Call us  707-418-5118

952 School St. Ste 280
Napa, CA 94559

Detecting workers’ compensation fraud

I’m concerned about my employees potentially abusing our workers’ compensation insurance. What should I look out for?

Workers’ compensation is an employee insurance benefit that covers workplace injuries. Employers are required to carry workers’ compensation coverage for their employees. Unfortunately, of the

$10 billion in workers’ compensation claims filed in California annually, up to

30 percent of those claims may be fraudulent.

My recommendation is that you shouldn’t have employees you don’t trust, and you should strive to keep your employees happy. But beyond that, there certainly are things you can do to prevent fraudulent workers’ compensation claims.

It is illegal to make, or assist someone in making, a knowingly false or fraudulent material statement for the purpose of obtaining or denying workers’ compensation, or to discourage an injured worker from claiming benefits.

What does “comp fraud” look like? If you deny an employee’s vacation request, and the employee suddenly suffers a workplace accident with no witnesses, which coincidentally keeps them out of work during the same days they requested off, you may want to investigate the accident further.

If your employee competes in a volleyball tournament over the weekend and then sprains their wrist at work first thing Monday morning, this could be fraud. In fact, any accident that occurs first thing Monday morning is a little suspicious.

Disgruntled ex-employees are always a red flag. If you are going to terminate an employee, conduct an exit interview and ask whether they have had any on-the-job accidents or injuries.

Another red flag is if your employee has a preexisting condition, such as a bad back, and then claim they sprained their back at work.

Another fraud indicator is when the employee waits several weeks to report an injury. There’s no reason to delay reporting a workplace injury.

Not every suspicious claim is “comp fraud,” but one or more indicators might justify further investigation. Every injury should be immediately and thoroughly investigated. If you are concerned about fraud, communicate your suspicions to your carrier.

The two best things an employer can do is to maintain a safe work environment and ensure that employees understand how accidents at work should be handled. Have a clear and easy procedure for reporting accidents.

The Napa District Attorney’s office enforces workers’ compensation fraud prevention and prosecution. If you know of possible workers’ compensation abuse, please call their Workers’ Compensation Fraud Unit at 253-4059. In addition to criminal prosecution, the district attorney may bring a civil action to collect civil penalties for workers’ compensation fraud.

Mary Luros is a business law attorney with Hudson & Luros, LLP, in Napa, and can be reached at or 418-5118. The information provided here is not intended as legal advice, nor does it form an attorney-client relationship with the author. The author makes no representations as to the reliability or accuracy of the above information. In a perfect world we wouldn’t need disclaimers — or attorneys.

Skip to content