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How To Minimize The Odds of Workers’ Comp Fraud at Your Organization

Yesterday, guest writer Bridget Miller explained some of the common types of workers’ comp fraud to watch out for. Today, she covers how to help prevent this common, and costly, problem.

What Can Employers Do to Minimize Fraud?

The possibility of workers’ compensation fraud can be frustrating, but, fortunately, there are a lot of actions employers can take to reduce the risk:

  • Have a clear policy regarding workers’ compensation. Employees should understand the benefits of the program, and they should also understand their obligations. The policy can clearly outline that suspicions of fraud will be investigated and legally pursued when warranted.
  • Ensure employees understand the need to immediately report any accidents or injuries and that you take their safety seriously. They should not be afraid to report such things and should not face negative consequences for doing so. Getting an injury treated quickly is often the key to helping the individual recover quickly—which will also minimize costs.
  • Conduct investigations related to claims to ensure they’re accurate and are being handled consistently within the law. When an injury occurs, investigating the details will have multiple benefits—not only will it reduce fraud, it could also lead to procedural changes that reduce the likelihood of that injury happening to someone else. Always ask for witnesses to explain what happened. Look for inconsistencies or other red flags, such as:
    • Stories that contradict each other. This could happen when the injured individual tells different people different accounts of the situation. It could also occur when witnesses give versions that contradict each other or contradict the injured individual’s account.
    • Injuries that are not medically consistent with the other details of what happened.
    • No witnesses.
    • Injuries and claims that occur immediately before a major change, such as a seasonal layoff, a strike, or other situations in which the employee would lose pay.


All your California workers’ comp questions answered—in one convenient, fully updated reference. Learn more.


  • Create a program to get injured or ill employees back to work as quickly as feasible. For example, institute a light-duty option (if possible) that facilitates the transition back to the workforce sooner rather than later. This can help both the employee and employer.
  • Stay in contact with employees for the duration of the time off. Create a regular schedule of communication and monitor progress. Have a process in place that tests the worker’s abilities (when appropriate) to determine whether he or she is able to return to work.
  • Be sure that HR and management/supervisors are trained to recognize fraud in workers’ compensation and what to do if it is suspected. They should know whom to turn to. They should also know how to keep employees safe and follow medical restrictions to ensure employees are not re-injured.
  • Listen to other employees. While rumors are often unfounded, employee discussions can still be a valid source of information about injured employees. Naturally, you don’t want to jump to conclusions or act without evidence, but take comments from other employees seriously if they are implying fraud from coworkers. Consider providing a way for employees to anonymously report suspicions of fraud.
  • Consider using surveillance equipment on the worksite.
  • Consider having a drug testing policy that includes testing any time an accident occurs. This could improve your overall safety and reduce all workplace injuries, not just fraudulent ones.
  • Get to know your workers’ compensation insurance agent as well as individuals in the company who are involved in loss control. They can often assist in investigations and help manage costs. They may be able to assist in determining which claims are likely to be fraudulent.
  • Have a designated workers’ compensation medical provider for your employees to use—and be sure to work closely with this provider. Work with the medical provider to ensure that the injuries are consistent with the explanation of the accident. Be sure the provider has a list of essential duties of the injured individual to assist in determining when that person may be able to return to work. Also, be sure the provider has a list of tasks involved in any light-duty program you offer that would get the employee back to work sooner.
  • Be thorough in how you screen new hires. One oft-overlooked way to prevent fraud is to hire individuals who wouldn’t even consider it in the first place. Use background checks to look for red flags such as overly frequent job-hopping or evidence of previous fraudulent activity. While you cannot disqualify someone merely for filing a workers’ compensation claim in the past, it could be a red flag if an individual has filed an inordinate number. Even if the claims are legitimate, it could mean this person does not follow safety guidelines.

Have you dealt with workers’ compensation fraud in your organization? How did you handle it? We’d love to get your thoughts in the comments.

All Your California Workers’ Comp Questions Answered

Dealing with workers’ comp questions—even when you don’t suspect fraud—can be stressful and time-consuming for HR. What can make it easier? Our exclusive HR Management & Compliance Report Workers’ Compensation in California: A Complete Guide for California Employers.

Workers’ comp is one of the few areas of employment law that’s almost entirely governed at the state level. And it’s complicated, to say the least:

  • What qualifies as a covered injury or illness?
  • Should you self-insure?
  • Who’s entitled to workers’ comp benefits?
  • What do you need to know about the State Compensation Insurance Fund (SCIF)?
  • How are premiums calculated—and how can you keep yours as low as possible?
  • What should be included in your Injury & Illness Prevention Program (IIPP)?
  • Which workers’ comp notices must you distribute to employees—and when?
  • How do you properly calculate benefits for injured employees?
  • What should your return-to-work program look like?
  • How does workers’ comp interact with other state and federal leave laws, including FMLA/CFRA and ADA/FEHA?
  • What can you do to reduce the risk of workers’ comp disputes—and fraud?
  • How should you respond to a workers’ comp-related lawsuit?

Fortunately, answers to all of these questions and more are covered in depth in our comprehensive, 138-page HR Management & Compliance Report Workers’ Compensation in California: A Complete Guide for California Employers.

This exclusive report includes everything you need to know for successful management of your company’s workers’ comp program and has been fully updated for 2015.

New in this edition:

  • The new, reduced fees for independent medical reviews (IMRs)
  • Annual rate increases for temporary disability benefits
  • Revised versions of information that must be provided to newly hired employees
  • Tips to help employers reduce fraud for billed services
  • New laws that affect the ability of professional athletes to file workers’ comp claims in California
  • And more!

Order your copy today—your satisfaction is 100 percent guaranteed. 

Download your copy of Training Your New Supervisors: 11 Practical Lessons today!

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