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October 23, 2013 in HR, Employee Management

Workers' Compensation Fraud Investigations & What to Look For

The threat of workers’ compensation fraud arose about the same time as workers’ compensation laws. As soon as those laws went into place, certain individuals looked for ways to exploit them, leading employers to the difficult question of what to do, and how to prove workers' compensation fraud. 

New York State How To Prove Workers' Compensation Fraud


Who Should You Call If You Think You Can Prove Workers' Compensation Fraud?

If you suspect or have compelling evidence of workers’ compensation fraud, contact your state’s workers’ compensation fraud bureau. The phone number can be found through an online browser search.

The appropriate bureau will likely have you fill out a fraud allegation form. Typically, it requires employers to provide the following information:

  • Name and address of the person or entity being reported.
  • A description of the suspected fraudulent activity.
  • Other general info pertaining to the suspected fraud. 

Although an investigation in some states may be based on mere suspicion, the more hard evidence an employer can provide, the better.

How to Prove Workers' Compensation Fraud

Frequently, fraud involves a worker exaggerating a claim based on a medical condition or working at a side job at the same time he or she is receiving benefits for being disabled. But some employers also commit fraud by underreporting payroll so they can benefit from lower premiums. In addition, health care providers are sometimes guilty of overbilling or billing for services that have never been rendered.

You can be vigilant by launching investigations into suspicious activities through the proper authorities (see box) or by hiring a private firm to do the leg work. But sometimes, a worker will lead you directly to the truth.

In one interesting case, a worker’s fraud was uncovered after he posted photos on his Facebook page. The photos showed him using rappelling gear at a construction job in Arizona while collecting benefits resulting from an injury suffered when he resided in another state. Literally, caught-red-handed by flaunting his status via the social media site, the worker eventually pled guilty to workers’ compensation fraud and was sentenced.

Understanding how to prove workers' compensation fraud is one of the toughest jobs for any employer, and many employers actually don't know what to look for. If they did, it would never happen. 

Signs to Look For When Trying to Prove Workers' Compensation Fraud

The cost of fraudulent workers’ compensation claims runs into the tens of billions of dollars each year. If anything, the problem appears to be getting worse.

What can be done to thwart or counteract the subterfuge?

Although every situation is different, here are some common red flags that usually merit closer attention.

    • The alleged injury occurs very early on Monday morning, or very late on Friday afternoon, but is not reported until the following Monday. Similarly, any other long delays in reporting a claim are suspicious.
    • An employee claims that an accident occurred immediately before or after a strike, termination, layoff, or the end of a major or seasonal project.
    • A worker has a history of staking suspicious or litigated claims or uses health care providers or counsel known for handling suspicious claims.
    • There are no witnesses to the accident or a worker’s own description either does not logically support the cause of the injury or it conflicts with other reputable information that has been provided.
    • An employee refuses to have a diagnostic procedure that will confirm the nature or extent of an injury.
    • A worker has a history of frequently changing physicians, addresses, or jobs –seemingly without any reason.
    • A worker is hard to reach by using the listed contact information.

Of course, none of these factors are conclusive proof of a fraudulent act, in and of themselves. Some danger signs may be dismissed by a reasonable explanation, yet an overabundance of such signs is often revealing.

In the end, employers must be vigilant. You never know what you may find or stumble across that may prove workers' compensation fraud. 

Workers' Compensation Fraud Proved Using Facebook

In one case, a worker voluntarily posted incriminating evidence online. An Arizona resident appeared to have an enviable job for a local construction firm, at least based on photos posted on his Facebook page. The candid shots showed him rappelling into a shaft and working in the great outdoors. His friends may have appreciated the display, but probably not as much as the fraud investigators with the Bureau of Workers’ Compensation (BWC) from another state.

At the time, he was supposed to be laid up with an injury that occurred while he resided in another state, which was paying him thousands of dollars in workers’ compensation benefits, even while he was working in Arizona at a physically challenging job.

Acting on a tip that he was doing construction work, the BWC checked with Arizona state officials. The investigators confirmed that the construction worker was performing a job as a rescue technician for Safety Compliance Services, a national firm with a location in Tempe, Arizona. They also discovered the photos of him on his Facebook page, wearing rappel gear and working as a rappeler.

Eventually, a summons was issued for the worker to appear in court in the state he was accused of defrauding. He pled guilty and began paying a restitution order of $7,644. Furthermore, he received a six-month suspended jail sentence, contingent upon him paying the balance of the restitution order as well as investigative costs by a specified date.

“Injured workers are often not permitted to work while receiving workers’ comp benefits,” stated BWC Administrator/CEO Steve Buehrer. “This particular case is a clear example of someone who knowingly broke those rules, flaunted his crime, and generated convincing evidence for our investigators to prove his wrongdoing.”

If you are a New-York based employer, or any employer, in need of help on how to prove workers' compensation fraud, a New-York based HR and payroll company can help. Contact us today with any questions on workers' compensation fraud. 

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