questionable claim, preserve the video as critical evidence in your case. It can help document or refute what’s claimed.
4. Report any suspicions. If you suspect fraud, report it to the adjuster or to the insurer’s special investigations unit or fraud hotline, which can be done anonymously.

Workers’ Compensation Coverage from AmTrust Financial

AmTrust is a leader in workers’ compensation coverage for small- to mid-sized businesses. We understand the importance of flexibility in today’s business environment, and we offer specific packages our insureds need to comply and succeed. For more information about our small business insurance solutions, please contact us today.

Jon Shifflett joined AmTrust in July of 2018, and as AVP of North American Investigations, he is responsible for SIU program management throughout the United States, including oversight of regulatory compliance, coordinating with claims management and fraud training. He's been a senior leader in insurance investigations globally for the past 14 years, after working 18 years in the Corporate Security and Investigations field.

This material is for informational purposes only and is not legal or business advice. Neither AmTrust Financial Services, Inc. nor any of its subsidiaries or affiliates represents or warrants that the information contained herein is appropriate or suitable for any specific business or legal purpose. Readers seeking resolution of specific questions should consult their business and/or legal advisors. Coverages may vary by location. Contact your local RSM for more information.