6 Key Workers’ Compensation Fraud Cases to Know

Some workers’ compensation fraud takes place on the side of the employer, while other cases place fraudulent claim-filing workers at fault. Regardless of which party is in the wrong, everyone can benefit from becoming familiar with common forms of workers’ compensation fraud. Employers can learn to recognize red flags and avoid making mistakes that may be interpreted as fraudulent, while employees can educate themselves about their rights.

These six well-known workers’ compensation fraud cases can provide you with a point of reference for what incidents are most common in the world of workers’ compensation.

1. California Hospital and Surgeons Allegedly Overbilled by $580 Million: Referred to as a “kickback” scheme, the doctors involved were receiving huge amounts of money to send patients to two particular hospitals in Southern California when in need of spinal surgeries. Five medical professionals were charged in relation to the scheme, which is believed to have operated for nearly a decade before it was discovered. The patients being referred had no idea that their doctors were receiving as much as $100,000 per referral, nor did they know that the hospital was overbilling insurance and workers’ compensation to recoup those payouts.


2. Ex Washington State Corrections Officer Investigated for $100,000 of Alleged Disability Payment Fraud: A former corrections officer at the Monroe Correctional Complex faces felony charges after surveillance discovered he was exercising while receiving $100,000 in workers’ compensation disability payments over a 5-year span. Contrary to his statements claiming he couldn’t work after an on-the-job injury, he was also found driving to a second full-time job as a security worker.


3. Home Improvement Company Allegedly Called Installers “Independent Contractors” to Avoid Paying into Workers’ Compensation: Lowe’s is one big name company that allegedly engaged in this practice. By referring to employees as independent contractors, Lowe’s avoided paying them employee benefits, as well as avoided paying the employer’s liability for taxes and workers’ compensation insurance coverage. While Lowe’s didn’t admit fault, they did settle their suit for $6.5 million.


4. Translators Billed for $24 Million of Allegedly Unprovided Services: The people involved in this California case also faced overbilling accusations. G&G Translation Services, via their owners and as many as 200 employees, allegedly billed for $24.6 million in translation services that were never performed. Not only were criminal charges brought in this case, there was actually a SWAT-style home raid that took place as part of the investigation.


5. Nurse Made an Almost Half-million Dollar False Claim: A nurse who worked for the Veteran’s Administration in Georgia was found guilty of fraud in relation to a series of claims filed between 2009 and 2014, which included both medical expenses and travel expenses for travel related to treatment. She received not only three years of probation, but a court order to pay back over $450,000 to the government for her claims against workers’ compensation insurance.


6. Roofing Business May Have Side-stepped Workers’ Compensation Requirements by Allegedly Lying About Payroll: Eventually found liable for $615,000, the two owners of a roofing business in Massachusetts allegedly underreported their staff’s wages as well as their business earnings in order to avoid additional liability for workers’ compensation Insurance.  


While there have been thousands of workers’ compensation insurance fraud cases successfully reported, investigated, and prosecuted across the United States in recent decades, obviously those cases with the largest sums of money defrauded from the system have received the most attention.

As an employer, it is important to be on the lookout for staff members who may exaggerate or falsify an onsite injury to garner workers’ compensation payouts. Familiarizing yourself with the most common forms of fraud in cases of workers’ compensation fraud is important, as is surrounding yourself with ethical and competent employees. If you’re concerned about claims in your workplace or if you want to learn more about claim resolution, visit our website today!

What to Do If Your Employee Is Injured on the Job

Though there are legal safeguards in place to protect workers in any industry, here’s what statistics tell us:

One employee is injured every three minutes in Washington State.

While many injury claims are legitimate, the reality is, some employees misrepresent the cause or nature of their injury. This is called workers’ compensation fraud. In some cases, employees may cheat the system in an attempt to reap the personal and financial rewards that come from an on-the-job accident, when their injury did not actually occur at work… or they aren’t actually injured at all. Regardless, employers must follow a specific protocol when any injury is reported.

What Happens When an Employee Reports an Injury?

When employees claim to be injured on the job, they will have to file a report on the accident with the Washington State Department of Labor and Industries (L&I). At this time, you will need to fill out a report about the accident as well. You will be notified in writing if your employee takes out a claim for workers’ compensation coverage. You are allowed, as the employer, to both protest and appeal claims decisions. Any claim decisions can impact your premium for workers’ compensation insurance, which means even if a claim is false, you may end up paying more. For this reason, it’s critical to act as soon as possible if you have a sound reason to believe a claim is false.

How Can You Tell if a Claim is False?

Sometimes, it’s simply that the story of the accident doesn’t quite match up with the nature of the injury. Or perhaps you overhear details before or shortly after the incident that lead you to suspect you don’t know the whole story. Talk to other employees, particularly those who were present or working at the time of the accident and those who socialize with the injured party. Include as much information as possible in official company records, such as human resources reports and interviews.

Does the Evidence Fit the Story?

Does something about the story seem askew? If your company has comprehensive security systems, there may be camera footage of the event and the time leading up to it that can provide insight. Perhaps there’s footage of the injured party arriving at work, already limping from a preexisting injury. Maybe there’s footage of them staging a fall. This is where the process can become sensitive and time-consuming. It’s important to work with an expert to carefully review any evidence left behind from the accident and other applicable materials as you move forward.

What To Do If You Think a Claim Is False

Now is the time to enlist the help of a professional firm such as Stop Claims to begin gathering evidence and fully investigate a fraud allegation. Services may include conducting a private investigation, performing a thorough case review, providing general expertise to follow up on the likelihood of fraud, and (ultimately) potentially saving your company money.

Stop Claims Can Help With Appeals

If you believe an employee has filed a fraudulent workers’ compensation claim, Stop Claims is here to help. We partner with medical and investigative professionals who can help disprove fraudulent claims with credible evidence and ultimately save your company money. We also have a strong track record of demonstrated success — so don’t allow yourself to fall victim to a potentially damaging scam! The choice is easy.

How to Build Positive Relationships with Your Employees (and Decrease the Chance of Workers’ Comp Fraud)

Workers’ compensation fraud can be costly and frustrating, but in order to mitigate it, employers must expand their focus beyond recognizing fraud when it occurs. In many cases, consciously forging positive employee-employer relationships and cultivating strong communication is one of the best precautionary steps to take.

Making this effort can foster an atmosphere of honesty and mutual respect, which can then reduce the motivation for an employee to defraud the company. When employees feel disconnected from and disregarded by an employer or corporation, they may be more likely to rationalize financially cheating that organization. Here’s how to avoid this by building and sustaining a beneficial symbiotic relationship.

Making this effort can foster an atmosphere of honesty and mutual respect, which can then reduce the motivation for an employee to defraud the company. When employees feel disconnected from and disregarded by an employer or corporation, they may be more likely to rationalize financially cheating that organization. Here’s how to avoid this by building and sustaining a beneficial symbiotic relationship.

1. Visit employees in person.Sending emails is convenient and functional, but face-to-face interaction is essential in building any relationship.

2. Provide an open platform for feedback. Start by keeping your office door open as often as possible so employees are invited to enter. When staff members feel they can come to your office to voice any concerns, tell you about new ideas, or even just to say hello, they feel respected — and in turn, they’re more likely to offer up mutual respect. Make every effort to remain approachable.

3. Don’t show favoritism.Be equally fair and just with each and every employee. It’s easier to justify a lapse in accountability when we feel we’re being treated unfairly… and employees may go so far as to rationalize fraud to even the score. This includes viewing yourself as an equal and following all company rules yourself.

4. Go the extra mile. If it’s within your means, try surprising the staff with coffee and donuts or a special-occasion early release as a reward for a job well done. Don’t be afraid to step outside of your office and offer hands-on help with especially challenging projects. This allows people to connect with you as an equal.

5. Keep goals realistic. It’s good to push your team, but don’t push so far that they regularly feel burned out. Besides lowering morale, burnout can be a potentially injury-causing distraction.

6. Cultivate mutual honesty.Ask your employees for their input, and be honest with them in return. Find ways to demonstrate that you value them as people, that you don’t just think of them as nameless workers under your control. This can be as simple as a quick “how was your weekend?” on Monday mornings.

Part of the key to stopping workers’ comp fraud is to make a conscious effort to connect with your workers on several levels. This will take time and regular upkeep, but it can pay off in the end.

equal to a success for employers and employees statewide. Let’s work together to prevent the bad apples from skewing the system against the rest of us!

How Workers’ Compensation Fraud Takes Advantage of You and Your Coworkers

Attention, Washington State employers and employees: Did you know, even if you aren’t directly involved in or victimized by a fraudulent workers’ compensation case, the ripple effect of each statewide fraud case is still likely to reach you?

Employers and employees that are part of the Washington State Fund pay toward workers’ compensation premiums on a quarterly basis, and when fraud occurs, those premiums rise and everyone in the state network suffers. In 2016, Washington State businesses experienced a 2% general rate increase — a number that reflects that year’s open workers’ compensation cases across the board, including fraud and abuse of the system. Furthermore, a new proposed increase of 0.70% is expected to go into effect at the beginning of 2017 if approved.

Why does the L&I base rate matter? An employer’s industry will dictate what base rate they will pay. The resulting workers’ compensation premium cost is deducted from each employee’s hourly wages, as well as from the employer’s profits. When more fraudulent cases occur, premiums skyrocket, and less of your hard-earned dollars end up in your bank account. Even if your business has earned a claim-free discount following a three-year experience period without claims involving time-loss or disability benefits, base rate increases can still raise your final workers’ compensation rates.

Don’t get stuck sacrificing your earnings to pay for a coworker’s (or even a stranger’s) phony injury. Stop Claims sides with employers whose experience ratings and business success have been affected by workers’ compensation fraud. If you believe you’ve been victimized by fraud, our experts will help you face Washington State L&I representatives and boost your chances of a favorable decision. A success for one business facing fraud is equal to a success for employers and employees statewide. Let’s work together to prevent the bad apples from skewing the system against the rest of us!

stuffed animal with bandage on head

3 Most Common Types of Workers’ Compensation Fraud in Washington State

Workers’ Compensation fraud is incredibly costly. An estimated 10 percent of workers’ compensation claims are fraudulent, costing the industry $5 billion each year. This kind of fraud accounts for 25 percent of all insurance fraud, and between 2005 and 2009, approximately $25 billion in disability payments were either improperly paid out or based in fraud.

According to the State’s Department of Labor and Industries, the most common types of workers’ compensation fraud by employees are:

Collecting time-loss while working.

When someone is paid time-loss benefits or receiving disability benefits for their recovery, they are not allowed to be working. The common symptoms of this disability fraud include working or doing ‘volunteer’ work while on time-loss, being consistently away from home during work hours, working and receiving payment under the table, and receiving unemployment benefits.

Filing a false claim or falsifying a condition.

While you can’t fake a broken bone, ‘soft tissue’ injuries such as strained muscles can be much harder to diagnose, and are usually identified based on the patient’s stated symptoms. A faked condition can lead to claim fraud, where the person is not injured or not injured as extensively as they claim they are.

Failing to register as a contractor.

The state’s Labor and Industries department wants to reduce unregistered contractors, since they are at risk for a variety of improper business practices and contractor fraud:

  • Improperly paying for workers’ compensation insurance.
  • Not paying prevailing or agreed-upon wages (and overtime, where required).


An employee receiving workers’ compensation may be seeking it fraudulently if one or more of the following symptoms apply in their case:

  • Their injury had no witnesses.
  • The injury allegedly occurred while the employee was not at work.
  • There was a delay reporting the incident and associated injuries.
  • Multiple claims are filed.
  • The patient delays seeking medical treatment, and/or misses appointments.
  • The injury allegedly took place concurrent with termination of employment.
  • The employee has personal financial stress.

If you think your employee may be claiming workers’ compensation fraudulently, please contact us for a free consultation.

Featured photo source: Pixabay.com