The RED FLAGS of Workers Comp Fraud

workers compensation red flags of fraudA critical part of controlling workers’ compensation costs is to put into place solid investigation techniques.  No matter how severe or minor a workplace injury, each case needs to be reviewed to identify any fraudulent claims and take appropriate action.


When communicating with employees, make it clear that the company will:



  • Identify corrective measures


  • Watch for minor extensions of days out of work and outright fraudulent claims.



Review these Red Flags of Fraud and request an investigation if you suspect a claim is illegitimate or exaggerated.


Injured Worker Red Flags:


  • Injury reported late, to an attorney or to the state commission before reporting it to the employer.


  • Fails to attend weekly meetings.



  • Is never home when you phone, especially during regular workday hours.


  • Has only a postal box rather than a home address.


  • Misses doctor appointments.


  • Is known to perform seasonal activities, hobbies, or work.


  • Has moved out of town or out of state.


  • Disputes average weekly wage due to additional income.


  • Files for benefits in a state other than the main location.


  • Disputes information supplied by the employer on “First Report of Injury” notice.


  • Refuses to cooperate in claim investigation.


  • Has an unstable work history.


  • Has recently been terminated, demoted, or passed over for promotion.


  • Has a prior history of injury management or liability claims.


  • Makes excessive demands or is pressing for a quick settlement.


  • Carries little or no health insurance.



Medical Flags:


  • Medical reports are repetitive, indicating continuing, constant pain with conservative medical treatment


  • The word “disproportionate” is used in medical reports


  • The doctor mentions there is “facial grimacing”


  • Positive “Waddell Tests” (test for low back pain) are mentioned



Workplace Flags:


  • Employer experiencing labor difficulties (i.e., layoffs, strikes, walkouts).


  • Tips from fellow workers, friends, or relatives.


  • The insurance company wants to settle the claim for a considerable amount of money.



“Things” just don’t ADD UP! Trust your gut, and if something seems off, be sure to check it out.



Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is the founder & lead trainer of Amaxx Workers’ Comp Training Center.



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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

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