How to prevent workers’ compensation fraud

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You can help your workers’ comp clients prevent fraud with these steps


  1. Communicate clearly: create and socialize your workplace safety program.
  2. Assemble your resources: Employee screening, drug testing, choosing a workplace health provider.
  3. Steps to take when an injury occurs immediately and in following weeks.


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

We’ve compiled information from insurers, HR practitioners, attorneys, claims experts and more. While by no means an exhaustive checklist, sharing this list with your work comp clients 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 company culture keeps safety top-of-mind, it’s harder to fake an injury because the circumstances just aren’t there.

Related: OSHA’s top 10 violations for 2020 with your work comp clients [slideshow]

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.

Related: Insurance fraud: Red flags to help agents spot potential fraudsters


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. “The cost of performing background checks is more than worthwhile if it helps avoid just one workers’ compensation claim,” said Duncan Prince of Invensure Insurance Brokers in an EHS Today article.

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 company.

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, says work comp insurance specialist MEMIC: 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. As we mentioned in an earlier post on return-to-work strategies, 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.

Related: Top reasons to add Arrowhead’s Workers’ Comp program to your book of business

Agents, take a look at our Workers’ Compensation Program to add to your portfolio of insurance solutions.

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
Seven Steps You Can Take to Stop Workers’ Compensation Fraud
An Integrated Strategy To Prevent Claimant Fraud In Workers’ Compensation

This article originally ran in our Tribal blogpost; it has been updated and modified to better fit the needs of Arrowhead’s workers’ compensation producers and their clients.