Steps to Take for 5 Common Areas of Employee Workers’ Comp Fraud

When employees file fraudulent workers compensation claims, not only are they stealing from the insurance company, but also stealing from their employer, the shareholders of the employer if a publicly held company, and from their co-workers. The fraudulent workers comp claim is included in the claim history used by the insurance company to set the premium rates for the employer. When the employer pays higher insurance cost due to fraud, there is less money available to invest in the company and to pay the wages and pay raises of the employees of the company.

 

Nearly 25% of workers comp claims involve some element of fraud or malingering, whether it is an outright false claim or inflation of an otherwise legitimate claim. The Coalition Against Insurance Fraud estimates workers compensation fraud cost employers $6 billion a year. The National Insurance Crime Bureau recently reported the number of suspicious or questionable claims has increased as the economy has deteriorated. In fact, workers comp fraud is the second largest category of white-collar fraud only behind income tax evasion. Every employer must be vigilant in protecting themselves from the dishonest employees who will attempt to exploit the workers comp claim system.

 

 

There are five common areas of employee workers comp fraud:

 

  1. The false injury. The employee claims a hurt back or neck or other muscle problems for the sole purpose of collecting indemnity benefits.
  2. The inflated injury. The employee receives a real job related injury but then tries to extend his/her time off work by pretending the injury is worse than it really is so s/he can collect indemnity benefits.
  3. The prior injury. The employee has a real back, shoulder or knee problem from years ago, but now needs additional medical treatment for it.
  4. The at-home injury. The employee gets hurt at home, working for someone else or participating in a sports event, and claims s/he got hurt on the job.
  5. The malinger. The employee got hurt, got well, but got use to staying home and does not want to come back to work.

 

There are several courses of action the employer can take to combat workers comp claim fraud. One of the most effective things an employer can do reduce workers comp claim fraud is to have a well publicized and well used transitional duty or light duty return to work program. While a return to work program will not prevent all fraudulent workers comp claims, it will stop many of them.

The dishonest employee who got hurt at home but does not have medical insurance, or has medical insurance with a high deductible, will still file the fraudulent claim that he got hurt at work. However, the dishonest employee who wants to take an extended paid vacation with workers comp indemnity benefits, or the dishonest employee who wants to work at another job while collecting workers comp benefits, will be stopped from doing so by a strong transitional duty program.

 

 

Steps to Prevent Workers’ Comp Fraud

 

In addition to a strong transitional duty program, there are various other steps the employer can take to fight fraudulent claims including:

 

  1. Do not hire employees of questionable character or background. Prior to any offer of employment, thoroughly check the references of the potential employee and their background information.
  2. If an employee refuses transitional duty work, or tries transitional duty work for an hour or two, or a day or two and then stops, make an immediate inquiry into what part of the transitional duty job can’t be done. Make arrangements to alter the transitional duty job to fit the complaints. If the employee still refuses the transitional duty work, ask the insurer’s claims office to consider surveillance on the employee to be sure the limitations away from work are the same as when at work.
  3. Keep an ear open to the rumor mill. Disgruntled employees are far more likely to file a fraudulent workers comp claim then happy employees. Address any legitimate grips or complaints of the employees.
  4. Train your supervisors and department managers to recognize the characteristics of claims frequently indicating fraud. Provide the supervisors and department managers with a copy of our blog on Employee Workers Compensation Fraud
  5. Make sure all new and current employees are aware of your fraud policy of prosecuting workers comp fraud as a criminal offense. (And back it up! If you have an employee who commits workers comp fraud be sure to fully prosecute. If you want to see the number of your workers comp claims skyrocket, feel sorry for the employee or his family and not prosecute an obviously fraudulent claim).
  6. Make sure all employees understand that fraudulent claims come out of the employer’s pocket and reduce the pay raises or bonuses for everyone.
  7. When you suspect a workers comp claim may be fraudulent or when you have rumors or evidence that a claim has an element of fraud, contact the workers comp insurer’s Special Investigative Unit. They have the expertise and the connections with law enforcement to properly investigate and build the necessary proof to prosecute the fraud.
  8. Make it a requirement that the claims handling office of the insurer or third party administrator files an Insurance Services Office index report on every new workers comp claim and does a claims inquiry every six months as long as a claim remains open.
  9. Do not make it easy for the employee to file a bogus claim by having a loose safety program. By removing safety hazards from the work place, the employee has fewer options in creating a false injury scenario.
  10. Remember many fraudulent claims start out with a real injury. When the employee sees the television commercial with somebody holding fists full of money their attorney got them for their workers comp injury, the employee may be tempted to exaggerate his/her own claim. Anytime an employee hires a television attorney, you cannot discuss the claim with the employee, but you can advise the employee of the company’s policy to fight all claims vigorously when an attorney is hired.
  11. Make it a practice to reward fraud tips. Have a publicized program of paying a reward to anyone who reports a workers comp fraud resulting in conviction.

 

Fighting fraudulent workers comp claims is not easy, but it is absolutely necessary to protect your company’s bottom line. Make fraud prevention a component of your integrated workers compensation program.

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Inside Tips & Tricks for Effective Social Media Investigation

Fraud, waste and abuse (FWA) continue to be a significant driver in workers’ compensation program costs.  The result for many programs are higher costs per claim, which are passed along to the insured.  This trickle-down effect ultimately hurts the employees, which are the people served by workers’ compensation insurance programs.  Now is the time for interested stakeholders to employ innovative and creative investigative techniques used advanced techniques in claims investigation based on easy to use technology.

 

 

Social Media: Going Beyond the Basics

 

Social media investigation continues to be an area of initial research in every workers’ compensation claims investigation.  This is based on the continued growth in it is use over the last decade.  It is also an important area to investigate given its use with all generations.  The use of Facebook is a common example:

 

  • There are currently over 1.5 billion users of Facebook worldwide. The United States contains some of the most active users on this social media platform;

 

  • Over 72% of people who use the Internet are connected on Facebook; and

 

  • Nearly 10% of Facebook users do not change the privacy settings on their account. This means there is still a significant portion of users who allow all posts and updates to be visible to the general public.

 

Pictures posted to Facebook and other social media often contain hidden metadata.  This is information stored in the background due to the user failing to adjust the settings on their smartphone or other cameras.  The result is a treasure trove of information for the taking.  This includes:

 

  • Date and time stamp information as to when the photograph was taken; and

 

  • Specific longitude/latitude information as to where the photograph was taken.

 

Using this data, someone creates a “geofence,” which tells the world when and where a specific event took place.  It also limits the ability of someone to testify otherwise.

 

 

Vehicle Tracking and Sightings

 

State and local governments have employed millions of public security cameras across the country to capture real time images of what is taking place in their communities.  Part of this technology includes the use of license plate tracking information, which records when and where a particular vehicle passes a certain location.

 

While accessing and searching this information may be time consuming, it can establish a number of items that can be useful in a claims investigation.

 

  • The location where a claimant’s vehicle has visited;

 

  • Establish a pattern of locations visited by an employee;

 

  • Verify the testimony of an employee concerning the route taken to a certain location, which is important in “traveling employee” cases; and

 

  • Accessibility of information nationwide—it is used in every major city in the United States.

 

 

Keyword Search Technology

 

Most social media platforms are driven by “keyword” search technology.  This allows all users to use various terms and locate posts and other information from all users on the platform.

 

In the context of a workers’ compensation claims investigation, any user can ethically search to find information on where someone has been.  This includes postings by organizations or events listed in the platform that tag or record the names of attendees.  Although a user has set their privacy to limit the information from strangers, the fact someone else has a posting that includes a specific person’s name allows the public to obtain information.

 

 

Conclusions

 

Members of the claims management team have lots of readily accessible information at their hands based on today’s technology.  Proactive members will learn how to harness this information to advance and coordinate surveillance on workers’ compensation claims in a cost-effective manner.  The ultimate result is lower program costs and quicker claims resolution on troublesome files.

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

11 Red Flags of Workers’ Compensation Fraud

As an employer, you must be vigilant in your efforts to protect your company from the few employees who do commit workers compensation fraud.   Adjusters often refer to possible fraud in a workers comp claim as looking for “red flags.” A “red flag” is anything standing out from the ordinary.

Any one of the items on the following list of “red flag” do not prove a workers comp claim is fraudulent. However, if you have several “red flag” on a single claim, it’s a good idea to consult with both the adjuster and the SIU unit about the claim.

 

 

11 Red Flags of Workers’ Compensation Fraud

 

  1. Late Reporting
    1. If an employee is really injured on the job, it is unlikely the employee will wait days or weeks to report the injury.
  2. Accident Details
    1. The accident details are sketchy, vague or fuzzy.
    2. The employee has difficulty in recalling what happened.
    3. The employee changes the description of the accident when inconsistencies are pointed out.
    4. The nature of the injury is not consistent with the nature of the work done by the employee.
    5. The date, time and location of the accident is unknown or forgotten.
    6. The accident details are inconsistent with the employee job duties.
  3. More Than One Version of the Accident
    1. The employee gives completely different versions of the accident to the employer and the adjuster and to the doctor.
    2. The employee keeps modifying the story of what happened.
    3. The employee leaves out pertinent information.
    4. The accidents details vary from medical report to medical report.
  4. Witnesses
    1. There are no witnesses to the accident and the employee normally works around other people.
    2. There are witnesses but their version of the accident differs from the employee’s version of the accident.
    3. The accident occurs at a location away from where the employee would normally be working.
    4. The nature of the injury is unusual for the employee’s line of work.
    5. The employee’s co-workers express doubt that the accident occurred.
  5. Unhappy Employee
    1. The employee is disgruntled about some aspect of his/her job requirements.
    2. The employee was demoted or passed over for a promotion.
    3. The employee is on the list to be laid-off.
    4. The employee is on “positive improvement needed” status and is about to be terminated.
    5. The employee has had numerous prior employers.
    6. The “accident” occurs immediately prior to a strike, plant closing or the end of seasonal employment.
    7. The employee is a new hire.
  6. Monday Morning Claims
    1. The employee has an early Monday morning accident before the supervisor or other employees see him on the job (accident occurred off the job over the weekend).
  7. Injured Worker is Never at Home
    1. The injured employee is not at home during the normal workday.
    2. The employee is always sleeping when the adjuster calls or cannot be disturbed.
    3. The employee’s family member is vague or noncommittal about when you can reach the employee.
    4. The employee is “away” but quickly returns all calls from a cell phone, not the home phone.
    5. The employee uses the address of friends or family members and has no definite address or uses a Post Office box as an address.
    6. The spouse or other family members do not know about the workers comp injury.
  8. Financial Reasons
    1. The employee’s spouse is not working and drawing workers comp indemnity benefits, social security disability payments, welfare or unemployment insurance and the  employee wants the same life style.
    2. The employee inquires about a settlement early in the claim process.
    3. The employee was having prior financial problems.
    4. The employee is nearing retirement age.
    5. The employee files for benefits in a state other than where the accident occurred.
    6. In the states where an employee can collect workers comp indemnity benefits based on the amount of combined wages from both the workers comp employer and a second job employee.
    7. The failure to report other work income while drawing indemnity benefits.
    8. The employee took excessive time off just prior to the injury.
    9. The employee is in the middle of a divorce or other family disturbance.
    10. The social security number used by the employee belongs to someone else.
    11. The employee applies for Social Security benefits before the injury occurs.
    12. Income from workers comp, disability or other sources exceeds the employees prior after tax income.
  9. Medical Care
    1. All the injuries are subjective — pain without trauma, soft-tissue, emotional.
    2. The employee changes doctors frequently “doctor shopping” or changes doctors when released to return to work.
    3. The employee has excessive treatment for soft-tissue injuries.
    4. The medical treatment reported by the employee is different from the medical care stated in the medical reports.
    5. The nature of the medical treatment changes from one body part to another after the employee has been treating for a while.
    6. The employee misses medical appointments.
    7. The employee fails to show up for an independent medical examination.
    8. The employee refuses or delays diagnostic testing.
    9. Whiteouts, corrections, erasures on medical forms submitted by the employee.
    10. Exaggerated pain symptoms.
    11. The employee has a history of multiple workers comp claims and/or reporting subjective claims of injury.
    12. The injury relates to a preexisting medical condition or health problem.
    13. The medical reports provided by the employee appear to be second or third times photocopied.
    14. The length of recovery is excessive for the nature of the injury.
  10. Inconsistent Physical Ability
    1. The employee who has been off work for a while has calluses on hands or grime under the fingernails
    2. The medical reports reflect “muscular” “tanned” or other adjectives to reflect the employee is in good health.
    3. The employee is unable to work due to the injury but is seen painting his/her house, mowing the lawn, carrying heavy objects, etc.
    4. The employee has a high-risk hobby or does other physical exertion activities.
    5. Surveillance reflects physical activity greater than what is reflected in the medical reports.
    6. You learn the employee is working elsewhere while drawing indemnity benefits, especially where the work requirements exceed the capabilities reflected in the employee’s medical reports.
  11. Miscellaneous Red Flags
    1. The employee is unusually pushy to settle the workers comp claim
    2. The employee has extensive medical knowledge but no training in the medical field, or has extensive insurance terminology but no work experience in the insurance field.
    3. The employee was referred by a friend who name he does not know to a particular doctor or attorney.
    4. The employee is a part of a group of employees using the same doctor and the same attorney for their workers comp injuries.
    5. The attorney’s letter of representation is the same day of the injury or even dated before the “injury.”


Summary:

Remember, even if the employee’s claim has every one of these “red flag,” it still does not prove fraud. However, if the work claim has more than one of these “red flag,” you definitely want to bring in a fraud investigator to delve deeper into the claim. The more fraudulent claims you identify and deny, the lower your overall cost will be for workers compensation insurance.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

11 Ways to Manage Employer, Provider, and Employee Fraud in Workers’ Compensation

11 Ways to Manage Employer, Provider, and Employee Fraud in Workers’ Compensation Workers’ compensation fraud by workers gets the most publicity. But additional fraud is committed by staffing companies, professional employer organizations, medical and ancillary service providers, and brokers.

 

Sometimes multiple parties are involved, as in the case in California involving an alleged $40 million medical billing and kickback operation that involved more than two dozen physicians, pharmacists, and business owners.

 

Here are also some simple preventive measures that could potentially save companies mega dollars.

 

 

11 Ways to Manage Employer, Provider, and Employee Fraud

 

  1. Educate the workforce. Explain to employees that workers’ compensation fraud hurts the whole company and the loss of revenue may threaten upcoming pay raises or even their jobs. They also need to be informed that fraud is a serious crime with penalties. They should have a way to report suspected fraud anonymously.
  2. Teach the higher-ups. Managers and supervisors should understand that every reported injury should be treated as legitimate; however, they should also be taught to recognize some of the red flags that may indicate a fraudulent claim and have a procedure for reporting them. They also need to know how to take statements about an injury — from the worker and any witnesses.
  3. Work with the insurer. Report all suspicious claims immediately.
  4. Investigate ASAP. Make sure all reported injuries and illnesses are immediately and thoroughly investigated.
  5. Pay careful attention throughout the claims process to see if any information changes or doesn’t make sense about the injury. Also, note whether the injured employee was disgruntled prior to the injury.
  6. Drug tests. Require drug testing as a condition of employment. Drug users are statistically more likely to file fraudulent workers’ compensation claims than non-users.
  7. Implement a zero tolerance policy for fraud and take every action possible to expose and prosecute it.
  8. Make examples of cheaters. Whether it is a worker, provider or someone else involved in the process, all participants should see that you will take all steps necessary to fight fraud.
  9. Evidence Based Medicine (EBM). Make sure all treatment follows evidence based treatment guidelines and do not allow claims handlers to authorize treatment unless they have been trained in EBM
  10. Clean the provider network. Vet providers before allowing them into the medical network. Verify their physical location and try to determine if they own the clinic. Where possible, remove from your network any provider who has been accused of fraud.
  11. Involve workers. Regularly send out notices to injured workers with the dates and types of treatment that has been billed and ask them to report discrepancies.

 

 

Conclusion

 

Fraud costs companies billions of dollars. The money lost is passed on — in the form of higher premiums, increased prices for services, or lower money available to pay employees or expand the business.

 

Instead of turning a blind eye to the situation, organizations should adopt a zero-tolerance policy for fraud, educate all involved and enforce rules and regulations to expose the guilty parties and deter it from happening again.

 

See also: Be Aware of Employer, Provider, and Employee Fraud in Workers’ Compensation

 

 

Michael Stack - AmaxxAuthor Michael Stack, Principal, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Be Aware of Employer, Provider, and Employee Fraud in Workers’ Compensation

Be aware of Provider, Employer, and Employee Fraud in Workers' CompensationWorkers’ compensation fraud costs the insurance industry an estimated $7 billion per year. Not only is it employee fraud, but employer and provider fraud can be just as, or even more expensive. Recent stories out of California, for example, revealed an alleged $40 million medical billing and kickback operation that involved more than two dozen physicians, pharmacists, and business owners.

 

Often the expense and time involved makes organizations reluctant to pursue fraud charges against offending parties. But being aware of the many ways fraud is perpetuated is key to preventing it. There are also some simple preventive measures that could potentially save companies mega dollars.

 

 

Types of Fraud

 

Employer Fraud 

 

Companies may misrepresent the nature of the business, or misclassify the types of jobs, number of employees or payroll to get lower premiums. They may hide premium scams behind dummy corporations. Or they may not even have workers’ compensation insurance, creating an unfair playing field for their market.

 

Here are some red flags that may indicate fraud by an employer:

 

  • The address. If a post office box is used or the company is located in an area different from its mailing address.
  • Workers are paid in cash with no payroll stub. Or, paid with in-kind services, such as free rent.
  • Too many admins. The number of clerical employees is significantly higher than the number of non-clerical staff for the type of business.
  • The company has not been audited.
  • Multi-businesses. The company has several businesses operating from the same address.
  • The name. The company’s name is inconsistent with the type of work done.
  • Too many independents. There is an excessive number of independent contractor classifications. The employer may require new employees to fill out a 1099 instead of a W-2.
  • Low bids. Estimated prices for projects are substantially lower than the industry standard.

 

 

Provider Fraud

 

Bills for unnecessary or nonexistent medical services have garnered media attention in recent years. In some cases, physicians team up with attorneys to commit workers’ compensation fraud. They may exaggerate the severity of injuries that do occur and bill payers for what would be the ‘appropriate’ type and number of treatments for the conditions.

 

In some scams, clinics and attorneys hire people to lure workers who may or may not even be aware something untoward is happening. In other cases, a ‘clinic’ may exist only on paper, or is just an office with little equipment. Then there are medical providers who game both the workers’ compensation and group health systems by billing both for the same treatment.

 

There are some red flags that may indicate provider fraud is taking place.

 

  • Questionable bills. The payer is billed for a treatment the injured worker does not recall.
  • Weekend bills. Invoices are received for services performed on weekends or holidays.
  • Bad timing. Provider sends bills for treatments after the injured worker has gone to a different provider.
  • Reports too alike. Medical reports appear nearly identical for different patients and conditions.
  • Questionable treatment. The type and length of treatment is not in sync with the type and seriousness of the reported injury.
  • Reporting delays. There are unexplained lags in receiving requested records.
  • Attorney closeness. The provider works with the same lawyer repeatedly on questionable claims.

 

 

Worker Fraud

 

Reporting an injury on a Monday morning or after a holiday are two of the biggest red flags that indicate something may be amiss with a claim. Other indications that an injury may be fraudulent include the following:

  • The worker is new, seasonal or contractual and/or has a history of short-term employment.
  • Early attorney involvement. The worker has a lawyer as soon as the injury is reported.
  • Changing situation. The employee is faced with possible termination or layoff.
  • Funny facts. The description of the accident does not make sense with the reported injury.
  • No witnesses. The worker was alone when the injury occurred.
  • The worker is resentful.

 

 

Conclusion

 

Fraud costs companies billions of dollars. The money lost is passed on — in the form of higher premiums, increased prices for services, or lower money available to pay employees or expand the business.

 

See Also11 Ways to Manage Employer, Provider, and Employee Fraud in Workers’ Compensation

 

Michael Stack - AmaxxAuthor Michael Stack, Principal, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Avoid Ethical and Legal Pitfalls In Workers’ Comp Surveillance

Surveillance can be an effective tool to reduce costs in a workers’ compensation program.  While many service providers can show “injured” employees doing some crazy activities, it comes with a price and often does not produce the desired results.  Before hiring a service provider to engage in surveillance activities, claims handlers and their managers should understand how to use it in an effective manner.

 

 

Use of Surveillance in the Right Case

 

The sheer volume of workers’ compensation claims coupled with the cost of surveillance limits the amount of cases that can use this discovery tool.  A proactive claims management team must set parameters on when it is to be used and for the length of time to conduct surveillance on a suspect employee following a work injury.  Cases that are prime for using surveillance often include:

 

  • Cases where the claimant is likely to or has made a claim for permanent total disability cases. It is understood that these are the cases with the most exposure.  This can also include catastrophic work injuries and their resulting complex claims;

 

  • Instances where you receive a report of possible fraud or other information the employee may be engaging in suspicious activity that exceeds their stated limitations or abilities. Tips should obviously be carefully vetted.  This is especially the case where the tip is anonymous.  Always consider the source; and

 

  • Instances where the information being reported by the employee does not coincide with verifiable information.

 

 

Avoiding Ethical and Legal Pitfalls

 

There are ethical and legal implications to surveillance that may impact your cases.  It is important to act within the confines of the law and other regulations governing a workers’ compensation act.  This also applies to the service providers you hire.

 

Before hiring a service provider, it is important to do your homework.  Before hire them, it is important to verify the company has the requisite licenses or permits to engage in surveillance activities, if applicable.  It is also important to verify the people conducting work on your behalf know the law and follow them.  Checking with state agencies or business bureaus regarding complaints or infractions is a necessary step.

 

 

Practice Pointers and Effective Techniques

 

Given the costs of most surveillance activities, it is important for claims handlers to do their homework in advance.  They should know when the claimant will be in public and report that information to the service provider.  Key events can include:

 

  • When the employee has a doctor appointments or will be seen by an independent medical examiner;

 

  • Civic groups or organizations they belong to and when certain events they may attend will take place; and

 

  • Other activities they like to do outdoors such as exercising or even if they get the mail, go to the grocery store or visit a local coffee shop.

 

 

Selecting the Right Private Eye

 

Other tips for effective surveillance include:

 

  • Selecting a service provider with a track record or proven results; and

 

  • Authorizing a service provider to conduct surveillance activities for at least two to three days in a row. It is also important to allow the investigator to work for at least eight to 10 hours per day to maximize the chance of better results.

 

 

Conclusions

 

Surveillance can be an effective tool to resolve workers’ compensation claims in a timely manner.  It is costly so it is important to use this tool wisely and within the bounds of the law.

 

 

Author Michael Stack, Principal, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Live Stream WC Training: http://workerscompclub.com/livestreamtraining

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

How To Use Central Index Bureau To Stop Workers’ Comp Fraud

One of the best fraud fighting tools is provided by the Central Index Bureau report, a division of the Insurance Services Office. It is known as a Central Index Bureau report, a CIB report, an ISO, or as a claim index. The terminology varies from insurance company to insurance company. Regardless of the name, the CIB is a basic record of the insurance claims filed by an individual. What makes it effective is it is one of the very few areas where insurance companies share information.

 

Over 90 percent of all insurance companies are members of the ISO Central Index Bureau. Be sure your insurer is a member too. If not, the insurance company may be paying fraudulent claims which will have an adverse impact on workers compensation insurance premiums.

 

 

Information Reported to Central Database On Every Claim

 

When one of the employees files a workers compensation claim, the basic information about the claim and the claimant (employee) is obtained. The CIB report will contain the claimant’s name, social security number, maiden names, aliases or former names if known as well as address, former addresses if known, occupation, and date of birth. The CIB report will include the accident location, the date of the accident and the alleged injuries. It will identify the type of injury whether it is automobile bodily injury, general liability bodily injury, automobile medical payments or PIP, workers compensation, homeowner’s liability, medical malpractice, or a non-occupational disability claim.

 

The report will identify the medical provider by name and address as well as the lawyer’s name and address if the claimant is represented. The report will also contain the adjuster’s name, the name of the insurance company (or third party administrator), the insurance company’s address, and even the adjuster’s phone number. It identifies who the insured is for the insurance company and the insured’s address.

 

 

Protect Yourself From Paying For Prior Injuries

 

Why is all this information reported to the insurance services office on every insurance claim, including property claims? The reason is to protect the insurance company from paying for a prior injury. The claimant’s attorney is not going to tell the insurance adjuster that he has previously represented Mr. Bad Luck on his five previous injuries, two auto accidents, one slip and fall, and two workers compensation claims against five prior insurance companies.

 

 

Example: Employee Sustains Injury Every Deer Hunting Season

 

Take the example of Mr. Bad Luck. When the workers compensation adjuster interviewed Mr. Luck, he stated he was in excellent health, had never had a real injury before, but now he severely injures his back. The adjuster is alert. She electronically files the Central Index Bureau report and receives an electronic report that lists all the information on Mr. Bad Luck, even though his social security number was changed 3 times and his address four times. Suddenly the claimant has selective memory about previous injuries.

 

In one claim file audit of governmental pool‘s workers compensation claims, the auditor notices the adjuster has received 18 hits (prior injury claims) on one unfortunate employee. The employee was employed 17 years with the same city government during each of the 18 workers compensation injuries. Of the 18 injuries, 14 of the injuries occurred in the first two weeks of November in fourteen different years. It turns out the claimant is a deer hunter, and deer season is the last two weeks of November.

 

Fortunately the claimant always made a fairly quick recovery from various strains and sprains and was able to return to work on the first Monday of each December. The claimant is committing fraud by taking a two to four week leave of absence each year paid for by workers compensation. The employer knew this, and the adjuster knew it too. Why they did not prosecute the claimant for fraud is unknown.

 

 

Fraudulent Employees Often Switch Doctors

 

Please note that most adjusters reviewing a case like this will be aggressive about the claim when the claimant is alleging a new injury to a body part that was part of a prior injury claim.

 

Injured employees like Mr. Bad Luck above will often change doctors so that they can tell the doctor they have no previous injuries. The smart adjuster will share the information with the medical providers on the claimant’s prior injury by obtaining and providing the relevant medical records from the prior medical providers. Also, there is something about the claimant knowing the adjuster is aware of prior injury claims causing many claimants, even those represented by an attorney, to make a speedy recovery.

 

 

Central Index Bureau Submission as Standard Best Practice

 

Make sure the use of Central Index Bureau submissions is a standard part of best practices and is included in your account handling instructions.

 

 

For additional information on workers’ compensation cost containment best practices, register as a guest for our next live stream training.

 

Author Michael Stack, Principal, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Live Stream WC Training: http://workerscompclub.com/livestreamtraining

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Claims Investigations 101: What Every Claim Handler Needs to Know

Investigating a workers’ compensation claim is an important step in claims management, however it can easily be overlooked or poorly done.  Now is the time to review how you investigate claims regardless of experience.  Doing so can save you time and ensure your program is effective and efficient.

 

 

First Things First: Determine Coverage

 

A workers’ compensation insurance carrier is responsible for a claim if they are contracted to provide coverage for an employer/insured.  This is something that should be verified from the onset of claim in order to avoid confusion later on in the process.

 

Verifying coverage is especially important in workers’ compensation cases that involve industrial exposure issues such as asbestos or repetitive trauma occurring over a period of time.  In other instances, insured falling into high-risk categories have multiple insurance carriers.  Conducting a diligent investigation on this matter may result in allowing a carrier to deny liability or identify other parties who may be responsible.

 

Important data points to consider as part of this review include:

 

  • Listed dates of injury on a claim petition;
  • Policy exclusions based on an employee’s different locations of employment; and
  • Dates when a policy was in force along with the requisite policy number(s).

 

 

Witness Identification 

 

All successful claim handlers need to be great sleuths.  They are given a limited set of facts found on the initial claim forms.  It is then their duty to ask questions and locate answers.  Part of this includes locating people who have information concerning the employee and the work injury.  Important people to consider include:

 

  • Employer: This includes not only the employee’s supervisor, but also other people who have contact with the injured party and understand their work activities.  It is especially important in claims subject to dispute such as unexplained injuries or those that take place over the course of time.

 

  • Other Fact Witnesses: These include a broad category of people.  It can include people who witnessed the accident in question, work directly with or have regular contact with the employee.  It is important to determine what information these persons have and also evaluate their credibility.

 

  • Employee: Contact with the employee is also important.  Not only will you be in contact with the employee as part of the injury report, but also following the injury as the claim handler manages the case.  Part of this contact may include a recorded statement.  When engaging in this activity, be sure to understand applicable rules and how to preserve it for use in litigation.

 

  • Expert Witnesses: The increasing sophistication and due process safeguards in workers’ compensation cases is leading to the growing us of experts.  This obviously includes medical doctors to address issues such as causation, the mechanism of injury and reasonableness/necessity of care.  Other experts include vocational rehabilitation counselors and others who can comment on design and safety matters.

 

 

Other Important Components of the Investigation

 

Members of the claims management team are responsible for investigating the claim at its onset.  This includes a number of other important considerations:

 

  • Determining issues of compensability. This goes beyond a determination of coverage and includes the threshold issue of all workers’ compensation claims—whether the injury “arose out of” and was “in the course of” employment;

 

  • Handling the injury triage and making sure the employee receives the medical care and treatment they are entitled to receive;

 

  • Obtain appropriate authorizations. This includes a number of different documents such as medical, insurance, workers’ compensation records and Social Security verification to name a few.

 

 

Organization is Key

 

A well-organized claim file can provide efficiency to internal processes, demonstrate competence to claim managers and assist legal counsel should the matter be referred for defense.

 

 

Conclusions

 

Members of the claims management team play an important role in investigating workers’ compensation claims.  It is important to be organized and work newly received file materials in an effective and efficient manner.  It can also result in a cost savings to your program, which pays dividends to all involved.

 

 

For additional information on workers’ compensation cost containment best practices, register as a guest for our next live stream training.

 

Author Michael Stack, Principal, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Live Stream WC Training: http://workerscompclub.com/livestreamtraining

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

13 Indicators You Might Get Burned By Workers’ Comp Fraud

On November 18, 2015 the US Department of Justice in Eastern PA published a partial sentencing of Barbara Stanley who fraudulently obtained approximately $199,000 between July 2006 and December 2010.  After committing a crime for over 4 years, why did it take 5 more years until she would be tried for her crime and then another 3 months for sentencing?  Would the $199,000 ever be recovered?

 

Another case in California involving former San Quentin prison worker Hosea Morgan came to a head in September 2015 when he was convicted of making 2 fraudulent workers comp claims back in 2009.  The trial lasted almost a month and sentencing took place about a month after in November.  Adding the 2-month gap between conviction and sentencing to the 6-year gap between commission and trial is worrisome.  Morgan was sentenced to six months’ jail time, 500 hours community service, and 5 years’ felony probation.  Collecting the over $160,000 in restitution may never occur.

 

 

Exposure:

 

While these two cases made headlines and give a very clear picture of how much workers comp insurance fraud costs, there are countless other cases that do not make headlines nor are even reported or prosecuted.  In some cases, prosecuting costs more than the fraudulent claim itself, so those cases fall to the wayside and are dismissed with no retribution.  With the time it takes for fraud cases to come to conclusion, statutes of limitation may apply anyway making restitution collection impossible.

 

Unfortunately, even with reporting requirements in place, Special Investigative Units have no measure of keeping records for the results on how much workers comp fraud costs across the board.  The examples above give the illusion that authorities are tough on workers comp fraud, however they fall short of keeping within laws that provide incarceration, fines, penalties, and restitution.  Fraud cases are often handled poorly, and leniency tends to prevail in favor of the perpetrators who are either excused, plea bargained, or given light punishments.

 

There are, however, many reports online for restitution recoveries which reveal a very sad picture.  Per the California Department of Insurance statement on Workers’ Compensation Fraud:

“In fiscal year 2014-15, the district attorneys reported a total of 740 arrests, which also included the majority of Fraud Division arrests. During the same time frame, district attorneys prosecuted 1,409 cases with 1,654 suspects, resulting in 650 convictions. Restitution of $32,065,830 was ordered in connection with these convictions and $8,647,532 was collected during fiscal year 2014-15. The total chargeable fraud was $646,186,555 representing only a small portion of actual fraud since so many fraudulent activities remain to be identified or investigated.”

With 1409 prosecutions, only 650 convictions were made.  Over $32 million in restitution was ordered, but less than $7 million collected.  In relation to the amount stolen (over $646 million) the amount collected is just over 1% of the total.  That means $639 million could go uncollected.

 

 

 Properly Investigate Every Claim

 

Every claim should pass through a “bulletproof investigation procedure”.  This is designed to give you the proper information to make an accurate decision on the claim.  Further subrosa investigation should be used as an information gathering tool.  It is better to investigate EVERY claim, than to investigate no claims.

 

Here are 13 claimant behaviors that raise red flags:

 

  1. Injury takes longer to heal than medical guidelines specify.
  2. Injury is reported late, reported to a lawyer or the state commission before reported to the employer.
  3. Fails to attend weekly meetings.
  4. Is uncooperative; will not try a transitional duty job.
  5. Is not home during the workday when you phone.
  6. Only has a postal box, not a home address.
  7. Misses doctor appointments.
  8. Performs seasonal activities, hobbies, or work.
  9. Has moved out of town or out of state.
  10. Disputes average weekly wage due to additional income.
  11. Files for benefits in state other than principle location.
  12. Disputes information supplied by the employer.
  13. Submits repetitive medical reports indicating continuing, constant pain with conservative medical treatment.

 

 

For additional information on workers’ compensation cost containment best practices, register as a guest for our next live stream training.

 

Author Michael Stack, Principal, COMPClub, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder of COMPClub, an exclusive member training program on workers compensation cost containment best practices.

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Live Stream WC Training: http://workerscompclub.com/livestreamtraining.com

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

10 Ways To Prevent Workers’ Comp Fraud

More and more cases are being publicized for successful prosecution of workers compensation fraud.  The more prominent cases are usually publicized due to their large monetary values.  However, fraud can occur at any level with it all adding up to a significant loss in dollar amounts.  Additionally, there appear to be more findings against employers than employees which means success rates may be woefully low in actual employee values.

 

It’s almost impossible to find accurate records of defrauded amounts, cases reported, prosecutions, or convictions.  Few organizations actually keep record and there is no federal central bureau or governmental entity compiling data.  Restitution recovery amounts (when reported) are dismal.  Most recovery amounts are less than 1% of the amounts ordered.  Many employees are unable to repay and others simply ignore the order considering recovery punishment is seldom enforced.

 

 

Workers’ Comp Fraud Drives Up Premiums

 

Since recovery dollar amounts are low, insurance premiums are increased.  The lack of restitution translates into claims impact by increasing experience and retro modifications.  The employer always ends up paying more.  Self-insured parties must retain more money for claims.  State guaranty funds lose out and pass this on to employers left in the system.

 

It is in every employer’s best interest to prevent workers comp claims to help stop the whole potential fraud spiral from starting in the first place.  There are several things an employer should do in order to keep claims at bay and protect their business from fraud:

 

  1. Hire the right employees. Contact previous employers. Check the references listed on their application.  Complete a through pre-employment background investigation.
  2. Report all claims immediately. Make sure the injured employee is receiving proper treatment, benefits, and is compliant.
  3. Keep in contact with both the employee and the adjuster during the duration of the claim and push for a speedy recovery and return to work. Intercede if the injured employee has problems, and conversely cooperate with the adjuster if any suspicions arise.
  4. Investigate the claim. Visit the employee’s work environment/accident site.  Talk with witnesses.  Check all equipment involved.  Address and correct any and all safety issues in the workplace to prevent further injuries.
  5. Train all managers and supervisors in proper policy and procedure for handling injuries.
  6. Be alert for common fraudulent claim filing: Monday morning, pre-layoff, pre-vacation, pre-holiday, unwitnessed claims should all send up red flags.
  7. Be sure all employees fully understand the workings of the compensation act. Explain their rights, benefits, and obligations as well as your own as an employer.
  8. Gain knowledge of traumatic injury and occupational disease. Learn normal recovery times, medical treatments, and average fees.
  9. Pull loss runs and review periodically for accuracy, proper payment, disability compliance, and injuries casually related to the current claim. Contact the adjuster for clarification of any discrepancies or issues.
  10. Obtain interface with unions or employee organizations for input and cooperation in preparing policy and procedure.

 

Preventing workers comp fraud starts with preventing claims.  Gain more insight from insurance agents, loss control experts, lawyers, and adjusters.

 

 

For additional information on workers’ compensation cost containment best practices, register as a guest for our next live stream training.

 

Author Michael Stack, Principal, COMPClub, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder of COMPClub, an exclusive member training program on workers compensation cost containment best practices.

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Live Stream WC Training: http://workerscompclub.com/livestreamtraining.com

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

Photo credit: CA Dept of Insurance via VisualHunt.com / CC BY-NC-ND

 

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