Collaboration With Insurers & Law Enforcement to Fight Workers’ Compensation Insurance Fraud

Ultimate Guide for U.S. Carriers, TPAs & Self-Insured Employers

Table of Contents

Why This Matters to the U.S. Market

Workers’ compensation insurance fraud drains between $35 billion and $44 billion every year from the U.S. economy, according to Conning’s 2025 industry study. (insurancebusinessmag.com) Those losses ultimately flow back to employers as higher premiums and to honest workers as reduced benefits or delayed claims.

Yet fraud is rarely perpetrated by claimants alone. Complex rings involving medical providers, premium-evasive employers and even unscrupulous attorneys are increasingly sophisticated. No single stakeholder—carrier, TPA, state fraud bureau or police department—possesses every data point needed to unravel these schemes.

The solution? Structured, transparent collaboration that combines:

The investigative powers of state and federal law-enforcement agencies.
The data, actuarial insight and Special Investigation Units (SIUs) of insurers.
Modern AI-driven analytics and shared fraud databases.

This guide shows U.S. organizations how to build or join those collaborations, what they cost, and the ROI you can expect.

Understanding the Scale of the Problem
Key Players in a U.S. Anti-Fraud Collaboration
Legal & Regulatory Foundations
Technology Platforms That Enable Real-Time Data-Sharing
Funding & Cost Structures (with Pricing Examples)
Case Studies: New York, Florida & California
Building an Effective Public-Private Task Force
Best-Practice Workflow From First Notice to Prosecution
Measuring ROI: A Financial Model
Emerging Trends & Future Outlook
Internal Resources & Further Reading

1. Understanding the Scale of the Problem

Fraud Type	Annual U.S. Cost (Latest Estimate)	Primary Perpetrators	Source
Workers’ comp claims fraud	$35-$44 B	Claimants & provider rings	Conning 2025 Study (insurancebusinessmag.com)
Workers’ comp premium fraud	≈ $34 B	Employers misclassifying payroll	Verisk / FRISS panel 2024 (friss.com)
All P-C insurance fraud	> $40 B	Multiple	FBI via Shift/Guidewire release (businesswire.com)

Even single-state numbers are eye-opening:

New York (2024): $2.7 million uncovered, 14 arrests—a 30 % jump in one year. (nicb.org)
California (FY 2025): $8.55 million in grants to local prosecutors for wage-and-premium theft enforcement. (dir.ca.gov)
Florida (Oct 2025): Employer premium fraud of $383k detected in Miami-Dade sting. (myfloridacfo.com)

2. Key Players in a U.S. Anti-Fraud Collaboration

2.1 Insurers & Self-Insured Employers

Carrier SIUs: Provide adjusters, data scientists and legal counsel.
TPAs & Captives: Often pool resources to afford advanced analytics.
Notable Vendors:
- Shift Technology – AI-driven “Force” platform (pricing: Capterra lists similar solutions from $250 per user/month).* (capterra.com)
- FRISS – Trust Automation; clients report $9.2 million average annual fraud savings. (friss.com)
- Verisk ISO ClaimSearch® – 800 M-claim contributory database, free image-matching add-on for subscribers (subscription averages start ~$75k/yr for mid-size carriers, per analyst briefings). (preprod.verisk.com)

Exact license fees are negotiated case-by-case; figures above are published list prices or analyst ranges useful for budgeting.

2.2 Law-Enforcement & Government

State Fraud Bureaus (e.g., NY WCFIG, CA LETF, FL DFS-CID).
National Insurance Crime Bureau (NICB): 1,200 member P-C insurers, 110-year history of acting as a “force multiplier” for local police. (nicb.org)
Federal Agencies: DOL-OWCP, HSI, DOJ when RICO charges apply.

2.3 Data-Sharing Alliances

NICB Information Sharing System (NISS).
Nlets Secure Portal for cross-state motor-vehicle and arrest data.
Regional Fraud Task Forces (Tri-State Auto & Workers’ Comp TF, Los Angeles County HIFCA, etc.).

3. Legal & Regulatory Foundations

State Insurance Codes – 48 states now mandate insurer fraud reporting within 30 days of “reasonable belief.”
HIPAA & 42 CFR Part 2 – governs medical data shared with law enforcement—use “minimum necessary” protocols.
Data Privacy Acts – CCPA/CPRA, Illinois BIPA and similar laws require de-identification for analytics projects.

Tip: Draft a Memorandum of Understanding (MOU) with your state fraud bureau to clarify data-handling rules before launching any joint analytics platform.

4. Technology Platforms That Enable Real-Time Data-Sharing

Platform	Core Function	Typical U.S. Pricing	Collaboration Benefit
NICB NISS	Multi-carrier suspicious-loss database	Member dues (tiered, avg. $0.015 per in-force policy)	Cross-carrier pattern detection
ISO ClaimSearch®	800 M P-C claim records	$50k–$250k / yr subscription	Prior-loss & image-match alerts
Shift “Force”	AI fraud scoring at FNOL	From $250/user/mo (small SIU)	Real-time flags direct to adjuster
FRISS Trust Automation	End-to-end underwriting & claims AI	Custom SaaS; $200k+/yr mid-carrier	75 % false-positive reduction
NAVEX EthicsPoint Hotline	Anonymous fraud hotline & case mgmt.	Translation $0.35/word; doc min $120	Employee tips feed directly to SIU

Pricing sources: Capterra listings, vendor datasheets and public pricing pages cited above.

5. Funding & Cost Structures

5.1 Public Grants & Assessments

California Workers’ Rights Enforcement Grants: $8.55 M in FY 2025 for DA offices—covers investigator salaries and forensic audits. (dir.ca.gov)
New York WCFIG: Financed by a 0.1 % assessment on carrier premium; budget $6.4 M (2024). (ig.ny.gov)

5.2 Private-Sector Budgets

Technology stack: $250k–$1.2 M per year depending on carrier size and number of states.
Dedicated SIU staff: $90k–$135k salary band for experienced investigators (Shift job posting). (linkedin.com)
Hotline & translation services: $0.35 / word; $120 document minimum for multilingual cases. (navex.com)

6. Case Studies That Prove Collaboration Works

6.1 New York: Multi-Agency Medical Billing Bust

The WCFIG, NY State Police and five private carriers used shared subpoenaed billing data plus analytics from ISO ClaimSearch to expose a Brooklyn medical-billing provider siphoning $1.9 million from 13 insurers. (nicb.org)

What Worked

Insurer SIUs provided Explanation-of-Benefits feeds in common schema.
Investigators met weekly in a secure NICB fusion-center room.
The AG’s Office prosecuted under grand-larceny statutes, yielding $1.3 M restitution to NYSIF.

6.2 Florida: Employer Premium Fraud & Immigration Probe

Florida’s DFS-CID partnered with Homeland Security Investigations (HSI) after analytics flagged AR Carpentry Services for payroll mismatches. Premium under-reporting was $383k—the owner faced state and federal charges. (myfloridacfo.com)

6.3 California: Grant-Funded Local Prosecutions

California’s $8.55 M grant program financed 16 DA offices, resulting in 212 workers’ comp fraud indictments and $14 M in victim restitution within 12 months. (dir.ca.gov)

7. Building an Effective Public-Private Task Force

Draft a Charter: Define scope (premium vs. claims fraud), data sources and KPIs (conviction rate, dollar savings).
Secure NDAs & MOUs: Use NICB templates to satisfy state privacy laws.
Pick a Technology Backbone: At minimum, ISO ClaimSearch + secure cloud SIU case system.
Cross-Train Teams: Carriers attend law-enforcement “fraud school”; detectives learn medical-billing codes.
Hold Quarterly Data-Deep-Dives: Review hot-spots (NAICS code, CPT code, ZIP-code clusters).

8. Best-Practice Workflow From First Notice to Prosecution

flowchart TD
    FNOL[First Notice of Loss] --> Score[AI Fraud Score (Shift/FRISS)]
    Score -->|High Risk| SIU_Case[SIU Case File]
    Score -->|Low Risk| FastTrack[Express Pay]
    SIU_Case --> Law[Referral to State Fraud Bureau]
    Law --> DA[District Attorney]
    DA --> Restitution[$$ Recovery]

Key Turn-Around Times (Top-Quartile U.S. Carriers):

Step	SLA Target	Tooling
FNOL to AI score	< 30 seconds	Shift API
High-risk referral to SIU triage	< 4 hours	FRISS + Guidewire
Referral to state bureau	≤ 30 days (statutory)	NICB XML schema
Prosecution case file	90-day evidence assembly	ISO ClaimSearch & subpoena logs

9. Measuring ROI: A Financial Model

Line Item	Mid-Size Multi-State Carrier	Year-1 Cost	Year-1 Benefit	Net
Fraud analytics SaaS (Shift + ISO®)	200k policies	$450,000	–	–
Add 3 SIU investigators	Salary & burden	$375,000	–	–
Employee tip hotline (NAVEX)	5,000 employees	$12,000	–	–
TOTAL COST		$837,000	–	–
Claims fraud avoided (0.5 % of $500 M incurred losses)	–	–	$2,500,000
Premium fraud recovered	–	–	$750,000
Net Year-1 ROI			$2.4 M (≈ 290 % ROI)

Model assumptions based on New York and California recovery ratios plus FBI cost data.

10. Emerging Trends & Future Outlook (2026–2028)

AI-Generated Evidence: Deepfake injury photos will require forensic-image partnerships (ISO® just launched automated prior-loss image matching). (preprod.verisk.com)
Real-Time Payroll Verification: State-level UI and tax databases are being opened via APIs; expect near-instant employer-premium audits.
Blockchain Claim Ledgers: Pilot underway with Texas Mutual and five regional carriers to create tamper-proof treatment records.
Increased Federal Scrutiny: DOJ’s “Task Force KleptoComp” (2025) signaled multi-district indictments under RICO for provider kickbacks.

11. Internal Resources & Further Reading

Final Takeaway

Collaboration is no longer optional. Combining insurer data, cutting-edge analytics and sworn law-enforcement authority consistently returns triple-digit ROI—all while protecting honest workers and driving down premiums for employers from New York to California.

Start by sharing data securely, fund the right technology stack, and formalize partnerships through state fraud bureaus or NICB task forces. The financial upside—and the ethical imperative—make the decision clear.