4 Common Signs of Workers Compensation Fraud

Most businesses are required by law to have workers’ compensation insurance, which provides benefits to employees who are injured on the job. Workers’ compensation fraud is a crime in which one person intentionally defrauds an employer or governmental agency out of workers’ compensation benefits intended to compensate them for lost income. Several indicators may suggest fraud is taking place.

Four common signs of workers’ compensation fraud.

1. Receiving Disability Benefits from Another Source

Most times, people who are receiving benefits from one source are not eligible to receive benefits from another. If an employee is receiving benefits from another source, such as Social Security, and they are also receiving workers’ compensation benefits, this is usually a case of fraud. Therefore, if you see that an employee is receiving benefits from more than one source, it is important to investigate further to not be held liable for any fraudulent activity.

2. Preexisting Injury

Pre-existing conditions are not covered under workers’ compensation. So, if an employee files a claim for a pre-existing injury, this is a case of fraud. For example, an employee injured their back a few years ago and is now claiming that their current job has aggravated the injury. However, if the employer can prove that the employee’s current job did not aggravate the injury, then the claim will be denied. Additionally, if an employee is receiving benefits for a pre-existing injury, and they fail to disclose this to their employer, this is also considered fraud.

3. Working While Receiving Benefits

If an employee is receiving workers’ compensation benefits, it means that they are unable to work. Therefore, if you see that an employee who is receiving benefits is working, this is a clear case of fraud. In some cases, an employee may try to hide their work by working under the table (this is whereby they are paid in cash so that their income is not reported) or doing freelance work. If you suspect that an employee is working while receiving benefits, it is important to investigate further and gather evidence.

4) Employee Injured Outside of Work

Injuries that occur outside of work are not covered under workers’ compensation. If an employee claims to have been injured at work but the injury occurred elsewhere, this is a clear sign of fraud. To prevent this type of fraud, employers should require employees to provide documentation of the injury, such as a doctor’s note and should conduct their investigation into the incident. Suppose an injured worker refuses to provide information about how the injury occurred, in that case, the employer may contact the workers’ compensation insurance company to see if they have any information about the claim.

Major consequences of workers’ compensation fraud are;

  • Employees may be fired if they are caught committing fraud.
  • They may also be required to pay back any benefits they received fraudulently.
  • In some cases, employees may be prosecuted criminally and face jail time.
  • Workers’ compensation fraud can drive up the cost of insurance for everyone.
  • It can also lead to higher premiums for employers.
  • Fraudulent claims can make it harder for legitimate claimants to get the benefits they need and deserve.
  • It can also cause insurers to become more skeptical of all claims, making it harder for everyone to get the benefits they need.
  • Finally, workers’ compensation fraud is simply dishonest and takes advantage of a system that is designed to help those who are truly injured.


Above are the four common signs of compensation fraud. If you notice any of these signs, it is important to investigate further to determine if fraud is taking place. Workers’ compensation fraud is a serious crime that can cost employers and insurance companies millions of dollars each year.


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