By Donna Motley, Vice President of Claims

I’ve written in the past about Fraud in Workers’ Compensation. Types of Insurance Fraud include: Welfare, Unemployment, Mortgage, Automobile, Healthcare, Medicaid, etc.

This year we had our tri-annual State Audit and one of the questions they asked was how we handle fraud. We would first have to define “fraud”. Webster’s dictionary defines fraud as: “intentional perversion of truth in order to induce another to part with something of value or to surrender a legal right”. Per the Insurance Institute of Michigan website, an example of (insurance) fraud (pertaining to Workers’ Compensation) is: exaggerating the extent of a minor injury to collect (W/C) benefits; billing insurance companies for medical services that were not rendered. I think we can take it further. What about alleging a work injury when the injury really occurred outside of work? Or what about the person who alleges their medication was “stolen” and they need another re-fill when the reality is that either they are addicted to the drug or they are selling the pills on the street? What about the person who claims they need “in home assistance” because they are too incapacitated to even make themselves a sandwich? Or how about the person that won’t let the Nurse Case Manager in the examining room so they can tell the doctor how heavy or repetitive their job is, or their pain level is a 14 on a scale of 1 to 10?

The October 9, 2015 Elko Daily Free Press (Elko, Nevada) reported a case wherein the State Attorney General prosecuted a 49 year old Dunkin Donuts employee who alleged a major back injury and had collected “tens of thousands of dollars” in health care treatment and benefits. The insurance carrier discovered the employee had “knowingly failed to disclose” a prior work related back injury and had denied any pre-existing conditions on multiple occasions. They also discovered the employee engaging in activities outside of the physical restrictions imposed by the physician. The judge sentenced the employee to probation, not to exceed five years with intensive supervision and house arrest. He was also ordered to repay $75,000 in benefits to his employer’s Workers Compensation insurance carrier.

The June 19, 2015 Detroit News and June 28, 2015 Observer newspapers reported a Medicare Fraud case resulting in charges filed against 243 individuals, including 46 doctors, nurses and other licensed medical professionals in the Metro area for fraud totaling $58.3 Million. One of the physicians charged was Dr. Laran Lerner. Dr. Lerner is well known to our department. Many years ago, Dr. Lerner was seen as a treating physician on a multitude of Workers’ Compensation claims for individuals living in East Dearborn. The doctor conveniently ran his own physical therapy department. He would never release an employee to return to work. Cindy Boyce, adjuster, one of our Nurse Case Managers and I paid a visit to Dr. Lerner’s office to speak to him in person about Workers’ Compensation and returning employees to work. We saw no change in his practices and ultimately, we refused to let anyone treat with him. It now appears he moved on to treating primarily Medicare patients. (And our instincts were accurate!)

To me, it is a matter of proofs. I can remember years ago I handled a claim that went into litigation. Once litigated, we are required to produce the personnel records of the injured worker to the court. In doing so, we discovered the employee had lied about his “date of birth”, that he was really ten years older than he had reported. This ten year discrepancy changed his benefit rate, thereby making him “over paid” and in our eyes, not entitled to additional monies. The court disagreed indicating that it is the employer’s responsibility to verify the employee’s age. What about HIPPA? I felt this was outright fraud on the employee’s part – the court disagreed.

Another more recent case I handled entailed an employee with a torn bicep tendon. The employee had a surgical repair but the treating physician refused to release the employee to full duties. A 40# lifting restriction was imposed. I showed the doctor a video of the employee carrying his girlfriend across the backyard (and she did weigh more than 40#) and asked for the restrictions to be removed – and the doctor said “NO”. Is that a case of fraud?

What level of deception constitutes fraud that can be prosecuted? Is it the amount of money that is paid on the case? Any level of fraud costs all of us!

The penalty, if convicted, in Michigan is up to four years in prison, a maximum fine of $50,000 and mandatory restitution. There is a Michigan Insurance Fraud Awareness Coalition (517-371-2880). There is a National Insurance Crime Bureau Hotline (800-TEL-NICB or 800-835-6422). At the bottom of the Form 100, Employer’s Basic Report of Injury, in small print, it is written: “Making a false or fraudulent statement for the purpose of obtaining or denying benefits can result in criminal or civil prosecution, or both, and denial of benefits.”