No Freeloaders: The Answer to Fraudulent Workers’ Comp Claims, Part 1


  • Matt, a new temporary worker who has been with your client company for two weeks, comes to you with complaints of a back injury. No one saw the injury occur and his explanation of the event just doesn’t seem to add up. He also seems unusually knowledgeable about workers’ compensation. At this point, you start to suspect fraud. What do you do?
  • Robert, a recently hired temporary worker out of a group of marginal job candidates, isn’t working out as your client company had hoped. His attendance and punctuality are poor, and his negative attitude is affecting the other employees’ morale. Regardless, the client company keeps him on through the busy season. When he comes to you claiming a suspicious lower back injury; it’s the last straw. You don’t want to deal with him anymore. What do you do?

Many workers’ comp claims are instantly recognizable as legitimate. Think in terms of blood or no blood. With blood or broken bones, there is no ambiguity. These legitimate claims travel down the normal adjuster track. In a case of no blood — soft tissue injury, back injuries, muscle injuries, shoulder injuries, etc. — doctors tend to play defense and be cautious. The path is not so clear.

Though situations like these can happen with any employer, temporary staffing businesses are more susceptible to fraudulent claims. Whether the claim is legitimate or fraudulent, your approach should start with assigning light duty work.

Means to an End
The objective of light duty work is twofold: to entice good employees to return to their usual job duties as quickly as possible and to watch the predatory employees resign or leave once they discover their plan has failed.

To lack a program subjects your firm to the system’s payback method; generally, for every dollar the carrier spends on a claimant, the employer will pay three dollars back into the system via its workers’ compensation experience modifier.

There is always light duty waiting to be done. The key is to design your program and work it strategically, thereby retaining charge of the situation as an employer.

When launching a light duty program, prepare three or four different types of jobs to handle any situation (e.g., not fluent in English, no access to transportation, i.e. can’t drive, can’t use their hands to write, or is illiterate and can’t read).

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Readers Are Leaders
While you could have them doing inane, simple tasks like sorting files around the office or counting paperclips, you must show that there is a productive cause for what they are doing. Instead, you have the claimant begin work on a “learning program.” By focusing the light duty program around reading, you are satisfying a few key points. First, while the doctor may have ordered no lifting or bending, they certainly have no problems with having the claimant read. The body can heal while the mind develops. Establishing the mental side of light duty quickly flushes out the people who dislike reading, especially when done in an intimidating fashion.

For example, let’s say a regulating body has mandated that all employers create a program to deal with an unusual circumstance or event that may arise. Maybe you have not had time to create this plan. Who should plan for it? What are you going to do as a business? How will you maintain operations? How will you protect employees and customers during this time? These questions are difficult to answer, especially in a vague or hypothetical area and completing this kind of task would likely tire anyone who was playing the system.

Setting up the Program
Most business owners don’t realize the importance or extent of completing said project. This “learning program,” during which a claimant would create, review, or edit the paperwork, may consist of reviewing up to 600 pages — nearly a ream of paper! Though intimidating, it is sedentary flexible, and always there.

You can even use this approach if the claimant cannot drive — just mail them a copy at home and have them work there. Daily or weekly, depending on proximity and established arrangements, have them send in their number of pages of allocation. The fraudulent claimants, when faced with such intimidating monotony, tend to buckle.

Setting in motion a “learning program” creates a project that will serve the company for years to come. It will take 12-18 months to complete. The claimants will create it. You will provide guidance. And through the project, both of you will quickly realize if they are truly hurting or not.

This project tends to weed out the predators quickly. Many low-wage employees with minimal skills would take de facto free health insurance and disability coverage, combined with no co-pays and no deductible. After all, they see it advertised all day on the television. By taking the light duty program seriously, you keep the claimant on the defense.

Our next post will provide tips for implementing and maintaining a return-to-work light-duty program.

Disclaimer: This article should not be construed as legal advice.
MORE: OSHA Releases Bulletin on Temp Worker Requirements

Brad Isaacs contributed to this post.

Andy Kohler

Andy Kohler
Andy Kohler is a professional buyer of insurance with Risk Transfer LLC. Risk Transfer's mission is to educate its clients about the risks within its business environment and to deliver solutions with the highest integrity and with unrivaled insurance acumen. He can be reached at akohler (at) risktransferinc (dot) com.

Andy Kohler

Brad Isaacs

Brad Isaacs
Brad Isaacs is a professional buyer of insurance with Risk Transfer LLC. Risk Transfer's mission is to educate its clients about the risks within its business environment and to deliver solutions with the highest integrity and with unrivaled insurance acumen. He can be reached at bisaacs (at) risktransferinc (dot) com.

Andy Kohler

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8 Responses to “No Freeloaders: The Answer to Fraudulent Workers’ Comp Claims, Part 1”

  1. EbonyKleinman says:

    I like the idea of having a light duty program for employees that say they’ve been injured. I think it will help entice them to want to get back to their regular duties, especially if it’s something like reading day in and day out. There isn’t much you can do to speed the healing process besides following your doctor’s orders and you don’t want to push yourself too hard if you have a bad injury. I can see how this would help weed out the fraudulent claims as well, since workers comp should be for the workers that actually need it.

  2. James Lisbon says:

    Andy, I liked the part where you mentioned that setting up a plan is a good idea in the long run.   I can see how not having a plan in play could possibly lead to some potential issues should someone get hurt on the job.   However, every job is a little different, so the needs might be a little different as well.

  3. Michael2327 says:

    I like how you mentioned the difference between blood and broken bones compared to injured back and shoulder pain. I think it’s important that someone doesn’t think they can get a workers compensation claim just by having stretched a muscle or by spraining an ankle. Although it is nice that no matter the case you can file for any injury. However, it may not be wise to do so if it isn’t severe.

  4. sfreddson2156 says:

    Thank you for this broad summary of what to do when you suspect worker’s compensation fraud. I never would have thought that being knowledgeable about worker’s comp would be a red flag, but it makes sense. Unless you’ve been through the process before, there isn’t much of a reason to be knowledgeable about it. Thanks for sharing your perspective!

  5. James Lisbon says:

    Andy, I liked when you mentioned the blood or bones rule when it comes to worker’s compensation.  I can see how that could be a good test because you could better find out what the specific problem is.  Worker’s comp. seems like it can help people to a certain degree if used properly.

  6. JamesSimon1 says:

    Andy, I like your suggestion about a “light work” regimen. It seems sad to me that people would try to exploit a system that’s in place to help and protect those who are legitimately injured. They are making a mockery of the suffering of many injured workers and their plight. Shame on them, and I hope that you can be sure to stop them before they take what isn’t theirs.

  7. Mstar58 says:

    It is sad that people try and take advantage of a system that is meant to help those who really need it. It is true that there are cases that are cut and dry workers’ comp while others can be ambiguous. I hope to never have to need to file for workers’ comp. To me it sounds like it would be a lot of effort for something that might not even be a big deal if you don’t have knowledgeable help.

  8. […] No Free Loaders: The Answer to Fraudulent Workers’ Comp Claims, Part 1 | The Staffing Stream. […]

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