Worker Compensation Fraud – Laws & Penalties in Colorado

Under CRS 8-43-402,  it is a Colorado crime to make a false statement on your workers’ compensation claim to obtain benefits, payments, or compensation to which you are not entitled.

Workers’ compensation fraud is a felony punishable by jail time, fines, loss of workers’ comp benefits, and having to repay any benefits you wrongly received.

In this article, our Denver Colorado criminal defense lawyers will address:

• 1. What is workers’ compensation fraud?
• 2. What are the penalties?
• 3. What are the signs of workers’ comp fraud?
• 4. What are the best defenses?
• 5. What if I am being investigated?
• 6. Related Offenses
• Additional Reading

1. What is workers’ comp fraud?

For a prosecutor to convict you of workers’ compensation fraud, they must prove these elements of the crime:

1. You made false statements or representations;
2. Claim decisions were made based on the false statements or representations material to the workers’ comp claim; and
3. You made the statements or representations with the intent to defraud.¹

Examples of workers’ comp fraud include:

• Making a false workers’ comp claim,
• Exaggerating or faking injuries,
• Filing multiple claims under different names,
• Falsely claiming an injury is work-related, or
• Working under the table while receiving workers’ comp.

Types of Worker’s Comp Fraud

Applicant/Claimant fraud is only one type of worker’s comp fraud. Six other types of workers’ comp fraud include:

1. Adjuster Fraud – This typically involves falsifying records to support denying a workers’ comp claim or trading bribes for patient referrals.
2. Attorney Fraud – Examples include knowingly helping a worker file a false claim such as by exaggerating injuries.
3. Billing/Provider Fraud – A common scenario is over-billing or failing to provide required services.
4. Employer Fraud – The classic case is falsifying information, under-reporting wages, or misclassifying an employee as an independent contractor in an effort to get a worker’s comp claim denied or approved with minimum benefits. Employer fraud also includes discouraging employees from pursuing valid claims.
5. Healthcare provider fraud – Here, physicians, chiropractors, or other medical providers over-bill, bill for services never rendered, or knowingly helping an employee make a false claim.
6. Premium Fraud – This is a type of employer fraud where an employer provides untrue information to a workers’ comp insurer in attempt to obtain a cheaper policy.

Workers’ comp fraud is a felony in Colorado.

2. What are the penalties?

Under C.R.S. 9-43-402, workers’ compensation fraud is a class 5 felony. The penalties include 12 to 18 months in prison and a fine of up to $100,000. There is a mandatory parole period of 2 years.

In addition, you forfeit all rights to workers’ compensation benefits. You may also be ordered to pay back benefits you received through workers’ comp fraud.

3. What are the signs of workers’ comp fraud?

Signs of workers’ comp fraud that employers, investigators, and insurance companies look for include:

• Your injury had no witnesses.
• You were recently reprimanded at work or are considered disgruntled.
• There are conflicting statements about your accident.
• Your injury occurred during the first shift of work Monday morning.
• Your medical bills are inconsistent with your injury.
• You waited a long time to report your accident.
• Your injury is taking an unusually long time to heal, suggesting that you are delaying recovery and exaggerating your symptoms.
• You are a new employee.
• Your injury occurred shortly before or immediately after a vacation.
• Your injury occurred during your final days on the job.

4. What are best defenses?

There are many defenses to charges of workers’ comp fraud. These include:

• You did not intend to commit workers’ comp fraud.
• You believed you were submitting an accurate and legitimate workers’ comp claim.
• Incorrect information was entered by mistake or was a typo.
• You were a victim of identity theft.
• An employer retaliated against you by falsely reporting workers’ comp fraud.

Insurance companies may use private investigators to look for evidence of workers’ comp fraud.

5. What if I am being investigated?

Workers’ compensation fraud may be investigated by:

• the workers’ comp insurance company,
• your employer, or
• Colorado officials.

Colorado’s Workers’ Compensation Fraud Investigation Unit is the office that conducts investigations for claims of workers’ comp fraud for the state. The Division of Workers’ Compensation also provides online fraud reporting forms that allow people to report fraud confidentially.

Insurance companies may hire private investigators to watch a claimant and look for signs of fraud. This includes:

• conducting video surveillance,
• reviewing online social media activity, and
• speaking to neighbors about your activity.

They may be looking for signs you are not disabled, such as doing yard work, playing sports, or going on vacations. In many cases, the insurance company uses this evidence to deny your workers’ compensation claim even if you are unable to work.

If you suspect you are being investigated for workers’ comp fraud, contact our Colorado workers’ compensation fraud attorneys.

6. Related Offenses

Workers’ comp fraud may involve related offenses. This includes identity theft charges when another person’s information was used to get workers’ comp benefits. Workers’ comp fraud may also involve insurance fraud for claims involving health, medical, or disability insurance.

Identity Theft C.R.S. 18-5-902

In Colorado, it is a criminal offense to use another person’s personal or financial identifying information to obtain anything of value. This includes using another person’s identity to file a claim for workers’ comp benefits.

Identity theft is a class 4 felony in Colorado. Penalties for identity theft include 2 to 6 years in prison and a fine of up to $500,000.

Insurance Fraud C.R.S. 18-5-211

Insurance fraud involves:

• presenting a false insurance claim for a loss,
• claiming a loss for damage that occurred prior to coverage,
• intentionally damaging covered property, or
• presenting a false statement for an insurance claim.

This includes medical insurance, disability insurance, or other types of insurance fraud.

Insurance fraud can be a felony or misdemeanor.

Additional Reading

For more in-depth information, refer to these scholarly articles:

• Everyone Gets Hurt: A Study in Workers’ Compensation Fraud – Insurance Fraud Casebook: Paying a Premium for Crime.
• Worker’s compensation fraud in construction – Transactions of AACE International.
• Civil RICO and Antitrust Law: The Uneven Playing Field of the Workers’ Compensation Fraud Game – Pacific Law Journal.
• Proving a Defense of Fraudulent Employment Application in Workers’ Compensation Accident Claims – Workers’ Compensation Law Review.
• The Unrepresented Class: Why the Ninety-Nine Percent Are Losing the War for Workers’ Compensation – Tort Trial & Insurance Practice Law Journal.

Legal References