Column: Workers' Comp

Fraud as a Ticket Out

By: | April 28, 2016 • 2 min read
Roberto Ceniceros is senior editor at Risk & Insurance® and chair of the National Workers' Compensation and Disability Conference® & Expo. He can be reached at [email protected] Read more of his columns and features.

News stories and press releases from insurance departments nationwide regularly disclose the prosecution of prison guards for workers’ compensation fraud.

I often wondered why guards, obviously familiar with prison horrors, would risk incarceration.

The answer recently came during a conversation with a prosecutor regarding the conviction of Mark Navarrete, whose workers’ comp fraud case offers an extreme example of how work environments impact behavior.

Navarrete, a 12-year Santa Clara County Sheriff’s Office veteran, worked as a correctional deputy.  The California county’s beleaguered jail system suffers horrendous problems.

Three of its guards, for example, currently face murder charges for beating a mentally ill inmate to death.

The day after I spoke with Santa Clara County Deputy District Attorney David Soares, video surfaced showing about 20 inmates pummeling each other inside the county’s main jail. The brawl erupted when one inmate brushed against another. The video shows what jail deputies face daily, the county sheriff said at a news conference.


Guards are responsible for policing inmates who grow increasingly volatile every day they are incarcerated. Fifty of them may share a single toilet, Soares said. It’s an awful work environment, leaving jailers desperate for an escape route and time away from the job.

Navarrete’s escape plan had several problems. A co-worker reported seeing a text with Navarrete bragging that a softball injury would become a work accident. A softball field security camera captured video of Navarrete injuring his arm while swinging for an inside pitch, and hospital documents revealed a timeline that refuted his workplace claim.

“I wanted to send a message that if individuals were encouraging the fraud they were going to go down too.” — David Soares, deputy district attorney, Santa Clara County

With widespread problems at the county jail, Soares dug deeper into Navarrete’s case to determine whether other deputies encouraged him in a conspiracy to defraud their employer.

“I saw this as a potentially endemic problem because of the issues within the jails and because we had recently had this homicidal death in the jail,” Soares said.  “I wanted to send a message that if individuals were encouraging the fraud they were going to go down too.”

In the end, only Navarrete was prosecuted. He pled no contest, receiving a 120-day jail sentence, but was allowed to serve it at home with electronic monitoring. He must also pay nearly $23,000 in restitution.

Inhospitable work environments don’t encourage claimants to hurry and return to work. As Navarrete showed, they even encourage some workers to rationalize committing insurance fraud.

Navarrete’s work environment, awful as it is, doesn’t justify defrauding his employer. But it does offer an example, albeit an extreme one, of the workplace environment’s potential impact on workers’ comp costs. &

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Managing Costs

Bill Review and the Commodity Myth

Do your homework when choosing a workers' comp bill review provider. One size does not fit all.
By: | April 25, 2016 • 5 min read
Magnifying glass on money background

Bill review is often touted as a “commodity.” But having done scores of detailed workers’ compensation bill review audits, I can tell you that the quality of bill review is not consistent across the board. If you’ve seen the work of one workers’ comp bill review vendor, you have not necessarily seen them all.


In fact, even when two different companies use the same bill review software, you will not necessarily get the same result. Based on audits I have completed, you could be missing up to 12 additional percentage points in savings.

Given the 50 state nature of the current workers’ comp system, our industry, in order to keep our medical costs under control, must rely upon vendor partners to reprice medical bills based upon all the different state medical provider fee schedules, or an accepted source of usual and customary (U&C) provider charges.

If you’ve seen the work of one workers’ comp bill review vendor, you have not necessarily seen them all.

While our lives would be much easier if medical providers/facilities billed according to state fee schedules or U&C recommended amounts, it is unrealistic to expect providers to handle these very complex and ever-changing jurisdictional rules given that workers’ comp medical care still accounts for a very small slice of the total U.S. health care system (<3 percent).

It appears that workers’ comp bill review is here to stay. So how can you be sure that you’re getting the best service and not sacrificing good quality, aggressive medical cost-containment for a less expensive, less effective alternative?

Let’s talk about what drives the differences between bill review service providers.

You might think that you can rely on the software in today’s world to handle the jurisdictional differences, but that’s not the case. Fee schedules and the jurisdictional rules that surround them are extremely complex and require knowledgeable interpretation. Having jurisdictional subject matter experts is a vital part of accurate, aggressive bill review. Some rules just can not be automated.

In addition, there is constant change within fee schedules and rules requiring constant monitoring and updating as well as appropriate workarounds should they be necessary due to time constraints. Check to see if your partner has dedicated compliance and jurisdictional experts to ensure you are in the best hands.

Most bills arrive with documentation, yet I have found that not all reviewers look at the attachments. I have seen bills paid for the wrong injured worker, bills for initial office visits (more comprehensive and more expensive) paid several times on the same claim from the same provider, bills paid for services never rendered, bills that include inappropriate modifier codes (making the bill more expensive), and bills without the appropriate modifier codes for an assistant surgeon or physician assistant when the documentation clearly notes who performed the procedure.

Does your bill review service provider train reviewers to utilize the documentation? Do they identify bills requiring clinical review?


You need to expect quality review from your bill review partner. You want to be sure that they have solid quality assurance processes in place for:

  • Their data capture process/vendor
  • The bill review application
  • Timeliness of the updates per jurisdictional guidelines
  • Testing of fee schedule and application updates prior to live processing
  • Testing accuracy of business rules processing
  • Bill review processors
  • Quality performance standards/reviews for staff
  • Evidence of ongoing processor training
  • Service level agreements with vendors ensuring compliance/quality

You want a bill review partner who is invested in your medical cost containment, i.e. one who understands your needs for quality, coverage and cost savings.

This involves an understanding of your key jurisdictional and loss cost drivers and integration of bill review with the “right” PPO networks and ancillary providers who will best meet your specific needs.

There are many different network contracts out there so be sure you are not paying a network-discounted fee above the state fee schedule. You should expect constant vigilance regarding these additional cost containment tools and an accurate accounting of their results as well.

You should also expect your bill review service provider to offer the option to measure the performance of providers in your networks and a method to direct to these “best providers.”

Have you had a discussion with your bill review partner about how aggressive you want to be in your key jurisdictions? If not, then you are not necessarily receiving the provider bill review you intended.

Talk to your service provider to make sure you are involved. Are you taking advantage of usual and customary reductions prior to PPO discounts in the appropriate states? Do you want to zero pay unlisted or invalid codes? How much provider pushback are you willing to tolerate? Get involved in the decision-making process regarding your workers’ comp bill review.

Bill review savings can be calculated in a variety of ways and comparing bill review service companies on savings alone is most likely an apples to oranges comparison.

Ask your vendor how they compute savings? What do they do with zero pay bills (pharmacy, pay in full or pre-arranged bills)? How about resubmissions and duplicates? If these types of bills are included in the savings calculation, your “savings percentage” will be inflated yet your ultimate paids the same. To avoid the game playing, ask questions of your vendor.

If you think about the medical encounter data we collect in bill review, you will understand why we should utilize this vast store of intelligence about our claims and the medical providers to truly enhance performance and outcomes.

We need to know the “real” impact bill review and other vendors are having on overall claim outcomes, what we and they can do to laser focus our resources and dollars on those areas where we are experiencing the most “pain.”


You need a bill review vendor partner who knows that delivering raw data is no longer good enough, that will take the time to turn that data into information and actionable intelligence and then drive the program fine-tuning and customization.

Don’t be fooled by the “bill review is a commodity” myth. Look for the differences and find your “right” partner who will deliver the very best value.

Maddy Bowling is a principal in Maddy Bowling Consulting, Inc., a WC consulting firm. Bowling has 35 years of broad-based executive management experience within operating, corporate and consulting environments. She can be reached at [email protected]
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Sponsored: Berkshire Hathaway Specialty Insurance

Searching for Stability in Cyber Space

The dynamic cyber risk landscape demands a stable insurance carrier with a prudent approach and an eye on the long road.
By: | April 18, 2016 • 6 min read

SponsoredContent_BHSICyber risk affects every industry differently, but there’s one common denominator. No sector is safe.

As headline-grabbing breaches crack systems and tarnish reputations of major retail, healthcare and financial companies, the need for cyber insurance has become increasingly apparent.

Given the constantly changing nature of cyber risk and the market landscape, creating a stable, sustainable cyber insurance business demands a prudent approach, with an eye on the long road.

“We’ve seen carriers jump in and out, wanting to take advantage of a new opportunity, but perhaps underestimating the risk,” said Danielle Librizzi, Senior Vice President, Head of Professional Liability, Berkshire Hathaway Specialty Insurance (BHSI).

“As cyber exposure became more tangible to carriers, in-force coverage was tested and many made radical changes to pricing and availability of coverage. BHSI is committed to entering the cyber market in a thoughtful and sustainable way. We want to be there for our customers as the risks continue to evolve.”

Diverse, Evolving Risks

Danielle Librizzi, Senior Vice President, Head of Professional Liability, Berkshire Hathaway Specialty Insurance

Danielle Librizzi, Senior Vice President, Head of Professional Liability, Berkshire Hathaway Specialty Insurance

Cyber exposure – and coverage — have been evolving, posing different risks and underwriting challenges for different industries. The technology, financial services and healthcare industries illustrate the diverse issues that must be considered in order to provide effective, financially sustainable cyber solutions.

The technology sector was the first cyber battleground, and technology E&O forms included some cyber coverage by virtue of the nature of the risk. “There’s inherent cyber coverage for third party liabilities in E&O,” Librizzi said.

While coverage is widely available, tech companies pose challenges to underwriters because of their unique position in the cyber “supply chain.” These companies provide software, hardware and cloud services; virtually every organization in the world is dependent on a tech provider of some stripe. If an insurer is covering both the provider and its clients, the aggregate risk should be monitored closely.

Think of a DOS attack on a cloud provider that prevents all of its clients – which could include anyone from a bank to a retailer or transportation company — from accessing stored customer or corporate data or running cloud-based service apps. That single attack could bring business in multiple industries to a grinding halt, potentially causing business interruption and E&O losses.

SponsoredContent_BHSIThe tech industry hasn’t seen a large scale event like this yet, but it isn’t waiting around for one to strike before addressing the underlying risk. Controlling and accounting for the aggregate exposure will mold the direction that coverage development takes.

“Our combined form, introduced in October, 2015, is a comprehensive solution that includes first and third party cyber coverage as well as traditional E&O coverage,” Librizzi said.

However, that approach may not be appropriate for other industries. Financial Institutions, for example, may seek a dedicated cyber only policy which does not include traditional E&O coverage.

While banks typically have strong protocols for network security and privacy, they also have a much greater exposure in massive stores of customer data. Financial Institutions are looking to address liability in the form of class action lawsuits or heavy regulatory investigations and fines emanating from cyber, and may not want to compromise their traditional E&O limits.


“Additionally, given the increased reliance on outsourced providers for technology solutions, we have started to see the introduction of sub-limited coverage for dependent business interruption and payment card industry (PCI) fines and assessments as enhancements to coverage,” Librizzi said. “We might see those sub-limits go to full coverage as competition gets heavier.”

Other industries, which may not be as advanced as financial institutions in addressing cyber threats, have suffered more from a lack of robust cyber coverage that can keep up with increasing exposure.

Healthcare, for example, has seen a surge of cyber attacks since hospitals and other health systems went electronic. To a hacker, healthcare providers represent a warehouse of valuable personal identifiable and protected health information.

SponsoredContent_BHSIEmail addresses from healthcare systems typically are white-listed and less likely to get caught in a spam filter, giving hackers incentive to obtain access and gain control of a healthcare provider’s network in order to launch phishing attacks.

After some high-profile breaches in 2015, Human Health Services and the Office for Civil Rights came under scrutiny for not doing enough enforcement of HIPPA. Fines imposed by regulators increased dramatically over the past decade, and seem poised to only get higher.

“They’ll be ramping up enforcement of regulations in 2016, and that’s only a peek of what’s on the horizon,” Librizzi said.

The burgeoning of healthcare’s cyber exposure has challenged the insurance industry to better understand the nature of the risk and how best to secure hospital systems. Coverage for this sector remains the most difficult to write effectively.

BHSI understands the need for different customers to have different solutions. Some customers desire a dedicated cyber policy that does not include traditional E&O coverage. BHSI’s Network Security and Privacy stand-alone policy is designed to address the needs to those customers.

“The cyber exposures and coverages needs of healthcare, financial services and technology are on different timelines and will look very different in the future,” Librizzi said.

Even in more mature markets, the conflation of commercial and personal cyber risk will challenge insurers going forward. Most existing cyber products don’t cover property damage and personal injury; as the risks emerge and the Internet of Things becomes more pervasive, the coverage will have to evolve as well.

“We must always be thinking about what is on the horizon from a risk and coverage perspective – our technology driven society demands it,” Librizzi said.

Anticipating challenges and adapting to each industry’s needs has been a cornerstone of BHSI’s approach to cyber. It’s careful and measured approach has also helped the specialty insurer build an arsenal of experts and ancillary services to help clients better grasp and mitigate their exposure.

“We know the importance of really understanding the risk and communicating it clearly to our customers,” Librizzi said. “We don’t bury our coverage in a pile of definitions, and we provide the expertise to help insureds stay ahead of the next big breach.”

To learn more about BHSI’s professional liability products, visit

Berkshire Hathaway Specialty Insurance ( provides commercial property, casualty, healthcare professional liability, executive and professional lines, surety, travel, programs, medical stop loss and homeowners insurance. The actual and final terms of coverage for all product lines may vary. It underwrites on the paper of Berkshire Hathaway’s National Indemnity group of insurance companies, which hold financial strength ratings of A++ from AM Best and AA+ from Standard & Poor’s. Based in Boston, Berkshire Hathaway Specialty Insurance has offices in Atlanta, Boston, Chicago, Fort Lauderdale, Houston, Los Angeles, New York, San Francisco, San Ramon, Stevens Point, Auckland, Brisbane, Hong Kong, Melbourne, Singapore, Sydney and Toronto. For more information, contact [email protected].

The information contained herein is for general informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any product or service. Any description set forth herein does not include all policy terms, conditions and exclusions. Please refer to the actual policy for complete details of coverage and exclusions.



This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Berkshire Hathaway Specialty Insurance. The editorial staff of Risk & Insurance had no role in its preparation.

Berkshire Hathaway Specialty Insurance ( provides commercial property, casualty, healthcare professional liability, executive and professional lines, surety, travel, programs, medical stop loss and homeowners insurance.
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