This is a TEST, Can You Spot the Workers Comp Fraud Red Flags

 

Amaxx Risk Solutions has published several articles on combating fraud in workers’ compensation claims.  While we can tell our readers the importance of fighting fraudulent claims, and publish lists of red flag indicators of fraud, it is often difficult for the risk manager or workers’ compensation coordinator to separate the legitimate work comp claims from the bogus claims.

 

To assist you in recognizing the bogus claims, we are providing a sample claim, using the actual facts of a submitted workers’ compensation claim to see if you can recognize or spot ten red flags of a bogus claim (the name of the employee  has been altered to protect the guilty).

 

 

The Claim:

 

John Doe works in an auto repair shop as a mechanic.  Upon arriving early for work on Monday morning, Mr. Doe went into the auto parts store room to get a part for the car he was going to work on.  While leaving the storeroom and using both hands to carry the heavy auto part in a box, he tripped over another box on the floor.  In an effort to keep from falling, he grabbed a storage shelf, twisting and injuring his shoulder as he fell to the floor.  No one saw him fall in the parts storage room as the other employees were just arriving for work.

 

Mr. Doe immediately reported the claim to the shop manager and explained to the manager how he fell over the box on the floor he did not see because of the box he was carrying with both hands.  The shop manager offered to take Mr. Doe to the nearest industrial medicine clinic, but Mr. Doe instead chose to take himself to his “family doctor”.  The family doctor took Mr. Doe off work and did not indicate when he would be able to return to work.

 

When the shop manager called Mr. Doe the next morning to see how he was doing, Mr. Doe’s wife stated he was sleeping and could be disturbed.  The shop manager waited and called Mr. Doe again that afternoon.  Per the wife, Mr. Doe had stepped out.  The shop manager asked for Mr. Doe’s cell phone number, but instead of providing the phone number, the wife promised to have Mr. Doe call the manager.  Mr. Doe almost immediately called the manager back to relay what the family doctor had said. The shop manager recorded the cell phone number of Mr. Doe.  When the shop manager called Mr. Doe’s cell phone the following week to see what the family doctor had to say after the second medical appointment, the background noises did not sound like the noise you would hear in a person’s home.

 

A second mechanic in the shop after being overworked for three weeks due to the absence of Mr. Doe advised the shop manager that he had heard through a mutual friend that Mr. Doe had injured his shoulder while rock climbing the weekend before the reported injury.

 

The claim has numerous red flags that could be a tip-off for fraud.  They are:

 

  1.      Monday morning accident.  Almost twice as many accidents occur on Monday morning than any other morning of the week.  This is due to people claiming non-work related weekend injuries as work related in order to not lose their source of income.

 

  1.      Arriving early for work.  Unless the employee habitually arrives early for work, arrival for work early on the day of the alleged accident is an indicator the employee wanted to “have the accident” before other employees see he is injured.

 

  1.      Not seeing a hazard he had just saw moments earlier. If boxes on the floor were a common occurrence, the employee would be careful about watching where he was going.  If a box on the floor was unusual, the employee would have made a mental note to avoid it.

 

  1.     The mechanism of injury does not make sense.  If the employee was using both hands to carry a heavy box, how did he have a hand free to grab the storage shelf?

 

  1.      The accident was not witnessed.  Bogus injury claims almost always occur where no one else will see the accident happen.

 

  1.      The selection of a particular doctor over a more qualified doctor who specializes in treating injured employees.  This is normally a sign the employee wants a doctor who will accommodate his desire to be off work.

 

  1.      A doctor who does not address return to work.  This is normally because the injured employee tells the doctor that he does not feel he will be able to meet his job requirements.

 

  1.      The employee being asleep when he would normally be awake.  Unless the doctor has prescribed some very strong pain killers, the employee should be available to talk to the employer.

 

  1.      The employee not being at home.  Occasionally not home is understandable, repeatedly not home/not available is usually a sign the employee has something better to do than being at home, i.e., possibly another job, either short-term or long-term.  Background noises that don’t sound like a spouse or a television often are an indicator the employee is working elsewhere.

 

  1. Tips from co-workers.  This is probably the strongest evidence of fraud and should be investigated thoroughly.

 

None of these red flags by themselves are proof of fraud, nor is a combination of two red flags.  However, the more red flags the employer sees on a claim, the higher the probability the claim is fraudulent.  If you see multiple reasons to question the validity of a claim, the insurance adjuster and the special investigative unit of the insurer should be notified as to why you believe the claim to be questionable.

 

 

Author Michael B. Stack, CPA, Director of Operations, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com.

Contact: mstack@reduceyourworkerscomp.com.

 

©2012 Amaxx Risk Solutions, Inc. 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 about workers comp issues.

7 Steps to Reduce Workers Comp Fraud

When an employee commits workers compensation insurance fraud, they are stealing direct from the employer.  While the insurance carrier or the self-insurance program may write the check, the cost of workers comp fraud comes right out of the employer’s pocket.  The fraudulent workers comp claim is included in the calculation of the insurance premium, the same as legitimate workers comp injuries.

 
Per the Coalition against Insurance Fraud, bogus claims cost employers $6 billion a year.  It is estimated that nearly 25% of the workers comp claims contain some element of fraud, whether it is the outright bogus claim or the employee who stays off work when he knows he could be working light duty. [WCx]
 
 
The employer should know the indicators of fraud, often referred to as the red flags.  Something unusual about the claim does not indicate fraud, but unusual things can point to the possibility of fraud.  When any of the following exist, consider a fraud investigation:
 
 
  • Late reporting of the injury:  real injuries get reported quickly.

 

  • Accident details that do not fit: the accident details are sketchy or vague, the employee has difficulty describing what happened, and the employee gives more than one version of what happened.

 

  • Witnesses:  there are no witnesses, especially when the employee normally works around other employees, or the witnesses’ version differs from the employee’s version of the accident.

 

  • Disgruntled employee:  the employee has previous express dissatisfaction with supervision or management, the employee did not get a promotion she wanted, the employee is on "positive improvement needed" status, the union has announced an impending strike; the factory is closing, etc.

 

  • Medical care: the injuries are subjective, i.e., low back pain, complaints of pain out of proportion to diagnostic findings, the employee changes doctors, the employee attempts to add additional body parts to the medical treatment.

 

  • Monday morning claims: the injury, usually with no witnesses, occurs early Monday morning shortly after the employee gets to work (the injury occurred over the weekend while the employee was away from work). [WCx]

 

 Unfortunately, when it comes to workers comp fraud, some employers take the defeated approach with “there is nothing we can do about it” line of thinking.  There are many approaches the employer can follow to reduce and/or eliminate fraud including:

 
 

1.  Having an established practice of investigating every workers comp claim.   If the employees know it will not be easy to commit fraud, they are less likely to try it. 

2.  A required transitional duty program that all employees know about will prevent the employee who wants to “take a vacation on comp” or to work another job while collecting workers comp benefits.

3.  Make sure all employees are aware that workers comp fraud is a crime and you strongly prosecute insurance fraud.

4.  Make fraud beneficial to the employee who reports it.  Have a published policy of paying a reward to the employee who provides information leading to the conviction of the criminal committing the fraud.

5.  Report ALL questionable claims to the Special Investigative Unit of the insurer or third party administrator.

6.  Have a strong safety program which will remove many of the scenarios the fraud prone employee can use to create a bogus claim.

7.  Avoid hiring people of questionable ethics.  Complete a thorough background check including criminal history and credit score (the lower the credit score, the higher the probability of a questionable workers comp claim).  If you do not have the time to do an in-depth background check, consider a member of the National Association of Professional Background Screeners, www.napbs.com.

 

 
Fraud should never be tolerated and should be fought any time it occurs.  As the employer, you should learn as much as possible about defeating workers comp insurance fraud.  Our 2012 Manage Your Workers Compensation: Reduce Costs 20% to 50% has an entire chapter on Fighting Fraud and Abuse.  It will show you many additional steps you can take as the employer to combat workers compensation fraud.
 

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Manage Your Workers Compensation: Reduce Costs 20% to 50% www.WCManual.com. Contact: RShafer@ReduceYourWorkersComp.com.
 

Our WORKERS COMP BOOK:  www.WCManual.com
WORK COMP CALCULATOR:  www.LowerWC.com/calculator.php

 
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
 
© 2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact

Is There Such a Thing as Only a Little Fraud

From time to time employers are confronted with the dilemma of how to deal with a small, but fraudulent, workers compensation claim. The employer knows the claim is fraudulent. However the cost of contesting the claim, and the extra time that will be required of the risk manager or workers comp coordinator, makes it seem like a good idea to let the employee ‘get away with it’. Why spend $5,000 in legal fees on the workers comp claim, complete the investigation needed to defeat the claim, and risk a wrongful discharge claim, when the employee will be back at work in a couple of weeks?

 
 
If the ‘little fraud” is not contested, there will undoubtedly be more little frauds. And as the word spreads that the employer is an easy mark, employees will push the envelope with larger fraudulent claims. When the employer lets the minor, clearly fraudulent claim run its course, the other employees notice what is occurring. [WCx]
 
 
The workplace grapevine quickly shares the news that ‘good ole Joe’ is going to claim he hurt his back, so he can take his family on that extended vacation that he has promised them for years. When everyone in the shop knows that he is going to make a fraudulent workers comp claim, they all watch to see what develops. ‘Good ole Joe’s’ bogus workers comp claim is often the subject of discussion at lunch, or during breaks. The employees will wait and see if he gets away with it. When Joe stays off work for a month then returns to the job like nothing has happened, the dishonest employees may also plan  “vacation on comp.”
 
 
The honest employees will continue to be honest, regardless of whether or not some co-workers get away with fraud.  But, the favorable impression of the employer is diminished, as the employer should have done more to prevent the fraud. Plus, when the fraudulent employee gets light duty or a cushy job, while the honest employees have to pick up the fraudulent employee’s heavier tasks, resentment builds.  This is not just towards  bogus ‘good ole Joe’, but also at the employer for giving the honest employees an unfair share of the work. Morale declines among all the honest and good employees.
 
 
While management may be frustrated by a bogus workers comp claim, when nothing is done about it, the employees do not perceive it that way. The impression the employees will get is that management does not care about a little time off on comp. And, most employees think that workers' compensation is paid for by the insurance company, not their employer. Besides it is the big, rich insurance company that is paying for it, not the employer (in the mind of the dishonest employee). Hence, since management will turn a blind eye to the fraud, the discontents, the gripers, the poor performers and the troublemakers all see this as a turn to get something for nothing.  The number of bogus claims then increases.
 
 
Many of the bogus claims will run a course in a month or two. However, for some employees the bogus claim is the solution to a long-term ailment. The pre-existing slip disc in the neck, or the torn knee ligament, can now be paid for by workers compensation. The employees saw that management took no action on ‘good ole Joe’s” claim; therefore, management does not care if the employees “fudge” a little bit, and claim the medical problem is related to work, when it is not.
 
 
The employee who turns in the bogus claim for a major medical problem does not think about the cost differential between his workers comp claim and ‘good ole Joe’ who just took some paid time off.  Also, the bogus employee may be a little concerned that he will get caught in the fraud. The employee committing fraud is much more likely than the honest employee with a legitimate injury to hide behind the curtain of protection of a personal injury lawyer (who does not care if the workers compensation claim is bogus, as long as he gets his fee).
 
 
The culture of fraud will grow from the minor claims to major claims, plus the number of bogus workers compensation claims will increase significantly, all because management allowed “a little fraud” to save the cost of fighting it. [WCx]
 
 
The employer can prevent the bogus / fraudulent claims from spiraling out of control. The employees should know that every workers compensation claim is investigated thoroughly, and all questionable claims are vigorously defended. In addition, any proven case of fraud should be turned over to local law enforcement for prosecution. Every employee should know that the employer pays for all workers comp claims through the insurance premium, and that bogus claims are theft from the company. A culture where every legitimate claim gets prompt medical care and every questionable claim is contested will go a long ways toward preventing the ‘it is only a little fraud’ mentality. 
 
 
Please see our Workers Comp Fraud Control resource for more information in our WC Employer Resource Center.


 

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact: RShafer@ReduceYourWorkersComp.com.

 


WORKERS COMP MANAGEMENT MANUAL:  www.WCManual.com

MODIFIED DUTY CALCULATOR:  www.LowerWC.com/transitional-duty-cost-calculator.php

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.

 

©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact us at: Info@ReduceYourWorkersComp.com.

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Quick Tips: Surveillance Cameras Can Substantiate An Incident

A lot of employers use in-house video cameras and surveillance devices to monitor employees and customers. This is not only for workers compensation issues but also liability issues. Customer injuries are another facet of risk management. It is important to properly document, record, and use surveillance for even minor injuries. They can also deter criminal activity.

 
 
Installing Surveillance Cameras in the Work Environment
Employers install surveillance cameras not to “spy” on workers, but to be able to record events when no witnesses are present. Again, it is about legitimizing, substantiating the claim and the injury.  Take for instance a worker who reported being on the ground for 20 minutes before being able to get up and seek help after an injury, but what evidence is there to support this report with no witnesses? Surveillance cameras are the silent witness. Finding even one fraudulent workers compensation claim can save a lot of money for the employer. (WCxKit)
 
 
If workers are aware of being recorded, surveillance lessens horseplay in the workplace. Many workers comp claims result from horseplay. In such case, the claimant lied to the doctor about a pallet falling, when the worker was actually injured while running and flipping into a rolling cart while coworkers stood by and laughed.
 
 
This injury required surgery. Since cameras caught the worker behaving inappropriately, the claim was disproved 100%. The employee deceived the boss, doctors, and the adjuster about how the injury occurred. In this case, it changed the compensability completely. (WCxKit)
 
 
In the end, an employer finds it very beneficial to have cameras installed especially when insurance premiums are also reduced.
 

Author Rebecca Shafer
, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing, publishing, pharmaceuticals, retail, hospitality, and manufacturing. See www.LowerWC.com for more information. Contact: RShafer@ReduceYourWorkersComp.com.
 

2012 WORKERS COMP BOOK:  www.WCManual.com
 
 

 WORK COMP CALCULATOR:  www.LowerWC.com/calculator.php

 
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
 
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.

Help I am So Injured I Can Only Work Two Jobs

An Australian dock worker was found guilty of workers compensation fraud after a WorkCover investigation found that he had lied about working up to 50 hours a week as a security guard while being too injured to carry out his first job, according to a report from Work Cover Authority of New South Wales.
 
 
Ronald Perrine, a 46-year-old store man from Welby, west of Wollongong, received a suspended jail sentence, was ordered to repay almost $20,000, and was fined $1500. Perrine alleged that in September 2000 his left wrist had become too damaged to continue working after repeatedly driving a forklift. His employer accepted his claims and Perrine began receiving weekly compensation totaling $19,059.05 from August 2004 to April 2007. During this time, Perrine took on a second job as a security guard and was receiving cash payments in envelopes. (WCxKit)
 
 
The WorkCover investigation found Perrine had been dishonest on numerous occasions in deliberately misleading representatives acting to protect the Workers Compensation Scheme. Perrine said he was working around 12-16 hours a week when he was in fact working around 50 hours and not informing WorkCover. His pay slips and  group certificate did not reflect the true income he was receiving from his second job. These had the effect of pushing the compensation payments he was receiving through the Workers Compensation Fund.
 
 
WorkCover staff requested to interview Perrine during the investigation however the requests were declined. Perrine was prosecuted for offenses under the Crimes Act 1900.
 
 
The Court sentenced him to an eight month jail term, fully-suspended, and a 6-month good behavior bond. (WCxKit)
 
 
In addition, he was ordered to repay the $19,059.05 he had fraudulently received in compensation, fined him $1,500, and ordered to pay WorkCover’s legal costs.

Author Robert Elliott, executive vice president, Amaxx Risk Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. See www.LowerWC.com for more information. Contact: Info@ReduceYourWorkersComp.com.

REDUCE WORK COMP 20-50% BOOK:  www.WCManual.com
 
 

 

WORK COMP CALCULATOR:  www.LowerWC.com/calculator.php
 
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
 
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.

Four in Medical Field Indicted in Alleged Workers Comp Overbilling Scheme

The Orange County (California) District Attorney’s Office (OCDA) and California Department of Insurance (CDI) are reporting the facts surrounding the indictment of a radiologist, a neurologist, and two co-defendants for a $17 million workers compensation insurance overbilling scheme. The indictments against the four defendants were issued May 11, 2011, and the grand jury transcripts were unsealed June 13, 2011.
 
Eliminating fraud and abuse is always a very hot topic in reducing workers compensation costs. In today’s climate of reduced medical compensation the temptation to manipulate the billing process is very strong thus, practitioners fall into these abuses. Why do they do it? Because it is easy.
 
 
In January 2008, a pair of BSMC employees filed a complaint with the California Department of Health Services regarding unsanitary conditions and lack of proper patient care at the facility. This complaint was forwarded to Don Marshall, Vice President of the National Anti-Fraud Program for Zenith Insurance Company (Zenith).
 
 
Based on the complaint, Zenith began a fraud investigation into BSMC and API and contacted CDI in July 2008. Zenith forwarded evidence showing BSMC was not conducting an appropriate medical business and was overbilling for procedures that had no medical value or necessity.
 
 
CDI began investigating in July 2008 and turned over the case to the OCDA in June 2010. Following an extensive, lengthy joint investigation, the OCDA presented the case to the Orange County Grand Jury in May 2011. All four defendants were indicted May 11, 2011.
 
 
In this case, the injured employees were primarily blue-collar workers in industries such as manufacturing, construction, or other fields involving manual labor. The majority, it turns out is Hispanic, many Spanish-speaking. All of these workers were referred by chiropractors or attorneys to API or BSMC.
 
 
In order to streamline the case, the OCDA chose to limit the charges to 600 patients and select time periods. In all of these cases (below), the injuries to the worker could have been treated and fully resolved for under $5,000. The defendants are accused of fraudulently billing over $15,000 per patient.
 
According to the OCDA, the alleged defendants include:
 
 
Dr. Sim Carlisle Hoffman, 59, Newport Beach, a radiologist and owner of Advanced Professional Imaging (API), Advanced Management Services (AMS), and Better Sleeping Medical Center (BSMC) in Buena Park. He is charged with 592 felony counts of insurance fraud for BSMC, 291 felony counts of insurance fraud for API, and one felony count of aiding and abetting the unauthorized practice of medicine. If convicted, he faces a sentence ranging from two to 892 years and eight months in state prison.
 
Hoffman is accused of opening API as a facility to perform Magnetic Resonance Imaging. In order to generate extra billing, he is accused of expanding to perform nerve testing called Electromyography (EMG), in which muscle cells are analyzed for neurological activity. This is a non-invasive, out-patient procedure usually billed at approximately $35 per test.
 
 
Between June 2007 and March 2009, Hoffman is accused of conducting an EMG test on patients and overstating the nature of the test. Instead of billing for the performed EMG, he is accused of fraudulently billing insurance companies for Single Fiber EMGs as many as 20 times per patient, despite this test never being rendered by Hoffman or any physician employed at API on any patient. The defendant is accused of inflating insurance billings from what should legitimately have been under $2,000 to approximately $10,000 per patient.
 
 
After receiving payment from the insurance companies on the fraudulent bills, Hoffman is accused of re-submitting the same bill as a lien against the patient’s workers compensation insurance case in order to collect additional payment.
 
 
Hoffman is accused of fraudulently billing seven insurance companies including Berkshire Hathaway Homestate Companies, California State Compensation Insurance Fund, Commercial Property and Casualty Insurance, Fireman’s Fund Insurance Company, Liberty Mutual, Travelers Insurance, and Zenith.
 
 
In all, he is accused of billing insurance companies over $9 million in Single Fiber EMGs alone in the API scheme.
 
 
Hoffman is accused of opening BSMC in 2007 and failing to hire a certified technician or a qualified physician to supervise the sleep center, as required by law. A “sleep center” is a medical facility specializing in the diagnosis and treatment of patients suffering from sleep disorders.
 
 
Between November 2007 and November 2008, Hoffman is accused of filing insurance claims for 1,247 patients. He is accused of billing for epilepsy and seizure testing for all 1,247 patients without ever conducting these tests on a single patient.
 
 
Hoffman is accused of paying Heric $100 per patient to write a report on the patient’s condition (see below). Despite all of the 1,247 “reports” indicating the patient needed medical treatment, none of the patients ever received medical treatment or care from BSMC.
 

The investigation determined that two patients who underwent “testing” suffered severe sleep disorders and were in dire need of medical attention. These disorders were neither diagnosed nor treated at BSMC. During the grand jury proceedings, medical experts opined that the service rendered to patients at BSMC was a “disgrace” and had “no medical value.”
 
 
Hoffman is accused of operating this facility as a “medical mill” for the sole purpose of insurance billing and without providing any legitimate treatment to any of his patients. For all 1,247 patients, Hoffman is accused of billing exactly $6,728 to the insurance company.
 
 
Hoffman is accused of fraudulently billing the City of Los Angeles and 19 insurance companies including Berkshire Hathaway Homestate Companies, California State Compensation Insurance Fund, Chartis division of American International Group, CNA Commercial Property and Casualty Insurance, Crum & Forster Holdings Corporation, Employers Insurance, FirstComp Insurance, Fireman’s Fund Insurance Company, The Hartford Financial Services Group, Liberty Mutual, Matrix Direct Insurance Services, Republic Indemnity Company of America, SeaBright Insurance Company, Sentry Insurance, Specialty Risk Services, Travelers Insurance, Southern California Risk Management Associates (now York Insurance Services Group – California), Zenith, and Zurich Financial Services Group.
 
 
By November 2008, he is accused of billing insurance companies over $8.4 million in the BSMC scheme.
 
 
Beverly Jane Mitchell, 60, Westlake Village, is the administrator in charge of insurance billing for all of Hoffman’s businesses. She faces the same charges and maximum sentence as Hoffman.
 
 
Mitchell was hired by Hoffman following his 2001 board discipline. She was hired to manage all billing and administration for his businesses through AMS as part of his rehabilitation. Mitchell is accused of knowing Hoffman was disciplined by the Board and helping him to continue his fraudulent scheme. She is accused of directly supervising all fraudulent billing from API and BSMC to the insurance companies knowing the procedures were overstated or never performed. Mitchell is also accused of “unbundling,” or breaking up procedures and billing them separately instead of together with the intention of fraudulently collecting higher payments.
 
 
Dr. Thomas Michael Heric, 74, Malibu, is a neurologist who worked for Hoffman at BSMC. He is charged with 296 counts of insurance fraud and one felony count of aiding and abetting the unauthorized practice of medicine. If convicted, he faces a sentence ranging from two years up to 315 years and eight months in state prison.
 
 
Heric is a neurologist and is associated with Hoffman from several years ago. He was convicted in 2008 of felony federal fraud, for which his medical license was suspended by the Board for 60 days. In exchange for $100 per patient, Heric is accused of writing “reports” on all 1,247 sleep center patients evaluating the data generated during their sleep study. He is accused of finding in his “reports” that all 1,247 patients were “disabled” by using a formula entirely of his own invention not recognized in the medical community to reach his conclusions. None of these patients ever received any treatment for their supposed disability. All of his reports on the 1,247 patients are almost identical. Heric’s reports were used to lend legitimacy to the fraudulent insurance bills for each patient.
 
 
Louis Umberto Santillan, 44, Chino Hills, worked for Hoffman in billing collections for API. He is charged with 141 felony counts of insurance fraud and faces a sentence ranging from two years up to 150 years in state prison if convicted. (WCxKit)
 
 
Santillan is accused of supervising the collections department for Hoffman’s businesses and collecting payment on the medical bills knowing they were inflated and fraudulent. He is accused of receiving approximately $800,000 in commission on all of the fraudulent monies collected for Hoffman between 2006 and 2007.
 

Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. See www.LowerWC.com for more information. Contact: Info@ReduceYourWorkersComp.com or 860-553-6604.

 
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
 
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.

California Fights Comp Fraud with Grants

California Insurance Commissioner Dave Jones announced $32 million in Workers Compensation Insurance Fraud grants statewide to aid district attorneys in investigation and prosecution efforts, according to agency.
 
 
"Workers compensation insurance fraud is a costly problem in California," Jones said. "As the economy struggles to recover, fraud of this type creates an additional strain on the system. We must protect those injured workers who need care and compensation so they can return to work in a timely manner and bring to justice those who seek to cheat the system."(WCxKit)
 
 
The grant funding is the result of assessments on California employers that are determined annually by the Fraud Assessment Commission. Counties submit applications to the department, which convenes the Workers Compensation Grant Review Panel that then reviews and makes grant funding recommendations based on multiple criteria including previous-year performance.
 
 
The panel then forwards a recommendation to the insurance commissioner who either accepts or amends the panel's recommendation. Once completed, the commissioner's recommendation is submitted to the Fraud Assessment Commission for their advice and consent.
 
 
The Fraud Assessment Commission agreed with the commissioner's recommendations in their meeting last month, ratifying the grant allocations.(WCxKit)
 
 
A List of California WC Fraud-Fighting Funding:

By county

Dollars

By county

Dollars

Alameda

$1,400,000

Sacramento

$   900,000

Amador

$   431,569

San Bernardino

$2,321,853

Butte

$   200,000

San Diego

$4,861,584

Contra Costa

$   575,000

San Francisco

$4,739,200

El Dorado

$   330,000

San Joaquin

$   608,808

Fresno

$1,240,529

San Luis Obispo

$     65,000

Humboldt

$   175,000

San Mateo

$   650,000

Imperial

$     51,200

Santa Barbara

$   290,000

Kerns

$   760,000

Santa Clara

$2,321,853

King

$   275,297

Santa Cruz

$   120,000

Los Angeles

$5,700,000

Shasta

$   175,000

Marin

$   238,000

Siskiyou

$     37,428

Merced

$   140,000

Solano

$   175,000

Monterey

$   520,000

Sonoma

$    98,735

Napa

$   119,000

Tehama

$    88,950

Orange

$3,500,000

Tulare

$   362,221

Plumas

$       6,000

Ventura

$   735,913

Riverside

$1,463,732

Yolo

$   245,960

 

 

TOTAL

$31,774,392

 
Author Robert Elliott, executive vice president, Amaxx Risk Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. See www.LowerWC.com for more information. Contact: Info@ReduceYourWorkersComp.com.

 
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
 
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.

Employer Assistance Program Helps Employers Avoid Delinquency and Fight Fraud

We don't hear about EAP's much anymore in the work comp industry, so I thought you would like to read about new Employer Assistance Program offered by Washington State’s Department of Labor & Industries (L&I) helps employers avoid becoming delinquent on their workers compensation accounts.
The program and new tools to fight fraud were announced at a recent press conference held by Gov. Chris Gregoire and L&I Director Judy Schurke at the L&I Seattle office. More than 4,800 Washington state businesses have been assisted by the new program.
“Like families across Washington, businesses have seen incomes drop but still have bills to pay,” Gregoire said. “When it comes to workers compensation, businesses face another challenge: they are undercut by an underground economy in which some businesses operate without legally required protections for their workers, and try to succeed on the backs of honest businesses that follow the law.” (WCxKit)
To help businesses during this difficult economic period, L&I launched the Employer Assistance Program last year, allowing struggling businesses to extend payment of their workers comp premiums to manage their cash flow more effectively if they find themselves in trouble.
The program was created after L&I discovered more than half of the 13,000 employers delinquent with their workers comp accounts had previously held stellar records making their payments. Initially scheduled to last nine months, L&I announced they will continue the Employer Assistance Program due to the slow pace of the economic recovery.
“I want to tell employers if you have a good payment history with L&I but you’re having trouble paying your workers comp premiums now, we want you to contact us and let us help you,” Schurke said. “We can set up a payment plan and, in many cases, waive late penalties and interest.”
The press conference was also an opportunity to unveil new fraud-fighting tools, looking for employers who don't pay their premiums, medical providers who overbill and injured workers who file fraudulent claims. Cheating the system is not a victimless crime, but one hurting workers, employers and taxpayers by driving up premium costs for everyone.
The new programs include Detecting Unregistered Employers, or DUE, scheduled to begin in Fall 2010. The program uses software to flag businesses who fail to register with the state and pay into the workers comp system. (WCxKit)
"Our return on investment for fraud prevention has been eight to one – for every one dollar we spend we bring back eight dollars to the Workers Compensation Trust Fund,” Schurke said. “Our goal is to make sure Washington is the least fraud-friendly state in the nation.”
Author Robert Elliott,  executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing.  Contact: Info@ReduceYourWorkersComp.com  or 860-553-6604.  
FREE IQ Test:   http://www.workerscompkit.com/intro/
WC Calculator:  http://www.LowerWC.com/calculator.php
TD Calculator:  http://www.LowerWC.com/transitional-duty-cost-calculator.php 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' comp issues.
  
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact
 Info@ReduceYourWorkersComp.com 

New Ways a Private Eye Can Reduce Fraudulent and Frivolous Claims

FACT: Your employees will file Workers Compensation claims . . .
FACT: Not all of them will be legitimate.
Patrick Barger, President of Arcane Invesigations, LLC, tells us that unfortunately, many try to beat the system by filing fraudulent or frivolous claims. The National Insurance Crime Bureau estimates Workers Compensation claim fraud costs the industry $5 billion per year. This occurs when your employees falsely claim to injure themselves at work; exaggerate minor work injuries to receive benefits; and/or take sick leave from your company while working another job. You become the victim. THE BOTTOM LINE: It costs you a lot of money!
Private Detective Agencies Can Verify ALL Claims
Hiring a reputable, experienced and credentialed Private Detective Agency for workers compensation claim verification can go a long way to deter would-be fraudsters. Private investigative services are routinely used by employers, claims adjusters and third-party administrators to confirm the legitimacy of certain claims where fraud is already suspected. But when investigators are hired after a claim has been filed and much time has elapsed, it costs you more money in surveillance fees. In these cases, insurance companies (and ultimately, the policyholder) and self-insurers pay for the “pound of cure.” (WCxKit)
Consider this potential solution to reducing surveillance fees and creating a blanket of deterrence to throw over those people waiting to cash-in on your workers compensation insurance: hire a Private Detective Agency to take the initial report of ALL workers compensation claims. In most cases, HR personnel take the initial report of a workplace injury. Likewise in most cases, HR personnel are not trained fact-finders or interview specialists. Good Private Investigators are subtle, know the right questions to ask and are experienced in determining and documenting the facts you need to know. When suspected fraud is discovered, investigators are already familiar with the case and can capture the necessary evidence to prove it. 
After the first time an employee visits with a private investigator to discuss an injury, it won’t take long for your entire workforce to know the first place they will stop when filing a workers compensation claim is a Private Detective Agency. As a result, those employees considering a fraudulent or frivolous claim will always think twice. This is a very inexpensive “ounce of prevention.”
Review ALL Claims
In addition to taking the initial injury report, Private Detective Agencies can also do a world of good toward terminating fraudulent and frivolous claims by conducting a review of existing open cases. For example, Arcane Investigations currently contracts with a major employer to periodically review each and every open workers’ compensation claim they currently have on the books. In this case, HR asks all injured employees to meet with us individually for a periodic review of their case. It is well publicized this is a review of all cases, not just one person’s — an audit of the employer’s entire workers compensation procedure, if you will. We go over the initial injury report and ask a series of follow-up questions concerning their current status. If we did not take the claimant’s initial injury report, this review process allows us to subtly inform them of our ongoing involvement.
A review strategy puts claimants on notice that there are trained professionals involved in their employer’s process. For our clients, it has had a profound effect on speeding-up the rate at which would-be malingerers return to work as well as toward early and reduced settlement or dismissal of claims in favor of the employer. Another valuable “ounce of prevention” versus a more expensive “pound of cure.”
Reduce Workers Comp Claims in General
Using a Private Detective Agency to verify all workers compensation claims is having an impact on reducing the overall number of claims for many employers. Arcane Investigations, LLC, has been taking the initial report of workers compensation injuries for several employers over several years. Those employers have experienced an average 35% decrease in overall claims filed since we began our program. This is attributed to the average employee asking themselves, “Do I really need to file a workers’ comp claim?” If the injury is "real" then of course they do, but if not, there is pause and reflection.
Various Investigation Types
If you do not use a Private Detective Agency to take the initial report of all workers compensation claims as an inexpensive “ounce of prevention,” then there are techniques that will definitely give you the “pound of cure” you’re looking for. A Private Detective Agency can use the following methods to help you verify workers compensation claims: 
·       Activities Checks are general in nature and determine several key elements of a subject’s life to document the person’s daily routine
·       Sub-Rosa Surveillance is specific in nature and uses video or still-photo evidence to document physical activity to compare to claimed injuries
One or both of these types of investigations will help determine if your employee’s claim is a legitimate one. Private Detective Agencies use a combination of both of these techniques in various degrees depending on the unique characteristics of the case. This is where the “rubber meets the road” and is no place to cut corners in your efforts.
Not All Private Detective Agencies Are Credible
When choosing a private detective agency, make sure the one you hire is reputable. Depending on your state’s requirements, many people who manage to get a license as a private detective are those who failed to be hired as police officers. In Nebraska for example, prior to about 15 years ago, anyone who could pass a background check could manage to get a license. Some were highly credible while others clearly were not. Many of these people who were not are still in business today. Since then, Nebraska has implemented a requirement that all private detectives must possess 3,000 hours of investigative experience before they are granted a license. Ask your potential private detective for references and credentials and know your state’s requirements for licensure. (WCxKit)
Pay Legitimate Claims Only!
Whether you own a business, are self-insured, an insurance agent, or responsible for employees, a Workers Comp investigation can help ensure all claimants are entitled to the compensation they receive.
 
Author Patrick Barger is President and Supervising Investigator of Arcane Investigations, LLC who we are pleased to welcome as our latest guest contributor. His firm consists of staff who were former law enforcement officers, government investigators or academics. Patrick is also a keynote speaker specializing in the area of fraud. He can be reached at 402-473-2773 or www.ArcaneInvestigations.com

WC Calculator:  http://www.LowerWC.com/calculator.php
TD Calculator:  http://www.LowerWC.com/transitional-duty-cost-calculator.php 
WC Round Table LinkedIn:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' comp issues.

  
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact
 Info@ReduceYourWorkersComp.com 

Indictment Alleges Workers Compensation Fraud at Illinois Clinic

A chiropractor, a medical doctor and a billing employee at a clinic owned by a chiropractor in Illinois were indicted on federal healthcare fraud charges, federal law enforcement officials announced.
 
The defendants allegedly illegally submitted false claims totaling more than $1 million to obtain payments from workers’ compensation and other insurers for services not provided and for inflated claims for provided services. The physician signed false documents and the chiropractor forged doctors’ signatures on documents supporting the false claims, according to an 18-count indictment returned by a federal grand jury.
 
Most of the patients of the clinic, the Spine and Joint Rehabilitation Center, were United States Postal Service employees who were eligible for benefits from the United States Labor Department’s Office of Workers’ Compensation Program.
 
Scott Caspall, special agent-in-charge of the Great Lakes Field Office of the U.S. Postal Service Office of Inspector General, noted, "Workers’ Compensation is a valuable healthcare program that provides a safety net to hardworking people injured on the job. This investigation is an effort to dismantle a group of medical providers and billers who the indictment alleges were abusing that program. In an age when individuals, businesses and the federal government are paying more for healthcare, this case is a prime example of the excellent results that come from combining the forces of federal law enforcement agencies."
 
According to the indictment, the defendants and others intentionally created and submitted false claims and information to the federal Workers’ Comp office and other health care insurers to obtain payment for the clinic and for patients. The false claims and information related to patients’ work-related injuries, including medical, diagnostic, and physical therapy services not provided or they  inflated provided services.
 
As part of the scheme, the defendant allegedly forged and caused others to forge physicians’  signatures on various documents falsely representing services, treatment, physical therapy and/or testing were provided, ordered or supervised by medical doctors. 
 
The defendant allegedly forged the doctors’ signatures, and caused them to sign reports without doing patient exams, knowing that Workers’ Comp would not accept a chiropractor’s opinions or reports as medical evidence to support patients’ claims.
 
Under the Federal Employees’ Compensation Act, chiropractors are not qualified physicians and their opinions did not constitute medical evidence except in very limited cases involving specific spine problems.
 
The defendant also falsely told patients he was qualified to prepare impairment rating reports and to order and provide testing and treatment. He failed to disclose that Workers’ Comp would not pay for services provided by a chiropractor except in very limited circumstances. The other defendant, et al  allegedly signed false documents making it appear the physician or another licensed physician had examined or treated patients.
 
The two defendants and others allegedly prepared false progress notes and fee sheets showing patient services were rendered when, in fact, they were not.  One defendant allegedly forged physicians’ signatures on claim forms certifying they were accurate, even though he knew many were false, including whether the services were provided and by whom.
 
He also prepared false itemized billing statements in personal injury cases to support payments to the clinic and patients. In addition, the two double-billed Workers’ Comp for disability exams the physician performed for which he received payment from every patient pay, so the clinic was paid twice for the same service, the indictment alleges. (workersxzcompxzkit)
 
Each count of health care fraud carries a maximum penalty of 10 years in prison and a $250,000 fine. If convicted, however, the Court would determine a reasonable sentence to impose under the United States Sentencing Guidelines advisory.
 
  \Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. Contact him:  Robert_Elliott@ReduceYourWorkersComp.com   or 860-553-6604.

FREE WC IQ Test:
http://www.workerscompkit.com/intro/
WC Books:
http://www.reduceyourworkerscomp.com/workers-comp-books-manuals.php
WC Calculator: http://www.reduceyourworkerscomp.com/calculator.php
TD Calculator: http://www.reduceyourworkerscomp.com/transitional-duty-cost-calculator.php

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' comp issues.

©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com

 

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