If you are a large employer or employee benefit broker, chances are you have spent a lot of time trying to determine the best ACA 6056 reporting and compliance solution. At ACA Reporting Service, we do not sell software - rather, full-service reporting. However, we have researched almost a dozen different Affordable Care Act employer reporting and compliance vendors, and we thought we would pass along what we learned.

Beginning Questions to Ask Yourself

As an employer or benefit broker, this is how the ACA software question breaks down for you.

1). Some employers will have their online enrollment (benefits administration) and payroll with the same vendor. In those cases, as long as the client is willing to pay for it, it will likely to make sense to just perform this required ACA reporting of IRS forms 1094 and 1095 with that vendor.

2). Some employers will not have an outside benefits administration vendor or payroll. They do everything in-house. For these employers, there is going to be a lot of ACA work to be done, and obviously you will need a stand-alone solution.

3). Finally, you have some employers that have payroll and benefits administration with different vendors. This would include the scenario where one of these functions is performed in-house. In these cases, you will either need to consolidate both payroll and benefit plan elections with one vendor, or you will need a stand-alone solution.

Basic conclusion: If you are an employee benefit broker with various types of employer clients, we don’t see a scenario where you can get away without having a stand-alone ACA software solution to help your clients meet their 6056 Affordable Care Act employer reporting requirements.

What do you need to know in evaluating ACA stand-alone software vendors? Here are some questions to ask yourself:

1). Security? What if all the Social Security numbers of your client's employees were stolen? Can you imagine the fallout? Many of the systems we reviewed were severely lacking in terms of security. What level of encryption is being used for the data?

2). Branded to your company? Many different ACA reporting vendors offer the ability to brand a portal to your company and let your employer clients log in.

3). Is the system mainly a benefits administration system? This can make an extreme difference. Will this add costs for the ACA reporting module? Also, with many benefits administration systems, there are additional charges for EDI (electronic data interface - where election data is sent to insurance carriers). Will additional fees apply with this new ACA reporting?

4). Is the ACA reporting solution even built yet? Many, MANY of the ACA reporting module demos we sat in on were from vendors that do not even have the software built yet.

5). How long will your data be stored? The IRS has said that audits will begin starting in about 18 months of filings, and that can last for 7 years total. If you do not have a methodology to get back to your data at the time of inquiry, you are stuck.

6). Is your vendor set up to file with the IRS? Did they just lie to you and say yes to that question? As of the writing of this blog, no one is set up to file with the IRS electronically (efile) for forms 1094 and 1095. The IRS has literally just issued the guidelines to begin getting started with this.

7). Variable hour tracking? Do you need variable hour tracking to determine eligibility? For many employers, a simple spreadsheet will do the trick. Many vendors have quite robust capabilities in this area, and for some employers this will definitely make sense.

8). The "Gotcha Moment." This comes at the end of a great presentation when you're told there is an additional charge of $3 to $5 per employee to file the forms with the IRS. Generally, these costs will render noncompetitive whatever solution you were just shown.

9). Robust ACA logic? We cannot tell you how important this is! If you have spent as much time looking at these forms as we have (especially in terms of form 1095c lines 14, 15 and 16), you will know that performing this reporting is MUCH MORE than just uploading a spreadsheet. The codes for these lines are based on logic. Most systems do not have this logic built into their system, so it will be up to you as an employer or benefit broker to figure this out. For most employee benefit agencies, you can count on this little "bug" shutting down your operations in January.

What if you decide to just file them incorrectly? When your largest client has 100 employees bring them letters from the IRS, you will then realize this was a very bad idea.

Also, without robust logic built into the system, there will be no accommodation for situations such as someone terminating in November/December and then electing COBRA in January. The codes for these situations are different.

10). Are forms stored for future access and corrections? Bottom line - there are going to be issues with the reporting from time to time. Do you have the ability to go back into the system and create a new/corrected 1094 or 1095 form on behalf of the employee? Many systems that rely solely on a census upload would require you to basically start over to make this one fix. OR, your staff can just manually create one in .pdf, which will take a lot of time.

11). Do you have to pay for the whole system up front, or are there monthly options? Do you need to commit to multiple years with the software vendor? Do you have to pay continually for the solution or only once? Are there implementation costs? Are there separate fees for the IRS form file reporting and all other functions in the system?

12). Can the employee elections be uploaded via census, or do you need to type it all in?

13). Will the vendor have adequate customer support between Jan. 1 and Jan. 31 so that you can KNOW you will be able to get all the work done?

14). Do you want to just let the payroll vendor do the work for your client? Do you really want to recommend that your client have another function performed by someone who wants nothing more than to take your business away from you?

. . . OK, that is enough! We hope you find this helpful.

This is the second of eight parts. The first article in the series is here.

"Opt-out" advocates have taken time to understand how workers' compensation systems work, so it is fair to expect option opponents to take time to understand how options work. Sometimes, option myths are simply because of misunderstandings. Sometimes, they are outright lies in a desperate attempt to maintain the status quo for workers' compensation programs that are championed only by a subset of interested insurance carriers, regulators and trial lawyers.

Despite what some myths say, most (if not all) option programs:

• Cover all common law employees
• Require immediate injury reporting, subject to a "good cause" exception (leading to faster medical care, more appropriate medical treatment, safer workplaces for co-workers and other advantages for workers and employers. For a further discussion of reporting requirements, go to http://journalrecord.com/2015/05/20/minick-oklahoma-option-works-for-companies-workers/)
• Pay all reasonable and necessary medical expenses
• Include no employee premium payments, deductibles or co-pays
• Pay for emergency care, surgeries (without regard to outcome) and skilled nursing care
• Cover mental injuries, like being a victim or witness to a criminal act and post-traumatic stress disorder
• Cover cumulative trauma claims supported by medical evidence
• Cover aggravations of pre-existing conditions to the extent caused by the course and scope of employment
• Cover catastrophic injuries (including impairments and death)
• Gain access to more of the best medical providers
• Allow employees to object to a treating provider’s findings, request a change in physician or seek a second medical opinion
• Use independent medical examinations

Opponents also do their best to avoid the fact that opt-out programs:

• Pay higher wage replacement benefits than workers' compensation (even after applicable taxes, if any - a subject addressed later in this series of articles)
• Deny fewer claims, result in fewer disputes and deliver more predictable outcomes than workers' compensation
• Rely on the same claim procedures used for more than 40 years in group health plans. Option programs allow appeals of denied claims, including employee discovery, submission of information and access to state and federal courts and are not subject to run-away jury verdicts
• Include employer liability exposure for any wrongful denial of benefits, discrimination, wrongful termination or retaliatory discharge or failure to provide information
• Are subject to the Americans with Disabilities Act, the Family and Medical Leave Act, the Occupational Health and Safety Act and other applicable state and federal laws (including civil and criminal penalties for any employer compliance failures)
• Do not require employees to have a lawyer to understand basic rights and responsibilities
• Are implemented primarily by small employers supported by independent insurance agents

Interested in learning more? Consider this public policy paper or FAQ on the Oklahoma Option. In-depth information is also available from many insurance carriers and third-party administrators with whom you likely already do business. Let me know if you need contacts, legal citations, actuarially credible data or other detail on any point above.

Fraud, when discussed in the context of workers' compensation, is an interesting thing that many can't seem to agree on. Some injured workers will tell you that there is virtually no such thing as workers comp fraud (except for all the fraud committed against them by the entire world -- insurers, employers, regulators, Starbucks baristas and assorted Disney characters). Workers will grudgingly admit that in the event workers comp fraud does exist at all, it is so inconsequential, so infinitesimal, that it doesn't even deserve the time of day. Some on the professional side seem to believe that any claim is a fraudulent one and that injured workers are "guilty until proven innocent." They view every claim through a suspicious microscope and look for any indicator that someone is trying to pull the wool over their eyes.

The reality is that workers comp fraud exists, both on the worker and employer side. Fraud represents the minority of cases, but its presence makes it ever more difficult for the legitimately injured to navigate the labyrinth of comp.

All I know is this: We are far, far too easy on fraud cases when they are caught.

Our CompNewsNetwork ran a story about a former California Department of Corrections and Rehabilitation officer who pleaded no contest to felony workers' compensation insurance fraud. He had filed a workers' compensation claim alleging he had injured his foot while working in the prison. It appears, however, that he failed to disclose his participation in certain events and activities. Those activities included "a 50-mile hike over rugged terrain just three weeks after he reported being injured at work." They also included activities like rock climbing, snowshoeing and acting in two plays, with multiple performances. He also engaged in numerous extreme hikes in rugged mountainous terrain during the one year and two months he was off work collecting benefits. Not to be satisfied with just committing fraud, he apparently felt compelled to document the endeavor, making video recordings and taking photos of many of his hikes and other activities.

Now, here's the rub: He will be placed on probation and ordered to serve 150 days in county jail, with the sheriff’s work furlough program recommended. He will also be ordered to pay to the California Department of Corrections and Rehabilitation and State Compensation Insurance Fund a stipulated restitution amount of $33,262.56, with an additional $10,453.68 in discretionary costs to be determined by the court at sentencing.

In what can be termed the "coup de grace" (or Coop Da Grass as it is pronounced in northern Florida), if he pays restitution in full, the charge will be reduced to a misdemeanor.

Really? You can steal $33,262.56 but have it classified as a misdemeanor if you give it back? Is that the way it also works for embezzlement? Armed robbery? Burglary? If you give it back, all (or most) will be forgiven? The recommended time in the sheriff's work furlough program is a nice touch, as well. Can he work as a corrections officer while on work furlough from jail? That would be a short commute.

I suppose that means he could supervise himself.

This isn't the only fraud story I've seen with what I consider ridiculously light punishment. The problem, in my humble opinion, is that workers' comp fraud is a crime, but all too often it is treated as a minor indiscretion; they weren't stealing, they just filed a less than truthful claim and let the system send them money while they played or worked for cash or did whatever floated their boat at the time. The fraud is almost treated as a victimless crime, as people find it difficult to view an insurance company as a victim.

Never mind that we all pay for fraud, whether it is a faking prison guard or an employer flashing a bogus certificate of insurance. There are even bigger victims of fraud. They would be the legitimately injured who endure all the extra scrutiny that the specter of fraud brings to the table. These would be the people who are questioned simply because the possibility exists, and who are often left to feel as if they somehow wronged society by getting injured in the first place.

Getting injured isn't criminal. Faking an injury, quite frankly, is, and we should not be afraid to treat those who do so as the felonious thieves they actually are. We need to be tough on workers' compensation fraud.

It is the only way we will eventually see less of it.

Last week, we spoke about how analytics in the insurance organization has been growing up in different locations and that it will continue to be interesting to see how and where analytics grows into maturity. Click here if you missed that blog and you would like to catch up. Today, we're going to step into the future and look at the most likely scenario in most insurance organizations, with the caveat that this will be highly dependent upon carrier size, type, unique features, etc.

To look at the logical location of analytics central within the insurance organization, it will be helpful to understand who will be using and needing data analytics and business intelligence (BI) reporting and how frequently it will be needed. In most organizations, this will naturally require some sort of assessment, because data gathering and analytics are changing at a rapid rate, and, if there is no current oversight, a survey/report will be needed.

For our purposes here, I'm going to assume that, sooner or later, nearly every area of the insurance value chain is going to be a consumer of data analytics. When we discuss analytics with insurance organizations today, we operate under the notion that data and analytics systems should be built with the capability to plug into areas of the organization that aren't clamoring for analytics yet. Operations or human resources might be excellent examples. Both are areas that may one day be composed of analytics power-users but today are only flirting with the fringes of data analytics. In the case of human resources, it may be making some data-driven decisions today, but often it is supplied through health insurance payers or other areas where it is pre-analyzed. As analytic capabilities grow, staffing choices and HR communications will benefit from entirely new levels of observation and reporting.

Once we make the case that anyone in the insurance organization could be a candidate for using analytics, we can also assume that data sources and analytics may frequently overlap from department to department. To address efficiencies, security and tool use throughout the organization, it may make sense to create an analytics department that operates as a central hub serving all other areas.

Let's use an analogy. We're in the midst of summer, and tomatoes or cucumbers may be growing in some of our back yards. With most vining plants, one root produces multiple fruits, varying in their maturity dates. Provided they are pollinated properly (go, bees!), the one vine will give many good tomatoes at various locations along the vine.

This is roughly comparable to what may happen in many insurers. Functions under the chief data officer will be responsible for gathering, housing and securing reliable data. Imagine that function as the roots and the soil of the vining plant. The data organization will then deliver the data to the analytics organization...the main vine that will turn the data "food" into the analytics "fruit." The fruit is the business intelligence every area needs to run its portion of the business. If we want to carry the analogy one step further, we can also consider that the fruit contains the seeds of the next generation's growth. So the analytics organization is not only going to produce good fruit but will also offer to plant its intelligence in areas where the business wants to see new growth.

Instead of having data gathering and analytics strewn all over the insurance greenhouse, there will be one location for warehousing and one central source for analytics. It is going to require oversight by the chief actuary, the chief data officer and in all probability a chief analytics officer. The chief marketing officer and the entire C-level will be a part of determining how this new unit is built to ensure timely and effective service to the organization. The analytics team will represent a unified core that will need to balance business needs with departmental priorities. In some ways, it will look much like today's management team, only with one goal - transforming the organization to be data-driven while keeping information secure and flowing through an ever-improving analytics infrastructure.

The workers' comp industry is burdened with perhaps 200,000 or more injured workers on long-term opioid treatment for chronic pain. Many more workers enter these ranks yearly. For 10 years, I have observed this awful misery slowly accumulate. But claims payers can do more to prevent new case and resolve "legacy" cases. It will require from them more commitment to best practice care and a lot more frank, open collaboration among themselves and with medical providers.

Conservative care is hugely under-exploited as an approach to prevent and resolve chronic pain among injured workers. Workers' compensation claims payers would not have paid so much for opioid treatment, failed surgeries and claims settlements had they adopted conservative care decades ago, when research support for this approach was already pretty strong. The failure to promote this approach cost the policyholders perhaps $100 billion in higher premiums and cost injured workers years of disability and, in some cases, funerals.

By conservative care, I refer to functional restoration programs, which came into existence in the 1970s or earlier. Cognitive behavioral therapy became established in the 1980s. Coaching, as a non-medical method of helping persons in pain, has been around forever but recently gained visibility as a scalable form of intervention. There's a lot of innovation going on, such as the PGAP program imported from Canada and a number of nerve-stimulation services such as Scrambler in New England.

Payers need to learn how to create conditions within which conservative care can prosper rather than repeatedly blossom only to die.

A friend prods me to use the term "evidence-based medicine." But "conservative care" is my choice for an umbrella term because it is easy to remember, though inexact.

A few years ago, I talked by phone with a senior medical case manager at a claims payer in Kentucky, an epicenter of opioid prescribing excesses, who had never heard of functional restoration programs. This reminded me of the Harvard professor who spent a year in Munich without ever hearing about Oktoberfest.

The long history of insurers includes many instances where they brought risk management solutions like conservative care to the market. The first modern evidence of that goes all the way back to London fire insurers in the late 17^th century. Mutual insurance companies played an essential role in introducing automatic fire-suppressing sprinkler systems to American factories in the late 19^th century.

In my special report published by WorkCompCentral, "We're Beating Back Opioids - Now What?", I propose that claims payers and selected medical providers collaborate for the purpose of better success in treatment. This is particularly valuable for conservative care. The collaborations would allow each party to act on its own but to pool information. Periodically, analysts will dig into the database to report on the group’s experience on outcomes and costs.

The healthcare community, sometimes with the explicit support of health insurers, engages in collaborations to improve health outcomes. A Health Affairs article in 2011 is titled, "How a Regional Collaborative of Hospitals and Physicians in Michigan Cut Costs and Improved the Quality of Care." The article addresses surgical collaborations, for instance:

• Michigan BCBS has been supporting since 2006 a bariatric surgery data-sharing project involving 27 hospitals and some 7,000 patients a year.
• Its major general and vascular surgery collaboration recorded 50,000 patients a year.

The article concludes that "results from the Michigan initiative suggest that hospitals participating in regional collaborative improvement programs improve far more quickly than they can on their own. Practice variation across hospitals and surgeons creates innumerable "natural experiments" for identifying what works and what doesn't.

Elsewhere, collaborations among independent medical providers have been noted in asthma, diabetes, surgery and congestive heart failure.

Another analysis of collaborations commented that "real improvements [in treatment] are likely to occur if the range of professionals responsible for providing a particular service are brought together to share their different knowledge and experiences, agree what improvements they would like to see, test these in practice and jointly learn from their results.

Claims payers need to help this cross-fertilization happen. Hard as it may seem, they need to "own" the need to build conservative care resources in their markets. Physicians don't understand conservative care; referral patterns are not set; and the providers of conservative care are often under-resourced. Claims payers need to step up.

ApplePay, the mobile payments service introduced by Apple in October 2014, could ultimately set the security and privacy benchmarks for digital wallets much higher.

Even so, the hunt for security holes and privacy gaps in Apple's new digital wallet has commenced. It won't take long for both white hat researchers and well-funded criminal hackers to uncover weaknesses that neither Apple nor its banking industry partners thought of.

Here's ThirdCertainty's breakdown of the security and privacy issues stirred by Apple's bold move into the digital wallet business.

ApplePay defined

Available on the iPhone 6 and Apple Watch, ApplePay stores account numbers on a dedicated chip. Apple refers to this chip as the "secure element" only available n the iPhone 6 and iPhone 6 plus. It is on this chip that your financial information is stored. It is only accessed when a random 16-digit number gets generated for a given transaction, and the number never makes it to the phone's software, where hackers could reach it.

The devices then use near field communication (NFC) to send a simple token, instead of the full account number, to the merchant’s NFC-enabled point-of-sale register.

"This allows an ultra secure payment," says Anthony Antolino, business development officer at Eyelock, a biometrics technology vendor. "The only remaining concern is keeping the smart phone under your control."

Apple tightens down who can control each device by integrating itsTouch ID fingerprint scanner and its Passbook ticket-buying app into ApplePay. This new approach keeps personal information on the device - instead of moving account data into storage servers within easy reach of thieves. The hacks of big merchants in the U.S. and Europe, including Home Depot, Target, P.F. Chang's and Neiman Marcus, show how adept data thieves have become at attacking stored data.

How ApplePay improves security

ApplePay validates a "data-centric security model," argues Mark Bower, product management vice president at Voltage Security.

"The payments world needs to move on from vulnerable static credit card numbers and magnetic stripes to protected versions of data," Bower says. "Tokenized payments reduce the risk of data breaches and credit card theft."

Mathew Rowley, technical director at security consultancy NCC Group, observes that the U.S. payment card industry continues to require minimal security checks in authorizing credit and debit card purchases.

“Things like chip-and-PIN and two-factor credit cards have been implemented in other countries, but the U.S. seems to be behind the curve,” Rowley says. “Any additional logic built into the process of making payments will make it more secure.”

How ApplePay introduces new risks

Adding a mobile wallet function to the latest iPhone gives criminal hackers more incentive and opportunity to find fresh vulnerabilities, says Mike Park, managing consultant at Trustwave.

"Any new additions and functionality to a platform, even ones meant to enhance security, can expand the attack surface," Park says. "With the introduction of this type of functionality into a platform, this makes every device a possible target."

The more popular ApplePay becomes, the more likely cybercriminals will devote resources to cracking in. Research from legit sources already is available showing how to hack into NFC systems -- for instance this 2012 report from Accuvant reseacher Charlie Miller.

It's probable that elite criminal hackers "are looking to steal identities and mass harvest payment card information as they do in other platforms and verticals now," Park says.

One simple crime would be to target Apple devices for physical theft. Another is to figure out how to remotely access and manipulate ApplePay accounts. "The weakest link is the consumer," says Alisdair Faulkner, chief products officer at ThreatMetrix. "And ultimately a web page with a username and login, like iCloud, now has an unprecedented amount of information about you backed up into the cloud."

Pushing payments to mobile devices makes Internet cloud services more complex - and complexity creates vulnerabilities.

"In the past, the only participants were the merchant, the merchant’s bank and your personal bank," says Richard Moulds, vice president of product strategy at Thales e-Security. "Apple is stating that they will not know the details of individual transactions, which is very important; however, there is clearly the risk of attacks on the phone itself."

Ho-hum: The FBI arrested 46 doctors and nurses...largest Medicare fraud bust ever.

That is from a headline in a recent CNN story. Seems the thieving doctors and nurses got away with $712 million before getting busted.

Per the story, "In total, 243 people were arrested in 17 cities for allegedly billing Medicare for $712 million worth of patient care that was never given or unnecessary."

Note the word "unnecessary." If there are doctors and nurses doing this to Medicare patients, they are defrauding self-insured benefit plan patients, too.

This has been getting worse and worse every year for 20 or so years. I say "ho-hum" at the beginning of this post because almost no one in the private sector takes stopping this kind of thing seriously. There is a lot of talk and little action.

I urge readers to start taking steps to stop this mess.

Employers should move quickly to review and update as necessary their human resources and employee benefit policies and practices concerning when same-sex partners of employees are treated as the spouses of the employees in light of the U.S. Supreme Court's June 26, 2015, decision in Obergefell v. Hodges.

Employer and employee benefit plan leaders and their consultants are cautioned that the decision requiring states to allow same-sex couples to marry does not eliminate ambiguities or differences in state laws and documentation of marriage. Consequently, policies, practices and programs for administering the employment and employee benefit rights of married employees need to be carefully tailored to identify and require proof of marriage evenhandedly. Administrators must take into account variances and potential biases in state documentation and practices that could create complications or even liabilities for employers and plans if not appropriately considered.

Since the Supreme Court ruled that the Equal Protection Clause of the U.S Constitution entitled same-sex couples to equal treatment with married heterosexual couples under federal law in U.S. v. Windsor, 133 S.Ct. 2675 (2013), employers have faced several challenges understanding and updating their policies and practices with respect to employees involved in same-sex relationships.

The Obama administration's aggressive reinterpretation of federal employment, employee benefit, tax and other laws and regulations placed pressure on employers to update their policies and practices concerning when to recognize employees in same-sex relationships as marriages for employment, employee benefits and other purposes.

As the Windsor decision did not address whether the U.S. Constitution also guaranteed same-sex couples a right to marry under state law, disparities in the treatment of same-sex marriages between the states and rapid changes in the state statutory and judicial rules governing these determinations created significant challenges. Employers had to determine if a same-sex couple could marry in a particular state and the right and duty of the employer in response to such an arrangement.

Today's Obergefell ruling will help to resolve some, but not all, of this uncertainty by answering the question whether states may refuse to allow same-sex partners to marry or refuse to recognize marriages of same-sex partners. The Obergefell decision settles this debate by holding that the U.S. Constitution requires all states to allow same-sex couples to marry on the same terms as apply to heterosexual couples.

Employers still face many challenges. While states must now treat same-sex and opposite-sex couples equally under marriage laws, determining consistently whether two individuals are legally married in any particular state remains anything but simple. Variations in the marriage laws of the states mean the requirements for and proof of marriage can vary significantly.

Care must also be taken to manage potential discrimination risks that might arise from the adoption of policies that treat same-sex vs. opposite-sex partners disparately. There could be administrative complications and compliance risks. There could also be sex discrimination liability exposures under the Civil Rights Act and other laws.

Parties should act promptly and carefully with the advice of counsel to evaluate and update their policies to respond to the new decisions and these other challenges and duties.

In the world of commercial insurance, there exists the very curious role of risk manager. I mean curious in the sense that successful risk managers appear to have superpowers. They are charged with taking the actions necessary to avoid or reduce the consequence of risk across an entire enterprise. Their knowledge must extend deeply into a variety of subjects such as engineering, safety, the subtleties of the business of their employer, insurance (of course), physics, employee motivation and corporate politics and leadership. Their impact can be wide-ranging, from financial (e.g., dollar savings from risk avoidance/mitigation) to personal (the priceless value of the avoidance of employee death or injury).

Sadly, the tyranny of economics restricts the access that businesses have to continuous, high-quality risk management. Full-time risk managers are prevalent in huge, complex, global companies. These firms often self-insure, or purchase loss-sensitive accounts, and the financial value of a risk management position (or department) is clear. The larger mid-market firms can afford to selectively purchase safety consultant services; their insurance broker might perform some of these tasks (especially at renewal), and their insurers may have loss control professionals working some of these accounts. However, for the majority of small businesses, risk management at the professional level is not affordable.

I have toyed with different ideas about how to automate this function to bring the value of a risk manager to the small commercial business segment. My attempts were always unsatisfying. However at a Front End of Innovation conference in Boston, a presentation by Dr. Rafael J. Grossmann (@ZGJR) crystallized the vision. I can now clearly see how existing technology can be combined to create a risk manager avatar.

Dr. Grossmann is a trauma surgeon who practices in Maine. In addition to the normal challenges of his profession, he is one of only four trauma surgeons servicing a very wide area. Although the area is sparsely populated, the challenge of distance and time complicates the delivery of medical services. Dr. Grossmann presented his vision of a medical avatar, a combination of technologies that will perform 80% or more of the routine medical cases in a consistent, timely and cost-effective manner. Combining the technologies of mobile, voice recognition, virtual reality, artificial intelligence, machine learning and augmented reality forms a new silicon entity - a medical doctor avatar. He also introduced a company, sense.ly, that is working to deliver similar services (video here: http://www.sense.ly/index.php/applications/).

If such systems can deliver medical services, then why not risk management? For example, given permission, a system would monitor the purchases of a small company and identify when the historical pattern changes, e.g., when the company begins to buy new types of materials. Using predictive algorithms, the pattern can be compared against others to evaluate if there is likelihood that the company is now performing new business operations. The avatar could then contact the small business, or could signal human intervention by an underwriter to evaluate the necessity for an endorsement to a policy to cover the new business operation. Eventually, some of these interventions would also be handled through machine-to-machine communication and would allow the endorsement to take place automatically.

Someone will build a risk management avatar. The question is, who will do it first?

This article started as another "Top Ten" list, but I quickly realized that, when looking for potential fraud or compensability issues in a workers' compensation claim, there are many more than 10 red flags - I came up with 66. You can probably think of more. Please add them in the comments.

The following is a loosely organized list of red flags signaling potential fraud or abuse by a workers' compensation claimant. Keep in mind that even if the claim has all of these red flags, this does not necessarily mean the claimant is committing fraud or that you have grounds to deny compensability of a claim. However, the presence of some of these red flags should cause you to investigate further. Also note that I am using the term "fraud" broadly to include general wrongdoing on the part of the claimant and not specifically referring to a legal cause of action.

Here we go:

1. Late reporting - If an employee is really injured on the job, it is unlikely the employee will wait days or weeks to report the injury.
2. The details of the accident are sketchy.
3. The employee has difficulty recalling what happened.
4. The employee changes the description of the accident when inconsistencies are pointed out.
5. The nature of the injury is not consistent with the nature of the work done by the employee.
6. The date, time or location of the accident is unknown or forgotten.
7. The details of the accident are inconsistent with the employee job duties.
8. The accident occurs in an area where the injured employee would not normally be.
9. Fellow workers hear rumors circulating that the accident was not legitimate.
10. The employee gives completely different versions of the accident to the employer, the adjuster and the doctor.
11. The employee keeps modifying the story of what happened.
12. The employee leaves out pertinent information.
13. The details of the accident vary from medical report to medical report.
14. There are no witnesses to the accident, and the employee normally works around other people.
15. There are witnesses, but their version of the accident differs from the employee's.
16. The nature of the injury is unusual for the employee's line of work.
17. The employee's co-workers express doubt that the accident occurred.
18. The employee is disgruntled about some aspect of his job.
19. The employee was demoted or passed over for a promotion.
20. The employee is on the list to be laid off.
21. The employee is on "positive improvement needed" status and is about to be terminated.
22. The employee has had numerous prior employers.
23. The "accident" occurs immediately before a strike, plant closing or the end of seasonal employment.
24. The employee is a new hire.
25. The accident occurs near the end of probationary period.
26. The claimant is a seasonal worker.
27. The employee has an early Monday morning accident before the supervisor or other employees see him on the job (meaning the accident might have occurred off the job over the weekend).
28. The injured employee is not at home during the normal workday.
29. The employee is always sleeping when the adjuster calls or cannot be disturbed.
30. The employee's family member is vague or noncommittal about when you can reach the employee.
31. The employee uses the address of friends or family members and has no definite address or uses a Post Office box as an address.
32. The employee's spouse is not working and is drawing workers' comp indemnity benefits, Social Security disability payments, welfare or unemployment insurance, and the employee wants the same lifestyle.
33. The employee inquires about a settlement early in the claim process.
34. The employee was having financial problems.
35. The employee is nearing retirement age.
36. The employee files for benefits in a state other than where the accident occurred.
37. The employee fails to report other work income while drawing indemnity benefits.
38. The employee took excessive time off just before the injury.
39. The employee is in the middle of a divorce or other family disturbance.
40. The Social Security number used by the employee belongs to someone else.
41. The employee applies for Social Security benefits before the injury occurs.
42. Income from workers' comp, disability or other sources exceeds the employees prior after-tax income.
43. The employee protests about returning to work and never seems to improve.
44. All the injuries are subjective - pain without trauma, soft-tissue, emotional.
45. The employee changes doctors frequently ("doctor shopping") or changes doctors when released to return to work.
46. The employee has excessive treatment for soft-tissue injuries.
47. The medical treatment reported by the employee is different from the medical care stated in the medical reports.
48. The nature of the medical treatment changes from one body part to another after the employee has been treating for a while.
49. The employee misses medical appointments.
50. The employee fails to show up for an independent medical examination.
51. The employee refuses or delays diagnostic testing.
52. There are whiteouts, corrections or erasures on medical forms submitted by the employee.
53. Pain is exaggerated.
54. Invalid or inconsistent effort is reported on the functional capacity evaluation.
55. The employee has a history of multiple workers' comp claims or reporting subjective claims of injury.
56. The injury relates to a preexisting medical condition or health problem.
57. The length of recovery is excessive for the nature of the injury.
58. The employee who has been off work for a while has calluses on hands or grime under the fingernails.
59. The medical reports reflect "muscular," "tanned" or other adjectives that reflect that the employee is in good health.
60. The employee is unable to work because of the injury but is seen painting her house, mowing the lawn, carrying heavy objects, etc.
61. The employee has a high-risk hobby or does other activities involving considerable physical exertion.
62. Surveillance reflects physical activity greater than what is reflected in the medical reports.
63. The employee is unusually pushy to settle the workers' comp claim.
64. The employee has extensive medical knowledge but no training in the medical field, or uses extensive insurance terminology but has no work experience in the insurance field.
65. The employee is a part of a group of employees using the same doctor and the same attorney for their workers' comp injuries.
66. The attorney's letter of representation is the same day of the injury or even dated before the "injury."

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Disclaimer: The information in this article does not constitute legal advice, nor is it intended to create an attorney-client relationship. Every situation is unique, and I encourage you to seek legal advice from a licensed attorney for your particular situation.