Here are two critical questions: How often are Workers’ Compensation claims filed against your company? And how often do you contest them? The answers are important.

The National Council on Compensation Insurance recently estimated that 25 too 33 percent of all Workers’ Compensation claims are invalid, yet less than 10 percent of these claims are challenged. The U.S Department of Labor calls it a crisis and says that for most companies, Workers’ Compensation is growing faster than any other expense. The estimated cost of an average claim is at least $34,000.

The expenses add up quickly. Among the direct costs for both privately insured and self-insured employers are medical expenses, payments for lost time, claims expenses, fees — including those paid to your state Workers’ Compensation Commission — and other insurance costs. Indirect expenses include hiring temporary labor, increasing overtime to compensate for an absent employee, replacement training and reduced productivity.

Workers’ Compensation coverage is legally mandated in most states. Generally, fraud occurs when an employee:

  • Makes false or misleading statements to receive money or services.
  • Knowingly receives benefits he or she isn’t entitled to.
  • Enters into a conspiracy to defraud an insurance company, state insurance fund or self-insured employer under the Workers’ Compensation Act.

The scams are pervasive, ranging from faking a back problem to passing off a weekend sports injury as a workplace accident on Monday morning.

Fortunately, there are some red flags that can suggest fraud is in the works. For example:

  • The injured employee isn’t home or is said to be sleeping and can’t be disturbed.
  • There are no witnesses to the reported accident. Or the employee can’t recall specific details of the injury.
  • The accident occurs just before a strike, layoff, plant closing or job termination.
  • The employee moves out of the state or country shortly after filing a claim.
  • There are conflicts between what the employee reports and the initial medical evaluation.
  • The employee refuses or continually delays undergoing diagnostic procedures to confirm the injury.
  • The injury is inconsistent with the nature of the work or business.

So what can you do? Take precautions to combat fraud. For example, publicize your Workers’ Compensation policy to all employees and educate supervisors on the issues. Explain how injuries decrease productivity and how costs affect the bottom line. Make your workplace as safe as possible. And pay attention to employee complaints and concerns. One strong predictor of fraud is a chronically disgruntled workforce.

Finally, if you suspect a fraudulent claim, contact your insurer’s special investigation crimes unit immediately.

While preventing fraud involves training, education, safety and communication, the major factor is getting injured employees back on the job as soon as possible. This helps control many of the costs of paying out unnecessary compensation.


As we’ve grown, so have our administrative and payroll needs. That’s why we’ve partnered with HR&P. HR&P supports us every day with human resources, payroll, benefits and compliance so we can focus on being the best BB’s Cafe we can be!

Brooks Bassler, Owner, BB's Cafe

Since 2010, my company has grown to over five hundred employees. With our tremendous growth we needed a human resources and payroll company that could grow with us. That company is HR&P. And as laws have changed, like the Affordable Care Act, HR&P has kept us in compliance. I focus on growing Twin Eagle. I trust HR&P with the rest.

Chuck Watson, Chairman, Twin Eagle

We are the industry leader in Oil Spill Cleanup Products and have dealt with numerous Oil Spill disasters. Knowing up close what a disaster looks like we choose to avoid them in our offices. HR&P guides us through the land mines of HR, Payroll and Benefit compliance so my team can focus solely on helping our clients with their problems, and we avoid our own.

Chad Clay, Owner, CEP Sorbents

One of the best things we did for our business was to partner with HR&P. They’re the experts in human resources, payroll and benefits administration.
HR&P’s web based solutions make it easy for us to manage our employee’s needs. They also help us stay compliant with the Affordable Care Act and with “the alphabet soup” of constantly changing Governmental regulations.

Ken Dennard, CEO, Dennard—Lascar Associates

I run a restaurant, from early in the morning to late at night, our team works hard to deliver great food in a fun atmosphere.
But there’s a lot more to running a business like human resources, payroll, benefits and compliance. So we turn to HR&P.
Outsourcing to HR&P keeps us focused on our business.

Marcus Payavla, Co-Owner, Orleans Seafood Kitchen



To receive more HR articles and tips that keep you informed, sign up for our newsletter.


What Fraud Can Look Like

Claimant Fraud is committed by employees and includes:

  • Faking or causing an injury.
  • Claiming a non-work injury.
  • Falsifying treatment that was not rendered.
  • Working for another employer or returning to work while collecting benefits.
  • Misrepresenting the seriousness of an injury.
  • Lying about lost wages.
  • Filing multiple claims for the same injury by using multiple identities.

Provider Fraud is committed by unscrupulous medical providers and includes:

  • Intentionally billing for services that were not rendered.
  • Prescribing or referring treatment unrelated to the injury.
  • Extending period of disability without justification.
  • Falsifying a diagnosis.

Premium Fraud involves an agent or policyholder underreporting payroll, misclassifying employees, or underreporting past losses to pay lower premiums.