Resources & Insights

Fraudulent Workers’ Compensation Claims Expected to Rise Amid COVID-19

July 21, 2020

Scott Carlson,
President, Construction Practice

3-minute read

Workers facing the prospect of a layoff amid an economic downturn will sometimes file a workers’ compensation claim because they’ll get more money and the benefits last longer than if they had filed for unemployment insurance.

Moreover, the frequency of workers’ compensation claims tend to increase as the economy worsens.

None of the above, of course, is ethical or legal, but it doesn’t stop people from trying to scam the system.

The COVID-19 pandemic is expected to drive up fraudulent claims, especially as more state legislatures try to make it easier for employees to file workers’ compensation claims for COVID-19 under the presumption they had caught the virus at work.

Workers’ compensation typically doesn’t cover such viruses for any workers but those in the healthcare world.

Recessions typically see an overall reduction in workers’ compensation claims. That happens for a number of reasons including:

  • Companies cut employment, which reduces the number of employees who might get injured and file a claim.
  • Employment often drops more in industries such as construction and manufacturing than in other sectors, which reduces injury rates accordingly.
  • Inexperienced workers, who tend to have higher injury rates, are typically laid off first during recessions, and there are fewer new hires, so there will be fewer untrained employees on the job, leading to fewer injuries and claims.

At the same time, there are factors during downturns that are responsible for injuries and workers’ compensation claims. Among them:

  • Workplace conditions may deteriorate because employers fail to replace older, less-safe equipment, leading to a jump in injuries.
  • Employees who keep their jobs are asked to work longer shifts, leading to injuries among overworked, and perhaps under-trained, employees.

Employers also can expect to see a rise in claims from furloughed employees with an injury that they might not normally have filed a claim for in a healthy economy. Worse yet, those claims often are for cumulative trauma, which are more complex and costly to manage.

Looking ahead, we expect to see a rise in fraud in coming months, fueled by that particularly malodorous segment of lawyers and providers known to engage in workers’ comp fraud, pandemic times or not.

Insurance companies are taking steps to protect themselves and their insureds.

Among other measures, they’re preparing their teams to handle the shift in claims and relying more on artificial intelligence to identify corrupt provider networks and long lag times to identify fraud that previously went unnoticed.

Bottom line on all this: layoffs during recessions will mean fewer workers’ compensation claims but it’s important to keep a closer eye than usual on the claims that roll in for instances of fraud.

Scott Carlson is the president of CCIG’s construction practice. Reach him at or at 720-212-2040.

CCIG is a Denver-area insurance, employee benefits and surety brokerage with clients nationwide. We do more than make sure you have the right policy. We help you manage your long-term cost of insurance with our risk and claims management expertise and a commitment to service excellence.

Share this:
Back to Resources

Contact Us

Call us at 303-799-0110 or reach out by filling out a short form.

Get In Touch