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11 Warning Signs of Workers’ Compensation Insurance Fraud

Workplace injury and illness risks differ depending on the company and industry. While accounting firms aren’t usually exposed to extreme workplace hazards, common employee injuries such as slips, trips and falls, back injuries and repetitive stress ...


Workplace injury and illness risks differ depending on the company and industry. While accounting firms aren’t usually exposed to extreme workplace hazards, common employee injuries such as slips, trips and falls, back injuries and repetitive stress injuries sometimes occur. Any time an employee gets hurt, there is the potential for workers’ compensation insurance fraud to occur.

According to the National Insurance Crime Bureau, workers’ compensation insurance fraud is a serious crime that costs businesses $30 billion annually.[1] One common type of fraud is claim-related fraud, which is when an employee attempts to gain a workers’ compensation insurance benefit by falsely stating an injury or illness occurred at work or by exaggerating an existing injury or illness.[2] Committing this type of fraud may lead to higher insurance premiums for employers and may ultimately hurt workers who are legitimately injured on the job.

Fraud Warning Signs

While there is no exact science to identifying claim-related workers’ compensation fraud, there are several “red flags” accounting firm owners should be aware of:

  1. Monday morning injury reports – The alleged injury occurs first thing on Monday morning, or the injury occurs late on Friday afternoon but is not reported until Monday.
  2. Employment change – The reported accident occurs immediately before or after a job termination, layoff, end of a big project or the conclusion of seasonal work.
  3. Suspicious providers – An employee’s medical providers or legal consultants have a history of handling suspicious claims, or groups of claimants use the same doctors and lawyers.
  4. No witnesses – There are no witnesses to the accident and the employee’s own description does not logically support the injury’s cause.
  5. Conflicting descriptions – The employee’s description of the accident conflicts with the medical history or injury report.
  6. History of claims – The claimant has a history of making suspicious claims.
  7. Treatment is refused – The claimant refuses a diagnostic procedure to confirm the nature or extent of an injury.
  8. Late reporting – The employee delays reporting the claim without a reasonable explanation.
  9. Claimant is hard to reach – The allegedly disabled claimant is hard to reach at home.
  10. Changes – The claimant has a history of frequently changing physicians, addresses or jobs.

Experience shows that when two or more “red flags” are present in a workers’ compensation claim, there is a chance the claim may be fraudulent. Keep in mind, these are simply indicators. Many perfectly legitimate claims are filed directly before or after an employment change and some claimants may be hard to reach at home.

If an employer suspects an employee may be committing claim-related fraud, they should report the suspicious behavior to their workers’ compensation insurance carrier immediately. The appropriate law enforcement authorities may investigate. After notifying your carrier, compile as much information as possible to support the claim. This might include identifying misstatements and witnesses.

Proactive Measures

Accounting firm owners can proactively reduce the potential for false claims. One way is to establish a zero-tolerance policy on fraud and clearly communicating these expectations with employees through written anti-fraud policies. Firm owners should also consider creating an environment where employees do not fear retaliation for reporting potential workers’ compensation fraud. This can be accomplished by establishing a variety of safe and potentially anonymous ways for employees to report suspicions of fraudulent activity. Promoting a culture of safety is another avenue for reducing potential claim-related fraud. Fostering a culture where all employees understand the importance of safety can mitigate potential risks and accidents, and ultimately reduce the number of opportunities an employee has to exaggerate an injury.

Workers’ compensation fraud is a serious crime that can have a real impact on business owners and their employees. By demonstrating a zero-tolerance policy on fraud, reinforcing policies and expectations and knowing what signals to look for, accounting firm owners can help reduce the likelihood of fraud in their workplace.



Samuel V. King is Vice President, Fraud Investigations Department, for EMPLOYERS, America’s small business insurance specialist, which offers workers’ compensation insurance and services through Employers Insurance Company of Nevada, Employers Compensation Insurance Company, Employers Preferred Insurance Company, and Employers Assurance Company. Not all insurers do business in all jurisdictions. EMPLOYERSÒ and America’s small business insurance specialistÒ are registered trademarks of Employers Insurance Company of Nevada.

[1] Workers’ Compensation and Medical Fraud Prevention Tips, Retrieved on 3/11/2018 from

[2] Five Ways Businesses Can Prevent Workers’ Compensation Claim-Related Fraud, EMPLOYERS, Retrieved on 2/20/2018 from