Workers’ Compensation Fraud
Private Investigators Stay Ahead Of The Game
MEDRANO & ASSOCIATES
Serving San Diego since 2008. Workers’ Compensation Fraud cost cost $1-3 Billion dollars annually in California alone. Having a highly skilled workers’ comp investigator working for you could save you 10s of thousands of dollars.
I am a retired Federal Police Officer for the Department of Defense and have been providing legal services since 1994.
Workers’ Compensation Fraud — Private Investigators Stay Ahead Of The Game
Workers’ compensation fraud costs employers billions in the United States per year. It is a
serious problem facing companies and businesses, but that doesn’t mean it’s a problem that
needs to ruin your business or your employment status. There are several reasons why hiring a
private investigator can be beneficial, possibly turning around a negative situation or helping you
avoid one altogether.
What Is Workers’ Compensation?
Workers’ compensation fraud costs employers billions in the United States per year. It is a
serious problem facing companies and businesses, but that doesn’t mean it’s a problem that
needs to ruin your business or your employment status. There are several reasons why hiring a
private investigator can be beneficial, possibly turning around a negative situation or helping you
avoid one altogether.
Workers compensation insurance is a state-mandated form of insurance that provides financial
benefits to employees who suffer work-related injuries or illnesses.
Workers’ compensation coverage is something most employers are required to provide. Each
state has its own laws governing workers’ compensation insurance and benefits, who is
covered, and how much time a worker has to report an injury.
To ensure that employees who are injured or disabled on the job receive fixed compensation
awards, workers’ compensation laws were created to eliminate the need for litigation in the case
of workplace accidents. The trade-off for this system is that employees forgo their right to sue
their employers for any negligence on their part.
Workers’ compensation is intended as a “no-fault” system, meaning that it does not matter who
was at fault (the injured employee or the employer) in causing the injury. The worker receives
benefits regardless of fault (although there are certain situations where benefits can be denied).
These laws also protect employers from lawsuits by employees claiming an injury was caused
What Is Workers’ Compensation Fraud?
Workers’ Compensation fraud typically occurs when an individual sustains an injury outside of
work or sustains an injury that is not as severe as reported. In both instances, the individual will
seek treatment and attempt to receive monetary benefits from the insurance company. Workers’
compensation fraud is a severe issue in the United States, costing insurers and employers more
than $30 billion annually.
Some examples of Workers Compensation Fraud include:
Injury sustained outside of work – An individual may be hit by a car while jogging on a
Sunday afternoon and sustain injuries to their back. Rather than reporting the accident to their
auto insurance company, they decide to report it to their employer’s Workers’ Compensation
carrier instead, so they don’t have to pay a deductible or copayment.
Injury sustained at work is exaggerated – An employee may cut their finger at work using a
box cutter. Rather than reporting a minor injury, they decide that they want some time off from
work and report that they have severed their finger and will require surgery.
Failure to disclose pre-existing conditions – Some employees may deliberately fail to
disclose pre-existing injuries or illnesses that could interfere with their ability to work. Employees
may also fail to disclose that they’ve filed previous claims for the same condition with other
employers.
Why Should an Employer Hire a Private Investigator?
A private investigator (P.I.) is an expert in gathering information. They use various methods to
gather information, including surveillance and undercover work. If you’re an employer, hiring a
private investigator will provide a level of security that you can’t get through usual channels.
When it comes to employees on workers’ compensation, there are things the P.I. can do that
your average insurance adjuster can’t.
The majority of private investigators are self-employed and work on a case-by-case basis from
their home offices.
Employers who hire P.I.s for workers’ compensation cases often have no idea what they’re
getting into because most P.I. firms don’t disclose that type of information.
You want to make sure the employee is genuinely injured and not faking it to get more money.
Many employers think they can spot an injured employee by their attitude or appearance, but
this is rarely the case.
You want to know how much money the employee has already received in workers’
compensation and whether there’s more coming (overpayment).
You want to know if there’s insurance fraud involved (such as hiding an injury by “forgetting”
medical treatment).
When Should an Employer Hire a Private Investigator?
Not every employee is fraudulent, and however, some take advantage of the system and the
trust that their employers have in them. The business owner must make sure that they do not
discriminate against legitimately injured employees and need help with medical bills or living
expenses while they recover.
The business owner has every right to research one’s employees, especially if they suspect that
fraud may be involved. The investigator will look into the employee’s past behavior and
determine if their actions are consistent with their medical condition or workplace injuries. This
can help them decide whether they want to pursue legal action against their employees or if
they would rather keep them as part of their company.
First and foremost, hiring a private investigator to follow someone around can be very
expensive, and this cost can grow if the investigation goes beyond a couple of days. The best
time for an employer to hire a private investigator is when the case seems to have unusual
circumstances or if the injury seems suspicious.
Some suspicious incidents could include:
● An employee who has been injured numerous times at work
● An employee who has been injured in similar ways multiple times at work
● An employee who has been injured in ways that are not consistent with their job duties
● An employee who has been injured in the same part of their body multiple times
● An employee who continues to have new injuries while receiving workers’ compensation
benefits
The list above is just meant to provide examples of some red flags. Many more suspicious situations could arise, prompting a private investigator’s need for surveillance and investigation.
What Are the Benefits of a Private Investigator Proving Compensation Fraud?
When a worker files for workers’ compensation, the state pays for medical treatment, temporary
disability, and wage loss, the cost of these benefits can be high.
Before the injured employee files a claim, a private investigator can prove that fraud has been
committed when the payments are made. If an injured employee has made fraudulent claims, a
private investigator can prove those claims without filing a lawsuit.
The benefit of this is clear: time. If a private investigator proves fraud before the employee files
a claim, the employer doesn’t have to pay any workers’ compensation benefits. In many cases,
proof of fraud will prevent the employee from ever filing a claim.
If you have an employee collecting workers’ compensation and committing fraud, catching that
fraud as soon as possible reduces the amount of money you are paying them throughout their
injury. For example, if you caught someone committing fraud after two months and planned on
being out for six months, your company would save four months’ worth of workers’
compensation payments.
If you have many claims, your insurance company will charge higher premiums to cover the
potential costs. If you can prove that some of your claims were fraudulent, the result could be
reduced insurance premiums.
Next Steps
Workers’ compensation fraud is a crime — and employers should not ignore it. One of the most
significant issues with workers’ compensation fraud is that it can be challenging to detect.
Employees are often unaware when an employee commits workers’ compensation fraud, but
employers should look for plenty of warning signs.
If you suspect an employee has committed workers’ compensation fraud, private investigators
can help.