Workers compensation fraud is on the rise. Here are 3 ways to help fight it:

Workers compensation fraud is on the rise. Here are 3 ways to help fight it:

Unfortunately, workers’ compensation fraud has been on the rise. The poor state of the U.S. economy is certainly a factor in addition to the mortgage meltdown and government cutbacks. Even rising student debt in this environment is placing pressure on young people. Equally unfortunate are those who see fraud as a solution to their challenges. Many consider it easy money and are simply clueless to the potential consequences. There are also plenty of examples of sophisticated cases that require careful and persistent digging.

Insurers write more than $1 trillion in insurance premiums annually according to the Federal Bureau of Investigation (FBI), providing significant opportunities for fraud to be perpetrated. The FBI estimates the total cost of non-health insurance-related fraud to be more than $40 billion per year, costing the average U.S. family an estimated $400 to $700 per year in increased premiums.

The National Insurance Crime bureau says that Workers’ Compensation fraud accounts for approximately 25 percent of the fraud perpetrated, or approximately $7.2 billion annually and is one of the fastest growing areas of fraud. One insurance executive has said that “If Workers’ Compensation fraud were a legitimate business, it would rank among Fortune 500 companies.”

Sadly, the cost of this fraud is not limited to any one entity; policyholders, employers, insurers, consumers and shareholders all bear the expense.

With cases of Workers’ Compensation fraud, there are three primary points of contact — the worker, the employer and the medical provider. Fraud may be committed for a variety of reasons including:


  • Financial problems
  • Lack of medical insurance
  • Sense of entitlement
  • Layoffs looming
  • Adverse employment action


  • Reduce premiums
  • Underbid competitors
  • Reduce costs
  • Bonus tied to safety programs


  • Organized crime
  • Exploitation of loopholes
  • The competition is doing it
  • Greed

In California, insurers are required to maintain a special investigations unit (SIU). As a broker, Keenan does not fall under this mandate, but it does operate its own SIU as part of its service for providers. Read more