Workers' Compensation

Warning Signs of Workers’ Compensation Fraud

Ella Baker
Warning Signs of Workers’ Compensation Fraud
Reading time 5 Mins
Published on Jun 5
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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 when an employee makes a fraudulent workers’ compensation claim. Claimant fraud is the most common type of fraud perpetrated within the workers’ compensation system. While the warning signs of fraud can vary from claim to claim, there are some common red flags that could signal potential fraud.

Employees who are disgruntled or dreading an impending change in employment status, such as the conclusion of seasonal work, the end of a project, layoff, or termination, are among the most likely to file a fraudulent workers’ compensation claim. 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 suspicion.

Finally, malingering is also a common practice in claimant fraud. Malingerers typically insist on their inability to return to work after the allotted amount of time following an injury. Malingering refers to the feigning or exaggeration of illness in order to avoid work.

Employer Fraud

While claimant fraud may be the most well-known type of fraud, employer fraud is actually among the costliest to the system. 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 medicine.

Common warning signs of provider fraud include billing for services that were never received by the claimant or for use of equipment or tests that were never performed. Another typical practice is billing for treatment of workers who never received treatment from the provider. Double or duplicate billing is also a red flag and typically occurs when a provider bills both workers’ compensation insurance and the claimant’s private insurance provider.

Other signs to watch out for include billing for services that don’t fit the reported injury, a significant and unnecessary increase in the frequency of visits, and long-term treatment of an injury without any improvement. Finally, medical providers or law teams that are frequently involved in questionable cases may also be a signal of potential fraud.

Reporting Fraud

The Ohio BWC relies heavily on members of the public, including workers, employers, and medical providers, to report suspected fraud. BWC offers an anonymous online Fraud Allegation Form for those wishing to report suspected fraud. When reporting suspected fraud, the BWC asks that reporters please provide as much information as possible, including:

  • Name and address of person being reported;
  • Details about the suspected improper or fraudulent activity;
  • Other general information pertaining to the suspected fraudulent activity.

This information allows the BWC to conduct an investigation that is thorough, fair and objective.

Your partners in identifying and preventing potential fraud

Your workers’ compensation insurance policy protects your company and your employees. The Ohio BWC and your MCO can help you identify and prevent potential fraud activities.

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