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Worker's Comp Fraud - How to Limit Its Impact on Your Claims

By: Scott M. Tilley, Esq.

There is little doubt that fraud is an issue in California workers’ compensation. Estimates of its prevalence range from 1-2% of all claims to a staggering 20% of claims. While the 20% figure has been largely discredited, the existence of any fraud in the system is too much and serves to further burden the already arduous job of workers’ compensation adjusters. In 1999 there were an estimated 1.6 million workers’ compensation claims in California. If 2% of these are fraudulent we are looking at 32,000 fraudulent claims. This is only applicant fraud and doesn’t even take into account medical provider fraud.

We all need to remember that insurers and employers are required by law to report suspected fraud claims to the local district attorney and the Department. But how is one to know when fraud is present? The first step is always to properly investigate all claims to include employer level investigation and a deposition of the applicant. The following are some “red flags” to look for:

Spotting injured worker claim fraud

• Number of days worked and amount of salary inconsistent with occupation;
• Injured worker disputes average weekly wage due to additional income (i.e., per diem and/or 1099 income);
• Cross-outs, white-outs and erasures on documents;
• Injured worker files for benefits in a state other than principle location of the alleged industrial injury or occupational disease;
• Injured worker-listed occupation is inconsistent with employer’s stated business;
• Injured worker address is different than principle location of employer other than border states;
• Injured worker cannot be reached because he or she is never home or is reportedly sleeping and cannot be disturbed;
• Injured worker is seen with calluses on hands, grease under fingernails;
• Injured worker moves out of state or country shortly after filing claim;
• Accident/incident occurs immediately prior to strike, layoff, plant closing, job termination or job completion;
• Injured worker is in line for early retirement;
• Injured worker refuses (or delays multiple times) diagnostic procedures to confirm injury;
• Conflicting descriptions of the accident/incident between employer’s report and initial medical evaluation;
• Injury is not consistent with nature of business;
• Date, time and place of accident is unknown;
• Injured worker cannot recall specific details about the injury
• Report of injury not timely and immediate;
• No witnesses to accident;
• Tips from coworkers.

Spotting health-care provider fraud

• Injured worker does not recall having received the billed service;
• Provider’s medical reports read almost identically even though they are for different patients with different conditions;
• Much higher health-care costs than expected for the allowed injury type;
• Frequency of treatments or duration of treatment period is greater than expected for allowed injury type, especially for older (non-catastrophic) claims;
• Frequent billing in older (non-catastrophic injury) claims;
• Larger volume of prescription drugs billed than expected for the allowed injury type;
• Billing for treatment on consecutive dates of service for minor allowed conditions;
• No change in treatment regimen or no measurable improvement after an extended period;
• Same doctor(s) and attorney(s) are repeatedly associated with the same questionable claims;
• Unexplained sudden increase in a provider’s billing and payment levels;
• Provider services are billed (for non-emergency care) for dates of service on weekends or holidays or on dates when the patient was hospitalized;
• Provider bills for dates of service within time periods for which the provider had previously billed and received payment;
• Provider bills for dates of service after the effective date for change of physician of record;
• Managed care organization knowingly participates in schemes intended to cause BWC to pay monies that it otherwise would not pay;
• Medical documentation does not support service billed and/or is inconsistent with the services billed;
• Frequent delays in the submission of requested records;
• Great distances between the provider and injured worker;
• Submission of bills with non-industrial diagnosis codes. Bills resubmitted with codes changed to an allowed diagnosis;
• Billed procedures are inconsistent with allowed conditions or industrial conditions;
• Billed procedures are identified by American Medical Association as being for “one or more areas” billed with multiple units of service;
• Billed procedures are for evaluation and management codes only;
• Provider is actively billing multiple claims for an injured worker;
• Day or date of service is inconsistent with the type of provider;
• Provider billed for services that were not likely to have been performed.

The presence of “red flags” doesn’t automatically mean the individual or provider is guilty of fraud, it just means that a closer look should be taken. When appropriate the SIU personnel in your organization should be consulted. Remember what it takes to show criminal fraud: there is a lie or misstatement, knowingly or intentionally made for the purpose of obtaining benefits or payment.

 

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