Recognizing and Preventing Workers’ Comp Fraud


Workers’ compensation is intended to protect the employer and the employee in the event of an on-the-job injury. While most claims are legitimate, there are a few that might raise some red flags for the employer. From exaggerating injuries to collecting benefits while working elsewhere, there are various scenarios that warrant an investigation. As we explore how to recognize the signs of a potentially fraudulent claim and how to prevent future incidents, ensure your operation is protected by a customized Texas Workers’ Compensation Insurance program.

Recognizing the red flags.

While it’s imperative you don’t make false and unsupported accusations of fraud, the following four signs should be understood and handled with a bit more scrutiny.

  • The employee in question has a history of frequent job changes and workers’ compensation claims from previous employers.
  • The employee’s recount of the injury is vague, or the injuries are not consistent with the type of accident he or she explained.
  • The injury was not reported immediately, or only reported after a layoff, termination, or at the end of a contract.
  • The employee refuses to undergo diagnostic procedures to confirm the injury.

Prevention techniques.

The best way to mitigate the occurrence of fraud is through prevention strategies. While workers’ compensation is a requirement for most businesses, it doesn’t have to be a costly expense each month. Here is how to reduce the risk of fraud and keep your premiums to a minimum.

  • Screen applicants – A clean criminal record and no previous suspicious workers’ compensation claim activity is a good indicator the employee is honest.
  • Listen to your employees – The Coalition Against Insurance Fraud indicates “the strongest predictor of fraud is a chronically disgruntled workforce.” Are there frequent complaints and concerns about working conditions? If so, take action to correct the situation and show you care about safe working conditions, explains Leavitt Group.
  • Communicate – Establish and communicate policies and procedures with new employees. These rules should be reiterated at least annually. Next, if an employee becomes injured, maintain communication with them regularly regarding their recovery. Monitoring his or her progress will ensure they feel valued and will be motivated to return to work quickly.

About Preferred Insurance

At Preferred Insurance, we specialize in providing quality insurance solutions that are tailored to your specific needs. We pride ourselves on working with you to give you the coverage you need at a price you can afford. For more information about our business line products and services, contact our experts today at (877) 547-4461.