Staked out by the Fund
By Robert Warne - December 18, 2001A few individuals this past year found out that the California State Compensation Insurance Fund (the Fund) isn’t a clumsy, sleeping giant. They learned the hard way that when you rile the giant by committing workers’ compensation fraud, it will unleash its bulldog, the Fraud Investigation Program (FIP). Able to pick up even the slightest scent of fraud—once the FIP is on your trail, your only hopes in throwing the dog off track is to spend a day in court.
adjustercom.com recently obtained information about three successful crackdowns on fraud by the Fund. The information was shared internally with the Fund’s claims examiners to congratulate them on their work and to illustrate the significant actions that led to the discovery and initial arrest for the fraudulent perpetrators.
The Fall Guy
A Fresno roofer fell approximately eight feet onto a dirt surface in October 1998. He was treated at an emergency room for lower back pain immediately following the fall, and didn’t seek further medical treatment for sixteen months. Then the roofer with the help of a legal counsel began treatment with a doctor of his choice and was placed on temporary total disability. This is when red flags started to fly.
The Fresno claims department didn’t agree with the physician’s determination and disputed the claimant’s subjective complaints against the physician’s non-corresponding objective findings.
The roofer was determined by an Agreed Medical Examiner (AME) April 1999 to be permanent and stationary. As a qualified injured worker the roofer was placed in an $11,000 vocational rehabilitation program.
Based on the inconsistencies surrounding the claim, an investigation was initiated in February before the AME’s determination. Investigators were able to obtain video footage of the roofer lifting, running, jumping and launching a boat. The incriminating footage was a key piece of evidence because it showed the roofer’s activities before, during and after the AME process.
Once the videotapes were shown to the AME, he revised his original determination and the roofer was no longer eligible for vocational rehabilitation.
The claims department filed a suspected fraudulent claims report to the FIP, who then referred the case to the Fresno County DA’s office and the California Department of Insurance (CDI). The timely investigation and proper use of video surveillance led to the roofer’s arrest June 1, 2001, for misrepresenting his level of disability and pain to increase his workers’ compensation benefits payout.
Bandwagon Blitz
The Employment Development Department (EDD) suspected that the owners of a Sacramento furniture store were paying employees under the table and not paying EDD taxes.
Based on the likelihood that employers who cheat on EDD taxes also cut corners with workers’ compensation, the EDD invited the CDI Fraud Division to join in the investigation. The CDI then in turn recruited the assistance of the Fund’s FIP. The office staff that serviced the workers’ compensation policy was also brought in to help.
The 13-month investigation culminated with the Sacramento DA’s office charging the owners with four counts of insurance premium fraud and two counts of tax fraud March 1, 2001.
The icing on the cake came when the Credit and Collections (C&C) team was brought on board by FIP to assist in the final resolution. The employer made a $59,000 restitution payment to the Fund before entering a guilty plea in court. C&C needed to modify the Fund’s computer system so that it could accept the restitution payment without it showing as an overpayment and automatically generating a refund check for the employer.
The owners were sentenced Aug. 22, 2001. They were ordered to pay restitution to the Fund and EDD, and spent 90 days in jail, and serve four years probation.
Identity Crisis
A proactive claims adjuster made all the difference in the case of the secretary/nanny who thought she could pull a fast one on some Fresno folks.
A secretary stopped working in a San Joaquin doctor’s office December 1999 because of repetitive trauma injury to her hands and arms. The company filed an employer’s report of injury February 2000 with the Fund.
The adjuster learned from an early medical report that the lady had started working as a nanny close to the same time the employer’s report was filed. The adjuster promptly sent a letter to the lady informing her of her temporary disability payments and that she needed to contact the Fund following her recovery from her surgery scheduled in July 2001. This letter established for the court proof that the lady had knowledge of why she was receiving temporary disability payments and made it clear she was no longer eligible for these benefits when she returned to work.
The lady never called following the reasonable recovery period, so the adjuster acted on the obvious red flag. An investigation was initiated to discover whether the lady returned to work after the operation. As suspected, she had, and it was soon learned that she was having her employer make out her paychecks in her daughter’s name. This act established intent to commit fraud.
The case was referred to the FIP, the Fresno County DA’s office and the CDI. The lady was arrested May 1, 2001.
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