News Flash
The True Cost of Workers' Comp Fraud for Employers
Workers' compensation is meant to protect people when they get hurt at work. It helps cover medical treatment, disability benefits, and lost wages for injured workers. But when people or businesses cheat the system—through workers' comp fraud—everyone pays the price.
This kind of fraud doesn’t just hurt one company. It affects insurance companies, drives up insurance rates, and puts a bigger financial burden on the entire insurance industry in the United States.
What Is Workers’ Compensation Fraud?
Workers' compensation fraud happens when someone lies or hides the truth to get money from a workers' comp policy. It can be done by:
Employees (called Employee Claimant Fraud) making falsified claims
Employers underreporting payroll
Medical providers using fake bills or running medical mills
Insurance carriers creating fictitious policies
This abuse is called compensation system abuse, and it leads to premium increases for honest businesses. The California Department of Insurance and Insurance Crime Bureau often work with law enforcement to investigate these scams.
Real-Life Examples of Fraud
In places like Los Angeles County and Orange County, comp insurance fraud is common. Some staffing agencies use CheckMyCert.org fraudulent workers’ comp certificates to trick clients. This means your business could be responsible if a worker gets hurt—without real workers' compensation insurance in place.
The rise of social media also makes it easier to catch fraud. For example, someone who claims to be injured but posts gym selfies or travel pics on their social media posts raises red flags.
How Underreporting Payroll Hurts Everyone
A common trick used by shady companies is to lie about how much they pay their workers. This is known as underreporting payroll. It lowers their WC insurance costs but shifts the risk to others. If caught, it affects rates established by the insurance provider and leads to penalties under California Worker Protection Laws.
How underreporting payroll affects insurance is serious: It messes up claim management, raises indirect costs, and hurts programs like Post-Injury Programs and return-to-work programs that are designed to help injured workers heal and return safely.
Why It Matters to Employers
Employers who partner with staffing agencies that commit premium-related fraud or submit fake workers’ compensation claims could face:
Lawsuits or a whistleblower lawsuit
Big fines or loss of coverage
Liability for medical costs, indemnity benefits, and hospital emergency room bills
Criminal charges under state laws and California labor laws
Even the use of recreational cannabis laws or long COVID conditions has led to questionable claims that increase costs in the health care systems.
Protect Your Business from Fraud
Here’s what you can do:
Use CheckMyCert.org to verify every workers' comp certificate you receive.
Watch for red flags like inconsistent payroll figures, high claim frequency, or changing classification of employees.
Set up a Zero-Tolerance Fraud Program in your company.
Partner with verified Medical Provider Partners and use visible operating procedures to track claims.
Embrace anti-fraud policies, fraud detection tools like artificial intelligence, and hire a strong claim team or special investigation unit.
A Digital World, A New Type of Risk
With the rise of Big Data, digital realm claims, and provider consolidation, staying ahead of fraud is more important than ever. The COVID-19 pandemic changed how injuries are reported, with more cases of long COVID, heat-related illness, and fake claims involving things like shockwave therapy for pain.
Safety procedures, clear benefits communication, and smart loss control management can protect your company and your workers.
Don’t Be the One Who Pays
Workers compensation fraud is real. It’s expensive. It’s illegal. And if you’re not careful, your business could pay the price—through legal trouble, direct costs, and ruined reputation.
Protect your team, your bottom line, and your peace of mind. Use free tools like CheckMyCert.org to stay compliant, safe, and ahead of fraud.
News Flash
The True Cost of Workers' Comp Fraud for Employers
Workers' compensation is meant to protect people when they get hurt at work. It helps cover medical treatment, disability benefits, and lost wages for injured workers. But when people or businesses cheat the system—through workers' comp fraud—everyone pays the price.
This kind of fraud doesn’t just hurt one company. It affects insurance companies, drives up insurance rates, and puts a bigger financial burden on the entire insurance industry in the United States.
What Is Workers’ Compensation Fraud?
Workers' compensation fraud happens when someone lies or hides the truth to get money from a workers' comp policy. It can be done by:
Employees (called Employee Claimant Fraud) making falsified claims
Employers underreporting payroll
Medical providers using fake bills or running medical mills
Insurance carriers creating fictitious policies
This abuse is called compensation system abuse, and it leads to premium increases for honest businesses. The California Department of Insurance and Insurance Crime Bureau often work with law enforcement to investigate these scams.
Real-Life Examples of Fraud
In places like Los Angeles County and Orange County, comp insurance fraud is common. Some staffing agencies use CheckMyCert.org fraudulent workers’ comp certificates to trick clients. This means your business could be responsible if a worker gets hurt—without real workers' compensation insurance in place.
The rise of social media also makes it easier to catch fraud. For example, someone who claims to be injured but posts gym selfies or travel pics on their social media posts raises red flags.
How Underreporting Payroll Hurts Everyone
A common trick used by shady companies is to lie about how much they pay their workers. This is known as underreporting payroll. It lowers their WC insurance costs but shifts the risk to others. If caught, it affects rates established by the insurance provider and leads to penalties under California Worker Protection Laws.
How underreporting payroll affects insurance is serious: It messes up claim management, raises indirect costs, and hurts programs like Post-Injury Programs and return-to-work programs that are designed to help injured workers heal and return safely.
Why It Matters to Employers
Employers who partner with staffing agencies that commit premium-related fraud or submit fake workers’ compensation claims could face:
Lawsuits or a whistleblower lawsuit
Big fines or loss of coverage
Liability for medical costs, indemnity benefits, and hospital emergency room bills
Criminal charges under state laws and California labor laws
Even the use of recreational cannabis laws or long COVID conditions has led to questionable claims that increase costs in the health care systems.
Protect Your Business from Fraud
Here’s what you can do:
Use CheckMyCert.org to verify every workers' comp certificate you receive.
Watch for red flags like inconsistent payroll figures, high claim frequency, or changing classification of employees.
Set up a Zero-Tolerance Fraud Program in your company.
Partner with verified Medical Provider Partners and use visible operating procedures to track claims.
Embrace anti-fraud policies, fraud detection tools like artificial intelligence, and hire a strong claim team or special investigation unit.
A Digital World, A New Type of Risk
With the rise of Big Data, digital realm claims, and provider consolidation, staying ahead of fraud is more important than ever. The COVID-19 pandemic changed how injuries are reported, with more cases of long COVID, heat-related illness, and fake claims involving things like shockwave therapy for pain.
Safety procedures, clear benefits communication, and smart loss control management can protect your company and your workers.
Don’t Be the One Who Pays
Workers compensation fraud is real. It’s expensive. It’s illegal. And if you’re not careful, your business could pay the price—through legal trouble, direct costs, and ruined reputation.
Protect your team, your bottom line, and your peace of mind. Use free tools like CheckMyCert.org to stay compliant, safe, and ahead of fraud.
