What Constitutes Workers’ Compensation Fraud?

By | January 20, 2012

Workers’ compensation insurance is one of the most useful benefits for employees around the country, because it protects not only against loss of income but helps ensure a peace of mind that many other job benefits do not.

Of course, with a great benefit often comes great temptation for fraud, and workers’ compensation benefits are no exception. A lot of people attempt to defraud the workers’ compensation insurance system by filing faulty claims, exaggerating their injuries, or by outright lying. Employers who want to protect against high insurance rates need to know what constitutes workers’ compensation fraud so they can root it out at the source. Here’s a guide for doing just that.

Faulty Claims

The first place to look for fraud is finding faulty claims. These outright cases of defrauding the workers’ compensation insurance program usually mean that someone claims they are unable to work because of an injury even when they are. For example, if someone has a leg injury that supposedly prevents them from working, but in reality have full strength and movement in their legs, then you know that they are probably defrauding the system.

Most faulty claims work on this principle: if someone is able to work but is still collecting workers’ compensation benefits, then there’s a good chance their claim is simply a faulty claim. But in some instances, they may be simply “milking” their injury or exaggerating the extent of the problems.


In these cases, outright fraud can be difficult to prove. But claims that are exaggerated or falsified still constitute workers’ compensation fraud, and can contribute to the overall high costs of providing workers’ compensation insurance to all employees. For those reasons, it’s important that this type of fraud also be rooted out.

Exaggerations might mean that someone did indeed suffer an initial work-related injury. But after that, it’s anybody’s guess about the true extent of the injury. Maybe the injury was minor enough that the employee can still work without any stress on their body. Maybe the injury was difficult at first, but the employee could have easily come back to work much sooner.

Because these exaggerations are based on reality, they can be difficult to sniff out for employers. They might not be as bad as the cases of outright fraud and falsified claims, but they still represent an abuse of the system.

Lying in Writing

In essence, fraud is taking place any time someone collects benefits under faulty pretenses. Though it’s not always to tell when the faulty pretenses exist, it is important that employers try to keep their employees accountable. Any time a lie takes place in writing, or a check is cashed under the pretense of a lie, then fraud has taken place, and fraud is a very serious crime indeed.

If you’re an employee who wants to avoid fraud, all you have to do is be honest with your employers and honest with yourself. You’ll be amazed not only at how much better you feel, but at the peace of mind avoiding fraud can give you.

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