Identifying potential workers’ compensation fraud involves recognizing certain red flags or indicators that may suggest fraudulent activity. Here are some common indicators of workers’ comp fraud in progress:

1. Delay in Reporting the Injury

• Red Flag: The employee delays reporting the injury.
• Reason: Genuine injuries are typically reported immediately, after all, you just got hurt. Don’t you want to go see a doctor? Delays may indicate the injury did not occur at work. This type of behavior is also frequently seen as a last ditch effort to secure additional money from an employer once they realize they may be facing disciplinary measures for an unrelated problem. For example, an employee who is about to be fired for missing a significant about of work may suddenly turn up with a back injury they sustained at work. This injury will now force them to A) miss any additional work they were scheduled for and B) Cost untold thousands of dollars, as will continue to receive a large amount of their average paycheck while their claim is investigated. This process may take years.

2. Lack of Witnesses

• Red Flag: No witnesses to the injury, especially when it occurred in a normally populated area.
• Reason: A lack of witnesses may suggest the injury happened outside of work. Consequently, this also has the fringe benefit of turning their case into a “He said-She said” argument, especially if there are no cameras in the area.

3. Conflicting Descriptions

• Red Flag: The description of the incident varies between the employee, medical provider, and employer.
• Reason: Inconsistent accounts can indicate a fabricated or exaggerated injury. Like many deceptions, if the employee in question is in fact attempting to file a fraudulent claim, their lie will likely need to evolve throughout the investigation as various parties point out the flaws in the original lie. A doctor will likely ask questions a supervisor wouldn’t know to ask. An attorney will ask questions neither the doctor nor the supervisor asked. And an investigator will ask questions no one thought to ask.

4. History of Claims

• Red Flag: The employee has a history of filing multiple workers’ comp claims.
• Reason: A pattern of claims can be a strong indicator of fraudulent activity. Believe it or not, filing fraudulent claims is in fact a profession in and of itself for some people. These cases will also often be the most difficult to deal with, as these subjects know the system and are skilled at evading many of the most common red flags that signal employers to take a closer look.

5. Unusual Circumstances

• Red Flag: The injury occurs immediately before or after a weekend, holiday, or vacation.
• Reason: Timing may suggest the injury occurred during personal time and not at work.

6. Reluctance to Cooperate

• Red Flag: The employee is reluctant to provide details about the injury or undergo a medical examination.
• Reason: Lack of cooperation can be a tactic to avoid revealing inconsistencies or the true nature of the injury. Refusing to set doctors appointments or setting appointments and them missing them is a common delaying tactic. Again, the employee will continue to receive benefits during this time whether they make the appointment or not, and rescheduling certain appointments can take months before the next appointment is available. On a personal note, if I had a dollar for every time I’ve seen an employee miss an appointment because “they got stuck in traffic” while I’m actively watching them lounge on a beach somewhere, I’d be retired and sitting on a beach myself.

7. Overly Detailed or Vague Description

• Red Flag: The injury description is either excessively detailed or extremely vague.
• Reason: An overly detailed story may be rehearsed, while a vague description might be a sign of fabrication. The truth is the truth, you shouldn’t have to think about it. Details that come and go with each retelling is never a good sign.

8. Discrepancies in Medical Records

• Red Flag: Medical records show discrepancies or do not support the severity of the claimed injury.
• Reason: Inconsistent medical documentation can indicate that the injury is exaggerated or non-existent.

9. Employee Behavior

• Red Flag: The employee is observed engaging in activities inconsistent with the reported injury.
• Reason: This suggests the injury is not as severe as claimed or may be entirely fabricated. Some injuries are entirely real when they’re reported, and the lie comes afterwards. This is known as malingering, or in layman terms, they were hurt but it got better. While the employee reported an honest injury initially, it has since healed and in the meal time the employee is perhaps realizing that getting paid a significant portion of their regular paycheck while not having to work is a pretty good gig! Depending on the employee, reactions to this realization may range from getting paid to stay home and play video games, all the way to going out and acquiring a second job, thus receiving two incomes from performing only one role (double-dipping).

10. Financial Difficulties

• Red Flag: The employee is experiencing financial problems or has significant debts.
• Reason: Financial stress can motivate an individual to commit fraud for financial gain. Being on workers comp means a guaranteed check in the mail even if you’re not going to work. As discussed above, some employees use this as an opportunity to acquire a second job and effectively double their income without working 90 hrs a week.

11. Employment Issues

• Red Flag: The employee is facing disciplinary action, demotion, or layoff.
• Reason: An impending job issue can prompt an employee to file a fraudulent claim as a means of retaliation or financial security. This tactic keeps the money rolling in long after the employee was scheduled to be dismissed, and is an effective means of punishing an employer for a dismissal the employee feels was unjust. It may also be a delaying tactic, giving the employee paid time to look for new work, or sometimes just not work at all while still receiving a paycheck.

12. Excessive Treatment

• Red Flag: The employee seeks treatment from multiple doctors or requests excessive medical procedures.
• Reason: Over-treatment can be a tactic to extend benefits or increase the settlement amount.

13. Travel Patterns

• Red Flag: The employee has a history of frequently traveling far distances for medical care.
• Reason: This could indicate doctor shopping to find a more lenient provider.

Conclusion

While these indicators do not confirm fraud on their own, they can collectively suggest the need for a more thorough investigation. By recognizing and addressing these red flags promptly, employers and insurers can better protect against fraudulent workers’ comp claims. Time is of the essence here. The longer it takes to start an investigation, the more evidence begins to disappear and opportunities for surveillance to refute the claim are missed.