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

 

3 Things To Watch For In Workers Comp Surveillance Footage

Many adjusters will use surveillance on cases to get a glimpse of what the claimant is up to on a day-to-day basis. Sometimes this can be helpful to the defense of the claim and other times it can yield no real pertinent results towards the actions on a case.

 

But you must know what to look for, and how to use these results to your advantage, to assist in the defense of a claim.

 

1) Look for consistency

One of the biggest things an adjuster will look for is consistent objective evidence of a disability. This can be in the way a person is walking, using a cane, or other assistive device, or are actually as disabled as claimed to the treating physician. It is almost a guarantee some surveillance will be initiated if a claimant is telling the adjuster he/she is stuck on the couch unable to move due to the injury, and it is more than a few weeks post-injury.

 

 

Keys to be looking for are in the overall way a person is moving. Just having some actual surveillance footage does not mean it works to the adjuster’s advantage. In fact, it can cement the fact that the person actually is in pain and limited in the overall daily activities which is good for the adjuster to know also. But, if there are some inconsistencies, it will contribute to the overall defense of a claim.

 

 

For example, a worker has a knee injury. Surveillance shows the employee walking normally without a limp. Then at the doctor’s or IME appointment, suddenly a noticeable limp appears. When brought to the claimant’s attention the claim of “having a good day that day” is made. Therefore, it is important to have multiple days of surveillance. If it can be shown that this person does not appear disabled or hindered in any way, except for when around a medical facility, then there may be a decent defense. Consistency is key. If holes are poked in this claimant’s statements of being “constantly disabled” and show with surveillance footage this is not so and the claimant is not being 100% truthful, the defense is greatly helped.

 

 
2) Are canes and crutches being used? Are they being used correctly? 

If a cane or crutches are prescribed, it is always good to see if the person is actually using them, and using them correctly. There are countless cases where a cane is prescribed and, if the person is actually using it, it is used incorrectly. Sometimes the cane is carried when walking. If an attempt is made to use the cane, it is used incorrectly in a way that isn’t helpful to the injury. Or, after leaving an IME appointment, the cane is tossed into back of the car and not used at any other time.

 

Note: Ask the IME doctor before the appointment to examine the cane or crutches for wear and tear. If the person is indeed using it all the time, the bottoms will be worn, and the handle may have some evidence of wear. If the medical device appears new and unused, and the worker is saying it is being constantly used, then there is some good ammunition to use in the defense, or at least as the basis for additional investigation.

 

 
3) Is the claimant breaking the medical restrictions on a regular basis?

Another great piece of evidence is getting footage of the injured party violating prescribed medical restrictions. This can come about in a variety of ways, from lifting and carrying heavier weights than allowed, to walking and running more than recommended. There could be evidence of other prescribed behavior such as golfing or hunting.

 

Try to show that these violations are happening on a regular basis, not only one time. Just because there is footage of the claimant walking to the mailbox when he reports being bedridden due to pain, does not mean there is a slam-dunk defense that warrants a denial of ongoing benefits. There is a need to establish the fact that this person is committing these violations on a regular basis, if not every day.

 

Be a supporter of getting regular surveillance on higher exposure cases, especially those that are post-surgical. This is especially true when there are other risk drivers supporting that the person is actually benefiting by being out of work. Some examples of these risk drivers include having newborn or infant children to save on daycare costs; subjective evidence of disability without the objective medical evidence support; and also with claimants who have a checkered past of workers comp and auto claims, with several employers and carriers.

 

 

Summary

Surveillance can be a very helpful asset to the defense of a workers compensation claim. But you have to look for key pieces of evidence and these pieces have to be shown to be occurring on a regular basis. Most Judges will say that if the claimant is proved a liar when it comes to the activity level, and you can poke holes in their claims to further disability, then there should be a favorable decision for denial or defense of a workers comp claim. This may not be the case all the time, but if some holes can be poked in the armor of the claimant, then this is closer to the right path of discovering the truth about if this person is as disabled as they claim.

 

 

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. Through these platforms he is in the trenches on a working together with clients to implement and define best practices, which allows him to continuously be at the forefront of innovation and thought leadership in workers’ compensation cost containment. Contact: mstack@reduceyourworkerscomp.com.

 

 

©2016 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.

 

Spotting Fraud to Reduce Work Comp Program Costs

The National Insurance Crime Bureau estimates that workers’ compensation fraud costs employers, insurers, third-party administrators and other interested stakeholders over $7 billion per year.  Fraud is not only illegal, but is an unnecessary tax on everyone.  This includes a negative impact on those workers’ compensation was designed to help—providing medical care and treatment, rehabilitation services and monetary benefits to the injured employee.  Spotting fraud is something that requires teamwork and coordination between all interested parties.

 

 

Identifying Fraud in Workers’ Compensation

 

Fraud is something that takes place every day.  It occur in all workplaces and is not limited to “the bad employee.”  Due to these considerations, employer representatives and members of the claim management team should be mindful of it anytime there is the report of a workplace injury.

 

Common red flags for workers’ compensation fraud include:

 

  • Unwitnessed or unexplained injuries and incidents;
  • Injuries that have a mechanism inconsistent with the alleged mechanism;
  • History of claims and litigation concerning personal injury and other workers’ compensation claims;
  • Injuries that coincide with work stoppages and strikes;
  • Financial strains and economic downturns;
  • Inconsistent injury reports;
  • Lack of cooperation by the employee and witnesses associated with an injury report; and
  • Employees new to the labor market;
  • Injuries that occur on Monday mornings or immediately following a longer holiday weekend.

 

There are several common these in the above scenarios.  This includes the opportunity for the employee to experience an injury outside of work and later report a work incident.  In other instances, there is a hidden incentive for the employee to claim an injury for gain.

 

 

Best Practices for Fighting Workers’ Compensation Fraud

 

The issue of fraud is something that should concern everyone within the workers’ compensation system.  This not only includes members of the claim management team and insurance industry, but workers themselves.  Creating a positive environment within the workplace can help stop fraud and encourage all interested parties to be vigilant.

 

Employers and their representatives must also take an active role.  There are many ways they can do to fight fraud.  This can include educating the workforce about how fraud impacts the bottom line of their company and all employees.  Other steps include:

 

  • Establish and enforce policies that punish those who engage in fraudulent activities;
  • Educate all employees about the workers’ compensation process. This includes easy access to information on state laws concerning work injury reporting and company policies on employee expectations when dealing with an injury or incident;
  • Coordinate with mangers and human resources professionals on the prompt investigation and documentation of all workplace injuries. This includes a review of all incidents for possible fraudulent activities; and
  • Ongoing communication with the injured worker and claims professionals following a work injury.

 

Members of the claims management team also play an important role in snuffing out fraud.  There are a number of things they can do to assist in fraud detection and prevention.  This includes:

 

  • Conducting a complete investigation on all claims. This includes the assessment of claims for warning signs of possible fraud;
  • Explore alternative methods of investigation in claims. An ethical review of all social media outlets is important; and
  • Use of surveillance in claims defense and fraud investigation. This method of discovery can be expensive as use of a private investigator should be over a period of days rather than a one-time occurrence.

 

 

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. Through these platforms he is in the trenches on a working together with clients to implement and define best practices, which allows him to continuously be at the forefront of innovation and thought leadership in workers’ compensation cost containment. Contact: mstack@reduceyourworkerscomp.com.

 

 

©2016 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.

 

What Goes on Facebook Impacts Your Work Comp Claim

Social media is popular with a majority of Americans.  The use of these outlets cover all spectrums of society with people willing to share with friends and strangers their professional accomplishments and personal events.  Facebook, Twitter, LinkedIn, Instagram—all are used by millions of Americans on a daily basis.  This treasure trove is a great source of investigation materials that should be utilized—and done so in an ethical manner when investigating a claim.

 

 

Social Media by the Numbers

 

Social media has its origins since the dawn of the Information Age.  This shifted into high gear in the 1990s with the rise of popular sites such as MySpace, Facebook and Twitter.  It is now something that impacts all aspects of American life as politicians, athletes and government organizations run accounts to project their message.

 

  • There are the same amount of videos watched online each month as there are stars in the galaxy.
  • Facebook now has over 900 million users, over double the number of dogs in the world.
  • Bloggers write a casual 2 million posts a day, enough for each American prisoner.
  • 294 billion emails are sent every day. That is an email for each cent people spent watching Avatar at the box office.
  • One million accounts are added to Twitter every day, the same number of pixels in a 1024×800 screen.

 

 

Why Should Claims Handlers Care About Social Media?

 

We are well into the Information Age.  More and more people are using social media.  Its usage is not limited to Millennials.  All generations are using some form of social media.

 

Social media is essentially a permanent, electronic paper trail.  As the popular saying goes, “What happens in Las Vegas stays on Facebook!”  Even if you delete a post or picture on most social media platforms, a permanent record is saved, which can be re-posted by friends, family and even strangers—regardless of security or privacy settings.  This creates a great opportunity for claim handlers to research a claimant’s actions.

 

  • Cost effective form of surveillance: Social media allows someone to obtain background information without them knowing.  It can also be used to check the honesty and integrity of a claimant’s sworn statements.
  • Discovery: Social media can be used to monitor post-injury activities or a claimant.  It can also verify the limitations or severity of their injury.
  • Legal ramifications: Use of social media is not limited to the claimant.  It can also verify the credibility of witnesses.  In other instances, it has been used to substantiate facts of case such as damages and liability issues.

 

 

Will You Be My Friend?

 

Defense attorneys and members of the claims management team are subject to ethical and legal considerations when using social media for claims investigation.

 

Ethical Considerations for Attorneys (ABA Model Rules of Professional Conduct):

 

  • RULE 1.6: Confidentiality of Information;
  • RULE 4.2: Communication with Person Represented by Counsel;
  • RULE 4.3: Dealing With Unrepresented Persons;
  • RULE 5.3: Responsibility for Non-Lawyer Assistants; and
  • RULE 8.4: Misconduct.

 

While a member of the claims management team is not subject to rules of conduct for attorneys, actions inconsistent to them can result in fines, sanctions and adverse judicial findings.  Issues that defense stakeholders should consider include:

 

  • Prohibitions on using third-person to contact witness to obtain information.
  • Prohibitions on contacting someone employed by a company that is represented by an attorney.

 

There are no rules or regulations that prohibit an attorney or claims hander from accessing public pages of another party’s social networking website.

 

 

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. Through these platforms he is in the trenches on a working together with clients to implement and define best practices, which allows him to continuously be at the forefront of innovation and thought leadership in workers’ compensation cost containment. Contact: mstack@reduceyourworkerscomp.com.

 

 

©2016 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.

 

Use Private Investigation to Prosecute Workers Compensation Fraud

Criminal Justice System Failure:

               

By reading adjudicated workers compensation fraud case histories, reviewing state statistics for investigations, prosecutions, restitutions, fines, and imprisonments it quickly becomes clear that the criminal justice system often falls short in successful fraud case resolution.  Some reasons for this failure are:

 

  1. Public Apathy
  2. Judicial Leniency and lack of Mandatory Sentences
  3. Lack of Funding for Investigation and Enforcement
  4. Weak Evidence
  5. Insufficient and Poorly Trained Staffs

 

 

Poor Documentation Allows for Adverse Interpretation

 

Because of the frequent failures in criminal-justice, just complying with mandatory reporting, may not get the desired conviction and restitution.  In most situations where a poor resolution occurs, it is poor documentation and prosecution that allows employees to profit and escape responsibility for fraud stealing.

 

  • A poorly investigated and documented record allows the claimant attorney to mitigate, limit, or have the case dismissed.

 

  • Investigations with unimpeachable witnesses, strong written and properly documented records will strongly limit the wiggle room for claimant attorneys and judicial interpretation.

 

  • Restitution that can be obtained through impounding employee assets, other sources of income, and/or current employment must be proven available. Such assets allow for prompt inducement for full recovery once the employee faces the loss of these tangibles.

 

  • The fraud committing employees must be proven guilty by the preponderance of evidence, as they are presumed innocent until then.

 

 

First Step:

 

When fraud is suspected the employer and claim unit management should have a confidential meeting to prepare a confidential plan of action for investigation, prosecution and restitution.

 

The process needs development of evidence that will stand up to defense challenges, cross examination and limit judicial interpretation or deviation.

 

To assist in the investigation, it is advisable to employ a private investigator (PI).  The PI needs a proven track record of factual development that has a high conviction success ratio.  It should be 85% to 90%.

 

  

Securing a Private Investigator and Points to Investigate:

 

Explore several Private Investigative Organizations. Develop a well-planned interview that covers the points discussed in this memo, and seek legal guidance for even more points to cover.

 

  • Always screen the applicants
  • Contact all references
  • Have the applicants produce a current list of successful as well as lost cases.

 

Research court and other public records for the cases that verify the applicant PI successes.

 

  • The PI needs to be discreet and know what can be legally obtained when interviewing fellow employees, neighbors, family members, doctors, employers, as well as securing public and private records. Any step that could be interpreted as entrapment must be avoided.  Actual direction by a criminally trained attorney is recommended.

 

  • A PI needs, or knows how, to gain access to criminal records, credit records, property records, employment records, medical records, bank records, motor vehicle records, investment records, insurance records, and educational records. These sources should develop the employees working capacities, assets available for restitution, prior adjudicated issues, and possible associates with knowledge of the employee’s wrong doings.

 

  • Proper employee identification must be established before giving carte blanche authority to proceed on full investigation. It will be necessary to confirm that the PI has the right person identified for name, address, and physical appearance. The best method is to have someone who knows the employee do the identity for the PI. If necessary, have the employee come to the adjuster office for some legitimist reason.

 

 

Launch the Case:

 

When the PI investigation is complete, a meeting with the adjusting unit management, the employer, the PI, and a criminal attorney should be held.  Review all the evidence and play devil’s advocate to challenge the results.  When all are in agreement that the evidence is sound, file the claim with the local prosecutor’s office with copies of all the documentation.

 

Request the prosecutor move the case swiftly to the judiciary for resolution.

 

 

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. Through these platforms he is in the trenches on a working together with clients to implement and define best practices, which allows him to continuously be at the forefront of innovation and thought leadership in workers’ compensation cost containment. Contact: mstack@reduceyourworkerscomp.com.

 

 

©2016 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 Effectively Use Video Surveillance For Workers Compensation Fraud

Claim units rely heavily on video or photographic evidence to prosecute fraud or mitigate workers compensation injury cases. Video surveillance is one of the best tools to use for these pursuits as a private investigator video or pictures can break a case open for disposition.

 

Unimpeachable video or photographic documentation can also be an appeal tool to overturn a poor judicial ruling. Strong video or photographic documentation with a proper presentation stands a 90% or better chance to obtain the desired claim outcome.

 

A strong video or photograph must have:

 

  1. Good technical quality.
  2. Proper Identification of the claimant.
  3. No evidence of the claimant’s entrapment.
  4. Proper verification as to date, time, and place when video was made.
  5. No evidence of tampering or altering the information on tapes, compact discs, or photographs.
  6. Proof video was obtained on public premises or on private premises with verified permission.
  7. Compliance with all legal requirements for filming.
  8. Sufficiently prolonged exposure to avoid good day/bad day challenge.
  9. No violations of any civil liberty, civil right, or constitutional right.
  10. Full documentation of the operator experiences and licenses.
  11. A reputable investigator, with high acceptance by the judiciary.
  12. Strong points that can be verified or addressed by witnesses, doctors, employer, or any party connected to the case.
  13. A review by an experience criminal prosecution attorney to be sure it can withstand the rigors of litigation.

 

Pitfalls:

 

Even if surveillance meets the above 14 points, there are still dangers that can allow a trial judge ruling

the tapes, compact discs and photographs inadmissible.

 

A few of these dangers are:

 

  1. Failure to have and prove continuity of possession and security for the original and all copies of the video surveillance.
  2. Showing the video to witnesses without the benefit for review and cross examination by claimant and/or counsel.
  3. Showing only the most damaging views to prospective witnesses.
  4. Having a medical review without accompanying medical reports or without a physical examination.
  5. Too much time lag between the filming and presentation to witnesses.
    1. Some judges have disallowed tapes shown more than one week between filming and presentation.
    2. This may be an option for appeal based on reasonability, still ,an overturn may not occur.
  6. The technician may make a poor witness. Test the witness using the moot court process.
  7. The tape or compact disc can only be viewed on certain playback equipment.
  8. People that may appear on the video are not identified if they are part of the activity.
    1. Example: Garden store employee helps the claimant in lifting a lawn mower onto a vehicle.
  9. Unaccounted for copies, misplaced copies, and who viewed the video.
  10. Improper equipment or set up for viewing in the court room.
  11. Unexplained stops and starts of the video. This includes fade in and out.
  12. Improper sequence and continuity for multiple videos.
  13. Need to know of and if it is necessary to disclose any prior or pre-existing videos or surveillances.
  14. The amount of video surveillance is great enough that it might be viewed as stalking or harassment.
  15. Failing to notify the claimant or counsel of the video existence and attempting to prevent disclosure.
  16. Documenting that all witnesses viewed the video without duress and gave their permission for usage.
    1. Preferably this should be done with dated, witnessed, and signed authorization.
  17. Witness testimony is not in keeping with the surveillance video.
  18. Any situation where the claimant can be embarrassed or publically humiliated because the activity is normally expected to be done in private.
    1. Example: Using the bathroom.

 

It is strongly recommended that a prosecution attorney be consulted for all potential pitfalls before video recording is begun. It is very important to remember; the fraudulent claimant is innocent until proven guilty.

 

 

 

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. Through these platforms he is in the trenches on a working together with clients to implement and define best practices, which allows him to continuously be at the forefront of innovation and thought leadership in workers’ compensation cost containment. Contact: mstack@reduceyourworkerscomp.com.

 

 

©2016 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.

 

 

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