How to prevent Workers’ Compensation fraud


Due to the prevalence of workers’ compensation fraud across the U.S., organizations are responding with a list of best practices to help fight this epidemic. You can apply many of these same tactics to help fight workers’ comp fraud in your own organization.

We’ve compiled information from insurers, HR practitioners, attorneys, claims experts and more. While by no means an exhaustive checklist, it can help prevent workers’ comp fraud in many cases, or at least make it more difficult for would-be fraudsters.

Communicate clearly

1. Make workplace safety a priority with your safety program. Hold regular safety training meetings. Reward workers when safety milestones are met. When it’s clear that your organizational culture keeps safety top-of-mind, it’s harder to fake an injury because the circumstances just aren’t there.

2. Have a clear policy regarding workers’ compensation. Explain to employees the purpose of this program, its benefits – but also its obligations. Help employees to understand how the program works and your zero-tolerance stance on fraud. Emphasize that suspicions of workers’ compensation fraud will be investigated and legally pursued when warranted. Also be sure employees understand how they can anonymously report their suspicions of fraud.

3. Promote a fraud-free workplace. Use emails, posters and employee newsletters to spotlight work comp fraud as a serious crime, detailing the anonymous reporting process.

Assemble the resources you’ll need

4. Choose a designated workers’ comp medical provider. Use this provider consistently for all employees. Work closely with this provider to ensure

  • Injuries at each occurrence are consistent with the employee’s explanation of the accident.
  • The list of essential duties provided to the injured worker is also given to you, so that you know when the worker is cleared for light duty or regular return to work.

5. Screen new hires thoroughly. Run thorough background checks on potential employees before hiring. Red flags to look for include excessive job hopping and previous fraudulent activity, whether in workers’ comp or in another arena. Your background check should include credit records, social security number, educational records, driving records and criminal records.

6. Consider installing video equipment. Monitoring employee activity has proven to be a deterrent not only of work comp fraud, but also other workplace crimes.

7. Consider drug testing. Review your state laws before you proceed, but it’s safe to say that drug users typically aren’t the best employees: not only are their actions typically more unsafe, but they’re also more likely to file false claims. So, instituting a drug testing policy any time an accident occurs may not only deter workers’ compensation fraud, but may also reduce workplace injuries overall.

When an injury occurs

8. Establish a plan for workplace injury. Designate a point person in each division or group to be in charge when an injury occurs. This person is responsible for: calling for medical help as needed; alerting the predetermined medical provider of an incoming injured worker; logging a description of the accident and injury; noting witnesses’ names; preserving any workplace evidence; and reporting the injury to HR and the insurance claims contact within your organization.

9. Investigate the claim. Make sure that HR and supervisors are trained to recognize fraud and know what to do if they suspect wrongdoing. Gathering and logging facts will not only help mitigate fraud – but may also uncover some procedural changes that might help reduce future accidents. Be sure to write down eyewitness accounts right away, while memories are fresh.

10. Look for red flags. Be on the lookout for these conditions which may point to fraud: the injured person is a job hopper or has a work history riddled with holes; the claimant has a child support lien or an extensive criminal record; the claimant seems to have exaggerated details about the incident or injury; co-workers are showing skepticism.

Related: Avoid these top 7 Workers’ Compensation claim mistakes

11. Listen to the grapevine. After the injury and throughout the claims process, keep an ear to the ground. While many rumors are just that – rumors, employee conversations may be a source of information about the accident or injured worker. If an employee comes forward with suspicions of work comp fraud, take them seriously without jumping to conclusions.

12. Stay in touch with the injured worker. Maintain a regular schedule of communication, monitoring their healing progress. Showing personal and company concern for the worker helps ease emotional strain and may help mitigate the temptation to become an opportunist – to milk the system for more money or more time off.

13. Ease the way for return to work. Assure the claimant that your goal is to get them well again and back to work. Work to create a light-duty job for the recovering employee.

Regularly training management as to what to do when an injury occurs and red flags to watch for, as well as consistent employee training on workplace safety, the purpose of work comp and the fraud detection you have in place, will go a long way towards mitigating workers’ compensation fraud.

For more information about Workers’ Compensation, please contact your Preferred Loss Control Consultant.

Tips for Preventing Fraud in Workers’ Compensation Claims, HR Daily Advisor
Here are the 3 most common types of workers’ comp fraud, and how to prevent them
An Integrated Strategy To Prevent Claimant Fraud In Workers’ Compensation

This article originally appeared on Arrowhead’s corporate blog. It has been used with permission and has been updated and modified to better fit the needs of our Preferred members.