Fighting fraud under the Federal Employees’ Compensation Act (FECA) is still a developing practice. While fraudulent activity can significantly undermine the system’s integrity, recognizing and addressing it often falls on the shoulders of individual agencies. The Department of Labor (DOL) lacks the resources to investigate every potential red flag. Instead, local agencies must identify questionable claims, vet the evidence and present it in a meaningful and useful format for DOL review.

Fraud is not one-size-fits-all—it varies in level of intent, complexity, and impact. Understanding how it can appear makes it easier to identify and pursue with appropriate action. Here are the 7 degrees of FECA fraud to consider.

1. Incremental Fraud

Incremental fraud occurs when a claimant incrementally engages in activities that conflict with their reported physical restrictions. These actions are often momentary and sporadic, such as carrying heavy bags of dog food despite weight limitations.

• Example: A claimant lifts groceries or performs minor tasks contradicting their medical restrictions on a sporadic basis.
• Response: Gather multiple examples of these activities and present them to the examining physician. This evidence can help adjust medical recommendations for light duty and return the claimant to work.

2. Benevolent Fraud

Claimants in this category perform physical activities outside their restrictions as charitable acts. Their intentions are virtuous, whether helping at a family event or volunteering for a local charity. However, these actions are often omitted from medical assessments or claim evaluations.

• Example: A claimant avoids “working through pain” for their employer but volunteers to move furniture at a community center.
• Response: Agencies should document such activities and share them with medical professionals to reassess the claimant’s true physical capacity.

3. Exaggerated Fraud

These claimants actively misrepresent their physical limitations, often to extend time off from work while continuing to receive benefits. Their behavior may include inconsistent pain responses or using medical aids like canes only in the presence of decision-makers.

• Example: A claimant limps during a medical exam but is seen walking normally in other settings.
• Response: Administrative investigations should capture evidence of discrepancies, which can prompt re-evaluation and administrative actions.

4. Opportunistic Fraud

Claimants in this category delay their return to work due to external circumstances, such as needing to care for family members or managing personal projects. They may also exploit financial incentives, as FECA benefits can outweigh other forms of compensation.

• Example: A claimant remains out of work during summer to care for out-of-school children.
• Response: Agencies should analyze contextual factors and financial motivations to determine whether the claim duration is justified.

5. Ritualistic Fraud

These claimants habitually file new workers’ compensation claims by compounding previous injuries or finding loopholes in the system. They are often well-versed in claims processes, rules, and medical systems, which they manipulate to their advantage.

• Example: A back injury evolves to include leg pain, later followed by psychological conditions.
• Response: Thoroughly examine medical histories and provider records. Identify patterns of claim escalation and potential doctor-shopping.

6. Flagrant Fraud

Flagrant fraud involves claimants blatantly engaging in activities that contradict their restrictions. These individuals are often overconfident and may inadvertently expose themselves through social media or public behavior.

• Example: A claimant on disability for back pain posts photos of themselves skiing or competing in marathons.
• Response: Social media monitoring and video surveillance can provide irrefutable evidence to challenge these claims.

7. Conspired Fraud

This is the most deliberate and egregious form of fraud. It questions the legitimacy of the injury itself, ranging from staged incidents to fabricated claims.

• Example: A claimant alleges a workplace injury that actually occurred off-site during non-work hours.
• Response: These cases require robust evidence gathering for presentation to the DOL and legal teams that will take lead. Conspired fraud often involves significant financial implications and demands extensive investigation.

Using the 7 Degrees to Inform Action

Identifying the degree of fraud helps agencies tailor their response and maximize resources.

• Low-Level Fraud (Incidental and Benevolent): These cases often require administrative handling. Evidence like video surveillance or multiple documented activities can prompt medical reassessment, potentially resulting in a full return to duty.
• Moderate Fraud (Exaggerated, Opportunistic, and Ritualistic): These cases benefit from administrative actions and legal procedures, such as invoking Title 18, U.S.C. Section 1920, which addresses false or fraudulent claims.
• High-Level Fraud (Flagrant and Conspired): These cases attract the most attention from stakeholders and DOL. While they often result in prosecution, they require significant time and resources to build a case. Patience and persistence are critical.

Fraud Prevention as a Collaborative Effort

FECA fraud is complex, but agencies can take proactive steps to combat it by identifying and classifying red flags early. Combining administrative investigations with tailored responses ensures that claimants receive fair benefits while protecting the system’s integrity.

Fraud prevention isn’t just about addressing wrongdoing, it’s about creating a culture of accountability, transparency, and fairness for all stakeholders. By understanding the 7 degrees of FECA fraud, agencies can work more effectively with the DOL to pursue justice and safeguard resources.

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Disclaimer: This blog post is for informational purposes only and should not be considered legal advice. Please consult your general counsel for specific legal guidance. Frasco investigators are licensed, and our operations comply with US industry, federal, state, and local laws.