1. Workers Compensation Fraud

2. What is Workers Compensation? Workers compensation is the “exclusive remedy for injured workers”. This means that in exchanged for the protection that workers compensation coverage offered, employees surrender their right to sue employers for damages arising from a work place injury.

3. When is it Fraud ? Workers Compensation fraud occurs when there is a knowing misrepresentation with the intent to obtain benefits that are not deserved.

4. Workers Compensation Facts The rising cost of insurance is a national concern. Historically claims increased during tough economical times. Fraud is one of the driving factors for increased insurance premium rates. (10% premiums to cost attributed to fraud) Difficult to access, estimated that 25% of all Worker compensation claim involve some element of fraud. Number of contested claims has more than tripled, 4000 cases since 1988 to 12,000 in 1994 Total number work related incidents exceeds 84000 cases in 1994. Estimated total annual fraud loses for KY are at $60 million to in 1994.

5. Attorney Fees For the first $25,000 of the award can charge up to 20% For the next $10,000 of the award can charge up to 15% and 5% for the remainder of the award not to exceed $12,000 $25,000 @ 20% = $5000 $10,000 @ 15% = $1500 $10,000 @ 5% = $ 500 $45,000 $7000

6. Ombudsman Program Was Formed To Help The Public Understand the Worker Compensation System 1. Serves as a neutral and reliable information source for employees, employers, medical providers and other programs participants; 2. Respond to inquiries and complaints about the system and participants in the program; Advise all parties of their rights; Mediate disputes; Workers Compensation Specialist 1.As a low cost means to resolve disputes Expedite delivery of service to injured workers. 2.In addition Specialist Assist workers obtaining medical reports and other documents necessary for a claim benefits and assist in completing claims forms. 3.Facilitate evaluation of injured workers to ascertain the feasibility of vocational rehabilitation.

7. Types of Fraud Claimant Employer Attorney Premium Medical provider Insurance provider

8. AIK Insurance Adjuster 14 year service Has turned in 5 fraud claims with overwhelming evidence; Video, witness statements and doctor record. (Results: Dismissed not enough evidence)

9. AIG Insurance Adjuster 10 year service 1 fraud claim with overwhelming evidence; (Results: Paid back 1/2 money no further action)

10. Work Comp Attorney 20 year service Fraud is hard to prove, pursue only to stop others. But remember frivolous claims are a result of your relationship with your employees.

11. Occupational Therapist Thera-care Seen some sort of fraud everyday Doctors/Therapist aligning with lawyers. Billing (Out of whack) Functional Capacity Examination (Functional Capacity Evaluation (FCE) is a systematic process of assessing an individual's physical capacities and functional abilities.)

13. Medical Expense Drugs are the fastest raising cost of worker comp medical expenses resulting in about 8% in 2002. The rising cost is mainly due to the greater use of prescription drugs doctors are prescribing more drugs. The best way to fight drug cost is to switch from name brands to generic equivalent types. The rising cost of drugs with clinic partnership and pharmacies lend itself toward fraud in small rural setting. Annual Prescription drug expenditures. 1991……………..…….$42 1996……………..…….$ 78 1992……………..…….$44 1997……………..…….$ 84 1993……………..…….$50 1998……………..…….$100 1994……………..…….$59 1999……………..…….$118 1995……………..…….$62 2001……………..…….$138

14. Mary Frickers Article Massive Fraud Exposed Desperate workers may turn to violence and suicide because of delays of benefits combined with bodily injury. Money paid is unbelievably small. System overhauled claiming widespread fraud by injured workers. 300,000 claims (30%) unsubstantiated, 5 years later legislature order investigation and suspicious claims were around only at 1%. Employers and Insurers commit fraud by denying benefits yet focus is on investigation against workers California Dept. of Insurance reported out of 1505 claims in 1996 (1222 workers, 88 employers, 120 medical providers 0 insurers) Every year for the past 7 years state audit finds insurers mismanaging 50% of the claims. In 1994 only 200 people in the state was rated 100% disabled California State Disability insurance is being used as a bank for insurance companies only 1/3 gets repaid.

15. Spotting Workers Compensation Fraud Several flags to watch for: Note: If two or more you should notify your work comp carrier. Injuries beginning on a Monday morning due to an employee getting hurt over the weekend. Hard to prove conditions such as : Carpal – tunnel syndrome, back problems and stress. No visible injury – Injuries are subjective. Doctor hopping. Associates that may be changing doctors may be looking for a doctor to give them the restriction they want or drugs proscribe to them

16. (continued) Employee retaliation when someone who has been discipline and is seeking a way to get back at the company. Employee termination or plant closing. The associate has a prior workers comp history or multiple claims. No witnesses to the injury. Associates filing claims may refuse diagnostic testing or therapy. Avoiding substance abuse testing

17. (continued) Accident not reported timely New employees - more likely to have an accident. Not taking medication

18. Taking Action Prevent Workers Comp Fraud Insist on experienced adjusters Know the attorney (Don’t be surprised if a new attorney is assigned. Develop a game plan that is agreed on by the employer, claims company and lawyer. Employer must get involve early and be more proactive in fighting fraud.

19. (continued) Prevent Workers Comp Fraud Institute a fraud line Publicize zero tolerance for fraud. Make sure employees know that claims will be investigated. Initiate and investigation with in the first 24 hours. Document jobs with picture and video taping. Have a rapid response for spotting a fraudulent claims. Train employees Require employees to keep you updated as to medical status and actions

20. What To Do If You Have A Accident/Claim (Initiate and within the first 24 hours) Initiate investigation View location Preserve scene Photograph scene Immediate witness interviews and statements Obtain detailed accounts (Who, what, when, where and how incident happen)

21. Guidelines ( Accident/Claim ) What part is hurt? / Where does it hurt? What did injured worker tell you? Where did it happen? Who witness this? How was the worker injured? Have they been trained? Was safety rules followed?

22. Guidelines ( Accident/Claim ) Was employee doing the assign task? Had they done this before? How often is this performed? What is their past history What have you heard? (Gossip)

23. Functional Capacity Evaluation (FCE) is a systematic process of assessing an individual's physical capacities and functional abilities. The FCE is a significant tool that can be used to make objective and reliable assessments of the individual's condition. To determine the individual's ability to safely return to work full time or on modified duty To determine if work restrictions, job modifications, or reasonable accommodations are necessary to prevent further injury To determine the extent to which impairments exist, or the degree of physical disability for compensation purposes To predict the potential ability to perform work following acute rehabilitation or a work hardening/work- conditioning program

24. Associates in Rehab Physical capacity evaluation Ergo’s 1) Static Dynamic Strength Measurements 2) Whole body range of motion 3) Work endurance 4) Standing Work Tolerance 5) Seated Work Tolerance Ergo’s Work unit

25. Surveillance What are you getting?

26. What have we Learned? Initiate good sound safety procedures (Place most of your energy toward prevention before it happens) Get supervisor involved. Train staff how to properly report an accident. Listen to your people. Good documentation is essential for claim prevention and investigations. ( supervisor report/near misses )

27. The End