How Does a Workers' Compensation Investigation Work?

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Private investigators do the legwork in a workers' compensation fraud investigation.
Private investigators do the legwork in a workers' compensation fraud investigation. (Image: Comstock/Comstock/Getty Images)

Workers’ compensation fraud is big business for some people. California’s Workers’ Compensation Fraud Investigation Unit indicated that in fiscal year 2008-09, 539 fraud cases resulted in 218 arrests in California alone. Of these cases, 327 submissions went to district attorneys and other law enforcement personnel for further prosecution. The potential loss for these claims amounted to $205,811,250. Workers’ compensation fraud is not only expensive -- it cheats legitimate workers out of benefits.

Red Flags

Workers’ compensation claims examiners receive training to spot fraud cases. Red flags to an examiner include employees with multiple workers’ compensation claims, lack of witnesses to the injury, suspicious Social Security numbers, multiple stories about how the injury occurred, and injuries that happen before or after disciplinary action or before a strike or layoff. Another huge red flag is an injury sustained prior to job termination or, interestingly, a new hire who experiences an injury on the job.

Internal Investigation

When the fraud flags wave, the claims examiner begins a quiet investigation to corroborate the story of the injured worker. This investigation occurs at the employee's place of work. A search is made for witnesses or anyone who can validate the injured workers' story. If this reveals the possibility of fraud, the claims examiner works with the injured worker’s employer to find out if there are disciplinary actions under way or if the claimant has filed multiple claims.

External Investigation

Claims examiners have relationships with multiple private investigators who handle workers’ compensation fraud investigations. The examiner assigns the case to the private investigator, paid for by the insurance company. These private investigators actually spend the time to catch the injured worker in a compromising situation, such as lifting heavy boxes from a car after shopping, playing or participating in extraneous sports unwarranted for the injury or working elsewhere while receiving benefits. The alleged injured worker rarely knows he is being filmed, photographed or investigated.

District Attorneys

Once a case is ready for prosecution, the claims examiner meets with the district attorney, who will make a determination in the case. When the district attorney accepts the case, he will take the investigative materials, film, photographs, case files and testimony from the examiner and the private investigator to use for his case. He may conduct a further investigation on his own if he feels he needs more material. Workers’ compensation fraud investigation involves lengthy and difficult investigations. Alternatively, the insurance company may conduct a civil suit against the claimant if the district attorney decides not to prosecute.

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