When a Fraud Allegation Lands on Your Desk
Your client worked security at a forward operating base in Afghanistan for three years. He filed a DBA claim after a back injury during a vehicle rollover. Six months into the case, the carrier drops a bombshell: surveillance footage showing him lifting furniture at a garage sale. Now they are alleging fraud under Section 31(c) of the LHWCA.
This scenario plays out more often than most claimant attorneys expect. Carriers invest heavily in fraud investigation units. They hire surveillance firms, monitor social media accounts, and retain medical examiners who specialize in identifying inconsistencies. The goal is straightforward: reduce exposure on high-value DBA claims by shifting the burden back onto the claimant.
The stakes are severe. A successful fraud finding does not just deny benefits. It can result in forfeiture of all compensation under Section 31(c), plus potential criminal referral. For claimant attorneys, understanding how these investigations work and where carriers overreach is not optional. It is survival.
This guide breaks down the legal framework for fraud in DBA claims, what triggers a carrier investigation, how ALJs actually evaluate fraud allegations, and the critical difference between legitimate fraud defenses and delay tactics designed to pressure settlements.
What Triggers a Carrier Fraud Investigation in DBA Claims?
Carriers do not launch fraud investigations at random. Specific patterns trigger scrutiny, and knowing these triggers helps you prepare your client before the carrier finds something to exploit.
Surveillance is the most common investigative tool. Carriers hire private investigators to conduct physical surveillance, typically focusing on claimants who report severe physical limitations. The investigator documents activities that appear inconsistent with claimed disabilities: yard work, recreational sports, lifting heavy objects, or driving long distances.
Social media monitoring has become equally important. Carrier fraud units review Facebook, Instagram, TikTok, and even LinkedIn posts. A claimant who reports debilitating pain but posts vacation photos from a hiking trip creates a problem. Some carriers use automated social media scraping tools that flag keyword patterns tied to physical activity.
Medical record inconsistencies provide the third major trigger. When a claimant's treating physician describes limitations that conflict with prior medical history, independent medical examination findings, or pharmacy records, the carrier's medical review team escalates the file. Gaps in treatment, doctor shopping across multiple providers, or sudden symptom escalation after a settlement demand also raise flags.
Two additional triggers are worth noting. First, employment records showing concurrent work while claiming total disability. Carriers routinely run database checks through services like Accurint or LexisNexis to identify unreported employment. Second, inconsistent statements across depositions, medical records, and claim forms. Carriers build timelines comparing every statement a claimant has made, looking for contradictions that suggest fabrication.
How Does Section 31(c) Define Fraud Under the LHWCA?
Section 31(c) of the LHWCA, which governs DBA claims through the DBA's incorporation of LHWCA procedures, provides the statutory basis for fraud penalties. The language is direct: any person who makes a false statement or misrepresentation to obtain benefits shall forfeit all right to compensation.
The legal standard requires the carrier to prove two elements. First, the claimant made a knowingly false statement or representation. Second, that false statement was material to obtaining or maintaining benefits. Courts have consistently held that innocent mistakes or honest differences of opinion about symptom severity do not constitute fraud under Section 31(c).
This distinction matters enormously in practice. A claimant who tells a doctor "I cannot lift anything over ten pounds" but is later filmed carrying a 20-pound bag of dog food has not necessarily committed fraud. The carrier must demonstrate that the statement was intentionally false and that it was made for the purpose of obtaining benefits the claimant knew they were not entitled to receive. Context, timing, and the claimant's overall medical picture all factor into the ALJ's analysis.
The burden of proof for a Section 31(c) fraud defense falls squarely on the carrier. This is critical because it stands in contrast to the Section 20(a) presumption of compensability, which initially favors the claimant. Even when a carrier presents surveillance evidence, the ALJ evaluates whether the evidence actually contradicts the claimed limitations or merely shows isolated moments of activity that do not reflect daily capacity.
What Is the Difference Between Legitimate Fraud Defenses and Carrier Delay Tactics?
Here is where DBA practice gets uncomfortable. Some fraud allegations are legitimate. Carriers have a right and a financial obligation to their policyholders to investigate suspicious claims. But a significant number of fraud defenses serve a different purpose entirely: delay, intimidation, and settlement leverage.
Legitimate fraud defenses typically share several characteristics. The carrier has invested in professional surveillance over multiple sessions. The evidence directly contradicts specific, documented medical restrictions. The inconsistencies are material, meaning they go to the core of the claimed disability, not peripheral details. And the carrier raises the defense early in the proceedings, not as a last-minute ambush.
Delay tactics look different. The carrier raises vague fraud allegations late in the process, often after discovery has closed. The surveillance evidence shows ambiguous activity that requires generous interpretation to contradict the claim. The carrier uses the fraud allegation to justify withholding benefits during investigation, sometimes for months. Or the fraud defense appears only after a high settlement demand, suggesting it functions as negotiation leverage rather than a genuine defense. Attorneys who encounter these patterns should review common red flags in DBA investigations to identify tactical maneuvering early.
ClaimTrove analysis of OALJ decisions reveals that ALJs reject fraud defenses more often than they sustain them. The pattern suggests carriers sometimes raise fraud as a strategic hedge, knowing the allegation alone creates pressure to settle for less, even when the underlying evidence is thin.
How Do ALJs Actually Evaluate Fraud Allegations in DBA Cases?
Administrative Law Judges apply a fact-intensive analysis to fraud allegations. Understanding the framework they use gives claimant attorneys a roadmap for rebuttal.
ALJs examine surveillance evidence with particular scrutiny. A few hours of video showing a claimant performing physical activities does not automatically prove fraud. Judges look at the totality of the medical evidence, the claimant's overall treatment history, and whether the observed activities truly exceed documented restrictions. A claimant's treating physician may testify that occasional good days are consistent with the diagnosed condition. That testimony often carries significant weight.
Credibility determinations drive many fraud decisions. ALJs assess whether the claimant's testimony at hearing is consistent with prior statements. They evaluate demeanor, consistency, and whether the claimant volunteered information about activities or attempted to conceal them. A claimant who disclosed physical activities to their doctor before the carrier's surveillance is in a far stronger position than one who denied all activity. If a carrier has denied your client's claim and raised fraud allegations, understanding the appeals process and your next steps is essential for building a strategic response.
The materiality requirement is where many carrier fraud defenses fail. Even if a claimant exaggerated symptoms on one occasion, the ALJ must determine whether that exaggeration was material to the overall claim. A claimant with a documented traumatic brain injury who overstated the frequency of headaches has not committed the kind of material fraud that Section 31(c) targets. The exaggeration must go to the heart of whether the claimant is entitled to benefits at all.
ClaimTrove's database of over 5,022 OALJ decisions includes cases where fraud was raised, analyzed, and ruled upon. The outcomes offer a practical guide to how different ALJs weigh surveillance evidence, medical inconsistencies, and credibility factors. These rulings reveal patterns that published case summaries alone do not capture, particularly in unpublished decisions that address fraud in granular detail.
How Should Claimant Attorneys Defend Against Fraud Allegations?
Defense against fraud allegations starts long before the carrier raises the issue. The best protection is proactive case management that eliminates the ammunition carriers need.
Counsel your clients about social media immediately. At intake, advise clients to lock down privacy settings and stop posting about physical activities. Better yet, advise minimal social media use during the pendency of the claim. What seems like an innocent post about a weekend barbecue can become Exhibit A in a fraud motion.
Ensure medical records are consistent and complete. Work with treating physicians to document the full range of the claimant's condition, including good days and bad days. A medical record that acknowledges variable symptoms is far more defensible than one that paints an unrelenting picture of total disability. Carriers exploit the gap between what claimants tell their doctors and what surveillance shows.
Prepare clients for surveillance. Claimants should assume they are being watched at all times. This does not mean they should avoid all activity. It means they should behave consistently with their documented limitations. If a client can lift 15 pounds occasionally, that should be in the medical record. The problem arises when limitations are overstated and then contradicted.
Challenge the carrier's evidence aggressively. Surveillance video can be misleading. A 30-second clip of a claimant bending over does not capture the pain that followed. Depose the surveillance investigator about the full scope of observation, including all the footage that was not included in the carrier's submission. Request the complete, unedited surveillance footage. Carriers sometimes cherry-pick moments that support their narrative while excluding hours of footage showing the claimant in obvious distress. Understanding how carriers handle TTD benefit disputes and termination tactics provides additional context for the broader defense strategy.
What Penalties Does a Claimant Face If Fraud Is Proven?
The consequences of a sustained Section 31(c) finding are severe enough that every claimant attorney should understand them fully.
Forfeiture of compensation is the primary penalty. Under Section 31(c), a claimant found to have committed fraud forfeits all rights to compensation. This means past, present, and future benefits. The forfeiture is not limited to the specific claim affected by the fraud. Courts have interpreted it broadly to cover all benefits arising from the underlying injury.
Criminal prosecution is a secondary risk. While rare in DBA cases, the Department of Labor's Office of Inspector General does investigate and refer fraud cases for prosecution. Federal fraud charges carry penalties of up to five years imprisonment and fines up to $250,000. The practical risk of criminal prosecution in DBA cases is low, but it exists, and carriers sometimes reference it to increase settlement pressure.
Reputational consequences extend beyond the individual case. In the DBA community, which is smaller than most attorneys realize, a fraud finding can follow a claimant across future employment with defense contractors. Contractors share information about prior claims, and a fraud finding can effectively end a career in overseas contracting.
For attorneys, the calculus is clear. If your client has engaged in conduct that could be construed as fraudulent, address it head-on before the carrier does. Voluntary correction and honest testimony about symptom variability almost always produces a better outcome than waiting for the carrier's surveillance team to build a case.
Build Your Fraud Defense With the Right Precedent
Fraud allegations in DBA claims require a precise response grounded in how ALJs have actually ruled. General principles are not enough. You need to know which arguments succeed, which fail, and how specific ALJs weigh surveillance evidence against medical testimony.
ClaimTrove's database of 5,022 OALJ decisions gives you direct access to fraud-related rulings across DBA and LHWCA cases. Search by issue, carrier, employer, or outcome to find the precedent that fits your case. Stop relying on generic legal research tools that were not built for DBA practice. Run your own investigation at ClaimTrove and find the fraud defense precedent your case needs.