6 Types of Workers’ Compensation Fraud

Fraud is a serious matter, one that’s punishable by heavy fines and even jail time in many cases. If the fraud involved a workers’ comp claim, Colorado law is quite clear on what constitutes fraud and the punishment for engaging in it.

In order for someone to be convicted of workers’ comp fraud in Colorado, the state has to prove that the accused made material false statements and representations involving a claim.

There are several “red flags” that indicate fraud may be occurring. Some of these signs include:

  1. An injury that occurs first thing on Monday morning
  2. There are no witnesses to the injury
  3. Injured worker has been recently reprimanded and is “disgruntled”
  4. Facts are materially misrepresented
  5. Workers prolongs their recovery or exaggerates their symptoms
  6. Services billed do not seem right for the type of injury

The Colorado Division of Workers’ Compensation has a Fraud Investigation Unit whose sole job is to investigate cases of fraudulent activity and build a solid case if indeed it’s determined an individual or company broke the law. To build a strong, prosecutable case, the Fraud Investigation Unit has to prove that (1) false statements or representations were made, (2) decisions about a claim were based on false statements or representations material to the claim, and (3) statements/representations intended to defraud were made.

Fraud in terms of workers’ compensation can take on many different forms. Six of the most common types include:

Applicant/Claimant fraud – can involve an injured worker making false statements knowingly, faking or exaggerating injures, making multiple claims using different identities, making a claim for injuries that occurred outside of work, or not reporting additional income or second jobs.

Billing/Provider fraud – can involve overbilling or not rendering services as required by Colorado’s workers’ comp law.

Attorney fraud – can involve soliciting and/or assisting a worker in filing a false claim, or directing a claim to a clinic conspiring with the attorney to overbill or exaggerate the extent of the worker’s injuries.

Adjuster fraud – can involve tampering with evidence to support denying a claim or accepting bribes in exchange for patient referrals, etc. The adjuster works for the insurance company.

Premium fraud – can involve giving false information to an insurance company in order to obtain a workers’ comp policy at a reduced rate.

Employer fraud – can involve providing false information knowingly to avoid, deny, or obtain compensation for an employee. Can also include lying to employees to discourage them from pursuing a claim or misclassifying employees and/or under-reporting their wages.

Of course, there could be many other instances that could be considered “fraud,” but these are the most common types according to the Colorado Division of Workers’ Compensation.

While some fraud can occur on the part of an employer or the insurance company, workers still need to be able to recognize it they stumble upon it.

If you believe there is workers’ fraud occurring at your workplace or among your coworkers, it’s important you notify the proper authorities. Fraud undermines the entire system and takes money that should be used to help injured workers recover.

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Categories: Workers' Compensation
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