The New York State Insurance Fund arrested two Long Island builders and one claimant in separate cases of alleged workers compensation fraud with a potential total of more than $1 million. All three arrests took place last week, resulting from joint investigations by the Suffolk County District Attorney Insurance Crime Unit, the New York State Insurance Department Frauds Bureau, the Workers’ Compensation Board Fraud Inspector General’s Office and NYSIF’s Division of Confidential Investigations.
NYSIF has mounted an aggressive campaign against workers’ compensation fraud for many years thanks to the cooperation and assistance of our investigative counterparts at other agencies and the law enforcement community throughout New York State,” NYSIF Chief Deputy Director Francine James said. Monica Martinez, 37, also of Freeport, was charged with fraudulent insurance practices for allegedly working while maintaining in documents she signed and returned to NYSIF that she had not returned to any form of work since suffering a back injury as a dental assistant in 2005.
Investigators said Martinez, who was receiving $400 per week for a temporary total disability, allegedly returned to work as a dental assistant while defrauding NYSIF of $39,360. A workers’ compensation abuse hotline and investigative unit to detect fraud is being set up by the Oregon Department of Insurance and Finance. The unit’s formal name will be the Medical Review and Abuse Unit of the Workers’ Compensation Division of the Oregon Insurance and Finance Department.
The decision to set up the hotline and investigative unit came in the wake of a test last year to gauge the level of possible fraud and abuse of workers’ compensation. Allegations from callers pointed to possible abuse in many quarters, including medical providers, workers, employers, attorneys, insurers, and vocational rehabilitation providers. He went on to say that the division “is currently drafting changes in workers’ compensation regulations which will increase its ability to closely monitor the performance of medical providers, investigate instances of abuse, and impose the appropriate sanctions when violations are verified. He noted that the right of six firms to write new workers’ compensation coverage in Oregon had been suspended because of repeated instances of poor service to claimants and disregard for workers’ compensation laws and regulations. Larry Doty, a member of the special investigations unit of ACE USA Insurance, said he has caught a number of “injured” employees out doing things they claim they can’t do at work. That lady, and anyone else who files false job-related injury claims, is committing workers’ compensation fraud.
Doty said the insurance industry estimates that 10 percent to 15 percent of workers’ comp claims are fraudulent. Still, Missouri and Kansas were concerned enough with issues such as fraudulent claims and uninsured employers to establish divisions to oversee workers’ compensation issues in 1993. I just think it is something that should be continually monitored,” said Dennis Moore, the chief administrator of Labor and Industrial Relations Fraud Detention and Investigation, part of Missouri’s Division of Workers’ Compensation.
Karen Wittman, assistant attorney general at the Division of Workers’ Compensation Fraud and Abuse Unit, saw 166 cases last year, compared with Missouri’s 1,858. Although Wittman deals more with fraud than uninsured employers, she is looking to crack down on businesses that are not in compliance with state workers’ comp laws. Occeno said employers and insurance companies can look for warning signs to pick out claims for possible investigation.
Also, claims filed during the holiday season, before an employee is expected to retire or quit, or before a large layoff are also warning signs of fraud. Investigators also watch for claims filed by employees with pre-existing conditions or prior claims or those who refuse medical treatment for the injury. With one fraud case successfully prosecuted, two Missouri state departments are hoping this sends a message to anyone who thinks he or she can Cheat on workers compensation claims.
She had withheld a doctor’s report saying that Alma Froemel, 61, was totally disabled after a lower-back injury while working for the Salvation Army, telling Froemel she could not give her the report and erroneously saying the report only had to do with Social Security, not workers comp. When a legal adviser in the workers compensation division felt the Froemel case needed additional investigation, he had asked Christiansen, who represented the insurance company, for doctor’s reports.
The case is significant in that it is the first successfully prosecuted case in which the state’s new Fraud and Non-compliance Unit played a role. Now, the unit is investigating about 400 cases of workers compensation fraud or noncompliance, which is when employers are not providing workers compensation insurance or who are otherwise not following state law on coverage Workers’ compensation insurers have referred more than 4,000 suspected fraud cases to law enforcement agencies and have saved millions of dollars in dismissed claims since a fraud law that went into effect about eight months ago.
Senate Bill 1218, the workers’ comp fraud-fighting measure, which provided funding for more workers’ comp fraud investigators at the Department of Insurance and District Attorney’s Office, also required insurance companies which issue workers’ comp policies to establish by July 1, 1992, their own special investigation units to combat fraud, said Jerry Treadway, Los Angeles regional supervisor of the Insurance Department’s fraud bureau.
Although insurers can comply with the law by hiring just one investigator, some companies have developed sophisticated computer systems, hired former police officers and run undercover investigations with video cameras, insurers said. In the first six months of 1992, 35 insurer groups representing 77 percent of the statewide workers’ comp premiums submitted 3,911 claims involving suspected fraud to various government agencies, according to the California Workers’ Compensation Institute (CWCI) an industry-supported education institution.
The main source of the problem are workers’ comp mills — organized operations which involve “cappers” (people who solicit workers to file claims, often recently unemployed workers) and networks of doctors and lawyers, insurance companies said. At Woodland Hills-based Transamerica Insurance Group, for example, 10 medical clinics using 120 different names accounted for 40 percent of the company’s total gross workers’ comp billings last year, said Sherri Miller, assistant vice president of special investigations for the company.
Chicago-based Kemper Group of Insurance Cos. , which through its subsidiaries is the ninth largest workers’ comp insurance writer in the state, has also saved money by refusing to pay claims they investigated and believed to be fraudulent, said Gene Adams, head of Kemper’s workers’ comp fraud investigations for California.
