Don Marshall Tells Audience At Pala Resort And Casino That It's About Perception And Creating The Sentinel Effect
By Lonce LaMon - May 18, 2015
Don Marshall, a chair on the Fraud Assessment Commission for workers’ compensation in the state of California, was the keynote speaker at Friday’s, May 15th 2015, luncheon for The Big 2015 Fraud Fighting Conference at the Pala Resort and Casino in Riverside County, California.
Don walked back and forth as he delivered his speech in front of the lunch tables with a strong voice not using a microphone and just like a lawyer delivering his arguments in a court room. He opened up by explaining the “Assessment” with a charismatic personality bursting with energy.
“If you’re insured or you’re a self-insured, that’s where the assessment money comes from,” Don emphasized. “I don’t like that statement made by people on the outside (that) the insurance company is paying for the prosecution of this person with the assessment. You can liken that to the fact that all of you pay taxes. Part of those taxes fund the prosecutors, the district attorney’s office. So if you want to use that logic, basically every time you prosecute a case with a citizen victim, there must be a conflict of interest.”
The Assessment is not paid by insurance companies and Don said he’s tired of reading in media articles that some poor victim is being prosecuted by financing coming from the insurance industry. Actually, it’s defense attorneys who are using this “conflict of interest” argument in their 995 motions against the prosecutions’ indictments, as this writer has heard the argument Don is referring to over and over again, ad nauseum, from the defense lawyers in the court rooms and has read it in the motions. The problem is that many journalists buy the argument and write it out as fact because they don’t know how the assessments are truly charged.
Laura Clifford is the Director of the Employers' Fraud Task Force. She put on The Big 2015 Fraud Fighting Conference at the Pala Resort & Casino in Riverside County last Thursday and Friday, May 14th and 15th 2015. photo copyright Lonce LaMon; all rights reserved
The Assessment money is paid by employers as a fee on their bills for their premiums, or else as a fee that comes out of their reserves as a self-insured entity. Insurance carriers collect the assessment but it goes to the Commission and not into the carriers’ pockets. Carriers act in a manner similar to employers that withhold employee income taxes and are responsible for forwarding that money to the respective tax collection agencies.
Thus, this “conflict of interest” argument stating that the insurance companies are using their own money to prosecute medical providers, misrepresents the true facts.
“It’s very important to understand the assessment commission of which I am just a member. I happen to represent the insurance industry.” The others are from various Labor, Employer Groups, Unions, and the State Fund.
The assessment has been 51 million dollars solid for the past five years. “This is the first year that we have increased the assessment. By 10 percent. We meaning the commission,” Don said.
Don told his audience at the Pala Resort on Friday, May 15th 2015, that: "We as an industry have to start looking at when we can identify activities that appear to be questionable or fraudulent; that our resources must be focused on finding out the truth.” photo copyright Lonce LaMon; all rights reserved
“Now why would we do that? I can’t speak for the other commissioners, (but) now the prosecutors and the Department of Insurance have started taking on the big players. You’ve heard about that today with some of these cases that have been going on for years. We’ve seen a number of these cases be taken repeatedly to the California Supreme Court. So the amount of time, effort, and paperwork needed to manage the cases as they move up through the court system require a lot more resources.”
Don has found that historically, when he speaks to employers or employer groups, that the focus is on the injured worker. Injured worker fraud. He said that the reason behind this is because it’s personal. It’s somebody in their work place.
Employers feel directly that the worker is ripping them off and as a result their premiums are going up. They can’t help them with healthcare as much as they would like. Employers feel, “I can’t give them additional benefits because I’ve got to pay workers’ comp. And so it’s personal,” Don said.
Don went on to express that the reality in the world of workers’ compensation fraud is that the claimant fraud makes up a very small portion of the overall fraud. The underground economy, including premium fraud, uninsured employers, and medical fraud is “what’s
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"We’re talking about turning injured workers into commodities. That’s all they are."
Don Marshall
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chewing up the system and chewing up the dollars.”
Don told the story about a search warrant that was done on a medical clinic in the central valley. Literally thousands of workers’ comp files of injured workers were seized.
The investigators noticed something about these files. Beside the patients’ names, each file had a dot. There were red, green, and yellow dots. “Prosecutors will tell you,” Don remarked, “that as soon as a search warrant is served on a medical facility, there’s almost always somebody who’s going to start talking. And so they learned quickly what those dots meant.”
A green dot meant an insurance carrier, a TPA, or a self-insured, was going to pay no matter how much was charged. A yellow dot was a little different. With a yellow dot one had to be a little bit more careful. “The carriers are not going to roll over but they will eventually.”
Don went on, “We went down to those people, the medical organized crime, and found they keep a database on every paying examiner in the state of California. What the percentage is. What it takes. How many phone calls. They have detailed records on
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“If you’re going to give money away, who should you give it to? To the people who are fighting for you? Or to those in the criminal activity?”
Don Marshall
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these people (the examiners) because they know at some point they (the examiners) are going to break. They (the medical organized crime group) are going to win. They won’t get it all, but they’ll get some of it.
“Which brings us to the red dots. Anyone take a shot at what a red dot means?”
The red dot represented a claims department that was not going to pay. No matter what. In the red dot files, the medical criminals would actually change the treatment not based on what was wrong with the person, but based on what might slide by in bill review.
Don arrived to his point. “Have you caught on at this point that we’re not talking about medical, we’re not talking about treatment, we’re not talking about helping injured workers. We’re talking about turning injured workers into commodities. That’s all they are.
“As soon as California and society in general recognize that the true victims are… the injured workers, when that becomes clear, (then) we’re going to finally get somewhere. Because it’s not clear.
“Too many people look at this thing called a medical bill and a medical report, and assume there must be a value.”
Don had a boss back in his California Casualty days who told him, “If you’re going to give money away, who should you give it to? To the people who are fighting for you? Or to those in the criminal activity?”
He’s not talking about medical bills that the examiner doesn’t agree with. He’s talking about fraudulent medical billing. “It takes good investigators, and it takes good attorneys doing good depositions.
“For as much work as the Department of Insurance and the prosecutors are doing, do not expect them to do it all.”
Don said poignantly that medical fraud in workers’ compensation can stop today. “Just quit paying them. What keeps the people going? Why do you think the defenses go on for years? Because the amount of money they are bringing in justifies their expense in fighting you, fighting the Department of Insurance, and fighting the prosecutor’s office.
photo copyright Lonce LaMon; all rights reserved
“We have got to change our way of thinking. We as an industry have to start looking at when we can identify activities that appear to be questionable or fraudulent; that our resources must be focused on finding out the truth.”
Don said that it comes down to perception. That there’s a thing called the Sentinel Effect. The Sentinel Effect is what happens when one knows one’s being looked at, observed, and then evaluated.
Then he held up a form 1040. “This is from the IRS. From (the year) 1960. In section 14, exemptions for your children and other dependents. So, what you put down was the name of your dependent and the relationship. That was it.
“In 1987 they changed the law. In 1987, in order to claim a child as an exemption, you needed a social security number. That year 7 million children went missing. 7 million!
“Why? It was the perception now that they were going to be looking.”
John Kallas of SmartComp reached into the basket for a raffle winner as Laura Clifford held the fine bottle of wine for the winner at the end of Don Marshall's speech. photo copyright Lonce LaMon; all rights reserved
Don’s point was that once claims professionals start looking, and not just cursory looks, but really start to dig, that’s going to build the perception that one is a red dot company.
“So what I will finish with today is this: with all due respect to the Department of Insurance and Prosecutors, for you (the claims adjusters) to sit back and think they can fix it all, you’re mistaken.
“They are working extremely hard to do just that. But the reality is all of us have to work together if we have any hope at all for impacting the cost drivers of this thing called workers’ compensation.”
lonce@adjustercom.com; Lonce LaMon; copyright Lonce LaMon and adjustercom; all rights reserved.
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