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The best way to prevent Workers' Compensation fraud is through education.

Employees should receive annual training on policies and procedures relating to fraud, the company’s code of conduct and ethics policies, the definition of what is considered fraudulent behavior and how it affects the company’s bottom line and ultimately their paycheck.

The California State Compensation Insurance Fund offers these ten practical tips to fight fraud:

  1. Show your employees you care about them: Companies that treat workers fairly and with concern have the fewest job injuries and fraudulent claims.
  2. Maintain a safe work environment: Every employer should have an injury and illness prevention program.
  3. Educate your employees about Workers’ Compensation: The law requires you to inform your employees about their workers’ compensation rights.
  4. Establish procedures for reporting accidents: Familiarize employees and supervisors with Workers’ Compensation reporting procedures and have appropriate report forms on hand.
  5. Handle fired workers with care: Disgruntled ex-employees can be more likely to file false claims and can be easy prey for unscrupulous professionals.
  6. Publicize your tough stance against fraud: Encourage your carrier to investigate all suspicious claims, fight all improper claims and turn over all evidence of criminal wrongdoing to the district attorney’s office for prosecution.
  7. Investigate immediately: Investigate all injuries thoroughly.
  8. Pave the way for a smooth return to work: Keep in touch with injured employees and make it clear you’re looking forward to having them back at work as soon as the doctor gives the go-ahead.
  9. Don’t be an unwitting part of the fraud problems: There are several ways by which an employer can be accused and found guilty of Workers’ Compensation fraud. Don’t let it happen to you. Be aware that the following actions may be considered fraud:
    • Knowingly providing false or misleading information regarding entitlement to benefits to discourage an injured worker from filing or pursuing a claim.
    • Knowingly giving false information that causes the carrier to either deny benefits that should be paid or pay benefits that are not due.
    • Knowingly giving false information for the purpose of reducing the premium, rate or cost of your Workers’ Compensation insurance.
  10. Protect yourself by acting responsibly: Fraud is a serious accusation that, if not handled correctly, could put you in the middle of a lawsuit for libel or slander.

Workers' Comp Red Flag Checklist

While most Workers' Comp claims are legitimate, fraudulent claims occur and drive up costs unnecessarily. Red flags are indicators that the claim requires further investigation to assess legitimacy. The applicability of one or even several of these flags does not necessarily mean the claim is fraudulent, but it warrants further examination:

  1. Unexplainable delay in reporting
  2. No witnesses to the alleged injury-producing incident
  3. Insufficient detail was provided surrounding the injury-producing incident
  4. Alleged injury seems inconceivable considering the work which the claimant performs
  5. Injury is not visible (e.g., soft tissue injury)
  6. Degree of injury is not likely to result from alleged injury-producing incident
  7. Allegations or rumors of fraud and/or the claimant has been observed working elsewhere
  8. Incident was reported on a Monday morning (or after one or more days off work)
  9. Claimant has recently purchased disability insurance
  10. Claimant is a new employee
  11. Claimant has no health insurance coverage
  12. Claimant has used all available sick days and vacation days
  13. Claimant is known to have personal financial problems
  14. Claimant is physically active outside
  15. Claimant has submitted Worker’s Compensation claims in the past
  16. Inconsistencies revealed from the claimant’s initial description of the injury-producing incident
  17. Claimant is unusually familiar with the Workers’ Compensation system
  18. Claimant is uncooperative and/or objects to administrative controls intended to address Workers’ Compensation fraud
  19. Claimant does not provide a street address for a residence
  20. Employer is frequently unable to contact the claimant while off work due to an alleged injury
  21. Claimant obtained legal representation soon after the alleged incident and/or has obtained legal counsel with a questionable reputation
  22. Claimant has indemnity checks mailed to his/her residence
  23. Subsequent medical evaluations apparently contradict the initial evaluation
  24. Employee has missed scheduled physician visits or rehabilitation appointments
  25. Treatment being provided seems more extensive than the injury warrants
  26. Claimant has changed medical providers more than once after the initial treatment
  27. Claimant has been referred to a medical provider close in proximity to the referring medical provider