Red Flags for Fraud

By: Timothy Kinsey

Shareholder, Stander Reubens Thomas Kinsey

‘Fraud’ in workers’ compensation is one of those concepts that is frequently discussed but is relatively difficult to prove. As attorneys, insurers and employers, we must demonstrate that there has been a material misstatement of fact for the purposes of securing workers’ compensation benefits. But what signs do we look for to determine if we should be looking deeper for potential fraud?

For one, we look to the circumstances surrounding the timing of the claim. Did the employee recently get turned down for a vacation request? Was the employee reprimanded or terminated? Was the employment short-term? Did the employee report the injury long after it allegedly occurred? Or better yet, did he or she file a claim right about the time that the employee's non-industrial benefits ran out (such as FMLA or non-industrial disability benefits)? This is not to say that injuries alleged within these parameters are fraudulent. But they do warrant closer scrutiny in light of the timing of the claim.

To further assess the validity of the claim, you have to assess the circumstances surrounding the incident. Was there a witness to the injury? Did the employee make any statements about the potential claim beforehand to either co-workers or the employer? In one case our firm handled, the employee literally told the employer he was going to “pay for” the employee’s termination. These red flags can be identified by a thorough employer level investigation as soon after the reporting of the alleged injury as possible.

And the issue can get even more complex. What if the injury actually occurred but the complaints are exaggerated? We need to look to the nature of the ongoing complaints, and the objective evidence, if any, that substantiates those complaints. While the occurrence of the injury itself may not be fraudulent, exaggeration of complaints for the purpose of securing a free vacation via the work comp system may very well be material misstatements. Is it the type of injury where the complaints can be reasonably verified, such as a compound fracture or a herniated disc? Or is it an injury that is based purely on subjective complaints without objective corroboration, such as ongoing complaints of headaches, dizziness, nausea, memory loss, difficulty concentrating, difficulty sleeping, etc.? These types of cases potentially benefit from surveillance. A CT scan may not show any objective evidence of a head injury despite complaints of dizziness. However sub-rosa footage of the same individual, riding a bike, working out, or even walking normally would tend to refute these allegations.

If the injured worker advised his treating physicians of these complaints, and the physician noted that he would not have recommended medical treatment and/or indemnity benefits had the employee truthfully and accurately revealed that he was able to perform such activities, we would have a material misstatement of fact. 

And we cannot overlook the obvious…social media. These sources should be checked whenever there is any hint of question as to the occurrence of an alleged industrial injury or exaggeration of an admitted injury – and they should be checked on a regular basis. Unless the data itself can be authenticated as to date and time, however, its use is somewhat limited to guiding further investigatory efforts. For example, a picture on Facebook of an injured worker lifting a large amount of weight at the gym that he stated he was unable to lift after his injury is only useful if we can show that the picture itself was actually taken after the injury. And while we are on the subject of Facebook…don’t expect to be able to get any actual content via subpoena. Facebook content is protected by the Stored Communications Act 18 U.S.C. 2701. Filing a petition to compel the injured worker to turn over the content may produce some useful information but then again, there is nothing to stop the injured worker from deleting what they want and providing the rest. And Facebook is not required to preserve deleted content except for law enforcement. ​

Depositions of both the employee and quite possibly of the treating physicians and AME/PQMEs are often the key to laying the foundation to prove fraud. As attorneys we utilize all of this information in order to show there has been a material misstatement for the purpose of securing workers’ compensation benefits; the key is spotting the red flags for potential fraud and digging deeper into the claim when needed.

Once these red flags turn into a fraud claim, we aggressively work with the District Attorney to get this “injured” worker exactly what he or she is entitled to…restitution and hopeful jail time. We have been successful many times and expect to continue these victories.