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Presentation: Workers’ Compensation Insurance Fraud 101

While most claims are legitimate, studies indicate that 1 to 2% or more of all workers’ compensation insurance claims are fraudulent. Learn more by viewing this presentation:

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More than 94% of American businesses carry workers’ compensation insurance. Source Referenced: 1

That covers more than 135,000,000 workers across the United States. Source Referenced: 1

In 2012, there were roughly 3 million non-fatal workplace accidents. That’s nearly 3 injuries for every 100 full-time employees. Source Referenced: 2

While most claims are legitimate, studies indicate that 1 to 2% or more of all workers’ compensation insurance claims are fraudulent. Source Referenced: 3

Workers’ compensation fraud essentially falls into two categories: Premium fraud, committed by businesses. (Misrepresentation of payroll, misclassification of employees or falsely changing a businesses experience modification in order to lower premiums) And claimant fraud, committed by a worker or provider. (Attempts to cheat the system in order to receive more benefits than are deserved) Source Referenced: EMPLOYERS Anti-Fraud Department

The Four Most Common Types of Workers’ Compensation Insurance Fraud

  1. The False Claim: The injury NEVER occurred, or was knowingly misrepresented as a work-related injury. Staging an accident also falls into this category, which is a worker intentionally injuring himself to receive benefits.
  2. Working While Collecting Benefits: The claimant says that they cannot or are not working to continue receiving workers’ compensation benefits while they are actually working at another job.
  3. The Exaggerated Claim: Workers who initially sustain a legitimate injury, but exaggerate its severity to collect more money and stay off the job for a longer period of time.
  4. Fraud from the Top: Businesses can break the law through premium fraud. The two most common types of fraud are underreporting of payroll and employee misclassification. Source Referenced: EMPLOYERS Anti-Fraud Department

Top 10 Warning Signs of Potential Workers’ Compensation Claimant Fraud

Experience shows that when two or more of these factors are present in a workers’ compensation insurance claim, there is a chance the claim may be fraudulent. These are simply indicators, and many perfectly legitimate claims often contain some of these indicators.

  1. Monday Morning Reports
  2. Suspicious Providers
  3. Conflicting Descriptions
  4. Treatment is Refused
  5. Claimant is Hard to Reach
  6. Employment Change
  7. No Witnesses
  8. History of Claims
  9. Late Reporting
  10. Other Changes, such as to Physician, Mailing or Home Address, Etc. Source Referenced: EMPLOYERS Anti-Fraud Department

Red Flag Warning Signs of Potential Premium Fraud

These are simply indicators. A legitimate claim could have some of these indicators, however further investigation may be conducted by the workers’ compensation insurance carrier.

  1. Policyholder uses a mail drop or post office box for a business address
  2. The business is located in another area of the state from the producing agent’s location
  3. An excessive number of certificates of insurance issued on a small policy
  4. An unusual ratio of clerical to non-clerical employees listed
  5. The business avoids audits by changing carriers frequently
  6. Reported injuries are not consistent with the risk that was written. Source Referenced: EMPLOYERS Anti-Fraud Department

Workers’ compensation fraud costs the average consumer $900 annually in reduced paychecks and bonuses. Increased Insurance Rates Increased Health Care Costs Revenue Stolen from Businesses.  Source Referenced: 4

Do you have more questions about workers’ compensation fraud and what you, a small business owner, can do to protect yourself against it?

EMPLOYERS Fraud Hot-line: 1-800-750-3939

Do you want to talk to an EMPLOYERS appointed agent about fraud and workers’ compensation insurance? Click Here to Get Started Now!

1. David F. Utterback and Teresa M. Schnorr, “Use of Workers’ Compensation Data for Occupational Injury & Illness Prevention,” Department of Labor, 2010,

2. “Workplace Injury and Illness Summary,” Bureau of Labor Statistics, October 25, 2012,

3. Quoted in Greg Hunter, “Worker’s Comp Scams that Push the Limits,” ABC News, March 3, 2013,

4. Quoted in Selena Maranjian, “The Real Cost of Workers’ Comp Fraud,” Daily Finance, June 21, 2011, comp-fraud.