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President
Verisk Insurance Solutions-Claims and Crime Analytics

Joe Wehrle
President and CEO
National Insurance Crime Bureau


There's a New Sheriff in Town


A new database ferrets out potential fraud in medical claims related to auto and workers' comp.

The Aggregated Medical Database (AMD) is not quite the Bat Crime Computer, but it is definitely a step in that direction. And the dynamic duo behind its innovation is Joe Wehrle, president and CEO of the National Insurance Crime Bureau (NICB), and Vincent Cialdella, president of Verisk Insurance Solutions-Claims and Crime Analytics.

Medical billing is a multibillion-dollar problem for property and casualty insurers in the United States. Even for legitimate claims, P&C carriers generally pay higher prices than health insurers for health care services to auto and workers' compensation claimants because of the absence of guidelines as well as inconsistent fee structures, internal insurer policies and procedures, and overall operational and procedural infrastructures that health insurers have in place.

Before the AMD, there was no centralized medical billing database for the P&C insurance sector. As a result, it was virtually impossible to conduct strategic analysis exercises, search for fraud trends, identify new forms of medical billing fraud and develop a baseline for medical billing related to auto and workers' compensation data.

"We did not know what we were going to get when we put this together," said Wehrle, "but we knew the data would be very powerful. At the same time, we have made security and patient privacy high priorities. We started with two years of data from member companies, and things began to show immediately."

When AMD unearths an anomaly that indicates possible fraud, NICB issues a "MedAware Alert" to the member carrier. Wehrle stressed that "we are only alerting our members to possible situations. We in no way tell our members what claims to pay or not to pay or what to do with the alert information we provide. That is their decision."

So far, as a result of the AMD, the NICB has issued 385 alerts to participating P&C insurers: 155 in 2011 and 230 in the first half of 2012. Additionally, the AMD has resulted in the referral of suspicious medical provider activity amounting to P&C carrier exposure of more than $101 million.

Wehrle cited one prime example. "There was one physical therapist who was billing about $11 million a year. That was 100 times the national average. We could not say just from the data that it was fraud, but we knew there was something there and we knew it warranted closer inspection.

"With AMD, we are able to start new cases, but so far we have mostly augmented existing cases. It is really very exciting," he said.

The program is a budget item in NICB, funded through the membership fee, as are other programs and services.

Cialdella has been involved in anti-fraud efforts in the P&C sector for more than a decade.

"We have a claims search system at Verisk that reviews all P&C claims daily against previous history for like cases. We don't collect the medical portion of P&C claims because, until now, that data have not been available."

In addition to his primary duties, Cialdella is an adviser to the board of governors at NICB. So he was aware of the early initiatives at that organization to create some type of database. Then, Verisk acquired a company, called Health Care Insights, that used data modeling and algorithms to conduct bill vetting for health payers on a nightly basis. The HCI methodology served as an ideal vehicle for getting NICB rolling, and for beta testing the results.

"I spoke to Joe about getting his member insurers to put their information into a database," said Cialdella, "and then we could apply the things that HCI was doing in health claims to their P&C claims."

Most underwriters were quick to agree in principle, but it took a bit of time to modify the details of the algorithms. It also took some time to get all the legal protections in place and all the memoranda-of-understanding signed among all the parties.

"We simply handle the data and the analytics," said Cialdella. "NICB gets the results regarding what providers may be ripping off insurance companies, and then they alert their member companies."

AMD was in active trials through the end of last year and went live and nationwide at the beginning of this year. The goal is to expand beyond the two years of data already in the system and, ultimately, to get close to real-time reviews; if not daily or weekly, at least monthly.

"Everyone benefits," Cialdella said, "the carriers, but also consumers because fraud leads to higher premiums." He also noted that, heretofore, there has been no review for the medical side of P&C claims. "I hope AMD has some suppressive effect."

Just like the Bat Signal: Wrongdoers, beware!

--By Gregory DL Morris

The Fraud Hunter

Vincent Cialdella's philosophy on insurance fraud is simple -- stop it and everybody benefits.

The president of Verisk Insurance Solutions-Claims and Crime Analytics, Cialdella helped develop the Aggregated Medical Database, which was the first database for medical billing in the property/casualty insurance market. The database now allows for the analysis of fraud trends and the technology could have the potential to stop fraud across the economy.

"It hurts society in general when perpetrators of fraud do this and get away with it," said Cialdella. "We all end up paying for it as consumers."

Being in the property/casualty business since 1978, he's seen how fraud can hurt businesses.

"It's a great industry," he said. "It's the heart and soul of what makes our businesses go. Without insurance, we couldn't have commercial industry. We wouldn't have an economy."

While he didn't want to guess how much money his various anti-fraud solutions could save, he did say that medical fraud is a very big piece of overall fraud in the economy. Fighting it would mean big savings.

"It's worth it to go after it," he said.

--By Jared Shelly

In Firm Command

We use the term Responsibility Leader® here to denote an innovator who went above and beyond in their service to the industry and their community. And on its own, the term sounds lofty enough.

But when measured against the achievements of Joe Wehrle, president and CEO of the National Insurance Crime Bureau, the term almost starts to feel inadequate.

For Wehrle's service to his country and the industry is so deep and long that the experience of many others pales in comparison. Before coming to the National Insurance Crime Bureau, Wehrle was president of USAA, the personal lines insurer that provides home, auto and life insurance to U.S. military veterans and their families. In his four years at USAA, Wehrle moved from senior vice president to president and oversaw record growth in premium volumes.

Before that, Wehrle spent 33 years in the U.S. Air Force, rising to the rank of Lieutenant General and along the way serving as a fighter pilot in Vietnam and later, in his command of the 3rd Air Force, leading an effort that brought crucial aid to flood-ravaged Mozambique.

After all of that, Wehrle said he wasn't daunted in the fight against medical billing fraud.

-- By Dan Reynolds

Insurance Manager
Virginia Workers' Compensation Commission

Playing it Safe, Straight and Fair

To this day, people in Vermont are still talking about the manager who reversed her approach and assumed employers cared but simply didn't know.


Powerful tools for workplace safety were piling up by the hundreds inside the Vermont Department of Labor.

They were "First Reports of Injury," documents filed by companies as part of the workers' compensation process -- but largely ignored until Laura Collins began flipping through them in the early 2000s when she worked for Vermont's workers' comp program.

The reports described injuries, the times they took place, the equipment involved and other crucial details. Collins was struck by the prevalence of injuries that could have been prevented, and she began urging employers to mine the documents for data.

"It's actually invaluable information, and it's unique for each company," she said.

Collins has moved on -- she now is insurance manager for the Virginia Workers' Compensation Commission -- but she remains an advocate of sifting through first reports of injury in search of clues to prevent accidents.

The idea sounds simple: look at routine documents to identify and reduce risks in the workplace. But for many employers, it's a revelation, Collins said.

Most companies feel they have little control over workers' compensation, she said. They file injury reports with their insurers, but they don't understand how their experience affects their premiums, or they spend more time worrying about what happens after an employee is hurt, she said.

"They question the claim and what's going on in the claim rather than focusing on what they can do to prevent this again," Collins said.

Employers may face another obstacle depending on who is responsible for filing reports. They may originate in human resources rather than departments charged with overseeing safety, Collins said.

"I'm sure there are good, safe employers where safety managers take into consideration first reports of injury, and they sure should look at their claims, particularly their higher-cost claims," Collins said. "But generally speaking, it's just not something that's done."

Once employers start looking, they are able to cut down on injuries and save money on workers' comp premiums, she said. "The employer actually has so much more control than they realize."

In addition to promoting a closer look at first reports, Collins collaborated with Vermont's largest employers and connected smaller employers with a state-funded program, called Project WorkSAFE, that offers free safety consulting.

As a state official, Collins struck the right balance between labor and business, said Doug Robie, risk manager for DEW Construction Corp., a contractor in Williston, Vt., that worked closely with Collins and Project WorkSAFE. In 2005, DEW became the first Vermont business to receive a Governor's Award for Outstanding Workplace Safety in the large employer category.

"She played it straight, and she played it fair," Robie said.

Statewide, the results have been dramatic, said a former co-worker, Trudy Smith, a vocational rehabilitation specialist in the Vermont Department of Labor. The agency used to collect between 25,000 and 26,000 first reports of injury per year. Today the number is closer to 17,000.

"She didn't make the assumption that a lot of our directors have made, that the employer knows and just doesn't care," Smith said. "She went with the opposite assumption: the employer cared and didn't know."

Project WorkSAFE, meanwhile, continues to see an uptick in inquiries, fueled by word of mouth from satisfied employers, Smith said. "People are still saying, 'Go to Project WorkSAFE. They can help you out.'"

Smith herself has benefited from Collins' focus on workplace safety. As a supervisor, Collins helped Smith find a position inside the agency that addressed a recurring pain issue, Smith said.

"That's the way she was as a boss and as a director," Smith said. "She wanted to try to prevent the injury from occurring instead of dealing with the fallout from an injury. Of course, you're never going to have an injury-free workplace. People are going to get hurt. People are going to lift boxes that are far too heavy for them, even if they've been informed of what they should and shouldn't do. But she wanted to make sure that employers at least had the information."

Collins spent a decade as a personal-injury attorney before entering state government in 2000 as director of Vermont's workers' compensation program. She spent four years in workers' comp before moving up in the Labor department, eventually becoming the agency's commissioner. She moved to New Hampshire in 2006, then to Virginia in 2010. In Virginia, Collins has continued to peel back problems, identify the sources and fix them, said Suzanne Soule, an assistant manager in the state's workers' compensation commission. Collins is her supervisor. "She's definitely made an impact," Soule said.
-- By Joel Berg

Seeing Both Sides

Laura Collins, the insurance manager for the Virginia Workers' Compensation Commission, likes to say that we are the sum of our experiences. As that statement relates to her career in workers' compensation, Collins recalls the time, when she was a young attorney, that she worked on a case involving a grievous personal injury.

The case involved an electricity line worker in Vermont who was given the wrong information when sent to work on a downed line. The poor man was told the line was dead when it wasn't. The resulting tragedy took both of his arms and some of his internal organs.

That story hammered home for her that injuries are preventable. Another lesson was that workers' compensation protects the employer as well as the employee.

"I am a huge, strong believer in workers' comp, that it has benefits for employers and employees. I believe in the system," Collins said.

Later, working as Director of Workers' Compensation for the State Department of Labor and Industry in Vermont, Collins began digging into first reports of injuries files, and it hit her. Why not make this information available to everyone?

--By Dan Reynolds

Director of Risk and Insurance Management
Advance Auto Parts

Appealing to the Heart

Gary Nesbit of Advance Auto Parts makes driving and working safer for more than 52,000 of his fellow employees.


There is very special meaning to the life dates "1990-2011" appearing on the opening screen of Advance Auto Parts' new online interactive defensive driving course. These dates represent the life and death years of Advance sales person Krystal McDuffie, who was killed on July 11, 2011 when her car was struck by a truck.

Those dates are followed by a message on the interactive defensive driving site from CEO Darren Jackson, who met with Krystal McDuffie's family in the aftermath of her death and emphasized the company's renewed commitment to taking proactive, preventative measures to ensure the safety of all team members.

To make good on Jackson's promise to the McDuffie family, Director of Risk and Insurance Management Gary Nesbit was chosen to spearhead a cross-functional partnership between the office of the CEO and the operations and organizational development teams at Advance to promote greater employee safety, especially on the road.

"Even though we had started working on the online defensive driving program before Krystal's death, what we wanted to do was incorporate the accident into our program to appeal to both the head but also the heart of employees," said Nesbit, who became the director of risk and insurance management at Advance Auto Parts in 2010.

There are two safety programs spearheaded by Nesbit that bear the imprint of Krystal McDuffie's legacy. One is the ambitious interactive online defensive driving program put in place on April 1, 2012.

The training features interactive modules built around the company's top five causes of preventable vehicle collisions: back-up safety, intersection safety, rear-end collisions, surroundings and wave throughs (when a driver pulls into traffic after being "waved through" by another driver).

Participants are required to test their existing knowledge of safe driving habits before being presented with the company's safety materials. In each case, team members are asked to interact and select answers that demonstrate their understanding of the desired skill. Use of actual team members in real driving situations lends additional credibility to the training course. The program concludes with a quiz and each member is asked to make a personal commitment to safe driving.

The second innovation implemented early this year by Nesbit and his team after McDuffie's death was the introduction of interactive safety training modules focused on a different safety topic each month, such as slip-and-fall prevention, safe lifting and ladder safety. Each of these safety modules takes a personal approach similar to that of the defensive-driving program by focusing on a single accident.

Even at this early date, the two safety programs have achieved impressive results.

Since the introduction of the interactive online defensive driving program, the company has seen a 17 percent reduction in reportable collisions; a 9 percent reduction in preventable auto collision claims; a 28 percent reduction in rear-end collisions, and a 32 percent reduction in auto liability claims related to rear-end collisions.

Most importantly, there have been no auto-related fatalities since the creation and rollout of this program at the Roanoke, Va.-based company.

The introduction of the monthly safety training modules has yielded similarly impressive results. Team member slip-and-fall injuries have declined by 34 percent, customer claims have decreased by 36 percent, and customer litigation has declined by 30 percent.

Susan Shemanski, the company's vice president of client services, said of Nesbit: "Gary has brought every level of the company into this training, so that it has become important to the people at the top of the company down to the people who are on the road every day, which I think is one of the leading reasons that everybody in the company is focused on interactive safety initiatives. Rather than just sending out a brochure with driving techniques, Gary made things very interactive and thus greatly enhanced the learning process."

"We've been doing this a long time," Nesbit said, "which is why we find when you partner with all kinds of team members you can deliver a product that better meets the needs of our customers and team members."
--By Steve Yahn

Safety First

Gary Nesbit of Advance Auto Parts was already working on a new company-wide car safety program when tragedy struck.

During a routine delivery, Krystal McDuffie, a 23-year-old Advance Auto Parts worker from Illinois, died in a car accident in July 2011. Her death only served to reaffirm the importance of what Nesbit had planned for the company.

"She was a mom with a two-year-old girl," said Nesbit. In response, Nesbit and the Advance team dedicated the entire safety program to McDuffie, hoping that associating the program with her would make employees take it more seriously.

Out of 52,000 employees, roughly 35,000 will drive a company car at some point, he said, so he created a defensive-driving program complete with a video containing a personal message from CEO Darren Jackson, stressing the importance of driver safety and discussing his visit with McDuffie's family after her fatal auto accident. The interactive, online training program set specific training programs for individual team members based on their job position.

"I saw a need for better training with our drivers," said Nesbit.

The 17 percent reduction in reportable collisions should go far in reducing workers' comp claims.

-- By Jared Shelly

Director of Health Care Risk
Sutter Health

An Ulcer Fighter Relieves the Pressure

Teresa Campbell Wallace of Sutter Health takes aim at ulcers and takes satisfaction in watching the average number of incidents drop. For health care workers, hospital-acquired pressure ulcers are a morale killer.

Commonly known as bed sores, they just seem so unnecessary and they strike the most defenseless patients -- the elderly, paralyzed or people with limited mobility. And the consequences can be dire as the lesions can cause pain, serious injury and even death in severe cases.

Teresa Campbell Wallace, director of health care risk with Sutter Health, knows that all too well. Back when she was a patient advocate in Michigan, Wallace had seen too many patients forced to suffer pressure ulcers on top of their existing conditions. In one case, an elderly woman's lesion was so deep that a doctor could put an entire elongated Q-tip inside. The image stuck with her.

"That was 15 years ago and I never forgot it," said Wallace. "I remember seeing the passion in the folks caring for her wanting to make her as comfortable as possible."

After moving to California to join Sutter Health, she found that the prevalence rate of pressure ulcers there was 12 percent. Even though that mirrored the national average for hospitals, Wallace declared war.

Staff at the Northern California not-for-profit network of community-based health care providers were put on high alert that they were now shooting for a zero percent instance rate of pressure ulcers. They were to check patients' skin every 24 hours. Turning and moving patients -- still the best way to prevent pressure ulcers -- became top priority regardless of how busy caretakers were.

Sutter also started utilizing products that can be applied to the skin to aid in prevention and treatment. It also conducted education summits, on-site classroom-style training, webinars, direct mentoring from clinical experts and issued newsletters focused on wound documentation and prevention.

In 2004, Sutter Health also bought 4,000 new mattresses equipped with non-powered pressure redistribution capabilities maximizing a patient's contact area with the bed. Those mattresses reduced pressure -- the ultimate cause of bedsores. If that weren't enough, Sutter changed its mattresses again in 2009 due to wear and tear.

It even changed the padding on gurneys, operating tables and patient lifts because even though a patient might not be laying on a table or gurney for a long period of time, they can still suffer harm.

"Critically ill patients are already compromised," said Wallace. "Waiting that hour for a doctor or waiting for very long procedures can be long enough to cause an ulcer."

By 2011, the prevalence rate of bed sores at Sutter Health dropped to 1.4 percent, said Wallace. It had an average of 58 severe incidents of pressure ulcers per quarter in 2003 and that dropped to just 12 per quarter in 2010.

Lowering the incidence rates saved Sutter roughly $150 million in medical costs over the years, according to internal statistics. It also saved money on lawsuits, as California is particularly harsh on hospitals whose patients acquire pressure ulcers. While California's Medical Injury Compensation Reform Act capped awards of damages for the pain and suffering associated with these incidents at $250,000, litigators responded by trying these cases as abuse of the elderly to get around the awards cap. Elder abuse charges can not only lead to costly litigation but also devastating reputational damage.

Bonnie George, vice president of risk services and chief risk officer at Sutter Health, said that while other health systems may focus on pressure ulcers as a "flavor of the month" this program is very different.

"We were never satisfied with just decreasing pressure ulcers, we're going for zero cases," said George. She credits Campbell Wallace with keeping the enthusiasm up among caregivers and leadership -- and making them realize that just decreasing the instances of bed sores is not enough.

"To have a preventable condition happen to our patients was not acceptable for our caregivers," said George. "When a patient gets one, it's a ding on a caregiver's pride." Sutter's claims adjuster, Chris Mulcahy, vice president of specialty operations at Sedgwick Claims Management Services, said that Sutter's commitment to preventing pressure ulcers is unmatched.

"They have been groundbreaking in the scope of their project and long-term dedication to it," said Mulcahy. "Teresa can be a resource for anyone in the country. They can share this program with anyone in the country and help them save money, save lives and save litigation. I never heard of a program quite as intensive as this."

-- By Jared Shelly

Infusing Patient Safety with Passionate Care

In her previous life as a medical social worker and patient's rights advocate, Theresa Campbell Wallace focused on patient comfort and safety. Even today, they remain her ultimate goals.

"I think the difference is, what we do out of the home office is recognize who will carry the message, who do we need to collaborate with at each of our affiliates to get that passionate ... patient care," said Wallace, director of health care risk at Sutter Health in Sacramento, Calif.

That focus is true not only of the health care risk function at Sutter, but it's a message and a passion that infuses many individuals and departments within the not-for-profit network of hospitals and doctors, she said. And that includes the company leaders, who "are not talking dollars and sense; they truly talk to us about patient safety."

"What I would like to believe is that my passion, my own personal passion around patient safety, influences my senior leadership [as their passion influences her]," she said. "I am very proud of that."

It's for her work and what she does beyond her company's walls that we have named her a Responsibility Leader®.

--By Anne Freedman

Senior Manager, Risk Management

Steve Wilder
Vice President, Risk Management

The Walt Disney Co.

Surprise Audits Lead to Safety


The Walt Disney Co.'s Steve Wilder and Karen Kridel-Schwabe are all EARS on safety.

When it comes to safety at its retail stores, The Walt Disney Company brings an intensity that other companies may find difficult to match. For its chain of Disney Stores (which sell toys, clothes and other Disney merchandise) the company set up surprise visits to audit safety. Perhaps in homage to Mickey Mouse, the program has been nicknamed EARS, meaning Each Audit Reinforces Safety.

Representatives from Liberty Mutual (Disney Store's insurance carrier) visit stores and conduct surprise safety audits. A store manager is asked "yes-or-no" questions, as well as open-ended questions. The auditor uses a tablet loaded with a program created by third-party vendor CS STARS which uploads answers -- as well as photos and video -- to Disney executives in real time.

Are the fire extinguishers charged and up to date? Are sprinkler heads the correct distance from products? Does the store have an emergency-preparedness kit that is fully stocked? Are staff members lifting boxes of merchandise in the correct manner to reduce the risk of injury?

Steve Wilder, vice president of risk management and Karen Kridel-Schwabe, senior manager of risk management for Disney say that each store has its own unique challenges. They may have been built at different times, have different layouts, and have different storage locations for safety equipment like fire extinguishers etc.

Complicating matters was that the Disney Store chain was acquired by The Children's Place in 2004. The Children's Place ran the stores under a license agreement until Disney bought the majority of them back in 2008. That meant that some stores had different standards with different designs.

"They opened stores in that time period" said Wilder. "They were continuing to build stores that were not necessarily our design."

"It was important to us that The Children's Place ran stores in safe way," he continued. "We're not suggesting that we had this huge problem and they weren't safe," but Disney did need to coordinate the safety standards across the platform when it bought the stores back.

The audit program allowed Disney to weight certain questions more heavily than others, in accordance with its safety standards. So if certain important questions were answered in a noncompliant manner it could still possibly result in a failing total score.

Now in its second year, the program performs more than 200 safety audits annually and continues refining its questions year after year.

"We've taken it up a notch," said Kridel-Schwabe. "As we continue learning what to look for, we strive to use the tool to raise the bar."

And the results show that the program is working well.

Scores can range from 0 to 100 percent, and there has been a 14 percent increase in store safety scores from 2011 to 2012. Disney also had an 18 percent decrease in overall claims over the same time period.

"The EARS tool very quickly allowed us to educate the locations as to what is important and take a good hard look against those key metrics," said Kridel-Schwabe. "Did they need education or shift in mentality?"

A few stores even earned 100 percent on their safety audits, resulting in congratulatory calls from the president of the Disney Store chain. Those stores that didn't do as well were given a checklist of recommendations on how to improve.

The data gathered in the process allows Disney executives to identify safety trends across the Disney Store chain and make wide-scale changes to operations and maintenance if needed, said Kridel-Schwabe.

The safety assessment program is working out so well that the Walt Disney Company is considering rolling it out to other properties it owns such as ESPN; Disney owns 80 percent of that company.

"We're really lucky as risk managers to work for a company where safety is key," said Wilder. "It makes our job so much easier and more fun."

Mark Shepherd, account executive at CS STARS, said that it makes sense for a company as well-known as Disney to take such a hard-nosed stance on safety. Disney is a household name and any safety infraction could really hurt its reputation and brand.

Disney needs to make sure all of its 149,000 employees are safe on the job because of the sheer magnitude of the workers' comp claims it could be exposed to.

"For an organization like Disney," said Shepherd, "those costs can be staggering if they aren't managed properly."

-- By Jared Shelly