Laura Miller

Article Summary:

Educating yourself is the most effective way to fight workers compensation fraud.

Fighting Workers Compensation Insurance Fraud

Workers’ Compensation Insurance fraud is a concern for many employers. Rising costs and a broken system are resulting frustration and concern. Unfortunately, fraud is difficult to prove. Fraud and abuse are often confused, leaving an employer feeling that their insurance company is not helping them combat fraud. Educating yourself on fraud is the most effective way to fight it.

First, let’s get the definitions of fraud and abuse. According to Webster’s Dictionary;

Fraud-intentional deceit

Abuse-to use wrongly

If you suspect fraud, you have to prove that your injured employee is intentionally deceiving you and your insurance company for personal gain. If your employee is merely abusing the workers’ compensation system it will be difficult to charge your injured employee with fraud in court. So how do you prove it is fraud and not abuse? You have to be diligent in your injury investigations and ask the right questions. If you are suspicious that an employee is committing fraud, it is imperative that you ask questions that will help you to prove deceit. You have to catch them in a lie.

Here’s an example;

A year ago, your employee injured their back lifting a box at your facility. It is a soft tissue injury and therefore it is difficult to tell the extent of the injury other than the injured’s description of their pain. You suspect they are malingering, that they have recovered from the injury months ago but are prolonging the injury in order to continue to receive benefits. Merely suspecting that they are malingering will not stand up as fraud in court. You must prove deceit. Here’s how:

  • Sit down with your employee for an interview. Ask them how they are doing. Ask them what specific activities they can no longer perform as a result of their injury. Write down your discussion.

  • Call your insurance company and request an investigation that includes surveillance. Be sure to send your insurance company and the investigator the list of activities that the employee claims they are unable to perform as a direct result of their injury. This will help the investigator possibly tape your injured worker engaging in those activities, thus proving deceit.

  • Find out when your employees next doctor appointment is. Have the investigator perform surveillance on the day of the appointment, both before and after the appointment. Review the doctor’s report against the surveillance tape. Did the employee tell the doctor that they cannot lift more than 10 pounds? Did the doctor restrict the employee from lifting more than 10 pounds? Does the surveillance tape on the day of the appointment show the employee repeatedly lifting their 30 pound toddler?

Work with your insurance company and your investigator to help combat fraud. There are no guarantees that even the most diligent investigation will reveal fraud, however playing an active part in the investigation will increase your ability to protect your company and its interests.

Laura K. Miller is the President and founder of LKM Consulting, a business management firm specializing in Human Resources and Workers’ Compensation Cost Control. Before founding LKM Consulting, Laura worked as the Controller of a small, California manufacturing firm for nine years. After helping her employer overcome the challenges of high workers’ compensation insurance costs and human resource compliance, she decided to help other small business owners. For information about speaking availability and consulting services, email her at [email protected]. You can sign-up for her free, monthly ezine at

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