How to Spot—and Stop—Workers’ Compensation Fraud

How to Spot—and Stop—Workers’ Compensation Fraud

By Kris Mathis
Senior Vice President, Claims
CopperPoint Insurance Companies

Did you know that workers’ compensation insurance fraud costs the industry an estimated $7.5 billion each year, making it the fastest-growing segment of insurance fraud, according to the National Insurance Crime Bureau?

What is fraud? Under state law, workers’ compensation fraud includes making false or fraudulent statements or representations in order to obtain or deny workers’ compensation benefits. Those who aid and abet in this kind of fraud may also be prosecuted. Workers’ compensation fraud may be perpetrated by a number of individuals, including physicians, attorneys, employers and injured workers.

The High Cost of Fraud

The repercussions of workers’ compensation fraud can have a ripple effect within organizations, which can impact the bottom line. These consequences may include lost productivity, increased staffing costs, decreased morale and higher insurance premiums. The damage also leads to potential losses in the billions. 

Fraud: Spotting Red Flags

The most important way to stop workers’ compensation fraud is to spot it! There are five key indicators that you should be on the lookout for when assessing a workers’ compensation claim. They include:

  1. The Timing of the Claim
  2. Questions Regarding Injury or Accident
  3. Events During the Claim Process
  4. Medical Treatment Issues
  5. Injured Worker History 

Let’s take a closer look at each red flag. They may indicate the presence of a fraudulent workers’ compensation claim. 

1.    The timing of the claim and the first notification of injury is:

  • After an employee is terminated or laid off
  • After a good faith personnel action, employment warning or change in employment policy
  • After returning to work from the weekend, holiday or vacation
  • After the injured worker took unexplained or excessive time off, is new on the job or is involved in seasonal work

2.    There are questions surrounding the injury such as: 

  • The description of injury is vague and it’s inconsistent with the injury described 
  • It occurs while the injured worker is performing duties inconsistent with normal job requirements
  • There are no witnesses and the injury occurs in a place where the injured worker wouldn’t normally need to be 
  • The employer’s report of injury contrasts with the accident description the injured worker provided to medical providers
  • Co-workers hear rumors that the accident was not legitimate

3.    Suspicious events occur during the claim process: 

  • The injured worker is consistently uncooperative 
  • The injured worker is unusually familiar with workers’ compensation claim-handling procedures, laws and terminology 
  • After the injury, the injured worker is never home, avoids the use of U.S. mail and the family and witness know nothing about the claim 
  • The injured worker refuses visits or rehabilitation at home or requests excessive warning time prior to a visit
  • Information is obtained that a totally disabled worker may be employed elsewhere

4.    Medical treatment issues arise when: 

  • The diagnosis is inconsistent with medical treatment and/or diagnostic findings, or the injured worker cancels or fails to keep appointments or refuses a diagnostic procedure 
  • Treatment dates appear on holidays or other days that facilities would not normally be open, and mileage records don’t align with medical visits

5.    Injured worker history:

  • The injured worker has submitted substantial material misrepresentation on the employment application

What to Do if You Suspect Fraud

It’s important to note that most claims are not fraudulent. However, if you as an employer suspect workers’ compensation fraud, you should report any concerns you have immediately to your carrier, directly or through your carrier’s fraud hotline. You may also want to initiate an internal investigation and partner with your insurance carrier, their Special Investigation Unit or law enforcement. 

By working together and learning how to spot these red flags, workers’ compensation fraud can be stopped.


Founded in 1925, CopperPoint Insurance Companies is a leading provider of workers’ compensation and commercial insurance solutions operating in six southwestern states. To learn more about our insurance products and find resources to better manage your risks, explore our website or contact your independent insurance agent.


Kris MathisKris Mathis
Senior Vice President, Claims
CopperPoint Insurance Companies

Kris has 21 years of experience in Claims Management and field services across multiple jurisdictions and lines of business. He joined PacificComp, a CopperPoint Insurance Company, in 2014.