Is There Such a Thing as Only a Little Fraud

24 Apr, 2012 Rebecca Shafer


From time to time employers are confronted with the dilemma of how to deal with a small, but fraudulent, workers compensation claim. The employer knows the claim is fraudulent. However the cost of contesting the claim, and the extra time that will be required of the risk manager or workers comp coordinator, makes it seem like a good idea to let the employee ‘get away with it'. Why spend $5,000 in legal fees on the workers comp claim, complete the investigation needed to defeat the claim, and risk a wrongful discharge claim, when the employee will be back at work in a couple of weeks?


If the ‘little fraud” is not contested, there will undoubtedly be more little frauds. And as the word spreads that the employer is an easy mark, employees will push the envelope with larger fraudulent claims. When the employer lets the minor, clearly fraudulent claim run its course, the other employees notice what is occurring. [WCx]


The workplace grapevine quickly shares the news that ‘good ole Joe' is going to claim he hurt his back, so he can take his family on that extended vacation that he has promised them for years. When everyone in the shop knows that he is going to make a fraudulent workers comp claim, they all watch to see what develops. ‘Good ole Joe's' bogus workers comp claim is often the subject of discussion at lunch, or during breaks. The employees will wait and see if he gets away with it. When Joe stays off work for a month then returns to the job like nothing has happened, the dishonest employees may also plan  “vacation on comp.”


The honest employees will continue to be honest, regardless of whether or not some co-workers get away with fraud.  But, the favorable impression of the employer is diminished, as the employer should have done more to prevent the fraud. Plus, when the fraudulent employee gets light duty or a cushy job, while the honest employees have to pick up the fraudulent employee's heavier tasks, resentment builds.  This is not just towards  bogus ‘good ole Joe', but also at the employer for giving the honest employees an unfair share of the work. Morale declines among all the honest and good employees.


While management may be frustrated by a bogus workers comp claim, when nothing is done about it, the employees do not perceive it that way. The impression the employees will get is that management does not care about a little time off on comp. And, most employees think that workers' compensation is paid for by the insurance company, not their employer. Besides it is the big, rich insurance company that is paying for it, not the employer (in the mind of the dishonest employee). Hence, since management will turn a blind eye to the fraud, the discontents, the gripers, the poor performers and the troublemakers all see this as a turn to get something for nothing.  The number of bogus claims then increases.


Many of the bogus claims will run a course in a month or two. However, for some employees the bogus claim is the solution to a long-term ailment. The pre-existing slip disc in the neck, or the torn knee ligament, can now be paid for by workers compensation. The employees saw that management took no action on ‘good ole Joe's” claim; therefore, management does not care if the employees “fudge” a little bit, and claim the medical problem is related to work, when it is not.


The employee who turns in the bogus claim for a major medical problem does not think about the cost differential between his workers comp claim and ‘good ole Joe' who just took some paid time off.  Also, the bogus employee may be a little concerned that he will get caught in the fraud. The employee committing fraud is much more likely than the honest employee with a legitimate injury to hide behind the curtain of protection of a personal injury lawyer (who does not care if the workers compensation claim is bogus, as long as he gets his fee).


The culture of fraud will grow from the minor claims to major claims, plus the number of bogus workers compensation claims will increase significantly, all because management allowed “a little fraud” to save the cost of fighting it. [WCx]


The employer can prevent the bogus / fraudulent claims from spiraling out of control. The employees should know that every workers compensation claim is investigated thoroughly, and all questionable claims are vigorously defended. In addition, any proven case of fraud should be turned over to local law enforcement for prosecution. Every employee should know that the employer pays for all workers comp claims through the insurance premium, and that bogus claims are theft from the company. A culture where every legitimate claim gets prompt medical care and every questionable claim is contested will go a long ways toward preventing the ‘it is only a little fraud' mentality. 


Please see our Workers Comp Fraud Control resource for more information in our WC Employer Resource Center.


Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact:




Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.


©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact us at:


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