Experienced claims adj
usters possess a keen eye for red flags in workers' compensation (WC) claims, indicating potential fraud or exaggeration. While employers and claims adjusters are primarily responsible for detecting these signs, private investigators should also be familiar with them. Spotting red flags doesn't automatically mean fraud, but it alerts the adjuster to investigate further.
Though most insurance claims are genuine, fraud is not uncommon and affects about 30% of all claims, according to Jody Ball's research. Among illegitimate claims, some involve intentional fraud, while others feature exaggerated injuries or malingering, where claimants pretend to remain incapacitated.
When investigators receive a new WC assignment, discussing the specific red flags observed with the adjuster helps conduct a more effective and cost-efficient investigation. For instance, if the adjuster mentions that the claimant's home address appears to be a friend or family member's address, the investigator will prioritize locating the claimant's current residence.
Let's examine the 40 most common red flags associated with WC claims and understand their implications and actions adjusters and investigators can take:
No witnesses to the injury or only close co-workers as witnesses. Installing security cameras at the workplace can deter fraudulent claims.
Conflicting information in claimant and witness statements, indicating possible rehearsed accounts.
Delayed reporting of the injury, suggesting a need for clear guidelines on reporting work-related injuries.
Numerous alterations, erasures, or incomplete information in documents.
Claimant's inability to recall specific details about the accident.
Newly hired employees making WC claims, which statistically have a higher likelihood of fraud.
Poor attendance record at work, which can escalate to WC claims.
History of discipline issues, making disgruntled employees more prone to fabricate claims.
Injury occurring right before or after a vacation or prior to an employee's retirement.
Injuries following disciplinary actions, demotions, or being passed over for promotion.
Problems with workplace relationships, indicating potential motives for fraudulent claims.
Claimant leaving the country for medical treatment, potentially to avoid scrutiny.
History of reporting subjective claims or multiple claims simultaneously.
Injuries related to pre-existing health problems.
Claimant involved in hobbies or sports, leading to potential injury misattribution.
Involved in home improvement or auto repair activities, which may lead to injury claims.
Having a part-time labor-intensive job, possibly using WC as an excuse for time off.
Injuries occurring on Fridays or Mondays, hinting at weekend-related incidents.
Conflicting information between incident reports and medical evaluations.
Claimant refusing or delaying treatment for diagnosis.
Claimant avoiding phone calls, sleeping excessively, or not being available, suggesting high activity levels.
Missed medical appointments, signaling a lack of genuine concern about recovery.
Claimant providing incorrect addresses or using friends' or family members' addresses, hiding from scrutiny.
Claimant's family members unaware of the claim or providing rehearsed information.
Claimant going through divorce or child custody battles, possibly using WC claims strategically.
Facing financial difficulties, leading to potential theft from employers.
Tips or anonymous information from co-workers, relatives, or neighbors suggesting exaggerated claims.
Incompatible lifestyle with known income, indicating possible fraud.
Claimant frequently changing physicians after unfavorable diagnoses.
Claimant appearing healthy, tanned, or sunburned, suggesting active involvement in outdoor activities.
Claimant and other workers from the same employer using the same attorney, doctor, or chiropractor, hinting at potential collusion.
Familiarity with claims-handling procedures or workers' comp rules, potentially indicating previous claims.
Understanding WC claims' procedures might imply prior experience or expectations of surveillance.
The claimant's lifestyle is incompatible with their known income, suggesting they have various sources of income or activities beyond their reported earnings. Conducting surveillance becomes essential to assess their daily activities and financial situation accurately.
The claimant's family members are also on workers' compensation or have a history of making claims or lawsuits, indicating a pattern of filing claims within the family. Investigators should exercise discretion while conducting surveillance and making neighborhood inquiries to avoid unnecessary complications.
The claimant's injuries are subjective, involving soft-tissue injuries, phantom pain, emotional distress, etc. Proving the legitimacy of such injuries can be challenging. Therefore, the most effective approach is to conduct surveillance over several days to observe the claimant's activities and behavior.
The claimant changes physicians frequently, especially when the current physician releases them to return to work or disagrees with the claimant's assertions. This pattern may indicate an attempt to shop for a more favorable medical opinion to support their claim.
The claimant appears healthy, tanned, or sunburned, suggesting active involvement in outdoor activities. People tend to follow routines, and even fraudulent claimants eventually go back to their regular habits. Surveillance is crucial to document their level of physical activity.
The claimant and other workers from the same employer use the same attorney, doctor, chiropractor, or clinic. Discovering multiple claimants from the same company being treated by the same facility raises suspicions. Some clinics may exploit these situations for financial gain. Caution is advised during surveillance at these locations, as they might be protective of their "cash cow."
The claimant is familiar with claims-handling procedures or workers' compensation rules, which may indicate prior experience with filing claims. Additionally, their knowledge might signal an expectation of surveillance. Investigators should use discretion and be cautious while conducting investigations involving such claimants to avoid potential complications.
Employers, adjusters, and investigators collaborating to recognize and react to these red flags can reduce false or exaggerated claims, benefiting everyone involved. By conducting comprehensive investigations, they contribute to minimizing the impact of fraudulent WC claims on businesses, consumers, and the overall WC system. Let us work together to be part of the solution.