Was That Worker's Injury Real or Fake?

Man in oranage reflective suit with his right arm in a sling
Image courtesy of [Monty Rakusen] / getty Images.

Most claims filed by workers for on-the-job injuries are legitimate. Yet, a small percentage are fraudulent. In some cases, employees fake injuries to collect workers compensation benefits. Faked injuries are a type of workers compensation fraud. When a worker collects benefits to which he or she is not entitled, your company pays a price. Thus, it is important to know the warning signs that an employee may have filed a false workers compensation claim.

Example

The following scenario demonstrates how a worker might fake an injury to collect workers compensation benefits. Fred is employed by the Master Machine Shop as a lathe operator. Fred has been off work for several months due to an alleged hand injury. He claims that the injury occurred on a Friday afternoon when he worked late at the shop. Fred filed a workers compensation claim the following Monday. He has been receiving benefits for a temporary total disability.

Five months after Fred's accident, a workers compensation adjuster phones Fred's boss. The adjuster reports that Fred has been committing insurance fraud. It seems that an investigator observed Fred operating a tree-trimming business during his "disability." Fred was also seen operating a lathe at another machine shop. Fred is subsequently convicted of fraud. He is ordered to reimburse the Master Machine Shop's workers compensation insurer for the money he received in disability payments.

Provider Fraud

Workers don't always commit fraud alone. Some work in cahoots with dishonest physicians, chiropractors and other medical practitioners. A crooked provider may submit a claim for treatment that the worker never received. Alternatively, he or she may provide unnecessary treatment or inflate the cost of the treatment provided.

The practitioner may then pay kickbacks to the worker in exchange for faking an injury.

Some providers join forces with crooked attorneys to operate "claim mills" that recruit workers to submit fraudulent claims. A claim mill can generate millions of dollars in fake claims.

Impact on Your Business

Any fraudulent claim can have a significant impact on your small business. For one thing, a worker who fakes a disability is not doing his or her job. You may have to pay overtime wages to other employees or hire a temporary worker to fill the gap. The extra costs may make your company less productive.

A fraudulent claim may also adversely affect your company's loss history. If your firm is subject to experience rating, payments your insurer makes on the worker's behalf may increase your firm's experience modifier. If your modifier goes up, the premium you pay for your workers compensation policy may go up as well.

Prevention

You can help prevent workers compensation fraud by taking the following steps:

  • Promote a positive atmosphere in the workplace. Satisfied workers are less likely than disgruntled ones to commit fraud.
  • Conduct a thorough background check on prospective employees so you can weed out those who have committed fraud in the past.
  • Make workplace safety a priority. Create and implement a comprehensive safety plan.
  • Establish procedures for reporting accidents, responding to injuries, and filing claims.
  • Implement a return-to-work program for injured employees.
  • Inform workers that your company does not tolerate fraudulent behavior.

Signs of Fake Injuries

It is impossible to entirely eliminate fraud from the workplace, so it is important to watch for signs of possible illicit acts. The following behaviors may indicate an employee has committed workers compensation fraud. If an employee of yours acts suspiciously before or after filing a claim, contact your workers compensation insurer.

  • The injury occurred either at the end of the day on a Friday or on a Monday. The worker may actually have sustained an injury over the weekend.
  • There were no witnesses to the injury. This can be a red flag if the employee normally works with other workers, and the injury occurred during a narrow time frame when the employee was alone.
  • The employee keeps changing his or her story about what happened. For instance, a food service worker first alleges that she slipped and fell in a puddle of water. Later, she says she tripped over a broom.
  • The worker has delayed reporting the injury. For example, a worker reports an injury that allegedly occurred three months ago.
  • The worker is unhappy or has behavioral issues. An employee who is dissatisfied with his or her job may be more likely to fake an injury. The same is true of a worker that has had performance or behavioral problems in the past.
  • The worker has filed previous claims. A worker who has received significant payments in the past or has filed a lawsuit may seeking a financial gain.
  • The worker refuses diagnostic tests.  For example, an employee declines an MRI that could confirm the existence of a knee injury.
  • The worker is difficult to reach. A worker may refuse to return phone calls or emails.