24 Red flags of fraudulent claims

When an employee has suffered an injury, it’s important to keep in mind that most claims are legitimate. In fact, it’s estimated that only one to two percent of claims are fake. However, according to the National Insurance Crime Bureau, fraud in worker’s compensation may amount to $30 billion annually and one fraudulent claim can cause your workers’ compensation costs to rise. Therefore, it’s a good idea to know how to spot claims that may be fake.

Claim-related fraud occurs when an employee falsely claims a work-related injury or occupational disease, exaggerates an existing injury or occupational disease or works at another job while collecting benefits. Here are 24 red flags (.pdf) that can help identify fraudulent claims:

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 is a new employee
10. Claimant has no health insurance coverage
11. Claimant has used all available sick days and vacation days
12. Claimant is known to have personal financial problems
13. Claimant is physically active outside
14. Claimant has submitted Worker’s Compensation claims in the past
15. Inconsistencies revealed from the claimant’s initial description of the injury-producing incident
16. Claimant is unusually familiar with the Workers’ Compensation system
17. Claimant is uncooperative and/or objects to administrative controls intended to address Workers’ Compensation fraud
18. Claimant does not provide a street address for a residence
19. Employer is frequently unable to contact the claimant while off work due to an alleged injury
20. Claimant obtained legal representation soon after the alleged incident and/or has obtained legal counsel with a questionable reputation
21. Subsequent medical evaluations apparently contradict the initial evaluation
22. Employee has missed scheduled physician visits or rehabilitation appointments
23. Treatment being provided seems more extensive than the injury warrants
24. Claimant has changed medical providers more than once after the initial treatment

Remember, the presence of one or even several “red flag” indicators is not necessarily indicative of the existence of workers’ compensation fraud. It is an indicator of the need for further investigation of a claim to determine its legitimacy. Employers that suspect fraud should seek assistance from their Advisor and claims administrator.