Workers’ Compensation Employee Fraud

Workers’ Compensation Employee Fraud.Workers’ compensation fraud costs employers $30 billion annually. Studies show that 1% to 2% or more of all worker’s compensation insurance claims are fraudulent.[1] Under NJ law, it is a fourth-degree crime, and penalties can range to a maximum of five years in prison and a fine of $250,000.[2] The severity of the penalties varies case by case.

What is Workers’ Compensation Employee Fraud?

Section 34:15-57.4 of the New Jersey Revised Statutes defines workers’ compensation employee fraud as: “A person who purposely or knowingly makes a false or misleading statement for the purpose of wrongfully obtaining benefits.”

Not all misleading statements could lead to a different number of benefits obtained. For example, if you slipped and fell during work at 3:30 instead of 3:00, then this is immaterial to your claim. It may not be relevant towards what goes into determining your benefits, unless you misrepresented the time of your injury because the actual time you were injured, you were not working.

Examples of Workers’ Compensation Employee Fraud

  • An employee reports that he was injured at work while doing manual labor his employer asked him to, such as setting up a new armchair. He receives workers’ comp benefits, but the injury never occurred.
  • An employee maintains that her illness or chronic condition was caused by occupational chemical exposure when the cause of the illness was not work-related.
  • An employee overstates or exaggerates the severity of their injury, such as from a repetitive stress/motion injury.[3]
  • An employee injured themself outside of working hours, such as during a personal lunch break.
  • A person collecting temporary disability benefits misrepresents that they are not working. You must report your earnings while collecting workers’ compensation benefits.
  • A person works a new job and lies to the insurance company about being unable to return to work at his previous workplace from where the injury occurred.[4]

Impact of Social Media on Claims

Social media has become a determinant for many things, including whether one lands a role at a company or is accepted to a school. Likewise, the opposite is true. One may be terminated from their employment or suspended/expelled from school because of social media. Indecent posts such as profanity, abusive content, adult content, offensive content, drugs, threats, and negative opinions about someone could all lead to disastrous consequences that may alter your life. [5]

Such is the same for one planning to commit workers’ compensation fraud. Evidence of a person walking or walking without an altered gait if they reported that they injured their leg, or evidence of a person working while collecting workers’ comp benefits could all lead you in serious trouble. You may not even be the one to post this content about yourself. Someone else could record you or a surveillance video could record it.

Remote Work in the Context of Workers’ Compensation Worker Fraud

The blurred line between when one is working and not working during remote work and telecommuting is a challenge for employers and insurance companies. It can also be a source of workers’ compensation fraud. Teleworkers could be multitasking or performing their work-related duties while also doing something not work-related, such as parenting children, cooking, talking on the phone with a friend, cleaning, walking on a treadmill, or taking the dog out. There may be no one to be able to witness your injury or accident, unlike at a commercial property. One can always falsify a claim and say their injury occurred while they were working, when, they might have just taken a break, had not started yet, or they just finished working.

If you suffered an injury while working remotely, one of our highly trained attorneys at Livingston DiMarzio, LLP, can work with you to determine if you have a case.

What can employers do to limit remote workers’ comp claims?

What Employers Can do to Limit Remote Workers’ Comp Claims

  • Provide training on ergonomic workstation setup and safety procedures through videos.
  • Outline required job duties.
  • Expected work product.
  • Expected job location. [6]
  • Communicating how work should be performed.
  • Specifying job hours and how the employee clocks in and out, as well as consequences for not doing so on time.[7]
  • Permitted break times.

Examples of Workers’ Compensation Employee Fraud

The most common examples of workers’ compensation employee fraud consist of workers earning money on the side while collecting workers’ compensation benefits.

One example is a U.S. postal worker admitted filing false documents to receive over $650,000 in workers’ compensation. She traveled extensively to Africa and France, earned extra income, and received reimbursement payments for home health aide services, all of which should have been reported.[8]

Another postal worker defrauded the U.S. postal service and U.S. Department of Labor $47,287 through false statements. While collecting disability benefits, they ran their own business preparing and delivering cookies.[9]

Investigations by special agents can be carried out to determine if one is committing workers’ comp fraud. In the case of the latter, an undercover agent videotaped the postal worker while they ran their business and bought products from them.

Speak with a New Jersey Workers’ Compensation Attorney in Confidence

At Livingston DiMarzio, LLP, our lawyers’ specialty is navigating the workers’ compensation system. With over 140 years combined experience, we know how to set the record straight and to guide our clients through their cases. We give each case the attention it deserves, no matter the circumstances.

Having a workplace lawyer by your side can mean the peace of mind you need during a difficult period in your life. We negotiate with the insurance companies, so you do not have to. Contact us today for a free legal consultation at 973-718-3769 or fill out a case form and we will get back to you.


[1] “Presentation: Workers’ Compensation Insurance Fraud 101.” EMPLOYERS Insurance, Employers, 5 Mar. 2021, www.employers.com/blog/2014/workers-compensation-insurance-fraud-101-presentation/#:~:text=More%20than%2094%25%20of%20American%20businesses%20carry%20workers’%20compensation%20insurance.&text=That%20covers%20more%20than%20135%2C000%2C000%20workers%20across%20the%20United%20States.&text=Source%20Referenced%3A%202-,While%20most%20claims%20are%20legitimate%2C%20studies%20indicate%20that%201%20to,compensation%20insurance%20claims%20are%20fraudulent.

[2] “FORMER U.S. POSTAL SERVICE EMPLOYEE ADMITS FILING FALSE DOCUMENTS TO RECEIVE OVER $650,000 IN WORKERS’ COMPENSATION.” Insider NJ, InsiderNJ, 4 May 2020, www.insidernj.com/press-release/former-u-s-postal-service-employee-admits-filing-false-documents-receive-650000-workers-compensation/.

[3] “What Is Workers’ Compensation Fraud?” The Hartford, The Hartford, www.thehartford.com/workers-compensation/fraud.

[4] “Workers’ Comp Insurance Fraud.” Pa Insurance Fraud Prevention Authority, Pa Insurance Fraud Prevention Authority, www.helpstopfraud.org/Types-of-Insurance-Fraud/Workers-Comp.

[5] “10 Things You Should Never Post on Social Media.” CollegeGrad, CollegeGrad LLC., collegegrad.com/blog/10-things-you-should-never-post-on-social-media.

[6] Curry, Lynne. “Our Remote Employees Are Filing Claims for Workers’ Comp That We’re Sure Are Bogus, but How Do We Prove It?” Anchorage Daily News, Arc Publishing, 7 Dec. 2020, www.adn.com/business-economy/2020/12/07/our-remote-employees-are-filing-claims-for-workers-comp-that-were-sure-are-bogus-but-how-do-we-prove-it/.

[7] Smith, Allen. “Manage Workers’ Compensation Claims from Telecommuters.” SHRM, SHRM, 7 July 2021, www.shrm.org/resourcesandtools/legal-and-compliance/state-and-local-updates/pages/telecommuters-workers-compensation-claims.aspx.

[8] “FORMER U.S. POSTAL SERVICE EMPLOYEE ADMITS FILING FALSE DOCUMENTS TO RECEIVE OVER $650,000 IN WORKERS’ COMPENSATION.” Insider NJ, InsiderNJ, 4 May 2020, www.insidernj.com/press-release/former-u-s-postal-service-employee-admits-filing-false-documents-receive-650000-workers-compensation/.

[9] “Former Postal Employee Sentenced For Worker’s Compensation Fraud.” The United States Department of Justice, U.S. Department of Justice, 24 Mar. 2021, www.justice.gov/usao-ndny/pr/former-postal-employee-sentenced-worker-s-compensation-fraud.

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