The orange worm is a predatory worm that needs to be extracted once discovered in your reef. It exudes a toxin to stun its prey, and devours it. If spooked, it retracts back into the safety of the rockwork via that same toxin-slime. It will appear to be bright orange when spotted in the tank during flashlight duty. Avoid shining the light directly on this worm if you hope to catch it, and have forceps handy. It will eat snails, clams and any other meaty items.
Read more here: http://www.reefaddicts.com/content.php/77-Pest-of-the-Week