Is it legal for employer to lie on the wc comp and hospital paper work?

do you have a wc atty?
They would be able to point out & discount the lies especially if there is written proof somewhere.

Any lies or even mistakes in the wc paperwork or forms by ins or employer make it better for your claim when those can be proved.
I don't know about arresting them but it gives ammo for your side that they can not be trusted or truthful.

What was the nature of the lie?

It is not legal, but it is often done.

My former employer denied that I reported my injury immediately, threatened to fire my immediate supervisor unless he signed an affidavit claiming that I didn't report it (which he later admitted after he himself was injured on the job), completed an on the job evaluation while I was out with my injury and reported that every task I did was unsatisfactory or needed improvement (despite my 3 prior years worth of outstanding evaluations) and threatened to fire or demote anyone who offered to testify on my behalf...

Get a lawyer now, get everything in writing and let the attorney handle everything. If your employer wants to play hard ball, let them know you will not back down. GOOD LUCK!