For employers, the best defense isn’t just catching fraud after it happens—it’s creating an anti-fraud culture that makes abuse harder to commit and easier to spot. By focusing on prevention, training, and accountability, employers can build a program that deters fraudulent behavior, protects resources, and ensures benefits reach the employees who truly need them.
Why Culture Matters
Fraud prevention isn’t just about investigations and surveillance. While those tools are essential, they are reactive. An anti-fraud culture is proactive—it sets the tone that fraud will not be tolerated, ensures employees understand the rules, and empowers supervisors to recognize red flags early.
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A strong culture reduces:
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Extended lost time from malingering or symptom exaggeration.
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Inflated settlements caused by questionable medical evidence.
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Repeat offenders who view workers’ comp as a financial opportunity.
When everyone from senior leadership to frontline supervisors is aligned, fraudulent behavior becomes the exception, not the norm.
Training Supervisors and Employees
The first step in building this culture is education. Supervisors and managers are often the first to notice suspicious patterns, but they need the tools to respond appropriately. Training should include:
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Red Flags of Fraud: Late reporting, inconsistent stories, refusal of transitional duty, missed medical appointments, or evidence of outside work.
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Proper Documentation: How to record workplace incidents, conversations, and observations without bias.
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Communication Protocols: When and how to escalate concerns to HR, adjusters, or legal counsel.
Employees, too, should be part of this conversation. Orientation sessions, posters, and policy updates can reinforce that the company takes fraud seriously. When workers know the risks of fraudulent claims—including potential criminal penalties—they are less likely to attempt them.
The Role of Transparency
Transparency is another key component. Employees should clearly understand:
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How the claims process works
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What benefits they are entitled to
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Why transitional duty is offered
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What actions constitute fraud
This openness prevents confusion and reduces the temptation to “game the system.” It also creates a sense of fairness—employees who feel informed and respected are less likely to exploit workers’ comp benefits.
The Power of Special Investigation Units (SIUs)
For larger employers or self-insured companies, hiring a Special Investigation Unit (SIU) director can be a game changer. This role, often filled by someone with law enforcement or insurance investigation experience, adds a dedicated layer of expertise and oversight.
An SIU director can:
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Develop a company-wide fraud control program.
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Train supervisors and employees on fraud awareness.
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Monitor trends and report to leadership on program effectiveness.
The mere presence of an SIU director acts as a deterrent—employees and outside actors know the company is watching closely and is prepared to act if fraud is suspected.
Additional Anti-Fraud Tools
Beyond training and SIUs, employers can implement practical measures to reinforce their anti-fraud culture:
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Anonymous Tip Lines: Encourage employees to report suspicious activity without fear of retaliation.
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Fraud Awareness Posters: Visible reminders that fraud is monitored and punishable.
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Check Endorsement Language: Some states require employers to notify employees of penalties for failing to report outside income while receiving benefits; endorsement language on wage checks can serve this purpose.
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Repeater Reports: Use reports from insurers or TPAs to track employees with multiple claims and assess their fitness for the job.
These strategies combine education, visibility, and accountability—making fraud both riskier and less appealing.
Shaping a Culture That Protects Everyone
At its core, building an anti-fraud culture is about protecting resources for those who need them most. Every fraudulent claim diverts time, money, and care away from legitimately injured workers. By creating an environment where fraud is recognized, reported, and addressed, employers not only reduce costs but also reinforce trust in their workers’ comp system.
Fraud will never disappear entirely, but with training, transparency, and strong oversight, employers can shift the balance. Instead of constantly reacting to abuse, they can prevent it—and in doing so, create a culture where both the company and its employees thrive.
Michael Stack, CEO of Amaxx LLC, is an expert in workers’ compensation cost containment systems and provides education, training, and consulting to help employers reduce their workers’ compensation costs by 20% to 50%. He is co-author of the #1 selling comprehensive training guide “Your Ultimate Guide to Mastering Workers’ Comp Costs: Reduce Costs 20% to 50%.” Stack is the creator of Injury Management Results (IMR) software and founder of Amaxx Workers’ Comp Training Center. WC Mastery Training teaching injury management best practices such as return to work, communication, claims best practices, medical management, and working with vendors. IMR software simplifies the implementation of these best practices for employers and ties results to a Critical Metrics Dashboard.
Contact: mstack@reduceyourworkerscomp.com.
Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/
Injury Management Results (IMR) Software: https://imrsoftware.com/
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