Workers’ Compensation Fraud

Workers’ compensation claims are at an all-time high. Although a lot of these claims are legitimate, others are dishonest or fraudulent claims. California is a zero-fault state, so that means the employer is always at fault. According to the California Department of Insurance, “In California, it is estimated that workers’ compensation fraud costs the state between $1 billion to $3 billion per year.”¹ Generally speaking, if an employer feels something is awry with an employee, the employer is usually right. Regardless, it’s better to be safe than sorry.

What a Fraudulent Workers’ Compensation Case Looks Like

One afternoon, our office received a call from a small employer. Unfortunately, he told us the same story we’ve heard far too many times. He has an employee, Henry, who was very recently out on a claim, but he’s certain it’s a dishonest claim. The employer stated Henry had an injury and needed to stop working immediately. Although it was known that Henry had a small side business, it wasn’t clear what kind. The employer recognized that hiring an investigator immediately would be vital to the investigation. Since the claim was filed within the week, we needed to determine if the claimant was actually injured or making a fraudulent claim. We received all the information from the employer and got started immediately as we understood the timeliness of this case. Once we located him and all his vehicles, the surveillance began.

On the first day, our private investigator didn’t get much. Henry dropped his child off at school, ran a few errands, and eventually arrived at a storage facility. We were excited, but he didn’t lift anything heavy and departed fairly quickly. Later that day, Henry arrived at a large medical building, presumably for his Individualized Medical Examination, or IME. He was there for over three hours and on the same day, the employer received a notification of this visit. Henry claimed he couldn’t lift or push anything over 5lbs, couldn’t work for at least six months, had emotional trauma from the experience, and the list goes on. We weren’t sure what to think.

Surveillance continued the very next day. Henry dropped his child off at school, ran a few errands, and then arrived at the storage facility. We followed him in and set up extremely close. Although that was risky, we knew the reward could be enormous. Within minutes, Henry threw open multiple storage units and got to work. Between chain-smoking cigarettes, he carried large boxes from one storage unit to the other. Once all the boxes were moved, he then opened each box and removed smaller boxes. He labeled each and every item and placed them back in the large boxes. He carried the large boxes and placed them in his truck. After he packed up his storage units, he departed and arrived at UPS. Our excitement climbed as we recorded Henry as he unloaded six large boxes onto a large shipping cart. He pushed the six boxes to the UPS facility and shipped them off.

As a result of our aggressiveness, we were able to use our advanced equipment and see the exact item names and specifications of each and every product. We determined the large boxes he lifted, carried, and placed in his truck had a gross weight of 65 lbs each. When he placed the boxes on the shipping cart and pushed it, we determined the gross weight of that cart was at least 390 lbs (not including the weight of the cart). Once we obtained the product name, we were able to use the information we gathered and determine Henry’s side business. He was purchasing and reselling items on an Amazon page under a business name. We located Henry’s Amazon page and determined he would need to continue with strenuous activity to keep his side business afloat.

As a result of quick thinking and our evidence, the employer was able to shut down the claim and pursue fraud. We cannot stress enough how important it is, in workers’ compensation claims especially, to hire an investigator as soon as the claim is started. It is important to tackle the problem before the claimant can lock up their social media or even, their online store. If the investigation begins immediately then the employer has all the documented evidence from beginning to end. Any claims the claimant makes can be squashed with a proper and consistent investigation.

How to Report a Suspected False Workers’ Compensation Claim

If you suspect your employee has filed a false workers’ compensation, check out our five step guidelines on how to defend and investigate your workers’ compensation claim.

Think surveillance is only for workers comp fraudsters?  Think again!  We perform surveillance on cheaters investigations or cheating spouses, personal injury claims to child custody investigations.  You name it, we can do it. 

Author Ken Childs Paramount Investigative Services, Inc