July 29, 2021

Professional Tool Reviews for Pros

What is Workers Compensation Fraud on Jobsites?

Worker's Compensation Fraud on the Job Site is Pervasive... and Illegal

When you think about workers compensation fraud, we’re usually talking about faking an injury to get workers comp rather than an employer trying to avoid a claim. Fraudulent claims on your workers compensation plan can really jack your rates up. Employers have plenty of motivation to cover it up if they believe they can slip under the radar and not get caught.

What is Workers Compensation Fraud?

As we mentioned earlier, workers’ compensation fraud goes beyond just exaggerating a medical condition or injury. It even extends past working for cash while supposedly on disability. Those examples still represent workers compensation fraud, but employers can commit workers’ comp fraud as well.

Employers might underreport payroll to lower their health insurance premiums. On the other side of things, health care providers can overcharge, overprescribe, or otherwise overbill for services not even rendered (or services not really needed or required).

Essentially, workers’ compensation fraud occurs anytime someone deliberately falsifies information or conceals information in order to receive or avoid workers’ compensation benefits.

Examples of Workers’ Compensation Fraud

Fraud by Employees

  • Exaggerating or artificially prolonging symptoms
  • Working while claiming disability without reporting income
  • Claiming fake job-related injuries
  • Misclassifying a non-work-related injury as work-related
  • Falsifying mileage reports

Fraud by Employers

  • Underreporting payroll
  • Misclassifying employees to lower insurance premiums
  • Deducting insurance premiums from wages
  • Failing to have required workers’ comp coverage

Medical or Health Care Provider Fraud

  • Padding medical billing with deliberately unnecessary tests or treatment
  • Billing for non-provided services or treatment
  • Double-billing workers’ compensation and health insurers for the same services

How Prevalent is Workers Compensation Fraud?

In 2019, the Bureau of Labor Statistics said the rate of nonfatal occupational injuries and illnesses among private industry employees was 2.8 cases per 100 full-time equivalent workers. There were 2.8 million injuries or illnesses in 2019 claimed by private industry workers. Those numbers more or less matched the numbers from 2018.

The good news is that the number of claims including loss of income due to time off work has been falling by around 3.9 percent every year since 2000 (measured through 2019).

On a more somber note, 5333 workers died from a work-related injury in the U.S. in 2019. That number increased by 2 percent from 2018. That equates to roughly 3.5 fatalities for every 100,000 full-time equivalent employees.

What’s the Big Deal

These kinds of fraud cost the industry, states, and the federal government many billions of dollars every year. Here’s the opening salvo from the Division of Investigative and Forensic Services, Bureau of Workers’ Compensation Fraud in just Florida alone:

The Division of Investigative and Forensic Services (DIFS), Bureau of Workers’ Compensation Fraud
(BWCF) has maintained twenty-one (21) detectives, two (2) intelligence analysts, and four (4) supervisors
assigned to squads located in Miami, West Palm Beach, Orlando, and Tampa. The BWCF is overseen
by a Captain and a Bureau Chief. In addition to these investigative resources, the Bureau currently has
five (5) dedicated prosecutors located in Miami-Dade, Hillsborough, Duval, Broward, and Palm Beach counties. These resources allow investigators to obtain timely arrest warrants and a more cohesive prosecution
of individuals charged with violating the workers’ compensation fraud statutes and related criminal acts.

First Hand Account of Workers Compensation Fraud on a Jobsite

I heard a firsthand account of an example recently and it’s not that uncommon.

A good worker—let’s call him Sam—had an accident and split open his knee. The supervisor noticed him bleeding profusely and told him to get to the ER and let a doctor stitch him up.

There was just one problem. This guy smoked a joint the night before. It’s going to show up in his blood test since it’s a workplace accident.

We can debate how long the effects of marijuana stay in your system another time. In this case, the guy said he’ll just resign rather than get that positive drug test on his record.

So far, we see no major issue. However, this guy’s a reliable hard worker. The Super decided to tell Sam to hold on while he made a few phone calls. After running it up the line—way up the line—they made a decision to just say Sam didn’t come into work that day. He just had an accident at home.

Health insurance covers the cost. For the employer, there’s no effect on the workers compensation policy, and the company gets to keep a key employee. It seems like a win-win all the way around—except, of course, for that pesky issue of workers’ compensation and health insurance fraud.

We Want to Hear Your Story!

Do you have a story about worker’s compensation fraud on the job site you’d like to share but stay anonymous? We want to hear from you. Feel free to let us know your thoughts in the comments below.

Or, send us a direct message on Facebook, Instagram, or Twitter. You can also contact us here. We won’t mention your name or company.

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Rick C

When I was working for an institutional employer with very good insurance, the common wisdom was to do everything possible to not ever claim workers’ comp. Management and workers all half-joked, “If I tear myself upon the job, drag me off the premises before you call the ambulance.”


Was that the end of the article? Is this part of a series? I’m sure more can be said on this issue

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