What is Workers’ Compensation Fraud?

Workers Comp Fraud 1

What is Workers’ Compensation Fraud?

Part One of Two on Fighting Fraud with Insured Solutions

Workplace injuries happen – and Workers’ Compensation Insurance is designed to be helpful when it does. It helps employees who have been injured on the job by covering medical costs and replacing missed income, and it protects employers from being sued by injured staff. 

But unfortunately, it doesn’t always work that smoothly. That’s because workers’ comp scams and fraudulent claims are a billion-dollar-a-year problem. In fact, 20-30% of all workers’ comp payments are based on some form of fraud or misdirection.

There are two major types of workers’ comp fraud that businesses might run into: Employee fraud, and health care provider fraud.

Employee fraud

When you think about employee fraud, you may instantly call to mind a low-class scammer faking a workplace injury in order to receive benefits. While there certainly are those types around, sometimes the fraud isn’t so direct. In fact, the fraudulent employee may not readily understand or admit there’s anything wrong with their behavior. In addition to the blatant “give-me-cash-and-I’ll-go-away” fakers, employee fraud could also consist of:

Off-the-clock injuries. An employee may very well be hurt, and thus feel entitled to compensation – but if that injury didn’t explicitly occur while at work or on work business, it’s fraud.   

Old injuries. Maybe the employee has had a bad knee for years, and took a funny step that caused the injury to return. It’s hardly a work-related injury; therefore, it’s fraud.

Inflated injuries. An employee sustained a boo-boo on the job – but a minor or fleeting pain isn’t the same thing as a serious injury that would keep them from doing their job. Saying otherwise is fraud.

Malingering. What if a legitimate injury did occur on the job? That doesn’t give employees the right to stay home and get benefits well after they’ve healed. Doing so is fraud.

Health Care Provider Fraud

If a worker gets hurt, it can be pretty scary, and they may look to others for advice on what to do next. However, that advice could come from opportunistic lawyers and bogus medical clinics who are working together to take advantage of injuries and maximize their billings. Health care provider fraud can take the form of:

Fake or inflated injuries. Knowing they’ve got a workers’ comp case, a medical clinic could make the worker think his or her injuries are much worse than they really are. After tacking on unnecessary tests and treatments, they pass the bill on to the insurance company.

Threat of a lawsuit. Once the medical provider convinces the worker that his injuries are severe (while racking up a hefty bill of useless treatments), a lawyer will then file a suit against the insurance company, knowing that each medical finding will help wrangle up a hefty settlement. They may even hire third-party “recruiters” to find employees to be a part of their scam. Once the insurance company agrees to settle, the scammers divvy up the profits.

Fabricated health clinics. In some states, entire health care operations are created just for the purpose of scamming. These clinics have no licensed doctors and don’t offer any real help to the worker – just a big, fat bill for their insurance to pay.

When it comes to workers’ compensation fraud, there’s a lot of quick-moving parts (and parties) attempting to confuse and frustrate the affected business. But with a partner like Insured Solutions, workers’ comp claims are handled with speed and expertise that encourages employees to recover and get back to work fast, and scammers to pack up and move along.

For more on Insured Solutions’ diligent post-claims management process, stay tuned for part two of this blog, or download our white paper now.







Carrie Charity Murphy is a freelance writer for Insured Solutions and Improv comedienne based in Louisville, Kentucky. She lives with her husband Ben and their two dogs, Sprocket and Ms. Brisby.


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