defending against workers compensation fraud: module ii

Download Defending Against Workers Compensation Fraud: Module II

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  • 1.Copyright 2012 EMPLOYERS. All rights reserved.EMPLOYERS and Americas small business insurance specialist are registered trademarks of Employers Insurance Companyof Nevada. Employers Holdings, Inc. is a holding company with subsidiaries that are specialty providers of workerscompensation insurance and services focused on select, small businesses engaged in low-to-medium hazard industries.The company, through its subsidiaries, operates in 31 states and the District of Columbia from 12 office locations.Insurance is offered through Employers Insurance Company of Nevada, Employers Compensation Insurance Company,Employers Preferred Insurance Company and Employers Assurance Company, all rated A- (Excellent) by the A.M. BestCompany. Coverage is not available in all jurisdictions and varies by company. See for coverageavailability.2

2. Ranney P. PagelerV.P. Fraud Investigations DepartmentEMPLOYERS Ranney has successfully referredmore than 600 criminal prosecutionsin 23 states for workerscompensation fraud related crimes. Anti-fraud program has been thesubject of several news mediaarticles and broadcasts. Member of several anti-fraudorganizations and taskforces.3 3. Claimant Fraud Detection and Investigation The Policyholder Recognizes several Red Flag indicators of fraud: The claim was filed late (upon termination of employment). Injury was unwitnessed. The facts did not support the claimants own description ofaccident. Medical treatment was initially declined by claimant. Notifies the carrier of suspected fraud: Notified the claim examiner of the Red Flags for potential fraud. Claim examiner notified the EMPLOYERS Fraud InvestigationsDepartment of the potential fraud issues. 4 4. Claimant Fraud Detection and Investigation (Contd) The Insurance Carrier Claim examiner coordinated the administrative claim handling, while the EMPLOYERS Fraud Investigations Department conducted a criminal investigation. Policyholder, employees and others were interviewed. Documentary evidence was identified and collected. Claimants previous claims history was obtained and reviewed. Claimant and witness statements were documented and scrutinized. Any exculpatory evidence was identified, documented and reviewed. 5 5. Referral of Criminal Investigation Package to LawEnforcementThe Insurance Carrier A formal report of investigation was prepared, documenting the overt acts that demonstrated that the crime of workers compensation insurance fraud had been committed by this claimant. The Investigation Report identified suspect(s), evidence, witnesses, the amount of actual/potential loss and a timeline of relevant events. The completed investigation package, including the report of investigation and all evidence items was provided directly to the appropriate law enforcement agency for further investigation. Communication was maintained between the claim examiner and the EMPLOYERS Fraud Investigations Department to ensure proper administrative handling of the claim. 6 6. Prosecutorial Review and Criminal Charging Law Enforcement and the Prosecutorial Agency Law enforcement independently investigated and substantiated the facts, statements and evidence contained in the insurance carriers investigative package. The Prosecutorial Agency assessed the criminal prosecution potential following a referral from law enforcement. The prosecutor submitted a seven-count criminal complaint, with affidavit in support thereof, to the court, which then issued a felony arrest warrant for the claimant. The claimant then fled the country for a period of more than four years.7 7. Handling Fugitive Flight The Insurance Carrier and the Prosecutorial Agency The insurance carrier had to check its records annually todetermine if any contact had been made with the claimant. The insurance carrier then had to annually notify the prosecutorialagency that had filed the criminal complaint of its records searchand request that the arrest warrant remain active. The prosecutorial agency had to attempt annually to locate thewanted fugitive and re-activate the warrant in the various nationaland state law enforcement databases. 8 8. Obtaining the Criminal ConvictionThe Prosecutorial Agency The claimant was arrested during the commission of another unrelated crime. The arresting agency discovered the outstanding felony warrant during the jail booking process. The claimant was brought to the court that had issued the felony arrest warrant where he ultimately pled guilty and admitted that no industrial accident/injury had occurred. The claimant was sentenced to extended probation, ordered to pay restitution and held in custody facing other criminal charges and subsequent deportation. 9 9. Totally Fraudulent v. Partially Fraudulent Claim The Criminal Conviction Impact A totally-fraudulent claim is a claim where it can be proven thatthe injury never happened or was never industrially related: boththe occurrence and the total amount of the claim is removed fromthe policyholders experience modification history (as a non-compensable claim), retroactively to the initial date of thefraudulent claim. A partially-fraudulent claim is a claim where it can not be proventhat the injury never occurred, merely proven that the injury hadno effect on the claimant after a specific date: an occurrenceremains on the policyholders experience modification history, butthe amount of the claim is reduced by the amount of the fraud. 10 10. Obtaining a Retroactive Positive Financial Result for thePolicyholder The Insurance Carrier Amended Unit Statistical Reports were filed by the carrier,retroactively removing the financial impact of the fraudulent claimfrom the policyholders experience rating history, even after morethan six years had expired from the initial date of injury to thedate of criminal conviction. EMPLOYERS issued a refund check to the policyholder to coverthe adjustment of premium for the covered policy periods that hadbeen adversely effected by the fraudulent claim. All subsequent insurance carriers had to provide similar premiumrefunds to the policyholder for the policy periods covered bythose carriers. 11 11. What Did All of This Mean to the Policyholder? The policyholders letter says it all:12 12. ContactYou may contact Ranney P. Pageler directly at EMPLOYERS Fraud Investigations Department: (800) 750-3939 While we can only handle suspected fraudulent cases forEMPLOYERS policyholders, please feel free to contact us with general workers compensation fraud questions. We can alsoprovide contact information to direct you to the appropriategovernment agency or insurance fraud unit for your jurisdiction.12


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