Tag Archives: workers compensation fraud

Identifying Fraud in Workers’ Comp

Workers’ compensation fraud creates a financial and administrative burden for employers, while increasing hardship for injured workers with legitimate claims. The early identification of potential fraudulent cases and quick action by workers’ compensation third party administrators can help make sure workers’ compensation programs run as efficiently as possible in providing needed help for injured workers.

The following are some best practices employers can implement to reduce fraud, as well as guidance on what to do if a claim is “not quite right”:

Identify Questionable Claims

Here are some of the “red flags” that may help identify fraudulent claims:

  • The employee does not immediately report the injury to his/her supervisor.
  • Information indicates the employee was injured somewhere else (auto accident, playing sports, etc.).
  • The facts of the injury do not align with the type of injury or disability.
  • The employee misses doctor appointments related to the claim.

Follow the Process

Even if an employer suspects a claim could be fraudulent, the employer must still follow the process to ensure the claim is submitted appropriately and the worker obtains medical treatment.

  • The employee still must complete a Claim Form (DWC-1).
  • The employer still must provide medical treatment within one day of notice of injury.
  • The administrator has 14 days to issue a delay letter, during which no temporary disability will be paid.
  • The administrator then has 90 days to either accept or reject the claim, during which time the administrator may solicit additional information.

See also: Real or Fake? Finding Workers’ Comp Fraud  

Investigate Promptly

Once a potential fraudulent claim is identified, it is imperative that investigations are initiated promptly. Investigations should be thorough, impartial and preventative. Using an outside party that specializes in workers’ compensation fraud investigation will ensure that the case is handled in accordance with all regulations and will hold up in court if there is a trial. Remember, only a court of law can determine fraud – not the examiner or the employer. These investigations can include:

  • Interviews with the injured worker
  • Interviews with coworkers
  • Witness interviews
  • Manager/supervisor interviews
  • Surveillance of injured worker

Upon the conclusion of the investigation, any relevant findings and evidence should be presented to the district attorney’s office as well as the Department of Insurance.

Increase Awareness

One of the best tools for fraud prevention is to let employees know that false claims will not be tolerated and that there are stiff penalties. It also helps to provide employees with easy ways to report any potential fraud that they see.

  • Post the penalties for filing false claims on your new hire pamphlet.
  • Hang a poster in the break room letting employees know how to report fraud anonymously.
  • Share stories about fraud convictions to deter abuse.

One recent example of identifying, investigating and prosecuting a fraudulent claim was in the conviction of a school bus driver in San Mateo County in California in July. The claims examiner identified numerous inconsistencies in the medical reports versus the statements provided by the employee. There were alleged migraines and double vision, but tests did not support these symptoms, and it appeared that they were exaggerated. Investigations were initiated, and the employee was observed participating in activities that were not consistent with any claimed injury.

The investigative evidence was forwarded to the San Mateo County district attorney’s office, which obtained a conviction; the defendant was ordered to serve 60 days in the county jail and pay restitution of $60,000 to his employer.

See also: Workers’ Comp Issues to Watch in 2019  

Organizations must implement a comprehensive strategy to curb fraud. Vigilant fraud prevention programs and investigative efforts can save a company hundreds of thousands of dollars by preventing the filing of fraudulent claims and prosecuting those who take advantage of the system.

Defending the Right to Bear…Toilet Lids

You would think a judge would know better. But then again, because he was also the local cemetery sexton, perhaps he was too busy to educate himself on the finer points of law regarding workers’ compensation fraud.

A former Seneca County village judge has been convicted of falsely claiming two men attacked him outside his courtroom two years ago. A jury found him guilty of insurance fraud, falsifying business records, defrauding the government and falsely reporting an incident.

The weapon he claimed to have been assaulted with? That would be the ubiquitous and sorely-in-need-of-regulating toilet tank lid. Yes, in what was sure to whip up a frenzy with the anti-toilet crowd, another seemingly innocent victim had suffered needless injury. Personally, as a pro-toilet guy, I feel compelled to urge calm and remind everyone that toilet lids don’t kill people; people kill people. While there is no specific constitutional amendment that protects the right to bear toilets, I can state unequivocally that they are essential for both number one and number two.

I sense I have strayed from my initial point.

The judge told police in August 2013 that he was attacked from behind while locking up the Waterloo Village Court. He claimed to have been choked with something and hit over the head with a heavy object. Village police, using what can only be described as excellent police investigative techniques, found the shattered lid of a toilet tank at the scene.

sen
Photo by Seneca County District Attorney’s Office

Ultimately, however, a story emerged that made it appear our jaded jurist made up the affair as part of a nefarious scheme to obtain prescription painkillers through a workers’ compensation claim. The district attorney who prosecuted the case said, “The jury heard evidence that this was a way for him to get a lifetime supply of painkillers.”

Can’t argue with him there. If you are looking for a way to get an endless supply of top-grade narcotics, then workers’ comp is where you want to be. We give that crap away like candy at Halloween.

Perhaps the fact that this guy spent nine days on a pain pump at a Rochester hospital, while doctors and nurses testified he did not sustain any injuries whatsoever from choking, a blow to the head or any kind of assault, should have been a clue. I find myself asking, then, why the pain pump? But then I remember, “Ah, yes, this was a workers’ comp case.”

Authorities report that the judge’s medical records showed, prior to the bogus assault, he’d been on prescription painkillers for lower-back pain and for gout throughout his body. He also had 20 to 30 previous insurance claims for alleged accidents.

The judge, who is not a laywer, had no known employment other than the acting village judge position — except, of course, for his position as cemetery sexton, where he is under indictment for allegedly stealing gasoline from the village. Perhaps he needed it to pick up all those prescriptions.

Honestly, we have a guy here who most likely has an obvious addiction problem and needs help beyond the two to seven years in prison he is currently facing. My bigger concern is the Waterloo village board. Despite the police department’s determination that the judge’s assault claim was false, the board re-appointed him to another term as acting village judge. Why they would do that is beyond my limited comprehension.

The lessons here are twofold. First, and most importantly, toilet lids are safe when used by responsible adults. We do not need a plethora of restrictions and regulations just because one person abused them. Second, this village judge and cemetery caretaker might be a criminal and addict, but that does not make him stupid. That designation, it would seem, is reserved for the village board, which clearly has its share of idiots.

Napoleon's Corporal And The Implementation Of Senate Bill 863

SB 863 was passed on the last day of August 2012. It is the largest and most comprehensive change to the California workers compensation system since April 2004 when SB 899 passed.

To make sure that the new law is implemented properly, the California Division of Workers Compensation and the Workers Compensation Appeals Board have both promulgated extensive regulations. Some of the regulations, by their nature, were considered “emergency” and were approved by OAL on December 31.

Because of the extensive impact of the various articles in the legislation, there will be ongoing regulatory efforts at least through the first six months of this year.

I strongly encourage all claims operations to review these regulations and provide their insight, thoughts, and comments on a timely basis to the Division of Workers Compensation. You can find all of the regulations on the California Department of Industrial Relations web site or the California Division of Workers Compensation web site.

Implementing SB 863
On the front lines there are many legitimate questions, such as:

  • How much of the new law applies to my existing cases?
  • If I have started Permanent Disability (PD) advances, and if the employee has returned to his/her regular work, do I still need to advance Permanent Disability?
  • What is Independent Medical Review (IMR)?
  • How will I pay for the Independent Medical Review evaluation?
  • Under what circumstances will I have to use Independent Medical Review?
  • What happens if I have an old case and the applicant attorney claims a sleep disorder?
  • What are the new ways to rate Permanent Disability?
  • What happens if the lien holders have not paid their lien filing fee?

To assist with helping claims operations and claims departments implementing the new law, I have provided an SB 863 Implementation and Survival Guide, organized by Mark Webb. It is intended to assist claims operations in the day-to-day implementation of SB863.

The original wording of the bill can be viewed here.

Napoleon's Corporal
Napoleon Bonaparte conquered most of Europe and North Africa. Many do not know the inside story of why he was a successful a military leader. One reason was his unique and extensive use of cannon. However he also had a secret weapon … His advantage was his use of a corporal.

Napoleon realized that war was a complex endeavor. When his generals outlined the battle plan, he had a random corporal assigned to shine his boots. After the plan was explained to Napoleon, he would look down at the corporal and ask if he understood the plan. If the corporal (who had been listening to the explanation of the plan) understood, Napoleon would then authorize the attack. However if the corporal was confused or did not understand the plan, then Napoleon had his generals re-do the plan to simplify it.

Napoleon understood that it was his front line that needed to execute the battle plan. If the plan was confusing, the front line would not be successful.

I recommend that this concept be considered when implementing SB863.

Here are some additional comments and observations on developing claim procedures to implement SB 863:

  • Usually the best and the brightest are used to develop procedures in claims departments. That does not always result in simple processes. This is because the focus is usually only on compliance with the new laws (which does not include simplifying the existing processes or the new process).
  • When the claims departments are developing their policies, rules and procedures, front line claims assistants and examiners should be included in the development of the processes and should also review the proposed plans to determine if they can be understood and implemented.
  • Unfortunately many times the new procedures result in processes that reflect the axiom “we have always done it this way.” Include folks who think “out of the box” and allow their voices to be heard.
  • SB 863 will result in major changes within the claims offices procedures and claims handling. Now is the time to take advantage of the change and embrace the change rather than to resist the change.
  • The focus on implementation should be: Benefit provision, Compliance, Cost Savings, Simplification, Documentation, Training.
  • For many claims adjusters, this will be the third system that they will be working with (Pre-899, 899 and 863).
  • Segregating claims by system may help but is not a panacea (because many of the provisions of SB863 apply to all existing claims).
  • Claims systems will also have to be changed. Limitations of some of the claims systems will result in problematic work-around procedures for awhile.
  • Sometimes working out a manual process first allows one to identify efficiencies. Do not be afraid to use a manual process for awhile (as the bugs are worked out).
  • Regular reviews of the implementation team specifically focused on simplification are productive.
  • The team should have a dedicated focus on the new law's cost-saving provisions.
  • The team should keep track of its costs and also develop an analysis of costs of implementing the laws.
  • The new laws may change the claims staffing model.
  • Third Party Administrators should notify their customers of the potential increased costs (Permanent Disability, for example) and also projected savings (lien reduction and resolution).
  • Third Party Administrators should review their contracts with their customers to determine if the changes in the laws impact their current pricing models and are best for their clients and for their success.
  • Bill review vendors and Utilization Review companies both have major changes to implement.
  • Special Investigations Units and Fraud Reporting have new issues to report because of the increased conflict of interest provisions in the law. Include the Special Investigations Unit as part of the implementation team.
  • I recommend an implementation team include: A senior claims executive, a senior claims supervisor, a claims examiner, a claims assistant, a bill specialist, a hearing representative, a finance person, a claims system expert, an attorney who knows the new law, and a person who is responsible for documenting the discussions, processes and procedures.
  • Training of the entire staff will take more than just one meeting and more than one month. Assume that there will be a need for re-training on a regular basis for the first nine months.