Employer Fraud in Workers’ Compensation

Legislatures around the country (including ours in Wisconsin) seem to be preoccupied with employee fraud in workers’ compensation, despite overwhelming evidence that employee fraud is virtually nonexistent. 

Employer fraud, however, continues to plague the industry.  Over the last decade, my friend and colleague Len Jernigan has published a Top 10 Workers’ Comp Fraud Claims.  The list from 2015 can be found at this link.

None of the Top Ten includes only an injured worker.  The top six of the Top Ten stem from California claims.  Others are from New York, Washington, Utah, and Massachusetts. 

This year’s dollar amounts were particularly substantial, with nearly $850 million in total frauds, the largest being a $580 million kickback scheme out of California.  The California kickback scheme involved surgeons and the owner of a hospital.  The other California claims included FedEx mislabeling their drivers as Independent Contractors in order to avoid insurance, and the owners of a translation service fraudulently billing the workers’ compensation system.  Additional mislabeling involved California truck drivers from Pacer Cartage, which owed over $2 million to seven truckers, due to unlawful payroll deductions and misclassifications as Independent Contractors.

The single case involving a worker is a professional football player from the New York Giants who colluded with a claims adjuster, providing fictitious invoices and statements for more than $1.5 million.  The New York, Washington, and Utah claims also involved misclassification in which no workers’ compensation insurance was paid for actual employees.

Another popular theme is the under-reporting of earners in order to be granted lower insurance premiums.  That scheme was uncovered in Massachusetts, avoiding more than a half million dollars in insurance premiums.

The workers’ compensation insurance industry has done a marvelous job in diverting attention from the real culprits (employers, medical providers, and insurers) to the very rare, but sometimes spectacular claims involving employee fraud.  (A worker claiming permanent and total disability climbing around on rocks is far sexier than a financial officer mischaracterizing his employees in a closed office.)

Status of Workers’ Compensation in the United States

For all those concerned about worker’s compensation in our country—which really is all citizens—take a look at this important report on the current status of worker’s compensation systems.  The report, from the Worker’s Injury Law & Advocacy Group (WILG) highlights the scary place where some legislators and big businesses want to take worker’s compensation.


WILG - The State of Workers' Compensation In The United States

Click Here For The Report (PDF)


Advisory Council Bill Is A Compromise …But The Alternative Is Chaos

Those of us representing injured workers were recently forced into a somewhat difficult decision regarding proposed changes to Wisconsin workers’ compensation law.  As discussed in prior posts, two parallel bills were proposed, one sponsored by the Workers’ Compensation Advisory Council (SB-536 / AB-724) and one sponsored by Republican Representative Spiros (AB-501)  The Spiros bill—aka the worker’s compensation destruction bill —would have completely altered the nature of 100 years of workers’ compensation in Wisconsin, adding the concept of “fault” back into a no-fault system that has been operating based on that premise for a century.  Additionally, the work comp destruction bill would have reduced the Statute of Limitations for filing the claim and claiming medical benefits on the claim from the current twelve years to an incredibly harsh two years. 

The agreed-upon Advisory Council Bill (WCAC bill) also contains benefits for injured workers as well as employer-friendly provisions, some coming at the expense of injured workers. For example, employees who are fired for misconduct or substantial fault could be denied workers’ compensation benefits based upon a definition of misconduct imported from the Unemployment Compensation system. Unemployment Compensation law defines misconduct as a worker showing such a willful disregard of an employer’s interest to be a deliberate violation, or carelessness or negligence showing wrongful intent suggesting an intentional substantial disregard of an employer’s interests. Quite simply, under this provision, injured workers might lose their jobs because of misconduct or substantial fault, thus losing out on both Unemployment Compensation and Workers’ Compensation benefits.

Additional provisions of the WCAC bill would deny benefits to those workers whose injuries have been caused by the use of alcohol or drugs. The Statute of Limitations reduced from twelve to a reasonable six years for traumatic injuries.  Significantly, the workers’ compensation insurance carrier can now ask for medical support to apportion pre-existing disability, which should trigger a substantial increase in litigation. 

Some would suggest that the Advisory Council bill is not “worker-friendly.” It is more appropriately viewed as a COMPROMISE. Labor and management representatives bargained for the changes. The Advisory Council bill is the result of give-and-take compromise and an acknowledgement by labor of the current political reality in Wisconsin.   In any compromise, parties get and give up certain things.  This compromise is the stabilizing force for the successful worker’s compensation system in our state. Lone wolf legislation without consideration by the compromises of the Advisory Council should be rejected. 

Support the Advisory Council process and Agreed-Upon Bill.

Unemployment and Worker’s Comp

Interesting take on a provision in the newly proposed Worker’s Compensation Advisory Council (WCAC) bill: https://wisconsinui.wordpress.com/2016/01/15/substantial-fault-and-misconduct-principles-from-unemployment-law-to-come-to-workers-compensation/ 

One of the provisions in the new WCAC bill would allow denial of temporary disability/lost time benefits if a worker is terminated for “misconduct” or “substantial fault.”  These terms will be defined based on unemployment law standards.  Misconduct and substantial fault recently were brought into play with changes to the unemployment insurance laws in Wisconsin.  These legislative changes certainly were employer-friendly, allowing employers a greater ability and opportunity to deny unemployment benefits.

With worker’s compensation poised to adopt this standard for lost time benefit denials, workers definitely could face a rough spot when recovering from a job injury.  If the employer terminates a worker for alleged misconduct or substantial fault, they would be denied unemployment benefits and worker’s compensation benefits–until an administrative hearing is held to determine the legitimacy of the employer’s actions.  The possibility for many worker’s compensation hearings turning into “he said/she said” determinations like in unemployment cases is a strong possibility.

In the bigger picture, all sides must remember that this was a compromised agreed-upon bill by labor and management.  Both sides gained and gave up provisions–this produces the stability in the worker’s compensation system.


Worker’s Compensation Advisory Council Bill Introduced!

The Worker’s Compensation Advisory Council has done what it always does: modifies and improves on the Worker’s Compensation Act.  The Advisory Council once again produced a common sense reform bill that was recently introduced into the legislature.

The Bill (SB-536) is here:http://docs.legis.wisconsin.gov/2015/related/proposals/sb536  Public hearings are now occurring on the Bill.   This is fantastic news.

Previous posts discussed the relevant provisions of the Advisory Council Bill.  The bill is a compromise–with benefits and concessions for employers and workers. Employers has provisions about addressing fraud in the system, denial of benefits for injuries connected to drug/alcohol violations, and ending of benefits for misconduct terminations.  In turn, workers have some modest increases in annual benefits and easier access to vocational retraining claims and benefits.  These compromises produce common sense reforms and improvements to the work comp system. 

The hope and goal is that the Wisconsin legislature swiftly passes the Council bill.  Passage of the Advisory Council bill preserves the integrity and stability of the worker’s compensation system–a system that is the nation’s gold standard.

Does HR Have a Retention Strategy for Injured Employees?

Today’s post was shared by Workers Comp Gazette and comes from workerscompgazette.com

Employee retention, employee engagement and talent management are the buzz words in the Human Resource Community. Every major publication predicts some level of talent shortage, yet every year employers allow trained talent to walk out their door after an occupational injury.

As the HR Professional managing workers compensation you must have a retention strategy for injured employees!

Historically, the workers’ compensation laws have not adequately supported the return to work process – it is much easier to offer injured employees a settlement than it is to provide them with the opportunity to return to gainful employment. The only problem with this scenario – the next employee you hire could be someone else’s settlement.

The key reason why employers do not make a valiant effort to retain injured employees – Fear! Fear of re-injury, fear of litigation or just fear of workers’ compensation.

All too often, an injured worker is not put back into the workforce for one of three reasons. First, employers do not feel that they can offer the employee a limited but meaningful job. Or second, you worry that the recovering employee, who is not up to “full speed”, many re-injure themselves and create additional injury claims. Third, you may not have the resources to systematically implement a proactive injury management program. And there’s also, the negative side of Injury Management.  Most employers do not want to deal…

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Insurance Carrier Subject to Lawsuit for Failing to Reimburse CMS

Today’s post was shared by Jon L Gelman and comes from workers-compensation.blogspot.com

Workers’ Compensation insurance carriers have a duty to reimburse the Centers of Medicare and Medicaid Services for conditional medical payments. Failure to do so may result in a private cause of action by the injured worker or his representative for double damages. Once the lawsuit is filed the workers’ compensation insurance company cannot mitigate the double recovery penalty by making payment.

A private cause of action was permitted to go forward seeking double damages by an estate against a workers’ compensation insurance carrier for failing to reimburse CMS for conditional medical payments. The District Court, Charles R. Simpson, III , Senior District Judge, held that an issue of fact as to whether insurer did nothing to reimburse Medicare prior to estate’s commencement of private action precluded summary judgment.

The Court held that a genuine issue of material fact existed as to whether workers’ compensation insurer did nothing to appropriately reimburse Medicare for medical expenses that Medicare had paid for a work-related injury until estate of deceased employee brought private action under the Medicare Secondary Payer Act (MSPA), precluding summary judgment on whether estate was entitled to double recovery under the MSPA. 42 U.S.C.A. § 1395y(b)(3)(A).

"The private cause of action provision allows for damages “in an amount double the amount otherwise provided” – the purpose being to encourage beneficiaries to bring claims even if Medicare…

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Drug Overdose Deaths Hit ‘Alarming’ New Record in U.S., CDC Says

Today’s post was shared by WC CompNewsNetwork and comes from www.nbcnews.com

Deaths from opioid drug overdoses have hit an all-time record in the U.S., rising 14 percent in just one year, the Centers for Disease Control and Prevention reported Friday.

More than 47,000 people died from these drug overdoses last year, the CDC reported.

"These findings indicate that the opioid overdose epidemic is worsening," the CDC’s Rose Rudd and colleagues wrote in their report.

"The increasing number of deaths from opioid overdose is alarming," said CDC Director Dr. Tom Frieden.

"The opioid epidemic is devastating American families and communities. To curb these trends and save lives, we must help prevent addiction and provide support and treatment to those who suffer from opioid use disorders," he added.

"This report also shows how important it is that law enforcement intensify efforts to reduce the availability of heroin, illegal fentanyl, and other illegal opioids."

The CDC is embroiled in a big fight over how to do this. It proposed new draft guidelines this month that include using every other possible approach to managing pain before giving someone an opioid such as fentanyl or oxycontin to control pain.

This wouldn’t apply to terminally ill cancer patients and the proposed guidelines would be voluntary. But the pushback has been hard from patients, doctors and the drug industry, as well as groups such as the U.S. Pain Foundation and the American Academy of Pain Management.

"Those of us with chronic disabling illnesses…

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