WORKERS COMPENSATION RED FLAGS October 18 th, Cassandra Rudy Workers Compensation Claims Consultant

Transcription

1 WORKERS COMPENSATION RED FLAGS October 18 th, 2018 Cassandra Rudy Workers Compensation Claims Consultant

2 AGENDA Workers Compensation Today Fraud Red Flags Prevention of Fraud Litigation October 15,

3 WORKERS COMPENSATION TODAY

4 WORKERS COMPENSATION TODAY Experience Modification Rating PTSD: Presumption & Treatment Parameters Presumption for Retirement Increased from age 67 to 72 for Dates of Injury After 10/1/18 4

5 WORKERS COMPENSATION TODAY $1.78 billion in 2016 Medical 35%, Insurer expenses 31% and Indemnity benefits 29% Integrated Benefits Institute: Direct loss, including time loss payments, medical, legal and benefits costs = 28% of total cost of disability >$6 billion annually on prescription drugs = 19% of overall medical costs 5

6 WORKERS COMPENSATION TODAY July 2018 Unemployment Rate 3% 6

7 QUESTIONS

8 FRAUD

9 WHAT IS FRAUD? A person who, with INTENT to defraud, receives WC benefits to which the person is NOT ENTITLED by misrepresenting, misstating, or failing to disclose any material fact is guilty of theft Representing party must know the fact was false and must have intended another to be induced to act based upon the false representation Misrepresentation must be the proximate cause of actual damages

10 WHAT IS FRAUD? 3 CONTEXTS IN MN WC CASES Perpetrating fraud to obtain benefit Fraud in the context of a WC settlement Fraud in the hiring process 10

11 WHAT IS FRAUD? TYPES Hurt off the job Self-inflicted or Intentional injury Inflated injury Double dipping Crooked doctors and lawyers Narcotic Abuse Fastest growing area of fraud Hard fraud vs. soft fraud 11

12 WHAT IS FRAUD? ABUSE VS. FRAUD > Abuse: any practice that uses the comp system contrary to either intended purpose that includes the magnification of symptoms and overutilization of benefits > PRESENCE OR ABSENCE OF A SPECIFIC, PROVABLE FALSE STATEMENT! 12

13 WHY DOES FRAUD HAPPEN? ROOT CAUSE: SOCIETY HAS CREATED AN ENVIRONMENT WITH HUGE INCENTIVES TO CHEAT LOW RISK, HIGH REWARD More than two-thirds of consumers (68 percent) say they believe insurance fraud happens because people believe they can get away with it (up from 49 percent in 2003); No formal Special Investigative Unit procedures Outreach weak overall 13

14 WHY DOES FRAUD HAPPEN? Morality Issues Regardless of age, consumers who cheated on exams in high school twice or more are far more likely to be dishonest later in life. Compared to consumers who didn t cheat, high-school cheaters are: Three times more likely to inflate an insurance claim (6 percent vs. 2 percent) and lie to a customer (20 percent vs. 6 percent); and Twice as likely to lie to or deceive their boss (20 percent vs. 10 percent). (Josephson Institute, October 2009) 14

15 WHY DOES FRAUD HAPPEN? FRAUD TRIANGLE SOCIOLOGIST DONALD CRESSEY > Incentive/Pressure > Rationalization > Opportunity ENTITLEMENT VICTIM 15

16 WHY DOES FRAUD HAPPEN? INSURANCE RESEARCH COUNCIL STUDY Approximately 10% of adults feel it is acceptable to have sustained an accident at home but claim they injured themselves at work Another 17% believe it is acceptable to cooperative with doctors and attorneys to file false claims to collect benefits 16

17 WHY DOES FRAUD HAPPEN? Coalition Against Insurance Fraud Accenture percent think insurance fraud doesn t hurt anyone. (Insurance Research Council, March 2013) More than half (55 percent) of U.S. consumers say poor service from an insurance company is more likely to cause a person to defraud that insurer More than three-quarters (76 percent) say they re more likely commit insurance fraud during an economic downturn than during normal times (up from 66 percent in 2003); 17

18 WHY DOES FRAUD HAPPEN? JOURNAL OF AMERICAN MEDICAL ASSOCIATION 1 out of 10 doctors have reported medical signs or symptoms a patient didn t have in order to help the patient secure coverage for needed treatment or services in the past year MEDICAL PROVIDER STUDY TASK FORCE, COALITION AGAINST INSURANCE FRAUD OCTOBER 2008 Licensing boards often fail to take any actions against those licensees who commit felony offences related to insurance fraud 18

19 FRAUD STATS MN DIVISION OF INSURANCE FRAUD PREVENTION ,476 referrals, 120 workers compensation related 2010 $20,836,308 in losses investigated 1,106 cases closed due to insufficient facts, unfounded or no prosecutable action 102 referred to prosecution 34 criminal charges with 8 convictions $608,940 in restitution 19

20 PROCESS OF PROVING FRAUD **It is the responsibility of the employer and insurer to prove all elements that fraud exists** MN INSURANCE PREVENTION UNIT > Since 1993 the Unit has investigated 3,300 cases, referred more than 200 to prosecution and between there were 99 criminal fraud charges filed with 74 convictions with $2,692,500 in total value 20

21 PROCESS OF PROVING FRAUD Workers Compensation standard exists of Reasonable Basis to Believe VERSUS the Criminal standard of Beyond a Reasonable Doubt 21

22 PROCESS OF PROVING FRAUD INCREASE SUCCESS RATE OF PROSECUTION Prove beyond a reasonable doubt Surveillance Interviews Synopsis 22

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24 CONSEQUENCES OF FRAUD If the employee is found guilty of theft in regard to a fraudulent WC claim = Up to 20 years in prison and $100,000 fine MN: Any theft >$500 = felony 24

25 CONSEQUENCES OF FRAUD 25

26 FRAUD CASES

27 RED FLAGS

28 RED FLAGS Rumors from co-workers Injured worker was recently hired Subjective complaints without objective findings Serial claimant 1 st thing Monday morning report Injury occurred immediately before interruption Lack of witnesses Injury occurred where worker isn t normally 28

29 RED FLAGS Immediate legal representation Overly familiar with WC terminology and legal Disgruntled employee Significant inconsistent statements Malingering Doctor shopping Development of symptoms in body parts not initially mentioned 29

30 RED FLAGS Reliable sources observe injured workers participating in activities outside restrictions Habitually missing medical appointments Lag time report Not home when you call Identification problems Medical incompliance 30

31 QUESTIONS

32 FRAUD PREVENTION

33 FRAUD PREVENTION PRE-HIRE Criminal Background Checks Professional Certification Verification Pre-Employment Physicals - CRT CANNOT LOOK INTO PRIOR WC HISTORY!! Character Testing 33

34 PRE-EMPLOYMENT PHYSICAL Strain/Sprain injuries account for 31% of the days that employees spend away from work if they have been on the job < 1 year Isokinetic physical capabilities evaluation that measures strength and range of motion for knees, shoulders and lower back Pre-Employment Post-Injury Assessment Fitness for Duty Functional Capacity Exam (FCE) Pre-Separation Baseline 34

35 CHARACTER TESTING Why? Because employee theft and fraud are costing an employer an average of $9 per employee per day!! Study reveals close connection between youthful attitudes & behavior and continuing patterns of dishonesty as young people enter the work world. People make companies successful and they are truly your #1 asset. 35

36 FRAUD PREVENTION: PRE-INJURY Promote a fraud-free workplace Educate employees on insurance costs Workers compensation orientation Safety policies and expectations Policies prompt reporting, stay-at-work program, reporting suspected fraud, filing false claims Supervisor training 36

37 FRAUD PREVENTION: POST-INJURY PROMPT REPORTING Waiting period 3 calendar days Insurance carriers view lag time reporting as a serious risk as it leads to higher costs! Institute written policy requiring employees to immediately notify their supervisor of a work-related injury. The rule should have disciplinary consequence for nonconformance 37

38 FRAUD PREVENTION: POST-INJURY MEDICAL TREATMENT Medical Choice? Interview Providers Communication Workability 38

39 FRAUD PREVENTION: POST-INJURY ACCIDENT INVESTIGATION Written form Physical inspection of scene Interviews Photos & preservation of physical evidence Written, signed narrative of injured worker Record keeping Recommendations 39

40 FRAUD PREVENTION: POST-INJURY STAY-AT-WORK PROGRAM Transitional Duty Indemnity costs decrease by 2/3 rd Medical costs decrease by 50% Speeds Healing by 3x Reduces Litigation Risk Improves Employee Morale Promotes Good Relationships & Trust 40

41 FRAUD PREVENTION : POST-INJURY FRAUD PREVENTION: POST-INJURY STAY-AT-WORK PROGRAM Impact of Age years old: 80-97% probability of return-towork years old less likely to return-to-work, out of work % longer than their younger counterparts Impact of Comorbities Diabetes Require 2-3x normal healing rate 41

42 FRAUD PREVENTION : POST-INJURY FRAUD PREVENTION: POST-INJURY COMMUNICATION Insurance Adjuster QRC, NCM Defense Counsel Agent Supervisor, HR, Safety 42

43 FRAUD PREVENTION : POST-INJURY FRAUD PREVENTION: POST-INJURY COMMUNICATION Employee - Listen - Find common ground - Be available - Sense of humor - Bring out their best 43

44 FRAUD PREVENTION : POST-INJURY FRAUD PREVENTION: POST-INJURY The most important single ingredient in the formula of success is knowing how to get along with people Theodore Roosevelt 44

45 FRAUD PREVENTION: POST-INJURY FRAUD PREVENTION : POST-INJURY TERMINATION Exit Interviews 45

46 QUESTIONS

47 LITIGATION

48 R=1

49 LITIGATION PROCESS LITIGATION PROCESS NOTICE TO DISCONTINUE BENEFITS Written notice to injured workers due to: Release without restrictions Maximum Medical Improvement (MMI) Return-to-work at full or partial wage Failure to diligently search for work Refusal of valid job offer Withdrawal from the job market Reaches TTD maximum cap 49

50 LITIGATION PROCESS DISCOVERY Medical Records Witnesses Employee Statement Depositions Independent Medical Exam (IME) Independent Vocational Exam (IVE) Surveillance 50

51 LITIGATION PROCESS SETTLEMENT CONFERENCE Office of Administrative Hearings (OAH) Informal Certificate of Readiness (COR) Approximately 9 months out from filing of Claim Petition Purpose: To discuss settlement, if impasses refer to OAH for Hearing or reset settlement conference days 51

52 LITIGATION PROCESS HEARING Both sides present evidence in support of their respective positions Generally the injured employee will provide testimony Compensation Judge issues final & binding decision on all parties within 60 days Process = 6 months to a year or more 52

53 LITIGATION PROCESS APPEALS 5 Judges 6 year terms appointed by the Governor, confirmed by Senate No term limit 53

54 LITIGATION PROCESS LITIGATION PROCESS MEDIATION Neutral 3 rd party assists disputing parties in reaching a mutually acceptable resolution Parties present summaries of their points of view Mediator meets privately with each party to explore the facts and issues of each side Continue to caucus alternatively with each party, carrying settlement proposals back & forth until an agreement is reached 54

55 LITIGATION PROCESS MEDIATION Agreement is an enforceable, legally binding contract Types of disputes Medical Change of doctor Wage loss Permanency Causation Retraining 55

56 LITIGATION PROCESS MEDIATION Benefits No cost Parties have equal say in process and decide all settlement terms No determination of guilt or innocence Voluntary & may be terminated at any time Promotes better relationships 56

57 LITIGATION PROCESS EMPLOYER INVOLVEMENT Attendance not required Why do you receive notices & other documents from the OAH? What if you disagree how the insurance company is handling the dispute? 57

58 LITIGATION PREVENTION RETURN-TO-WORK JOB OFFER Should be in writing, not required Within physical restrictions At or near pre-injury wage Employee obligated to respond within reasonable time Unreasonable refusal = forfeiture of TTD benefits 58

59 QUESTIONS

60 Cassandra Rudy Workers Compensation Consultant Legal/regional regulatory statement to be added here if required.