Workers’ Compensation Fraud and Large-Scale Misrepresentation

A seemingly routine red flag in a single workers’ compensation claim investigation could be the string an investigator pulls that leads to uncovering a larger operation of misrepresentation and deceit. 

Take this investigation: authorities found connections between claimants, a medical clinic, and a law firm, resulting in criminal charges for three providers, two attorneys, and 15 claimants, in addition to the ordering of $2.4 million in restitution. 

Those types of large-scale fraud cases rely on adjusters collaborating with experienced SIU professionals for early investigative support. This makes adhering to ethical standards and industry best practices that much more vital.  

Knowing about various red flags for workers’ compensation, how they can indicate the possibility of a larger type of misrepresentation, and how to properly retain and document evidence while substantiating the facts of a claim will benefit adjusters, investigative agencies, and those who prosecute these crimes. 

Identifying What Could Be Part of Large-Scale Workers’ Comp Fraud 

A workers’ compensation large-scale fraud scenario could look like any combination of employees, employers, medical providers, or legal professionals working together in hopes of attempting to deceive others for financial or professional gain.  

One type of potentially fraudulent activity that could indicate a large-scale situation involves referrals among medical or legal professionals that result in illegal payments. 

Common types of unscrupulous situations that adjusters should be aware of are referral schemes, orchestrating circumstances with the intent of attempted deception, and the use of legal or medical mills. These can occur independent of each other or in concert: 

•  Referral schemes lead to illegal monetary payments, known as kickbacks, for a provider who refers clients or patients to a person or organization within the provider’s network. 
• In orchestrating, an attorney or medical provider could guide a client or patient through the process of exaggerating or misrepresenting injuries or events when discussing a claim. 
• High-volume practices, known as “mills,” process claims with little to no review and have limited, if any, contact with their clients or patients.  

Coaching and mills can be related, according to the National Insurance Crime Bureau, with the attorney leading a client through the claims process then sending them to “doctors who pay the attorney for the referral.” 

Investigating Questionable Workers’ Compensation Claims 

While verifying details of a questionable claim, the investigator may notice potential red flags that could suggest it is part of a larger fraud syndicate that warrants even more investigation. 

Some potentially questionable indicators, like timing issues and a pattern of similar claims, can lead to further inquiry, though their presence does not guarantee something is amiss or that an individual claim is part of a larger, multi-pronged attempt to deceive. 

Skilled investigators treat all investigations the same, even if potential fraudulent activity could suggest a particular case needs a more in-depth inquiry. 

The objective investigative process remains the same regardless of suspected misrepresentation among one or more parties involved in a claim. Once identifying the possible misrepresentation and conducting an initial assessment, it is up to the carrier to decide how in-depth of an investigation is needed. 

Regardless of if the investigation yields no questionable behavior, some fraudulent activity, or evidence of a larger scheme, an experienced investigator will validate the facts of a claim through organizing documentation, creating a timeline of events, summarizing evidence, and arranging a legal review of all materials. 

If fraud is confirmed, possible medical and legal repercussions can include reporting indiscretions to professional boards for a separate evaluation, filing civil suits to recover fraudulently obtained payments, or submitting evidence to prosecutors or specialized insurance crime bureaus. 

Not every case will yield results of large-scale fraud—or even fraud at all—but even one act of fraudulent activity could potentially be identified and thwarted before a workers’ comp claim is settled. 

VRC Investigations understands potential misrepresentation can occur at any stage of a claim, making it important to remain vigilant and keep an eye out for red flags while following established investigative and ethical protocols. 

Our licensed investigators are trained to objectively verify details and point out questionable activity from any and all participants in a workers’ compensation claim investigation and stay abreast of the ever-changing schemes that can originate with employees, employers, legal representatives, or medical providers.  

Adjusters can learn more about workers’ comp red flags through the VRC University self-study course, “Workers’ Comp Fraud Exposed,” which is also eligible for adjuster CE credit. 

Now that you’re ready to partner with a trained and experienced investigator, submit an assignment with VRC Investigations today. 

Alpine Intel’s content is meant to inform and educate readers using general terms and descriptions. They do not replace expert evaluations that determine facts and details related to each unique claim.