PAUL GALLAGHER, an author in the Philadelphia area who frequently writes for our sister publication, Human Resource ExecutiveŽ
In April 2008, a drive-through cashier employed by a Taco Bell in Vallejo, Calif., claimed a box of soda syrup fell on her foot, injuring her. At the time, she might have thought she had a pretty sweet case to take a little time off by filing for a workers' compensation claim.
After all, none of her co-workers witnessed the alleged accident and when the employee called for help, she certainly seemed to be in pain.
Unknown to the employee, a video-surveillance camera recorded her every move, and when the employer and its insurance company reviewed the data of the time of her alleged injury, her claim fell apart like a soggy taco.
Investigators clearly saw the employee carefully place the box of syrup on her left foot before calling for help. In January, she pleaded no contest to one count of insurance fraud in a Solano County, Calif., courtroom.
While the case was a slam-dunk for the employer, insurer and prosecutor to prove, many cases of workers' compensation fraud are not that simple, according to experts.
Joe Burgess, senior executive vice president at CHSI, a Sacramento, Calif.-based company that designs and manages workers' compensation self-insured groups, says the variety of possible fraud schemes can strike terror into the hearts of employers, who may feel helpless as they watch premiums skyrocket.
"Most people, when they think of workers' comp fraud, they think of the bad employee who's working the system," he says. "They're certainly out there, and that's the thing that's probably most real to employers."
He notes there are a host of fraudulent schemes that exist beyond the crooked employee, including dodgy doctors and phantom physical-therapy services that jack up the bill, sometimes without the injured employee's knowledge.
Laura Clifford, the founder and owner of Anaheim, Calif.-based Employers Fraud Task Force, says there are many red flags that employers have to be attuned to.
Clifford founded the group in 1998 after she found that businesses were reluctant to expand into California due to the perceived rampant fraud. The group's first meeting was held in the Los Angeles District Attorney's office and included major employers, insurance executives, doctors, attorneys and others. They reviewed cases and discussed methods of approaching fraud.
"What we found was that less than about 10 percent of the fraud was being committed by the injured worker, and about 90 percent was everybody else: the doctors, the lawyers, employers, adjusters, a bill review company. ... Virtually anybody who touches a claim could cheat the system," Clifford says. "This is a national problem."
One policy that Clifford's organization advocates is transparency of benefits to the injured employee. By making certain that the injured employee receives a detailed explanation of benefits, employees can review billed services, and potentially catch fraudulent charges.
"Employees don't know it's going on, the employer doesn't know it's going on," says Clifford, yet millions of dollars can be lost through such fraud. "Sometimes, it's just $500 at a time."
Clifford says the Walt Disney Co. is enacting such a policy this month, requiring that all injured employees receive a full explanation of benefits. The Burbank, Calif.-based company is among the members of Clifford's group.
"If just one injured worker calls and says, 'You know, I only went to the doctor four times, I didn't go eight times,' then Disney will look at that doctor and see what other patients this doctor might have seen," says Clifford.
David Weinstein, a partner in the litigation department of Chicago-based employment law firm Wildman Harrold, says "here is an underworld to almost every kind of profession. You have the renegade doctors, the renegade X-ray technician ... all the folks that are going to think that, because they're getting a little bit on this, it's all worthwhile."
But, Weinstein says, such criminal activity is the exception rather than the rule, because of the potential loss of a license to practice medicine. "Talk about low dollar return," he says.
In fact, says Weinstein, most practitioners and service providers who work with workers' compensation claims are unlikely to defraud the system because they won't want to risk interrupting a steady source of income. An employee who attempts fraud, he says, is the type who would simply settle for a fraction of their salary in lieu of working.
"Somebody can be doing work on the side, but the reality is, sooner or later, they're going to get caught doing that," he says.
But catching an employee who fraudulently files a workers' compensation claim can also be sticky, says Weinstein. If an employer is certain they've been stung by a fraudulent claim, and their insurer is lax in investigating the allegation, they can't just grab a video camera and play private eye.
"Let's say the person says they have a back injury, and [the employer] now [has] a videotape from a private investigator showing the person playing basketball and doing back flips," says Weinstein. "They fire the person for fraud. The workers' compensation claim may very well be defeated, but in many states, that employee can turn around and sue the employer for workers' comp retaliation.
Weinstein suggests that employers who feel they're not getting satisfaction in protecting their interests against such fraud should try to work with their insurer to come up with more aggressive investigations, or even consider finding a new carrier.
"If they still want to do something further, yes, they can hire a private investigator, but at that point, the employer needs to contact counsel," he says.
Burgess says he doesn't think the impulse to defraud an employer through workers' compensation is driven by economic pressures. On the contrary, he says, a troubled economy may pressure employees to steer clear of such schemes out of fear of getting caught and losing their jobs. In some cases, Burgess says that a potentially fraudulent claimant will give himself away by revealing a pattern of such claims in his past.
"Those would be a red flag, of course," says Burgess.
While investigating injury reports is important for fraud purposes, Burgess says, it's also important as a means of demonstrating to employees that the company cares about its employees.
"It says to everybody, 'Hey, accidents are important around here,' " says Burgess.
Clifford also suggests that employers should personally contact employees to explain benefits as well as send get-well cards and other communication. Doing so will not only bolster employee loyalty, but can also help fill a void that sometimes follows a workers' compensation claim by the employee -- a void that sometimes is filled by an attorney, says Clifford.
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February 23, 2010
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