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Langham: A Recent 'Real' Fraud Discussion

By David Langham

Monday, August 21, 2017 | 646 | 0 | 0 min read

Workers' compensation is a topic that evokes strong emotions sometimes. Back in June, Joe Paduda penned a short piece on fraud that generated a fair amount of discussion, titled The Real Fraud in Workers' Comp.

Judge David Langham

Judge David Langham

He contends that there is fraud in workers' compensation, but that it is not what many perhaps think about most readily. He asserts that this "real" fraud is too infrequently the focus of the media, and he encouraged "real journalists to concentrate a lot more on the real problem — employer fraud."

Despite that urging, he notes that the "real fraud" includes:

(1) employers going without insurance coverage so workers and taxpayers foot the bill, (2) providers scamming the system to make millions, and (3) a relative few applicant attorneys and their schemes to defraud employers and taxpayers.

These are all worthy of attention and examination. Following the Paduda post, WorkCompCentral responded editorially with Clickbait News is Still News. It seemingly took some issue with Mr. Paduda's "real journalists" characterization. It provided some recent examples of injured worker fraud stories in the news, and explained that "Readers love dumb crook stories."

At this stage in the discussion, there is perhaps too much focus on the "real." Back in 1982, there was a book challenging some perceptions of masculinity, titled "Real Men Don't Eat Quiche." The emphasis on the "real," as in a man might eat baked egg casserole, but not a "real man."

This was a tongue-in-cheek examination of masculinity and the macho America of the 1980s, coming on heels of the Village People's "Macho Man" and other pop culture male references. It perhaps illustrated the literary use of "real" as some sort of contrary demeaning accolade (by complimenting one, perhaps all others are diminished).

WorkCompCentral also asserted "a larger purpose in telling these kind of stories" —— fraudulent employee stories, that is. It says that such stories "provide real-life examples of how to successfully defend against a fraudulent claim," and this is information of value to those who manage employees and claims. It urges thorough investigation of claims and purports two benefits therefrom, (1) "to prevent future mishaps" and (2) "to make sure the claimant didn’t make it up."

To be fair to each, there is not "real conflict" between the Paduda point and the WorkCompCentral response. There is a seeming consensus that fraud is bad. On that point, you rarely hear any outright disagreement. But it is not uncommon to hear excuses and minimization. I have often heard conversational disagreements regarding both the extent and nature of fraud, but they rarely make the point that something is not fraud.

Instead, when some action is described, a response is often to the effect of, "Well sure, but that is not as bad as ___________." Sometimes, those conversations devolve into absurdity, like some comparing of scars as popularized by 1975's "Jaws" or 1992's "Lethal Weapon 3." Oh, you think that's fraud, let me tell you about this fraud. Oh, that's nothing, the real problem is this. Oh, sure that sounds horrible because of the dollar amount in one instance, but it is so rare. Oh, that fraud impacts so few.

It would perhaps be humorous except that these discussions only distract from what should be the "real point," that fraud is illegal and it is unacceptable in any context or extent.

Misclassification is a problem. It is not a new subject and has been perpetrated for years. For the basics, read Misclassification — What It Is. It presents challenges, which government regulators and legislators may struggle to address. It is perpetrated by often imaginative and creative individuals who are well aware of how to skirt the law, and avoid detection and prosecution.

There are service providers who are working the system. We know about a hospital scheme in California, We are well aware of medical care provider behavior that has propagated pill mills and even led to disability and death. And these topics are discussed at seminar after seminar, by panel after panel.

Back in 1992 a billionaire named Ross Perot ran for president. One of his arguments regarded the national debt, and he said:

"The debt is like a crazy aunt we keep down in the basement. All the neighbors know she's there, but nobody wants to talk about her."

His point was his perception of a problem (debt) that was ignored, not discussed enough. One might argue that fraud is a similar issue today, a problem that everyone loves to talk about but about which no one wants to take any "real" steps.

But it makes sense to do something about it. The common theme in all of the fraud examples is harm. The harm is real, and damaging.

The worker who is misclassified works under a cloud of risk. Some are injured, only to find that they have no coverage. Certainly, "Obamacare" has mandated that all Americans have health insurance, and the government is empowered to assure that.

However, CNBC reports that 13% of adult Americans nonetheless remain uninsured, about 33 million people. How are there uninsured when health insurance is mandatory? Perhaps someone will write and tell me what the "real" meaning of mandatory is.

Someone who is injured, but who lacks workers' compensation and group health insurance, is likely unable to afford medical care. Choices will be made, and ultimately someone will pay for that injury, in money or otherwise.

The worker who takes money from the system illegitimately creates cost and harms others. Resources are diverted from those in legitimate need. The system is burdened, costs are incurred and resources are directed, as WorkCompCentral suggests, to the making "sure the claimant didn’t make it up" in all cases thereafter. Investigation costs money, and "real" investigation really costs money.

The doctor, hospital or chiropractor who bills too much, engages in kickbacks or over-prescribes dangerous drugs are likely bad actors. The news alerts us to both their existence and reminds us of their impact. And yet, it seems the risks must be worth the money, or their behavior would stop.

Maybe it is the money. Fees for medical procedures in workers' compensation that cost double what is paid in other settings divert resources and could encourage bad behavior.

The "real fraud" in workers' compensation is not any particular category, nor are those who write about any particular description "real" journalists. Despite the best efforts of some to explain away or minimize or apologize, various types or descriptions of fraud are misdirection at best.

The "real fraud" in workers' compensation is all of the fraud. It is high time to remember that criminal activity is criminal activity. Words should not be twisted to explain or excuse behavior that is criminal (George Carlin could have a field day with this topic of words).

In our modern vernacular, we mix metaphors and sometimes confuse. But Huey Lewis and News reminded us way back in 1984 that "sometimes bad is bad." I would suggest that all fraud is bad, and all fraud is real. 

There is no reason to hide any of it, ignore any of it, massage words about any of it or excuse any of it. The only solution is to prosecute all of it and to impose penalties that are sufficient to stop it — perhaps jail time, long probation, exclusion from markets, repayments of what was taken, or perhaps two or three times what was taken.

Fraud is an intentional action. When one is convicted of it, the outcome should prevent both that person and others from traveling that path again.

David Langham is deputy chief judge of the Florida Office of Judges of Compensation Claims. This column is reprinted, with his permission, from his Florida Workers' Comp Adjudication blog.

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