Dealing with Workers' Compensation Fraud - Part 2

Saturday, December 31, 2005 | 0

This is the second and final part of this article series for the claims adjuster on how to deal with workers' compensation fraud by Dennis Knotts.

THE ROLE OF THE CLAIMS ADJUSTER:

The role of the claims adjuster is to minimize the effects of the injury. This requires minimizing the effects of the injury on the employee and on the employer. However, the way the industry is structured, the adjuster must meet obligations to the employee first before focusing on the needs of the employer.

The first goal of claims adjusting is to provide benefits. Again, the focus and obligation is to the employee. This list of goals is a progressive list, and the adjuster is not free to move from one goal to the next until all the obligations under the prior goal have been met.

The first goal is to provide benefits. This means to provide treatment that cures and relieves from the effects of the injury. Here the adjuster may need to be proactive and if the employee is not getting well, the adjuster cannot automatically assume the problem is with the employee. There will be those cases where the wrong physician has been assigned to the case.

How do we tell where the problem is? It involves knowing the phases of treatment and the goals of treatment. Most claims go through four phases. The first phase is first aid. Here we prevent further injury. We put a splint on a broken bone. We put pressure on a laceration. We put ice on a sprained joint. We then move to phase two. At this phase, the physician determines the diagnosis. In short, what is wrong with the employee? The treatment then progresses to phase three: treatment. This is where we take steps to fix what is wrong. This might involve medicine. It might involve surgery. It might involve physical therapy. The last phase is rehabilitation. Here the treatment program moves from passive therapy [where the employee receives the treatment] and into active therapy [the employee performs the treatment (i.e. exercises, training, stretching, etc)]. This way we prevent future injuries from taking place. We are strengthening the injured body part to protect it when full use is required.

As treatment moves through these phases, three goals are reached. The first goal is to stop the pain. The second goal is to restore the function. The third goal is to bring the employee to that point where he/she puts the injury behind him/her. It is no longer the point of focus in his/her life.

So when an employee calls and says he/she is still in pain, or he/she cannot do certain things; then we call the physician. We verify with the physician that we have the right diagnosis. If this is the right diagnosis; then do we have the right treatment plan? If so, then logic tells us that the pain should be decreasing and the function should be improving. Our next question is if the employee has unrealistic expectations concerning recovery. If not; then we have to ask why the employee is not getting well.

This is where surveillance comes in. We go out and see what the employee is doing. If they are active and show no signs of pain, then our problem is not with the physician; it's with the employee. At that point we have fulfilled all the requirements under goal number one and move to goal number two. If they are obviously in pain or still disabled; then our problem is with the physician and we change physicians to meet the obligations under goal number one.

Goal number two takes the focus off the employee and puts it onto the employer. We now move to prevent abuse. This can result in a more aggressive posture on the case. It might even involve litigation and/or prosecution of the claim.

When we have fought the fraud and abuse, we can now move to goal number three. This goal is to bring the file to a close. Any unresolved issues after providing benefits and fighting fraud and abuse can now be addressed. Keep in mind that if we are talking about liens that represent abuse of medical treatment or testing; we are still in the goal number two phase. We continue to fight the liens via litigation or aggressive negotiations.

WHERE CLAIMS GO WRONG:

For the most part, claims go wrong because someone is not giving the claim the attention it needs. This can be due to case loads being too high, staffing being too low, claims operation structure counterproductive to fighting fraud, or the people involved not knowing what to look for or what to do.

USING THE RED FLAG APPROACH:

Going back to our original model, the injury is witnessed and reported right away. This will created the following red flags:

1. Unwitnessed injuries
2. Late reporting of injury
3. Injuries that take place first thing Monday morning [or after a holiday/vacation/or time off]
4. Injuries that take place on Friday afternoons [but are not reported until Monday morning]

Another area of red flags falls under this, but this deals with motivation of the employee:

5. Injuries reported after disciplinary action
6. Injuries reported after termination, lay off or quitting
7. Injuries reported when changes in shift, positions, duties

The next part of our model has the employee returning the forms and seeking treatment with the clinic:

8. Employee does not return claim forms
9. Employee does not disclose injuries/impairments/awards
10. Employee does not release medical records
11. Employee seeks treatment with own [or different] physician

Along the same lines are other red flags people often overlook. This red flag centers on the ability of the employee to manipulate the system to obtain what he/she wants, but which he/she knows they are not entitled to:

12. Employee becoming confrontational at initial contact
13. Employee being evasive during investigation of the claim
14. The employee "goes over" the adjuster's head
15. The employee makes accusations about unfair treatment [This is when the claim is being set up or initiated]

Another set of red flags is also subtle and people miss them:

16. The employee is familiar with the procedure
17. The employee knows work comp terminology [And should not otherwise know these terms]
18. The employee describes condition in proper medical terminology [And should not otherwise know these terms]
19. The employee says they want to return to work, but resists coming back

The next phase of our model is that the employee seeks treatment and gets better:

20. The injury description keeps changing
21. The complaints of pain [and location] change
22. Other body parts become affected
23. Employee does not respond to proper treatment

Along this same concept, the adjuster may notice other indications that the employee is not acting as if injured or improving:

24. The adjuster calls and the employee is not home
25. The employee is making major purchases while off work
26. The employee is traveling while off work
27. Major projects are started by employee while off
28. Missed medical appointments

These all may suggest the employee has some other source of income while off due to the industrial injury. The adjuster should have asked these questions initially during the first contact as asking these questions now could warn the employee that fraud is being suspected.

Following along with the progression of medical treatment we have other red flags:

29. All test results are normal or average
30. Positive test results do not relate to the site of injury
31. Extensive chiropractic or physical therapy treatment [Most injuries respond to chiropractic treatment after 30 visits Or 90 days -Benjamin Cox, D. C. study]
32. Complaints of pain do not follow dermatomal patterns
33. Surgery requested/sought/obtained where no objective findings

As the case moves into lengthy treatment and litigation we will see other patterns develop:

34. Certain physicians who have reputations for abusing the system
35. Certain attorneys who have reputations for abusing the system
36. Medical reports that are unsigned
37. Medical reports that are electronically signed or name stamped
38. Reports that are dictated but not read
39. Reports signed by others for physician
40. Self-referrals to clinics/testing/treating
41. Failure to follow procedures under Labor Code 4062
42. Failure to follow procedures for AMA Guide evaluations
43. Failure to treat per ACOEM Guidelines
44. Treating without obtaining prior authorization
45. Questionable billing practices

Perhaps the best "rule of thumb" to test the credibility of the physician is to make a copy of his/her report. Read the report all the way through. When you get to the end of the report, if you are nodding in agreement, then the report is credible. It did what it was designed to do: it convinced you. If, however, you get to the end of the report and you find yourself upset, angry, frustrated or disagreeing with the physician, then the report lacked credibility. At this point you go back and read the report carefully a second time. Read the copy and not the original of the report. Using a highlighter and pen, highlight anything you disagree with. Make notes or ask questions in the margins of the report. Identify the point where you stopped agreeing with the physician. Follow this through to the end of the report and you will have the basis for your arguments, investigation and objection to the report.

CONCLUSION:

There are other red flags. Some lists are as long as 150 items long. These may be some of the above red flag split into to various versions, or it may deal with certain issues on certain claims. The list was not designed to be all-inclusive or comprehensive. It was designed to get you thinking. Each case is different. Each case must be judged on its own merits. It may be possible for someone who is truly injured to end up being treated by a questionable physician and represented by a questionable attorney. One or two of these red flags may not indicate fraud.

The adjuster may find having to fight the physician and attorney to get proper treatment for the employee, and to get the employee away from those who would use the employee to defraud the system by not offering effective medical treatment.

Some employees do not know what their physician is billing for, or what allegations the physician/attorney are making on the claim. For this reason, the adjuster must determine not only if there is fraud and abuse, but who is committing the fraud and abuse.

In order for a case to be to the level that criminal prosecution can take place, the lie must be identified. The lie has to be carefully documented. The lie has to be explored and tested to see if there are any other explanations for the statement or action other than fraud and abuse. This is frustrating for many adjusters and employers, but when a case comes to criminal prosecution, the other side will be using every trick to bar evidence so it is not heard, twist statements or testimony so it is not damaging and look for loopholes that those who wrote the laws never considered.

The term used in legal prosecution is "wiggle room." If our investigation leaves unanswered questions, multiple explanations for statements or actions, we create wiggle room. It is in that wiggle room that the defense does its best work to frustrate our efforts to prosecute fraud.

The key is to take your time. Carefully examine your evidence. Build your case and remove the wiggle room. Another important key is to not limit your options for prosecution. This involves using multiple jurisdictions for your depositions, medical evaluations and other activities so that you can pick that jurisdiction that is most favorable to your goal. This may also involve seeking civil law suits over criminal prosecution if you do not get the support you need from local law enforcement.

Fraud slipped in because we weren't watching. We didn't pay attention. We didn't ask the right questions. It's not going to go away willingly. It is a war. It is not a pleasant war. It is a long term battle that will weaken the enemy, but never defeat that enemy. Those wanting something for nothing will always be ready to try again. They keep hoping we get sloppy or lazy and stop looking or stop asking the questions. We have to prove that they are wrong.

Article by claims adjuster Dennis Knotts.

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The views and opinions expressed by the author are not necessarily those of workcompcentral.com, its editors or management.