Where there’s money to be made, someone will use fraud to make it. That includes workers’ compensation benefits, which should pay for medical and rehabilitative care for those injured while working. The Hartford Insurance estimates workers’ compensation fraud costs employers about $30 billion annually.
Employers and employees can engage in workers’ compensation fraud. An employer can lie about how many employees they have or what they do to lower their premiums. Employees can fake supposedly work-related injuries or their severity to make money.
What Are Common Types Of Employee Fraud?
Fraud is an intentional act resulting in benefits to a person or entity not lawfully entitled to receive them, according to the Society for Human Resource Management. Most common fraud schemes involve people receiving benefits while they work, whether for their employer, themselves, or someone else. They may be labeled as totally disabled while earning an income.
As an international litigation lawyer can explain, other kinds of fraud include:
- Staged injuries or accidents
- Lying under oath
- Identity theft
- Exaggerated injuries
- Suffering an injury outside work and then later claiming it happened while working
Whether an employee commits fraud boils down to two considerations, which include:
- Did they knowingly make a misleading or false statement?
- If so, was it to secure workers’ compensation benefits?
These cases can be difficult to prove because they involve intent or what the person was thinking or intending at the time. That can be shown by the facts of the situation, what others told them, and what they said to others. A fraudulent claim can start as a legitimate one falsely portrayed as much more severe than it is.
What Should An Employer Do If They Suspect Fraud?
You may hear rumors or reports that an employee is “milking” the workers’ comp system. If you have the resources, you could discreetly look into the issue to see what you can find — as our friends at Focus Law LA can explain — such as:
- Casually speak to co-workers and ask if they’ve heard from the person. If they appear to know of fraud, you can ask them for a written statement
- The employee may have public social media accounts you could check out to see if they discuss their health or abilities. If it appears the person’s healthier than they claim, save screenshots for later use
- If this is serious enough or costing you enough money, your company could hire a private investigator to see if what the person’s doing or saying is inconsistent with their reported injury
Don’t accuse the employee of fraud unless you have solid evidence to back you up. If you have discussions with the person’s manager or human resources, it should be something you’re looking into or checking out.
A small business may lack the resources to conduct a full investigation. Instead, it may pass the information on to its workers’ compensation carrier or the state board or agency responsible for its system. Either of those two may have the desire and ability to investigate claims.
Accusing Someone Of Workers’ Compensation Fraud Is A Serious Business
Letting someone get away with fraud or wrongly accusing an employee of fraud can cost your business. If employees know they can make extra money with fake workers’ compensation claims, the problem will spread, and the costs will rise.
If you falsely accuse someone of fraud and fire them, you may expose yourself to legal action. You may be accused of wrongly blaming them and be sued for libel or defamation. You may also be accused of firing the person in retaliation for their workers’ compensation claim.
These consequences are why these situations should be professionally and thoroughly investigated. You may not only save yourself some money and fire someone using dishonesty to make money, but you can avoid being sued by a fired employee if you have enough solid evidence to substantiate your claims.
If you think an employee is engaging in workers’ compensation fraud, contact your lawyer to discuss what you should do and who to contact so you can resolve the issue and take any necessary steps.