Recognizing Fraud in Medical Case Management

Whether coordinating care, managing return-to-work plans, or liaising with medical providers, case managers are working with many moving pieces. While case managers are not fraud investigators, they are often among the first to notice inconsistencies, patterns, or behaviors that do not add up. Recognizing red flags early in medical case management can help prevent wasted resources, protect patients, and ensure claims integrity.

Health care and Workers’ Compensation fraud remain serious issues. In 2025 alone, a federal operation led by the U.S. Department of Justice charged 324 defendants in connection with more than $14.6 billion in alleged health care fraud. Effective medical case management plays a critical role in preventing this kind of fraud by identifying red flags early and ensuring treatment stays aligned with legitimate clinical needs.

Medical Case Management Red Flags in Clinical Care

Medical case managers should watch for the following warning signs:

1. When the diagnosis does not match the story: Sometimes the reported injury mechanism does not align with the medical findings. For example, a minor slip on a wet floor resulting in severe spinal damage may raise questions. Case managers are well positioned to recognize these mismatches since they review both the injury narrative and clinical documentation.
2. Treatment that drags on without clear reason: Recovery timelines vary, but most injuries follow a predictable course. If treatment extends far beyond normal guidelines without strong medical justification, it deserves closer examination. Prolonged care can signal malingering, overtreatment, or even billing fraud.
3. Multiple providers prescribing overlapping care: When a patient sees several doctors, especially in different regions, for the same condition or prescriptions, it may indicate “doctor shopping.” This practice increases costs and can endanger the patient if medications conflict.
4. Inconsistent or missing medical documentation: Clear, detailed, and consistent records are the cornerstone of legitimate care. If documentation is vague, contradictory, or missing altogether, it creates gaps that fraudsters can exploit. Case managers who routinely cross-check medical records are often the first to detect these inconsistencies.
5. Costly tests or equipment that do not match the condition: Ordering advanced diagnostics or expensive durable medical equipment without clinical necessity is another red flag. In some cases, items billed to insurance are never actually delivered: a classic fraud scheme highlighted in federal enforcement actions.

Behavioral Red Flags in Medical Case Management

Fraud warning signs are not limited to medical data. Behavioral indicators can also suggest potential fraud:

1. Stories that change over time: A claimant whose description of the injury evolves with each retelling may warrant additional review. Shifts in how, where, or when the injury occurred should be documented and communicated.
2. Limited availability during normal work hours: Claimants who are difficult to reach during the day but consistently available in the evenings or on weekends may be engaged in undisclosed secondary employment. Case managers monitoring treatment compliance are often among the first to observe this pattern.
3. Resistance to returning to work: Modified or light-duty assignments are intended to ease transition back to work. If a claimant resists these opportunities despite medical clearance, it could indicate that financial incentives are driving reluctance.
4. Overly defensive or aggressive behavior: Fraud experts note that individuals engaged in deception may respond with irritability or hostility when questioned. While defensiveness alone does not confirm fraud, an exaggerated emotional reaction to routine questions can suggest something is amiss.
5. Signs of financial stress outside the claim: Financial strain is one of the most common motivators of fraud. If a claimant mentions financial troubles or seems unusually focused on money, that context matters. Many successful prosecutions, according to the Association of Certified Fraud Examiners, involve individuals under financial pressure.

Provider and Billing Red Flags

Fraud is not always claimant-driven; it can also originate from the provider side. When reviewing medical documentation, case managers should remain alert to several warning signs:

• Boilerplate medical reports that appear identical across multiple patients may indicate that a provider is cutting corners or fabricating details.
• Unusual billing patterns, such as charges for complex services that do not match the injury or duplicated charges, are classic fraud tactics.
• Providers located far outside a patient’s geographic area without a clear referral reason can also be a signal that something is off.

The Centers for Medicare & Medicaid Services (CMS) has repeatedly flagged “phantom billing”, which means charging for services never rendered, as one of the most common health care fraud schemes in the U.S. Recognizing these patterns early can prevent a questionable claim from escalating.

From exaggerated injuries to complex provider billing schemes, fraud can appear in many forms. By remaining alert to red flags, medical case management professionals help preserve resources, ensure patients receive appropriate care, and maintain the integrity of the claims process. Attention to detail can prevent small inconsistencies from growing into multimillion-dollar schemes.

Don’t let red flags turn into losses. Connect with our team today.

Check out our sources:

Association of Certified Fraud Examiners. Report to the Nations: 2024 Global Study on Occupational Fraud and Abuse. 2024, https://acfepublic.s3.us-west-2.amazonaws.com/2024-RTTN.pdf.

Centers for Disease Control and Prevention. Doctor Shopping and Prescription Drug Misuse. U.S. Department of Health and Human Services, 2023, https://www.cdc.gov/drugoverdose.

Centers for Medicare & Medicaid Services. Medicare Fraud & Abuse: Prevent, Detect, Report. U.S. Department of Health and Human Services, 2025, https://www.cms.gov.

Coalition Against Insurance Fraud. The Impact of Insurance Fraud on the U.S. Economy. 2024, https://insurancefraud.org.

United States Department of Justice. National Health Care Fraud Takedown Results in 324 Defendants Charged in Connection with Over $14.6 Billion in Alleged False Billings. 25 Sept. 2025, https://www.justice.gov/opa/pr/national-health-care-fraud-takedown-results-324-defendants-charged-connection-over-146.