Stories of people who claim a work injury after they hurt themselves at home are common. But did you hear the one about the man who nearly got away with his deception until an unrelated theft at his workplace tripped him up?
This man had injured his shoulder at home. Not knowing if the injury would be covered by his Health insurance and worried about lost time from work, the man decided to recreate his accident at work and claim a work-related injury. Everything was going along wonderfully until, eight months later, all the company's employees were asked to take a polygraph test for an office theft. Knowing that he was not the thief, the 'injured' worker believed that he had nothing to worry about-but the polygraph test indicated that he wasn't being truthful.
The polygraph expert told him that his test results made him a suspect in the theft and that the results would have to be reported to his employer; however, the expert also advised him that another possible explanation was strong feelings of guilt. Faced with the possibility of prosecution for a crime he didn't commit, the worker came clean and told his story. He had almost gotten away with it.
Speaking to the Southern California Fraud Investigators Association training seminar in San Diego, the Honorable Pamela Foust, a judge with the California Workers Compensation Appeals Board, stated that this was a prime example of Workers Comp fraud-but one that you probably can't change. Even though the employer got lucky in this story, many similar Workers Compensation fraud cases are practically foolproof.
Judge Foust expressed the opinion that whenever a system gives or takes money, some individuals will decide not to follow the rules. People will cheat the IRS, file phony Disability or Health insurance claims for relatives, and pretend to hurt themselves at work when they've been injured elsewhere. But isolated incidences of individual fraud are wrong and should be investigated and uncovered. When such fraud goes unpunished, the word gets around, and others jump on the bandwagon to get their share of the easy money. Judge Foust thinks it much better to give the impression that fraud is not common and that fraud artists do get caught and punished than to let the general public feel that fraud is rampant and easy to get away with. For this reason, Judge Foust objects to the proliferation of fraud reporting on television news shows. These reports serve merely to show how easy insurance fraud can be.
The Workers Comp insurance community seems to have become obsessed with the issue of fraud in recent years, with everyone accusing each other of fraud. Medical providers are accused of defrauding insurance companies by padding their bills. Insurance companies are accused of fraud when they cut the medical provider's bill too zealously. Employers are accused by insurance companies of underreporting payroll and neglecting to report claims. The employers accuse insurance companies of paying bogus claims and passing the cost on to the insured.
All these charges probably focus too much on the issue and contribute to a belief that fraud is pervasive rather than a matter of isolated cases. This in itself is a problem, since a party that believes someone else is engaging in fraudulent practices may then feel that its only recourse is to do the same. Some people actually believe that it's OK to engage in fraud as a response to someone else's fraud. The end result, says Judge Foust, is the same: 'Money is transferred from one pocket to another, neither pocket being where it really belongs.'
The feeling that everyone is doing it and if you don't join in you'll lose bears much responsibility for the seesaw effect we see today: Physicians inflate their bills when claims adjusters 'fraudulently' cut the bills down; claims adjusters cut a little deeper than they should to protect the insurance company from the 'fraudulent gouging' of the doctor.
In California, even Workers Comp judges have been accused of unsavory behavior. Investigations into allegations of bribery and paid vacations turned up only a few lapses in judgment, according to Judge Foust. Such charges do not really harm the judges but do an enormous amount of damage to the integrity of the administrative law process-forcing litigants to decide whether they lost their cases on their merits or because the judge owed the other side a favor.
These developments contribute further to the idea that it's necessary to go outside the rules to protect oneself. But if we don't follow the rules, we'll be lost.
Insurance professionals usually see the issue of insurance fraud defensively: The big bad applicant is trying to rip us off. But if we could overhear applicant attorneys or doctors talking about the insurance companies, we'd find that they use the term 'fraud' liberally. If these people were given polygraph tests, they'd probably pass with flying colors, as would insurance companies' representatives. It's all a matter of seeing things in the proper scale.
'Practically everyone in the Workers Compensation system today thinks that they're a victim or a potential victim of fraud,' Judge Foust said. 'It used to be that except for a few rotten apples, we all used to trust each other and give each other the benefit of the doubt. Most of that is gone now-replaced by accusations of fraud and dirty dealing.'
We all need to put fraud in perspective. The emphasis on fraud investigation today is good, in Judge Foust's opinion. It's better to make sure that fraud doesn't happen again than to fix it. If we'd had this kind of emphasis five years ago, there wouldn't be the perception of rampant fraud today.
Not everyone who files a claim or lien is guilty of fraud. In fact, many of the most egregious abuses of the past have dwindled to nearly nothing. A few years ago, the business managers for the stress mills would swagger around the appeals board as if they owned the place; now they're glad to get any compensation for their liens at all. Some are still a little aggressive, Judge Foust said, but most are not.
One of the major stress mills in California sold all its accounts receivable for 20 cents on the dollar last year. Now, when a lienholder comes in and asks Judge Foust whether she's going to disallow the lien, she tells him she won't have to disallow it-that he'll withdraw the lien and stop being a poor sport. And the lienholder will drop the lien. 'Why should someone cause everyone else a lot of trouble when they're trying to get money they are not entitled to?' Judge Foust asked.
In some cases, there may be a problem with the liens presented. The doctor feels he's entitled to something because it's not his fault if the applicant attorney did not comply with all the rules. But it's not the insurance company's fault either. It's not fair to wipe out a lien for lack of an appointment letter. The doctor may be entitled to some payment for his services, but is he entitled to get the payment from the defense? Unfortunately, Workers Compensation judges have no jurisdiction over anyone but the defendant.
In one such case, the doctor and applicant attorney both did a good job, but from the applicant's testimony, it was clear that the case was fraudulent. The sad fact is that there were three victims involved: the doctor, the applicant attorney (both of whom were fooled by the applicant), and the insurance company. How can we make one indemnify the other two for the loss? You can't make someone finance the cost of a fraud against themselves.
When a legitimate dispute is decided against the applicant, then the doctor and attorney should be paid. If you believe that the liens ordered were in error, your best recourse, according to Judge Foust, may be to file a petition for reconsideration. If a judge is repeatedly ordering payment on liens that should not be paid, perhaps the judge doesn't understand the law and needs to be told so.
The majority of cases Judge Foust sees these days are legitimate injuries in the sense that the parties are entitled to something. The problem is that they're asking for more than they're entitled to. This, she says, is why we need judges and courts. And although the applicants may pad their side, it's a rare insurance company that does not want to pay less than it owes.
Workers Compensation is supposed to be a no-fault system. All the sides can accept this intellectually but not emotionally. Applicants might not be entitled to 'pain and suffering' compensation under this system, but in their minds they're thinking, 'Look how much I suffered! I'm only getting a pittance and I should be entitled to more. I'll just pad the claim.' The claims adjuster and the employer, on the other hand-while they know that this is a no fault system-think, 'Why did he lift that thing if he knew he was going to hurt his back when he did it? I don't think we should pay anything, so we'll just offer less.' No side is all good or all bad-which is why we need our elaborate system to sort things out.
One of the misconceptions contributing to our current mess, according to Judge Foust, was the idea that 'Insurance companies are the goose that laid the golden egg-a bottomless pit of money. Who cares if we rip off the insurance companies? They're rich. Let them pay.'
Fraud investigation units should allocate their resources properly to be effective, Judge Foust cautioned. If insurance companies didn't have limitless resources to pay the stress mills, then they probably don't have limitless resources to pay for fighting fraud. So pick your cases wisely and if investigation or surveillance turns up nothing, accept the case and go on. If you think everyone is defrauding you, you'll go crazy. Where is the savings in paying $10,000 to fight a claim that will cost $3,000 if you don't fight?
It's more important to keep the system working for the injured worker, Judge Foust said, than to go on a wild-goose chase looking for evidence of fraud. The Workers Comp system is like a pendulum, and the situation was so bad for so long that the pendulum has swung back past the middle. Now we need to work on achieving a happy middle ground. If we stay focused on the true fraud-the really bad stuff-we can make sure that fraud as a whole is better controlled.