The Five Most Common Workers Comp Claimant Fraud Scenarios—Part
1 of 5:
For insurance carriers who underwrite workers compensation
policies, fraud is a constant risk.
Claimant (or Injured Worker), Premium and Provider fraud are the “big
three” in workers compensation fraud.
Premium fraud often involves multi-million dollar schemes
where an insurance company misrepresents their payroll and operations in order
to avoid paying the true cost of their insurance. Medical and Legal Provider cases often
attract significant medica coverage and impact hundreds or thousands of injured
worker claim files.
Claimant fraud, however, typically involves losses under
$50,000 and don’t usually attract media attention unless the claimant was a
public sector worker, such as a law enforcement officer. These cases can be difficult to difficult to
prosecute because claimants sometimes evoke sympathy from juries. Often, there is some legitimacy to the injury
but the claimant made a material misrepresentation regarding the benefits,
which makes the suspected fraud harder to articulate.
On the other hand, Claimant fraud is much more “personal” to
the policyholder/employer. Small
business owners, in particular, feel extreme frustration when they perceive
fraud is being committed by someone they hired.
They took a chance on someone and may get rewarded with larger insurance
premiums. The cost of workers
compensation insurance is often a large item in a company’s finances.
I have been investigating workers compensation fraud for
over seventeen years. Many of my
suspected fraud referrals have led to charges filed by District Attorneys in
Los Angeles, Orange, Riverside, Ventura, Imperial and San Diego Counties. I
have learned from these law enforcement officers that true workers comp
Claimant fraud cases tend to fall into one of five scenarios. I will provide examples of each scenario,
referencing actual cases, with the names changed.
“The Double Dipper”
Sarah Miller was a bookkeeper for a construction firm who
filed a workers compensation claim due to work related carpal tunnel. The insurance company accepted her claim and
began paying her Temporary Disability (TD) benefits because her primary
treating physician declared her “Totally Temporary Disability”. However, the owner of the construction heard
that Sarah was supposedly working for a travel agency while she was collecting
her TD checks, so she called the assigned claims adjuster, who notified SIU of
the red flag.
As the assigned SIU investigator, I reviewed Sarah’s
Facebook account. Sarah’s account was
private, so very little info was available. I was able to see that Sarah had
recently “checked in” at a local travel agency.
I reviewed the website for the Travel Agency and under “Contacts”, there
was a phone number and email address for “Sarah Douglas” in the Accounts
department.
In my background research on Sarah Miller, I had noted that
Miller was her married name. Her maiden
name was Douglas. I drove by the Travel
Agency during working hours and found Sarah Miller’s car parked in the lot.
In reviewing the medical reports in the Claims file, I saw
that Sarah had denied working anywhere since her date of injury. At the time, our company sent paper checks to
claimants for their benefits. Each TD
check came with a letter advising the claimant that if they had resumed working
during the time period they were being paid for, they needed to report it to
their claims adjuster. Sarah appeared to
be working at the travel agency while receiving TD benefits and she had never
disclosed it.
However, this did not feel like enough evidence to support a
suspected frau referral. I did not have
tangible evidence that Sarah was currently working for (and getting paid by)
the travel agency. Sarah had retained an
applicant attorney so I spoke with the Claims adjuster and our assigned in
house attorney about the case. We
decided to depose Sarah.
Our attorney did a very good job in the depo. She asked Sarah “Have you worked anywhere
since you stopped working for the construction” and
“Have you worked anywhere under your maiden name of “Douglas” since she was
married three years prior. Sarah Miller
nee Douglas answered “No” to bother questions.
After the depo, the claims adjuster subpoenaed Sarah
Douglas’s employment file form the travel agency. In those records, we found that Sarah Miler
and Sarah Douglas had the same Date of Birth, social security and home
address. Sarah had worked part time for
the travel agency while working for our insured full time. When she went on TD benefits from her job
with our insured, she began working full time for the travel agency. Apparently, her carpal tunnel syndrome did
not affect her ability to work for the travel agency.
I submitted my suspected fraud referral to law enforcement. The key pieces of evidence were the depo transcript, the employment records from the travel agency, the medical reports and copies of cashed TD checks equaling approx. $45,000. The DA filed charges within six weeks of receiving the case. Sarah entered a guilty plea at the Preliminary hearing to two counts of Felony Insurance fraud and agreed to pay restitution, while on probation for three years. Our Legal department successfully petitioned the Workers Comp Appeals Board to bar Sarah form receiving any further benefits related to her alleged injury.
Next up--The Serial Claimant.
Thank you!
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