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By Dane Johnson, CPA, Director, Internal Audit/SIU,
CompSource Oklahoma
Most workers’ compensation nsurers understand fraud is a topic that holds high interest for insureds whether it is detecting it, prosecuting it, or eliminating it. It’s true that most insureds believe a larger portion of their claims are fraudulent than actually are. Regardless, the fact remains that the perception to most policyholders is one of widespread abuse – which is reason enough for an insurer to establish a strong anti-fraud program aimed at early detection and reduction of fraud. One way to achieve that goal is to recognize and target those who have a vested interest in working with you to fight this crime. Claims adjusters, third party administrators, and policyholders are all likely candidates. By arming these individuals with the knowledge and expertise to recognize the red flags associated with fraud and encouraging them to act on their suspicions, you can expect your organization to experience more success in fighting this crime over time.
Oklahoma’s largest workers’ compensation insurance provider, CompSource Oklahoma, began an earnest commitment to fighting fraud in 1993 through the establishment of a Special Investigations Unit (SIU) which has realized cumulative savings of $27.6 million since its inception. Most recently, CompSource developed educational seminars designed to help claims adjusters, third party administrators, and private investigators increase their awareness of fraud. These seminars are also approved by the Oklahoma Department of Insurance and the Oklahoma Council of Law Enforcement Education Training for continuing education credits.
Fighting fraud requires a proactive team approach. The seminars help increase the size of an insurer’s fraud-fighting team by combating indifference and attrition while increasing fraud recognition, better enabling those involved in the workers’ compensation system to report any suspicions of fraud. With the amplified scrutiny, fraudulent activities are recognized early, lowering unwarranted benefit payments.
Educational/Training Seminars
The four-hour class covers all aspects of workers’ compensation fraud including claimant, policyholder, attorney, and medical provider fraud. While not intended to make experts of attendees the goals are to increase awareness of fraud and the difference between fraud and abuse. Good candidates for this kind of educational seminar are outlined here:
- Claims adjusters act as the insurer’s first line of defense against fraud. The seminar teaches adjusters how to identify potential fraud and how they can work with investigators toward a common goal. Not all investigations result in criminal charges or prosecution; however, the fraud investigation can be helpful to the adjuster in handling the claim and minimizing costs.
- The seminar teaches private investigators the difference between fraud and mere abuse or embellishment of a claim. This education gives the investigator a better idea of what to look for, adds value to their investigation and improves the quality of their materials, reports, and video surveillance efforts. With emphasis on identifying fraud (as compared to abuse) in relation to Oklahoma statutes, identifying and securing sufficient evidence of fraudulent activity, and the process of criminal prosecution, the seminar examines use of several tools.
- Surveillance: Attendees learn how to conduct video surveillance, the best times to do so for maximum effectiveness, how to analyze video footage in relation to known statements of the claimant, and how to determine when additional surveillance is warranted.
- Depositions: Guidance is given on how to develop specific questions in relation to the claim, the best time to request a deposition of the claimant or medical provider, and interpreting the results of the deposition.
- Subpoenas: Information is provided on the best timing for issuing a subpoena to ensure full disclosure of all pertinent records from a medical provider or employer.
- Interrogatories: Guidance is given on how to develop specific questions to ask the claimant in relation to their work or medical history. Assistance is given on identifying the timing and need of interrogatories in relation to the claim process.
- Workers’ Compensation Questionnaire: A questionnaire is provided to doctors and medical providers to complete when treating a claimant referred by CompSource. The questionnaire helps determine exactly what activities the claimant is no longer able to do because of the injury. The seminar points out the benefits of completed questionnaires and the disadvantages of failure to obtain one.
Hopefully, by arming seminar attendees with increased knowledge, your organization’s ability to fight fraud increases as well. The following case is an example of the success that can be achieved through this approach.
Teamwork in Action
While gathering information for processing a new claim, an adjuster became suspicious and referred the matter for investigation. It was determined the claimant had been employed for two months when he reported he had injured his right shoulder during a fall from a landing. The claimant was referred for medical treatment and physical therapy. During these visits, the claimant complained about not being able to use his right arm due to the pain in his shoulder. The physical therapist’s notes repeatedly indicated the claimant refused to cooperate with the therapy, claiming the movement caused him too much pain.
However, when the claimant’s activities were observed, it was discovered that at the same time he was telling the doctor and physical therapist that he was unable to use his arm due to pain, he was actually working for another company as a delivery driver performing heavy physical labor. The claimant used his arms and shoulders continuously without any medical aids or devices and displayed no hesitation or discomfort.
Investigative evidence clearly indicated the claimant had not received an injury of the severe nature he was alleging in his statements to the doctors and that, in fact, during the same time period he was engaged in the very type of activity he was claiming to be unable to perform.
CompSource’s Special Investigations Unit (SIU) submitted the case to Oklahoma’s Office of the Attorney General. Workers’ compensation fraud charges were filed. The claimant later pled guilty to the charges and, due to circumstances of the case and his prior criminal record, he was sentenced to fifteen years jail time with the first nine years to be served in custody and the last six years to be suspended. The claimant was also required to pay $2,733.01 in restitution.
The combined efforts of the claims adjuster, the SIU investigator, and the Office of the Attorney General resulted in a positive outcome in the continuing fight against workers’ compensation fraud.
It is a flight of fantasy to believe that workers’ compensation fraud will one day be eliminated. However, it is possible through a proactive teamwork approach to minimize its impact in the workers’ compensation system.
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