Transcript
Page 1: Defending Against Workers Compensation Fraud: Module II

ADP Module III

Fight Claimant Fraud

and Win!

Don’t Let Your Business Become a Victim

Page 2: Defending Against Workers Compensation Fraud: Module II

Copyright © 2012 EMPLOYERS. All rights reserved.

EMPLOYERS and America’s small business insurance specialist are registered trademarks of Employers Insurance Company of Nevada. Employers Holdings, Inc. is a holding company with subsidiaries that are specialty providers of workers' compensation 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. Best Company. Coverage is not available in all jurisdictions and varies by company. See www.employers.com for coverage availability.

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Page 3: Defending Against Workers Compensation Fraud: Module II

Ranney P. PagelerV.P. Fraud Investigations Department EMPLOYERS®

Ranney has successfully referred more than 600 criminal prosecutions in 23 states for workers’ compensation fraud related crimes.

Anti-fraud program has been the subject of several news media articles and broadcasts.

Member of several anti-fraud organizations and taskforces.

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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 claimant’s own description of

accident. 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 Investigations

Department of the potential fraud issues.

Claimant Fraud Detection and Investigation

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Page 5: Defending Against Workers Compensation Fraud: Module II

Claimant Fraud Detection and Investigation (Cont’d)

• 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. Claimant’s previous claims history was obtained and reviewed. Claimant and witness statements were documented and

scrutinized. Any exculpatory evidence was identified, documented and

reviewed.

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• The 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.

Referral of Criminal Investigation Package to Law Enforcement

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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 carrier’s 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.

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Handling Fugitive Flight

The Insurance Carrier and the Prosecutorial Agency

The insurance carrier had to check its records annually to determine if any contact had been made with the claimant.

The insurance carrier then had to annually notify the prosecutorial agency that had filed the criminal complaint of its records’ search and request that the arrest warrant remain active.

The prosecutorial agency had to attempt annually to locate the wanted fugitive and re-activate the warrant in the various national and state law enforcement databases.

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Obtaining the Criminal Conviction

The 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.

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Page 10: Defending Against Workers Compensation Fraud: Module II

Totally Fraudulent v. Partially Fraudulent Claim

The Criminal Conviction Impact

A totally-fraudulent claim is a claim where it can be proven that the injury never happened or was never industrially related: both the occurrence and the total amount of the claim is removed from the policyholder’s experience modification history (as a non-compensable claim), retroactively to the initial date of the fraudulent claim.

A partially-fraudulent claim is a claim where it can not be proven that the injury never occurred, merely proven that the injury had no effect on the claimant after a specific date: an occurrence remains on the policyholder’s experience modification history, but the amount of the claim is reduced by the amount of the fraud.

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Obtaining a Retroactive Positive Financial Result for the Policyholder

The Insurance Carrier

Amended Unit Statistical Reports were filed by the carrier, retroactively removing the financial impact of the fraudulent claim from the policyholder’s experience rating history, even after more than six years had expired from the initial date of injury to the date of criminal conviction.

EMPLOYERS issued a refund check to the policyholder to cover the adjustment of premium for the covered policy periods that had been adversely effected by the fraudulent claim.

All subsequent insurance carriers had to provide similar premium refunds to the policyholder for the policy periods covered by those carriers.

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What Did All of This Mean to the Policyholder?

The policyholder’s letter says it all:

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You may contact Ranney P. Pageler directly at EMPLOYERS® Fraud Investigations Department:

[email protected]

(800) 750-3939

While we can only handle suspected fraudulent cases for EMPLOYERS policyholders, please feel free to contact us with general workers’ compensation fraud questions. We can also provide contact information to direct you to the appropriate

government agency or insurance fraud unit for your jurisdiction.

Contact

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