Legal Articles
Workers Compensation
Get Started Finding a Local Attorney Now

Simply fill out this form to connect with an Attorney serving your area.

Workers' Compensation Fraud

Workers' compensation is paid out to employees who are injured during the course of work. However, sometimes workers file false workers' comp claims with their employers in order to receive workers' comp benefits. This is called workers' compensation fraud.

How Workers' Comp Works

Workers' compensation provides both employers and employees a layer of protection in the event of an on-the-job accident. States each have their own workers' comp laws. These laws mandate that most employers must purchase a href="" target="_blank">workers' comp insurance from an insurance carrier.

Workers' comp insurance pays an employee who is injured on the job while also protecting the employer from a lawsuit. Under most workers' comp laws, the worker waives the right to sue the employer but in return may be compensated without having to prove the accident was someone's fault.

When an employee is injured, he or she must file a claim with the employer, which turns the claim over to the insurance carrier. The carrier may conduct an investigation to determine whether the claim is legitimate. In other words, the carrier may attempt to determine if the employee is attempting to commit workers' compensation insurance fraud.

If the initial claim is denied by the insurance carrier, the employee can appeal to the state's workers' comp agency, often called the workers' comp board. The board will then do its own review of the claim to determine whether benefits should be awarded.

Workers' Compensation Fraud

According to the National Insurance Crime Bureau, workers' compensation fraud significantly contributes to the country's annual $30 billion insurance fraud problem.

Workers' comp fraud often occurs when an employee fakes an injury and then files a false claim with his or her employer. Sometimes the employee actually suffers a genuine injury but exaggerates the claim in order to get a larger payout.

Workers' compensation fraud is especially appealing to some because of the potentially generous payouts an injured worker can receive. In fact, most states mandate that workers' comp insurance must pay employees 100 percent of all medical and rehabilitation bills, as well as up to two-thirds of lost wages due to time off from work.

These workers will sometimes conspire with dishonest lawyers and doctors to back up these false claims. Oftentimes, they'll say they have suffered injuries that are hard to disprove, such as injuries to soft tissue, headaches, and whiplash.

Effects of Workers' Compensation Fraud

Workers' compensation fraud does not just award money to someone who doesn't deserve it; it also results in higher workers' compensation insurance premiums for employers.

In addition, these claims can cause raise the prices of goods and services for all consumers. This is because workers' compensation fraud results in delays in production, retraining costs, and the replacement of equipment.

Spotting Workers' Compensation Fraud

Employers have several ways of identifying fraudulent claims. Often, co-workers will tip off the employer to fraudulent claims. Some companies will hire private investigators if they suspect an employee has filed a fraudulent claim. And employers know that certain details in a claim are more likely to indicate possible fraud.

Employees who are tempted to file fraudulent workers' compensation claims should know the penalties can be steep if they are caught committing fraud. Depending on state laws, you may be required to pay back all of the money you received, pay fines and penalties, and even face jail time if you're convicted of workers' compensation fraud.