Dealing with Fraud

On Monday, December 19, 2011, in Fighting Fraud, Workers' Comp Fraud News, by randy
by County of Riverside Special Investigations Unit

Fraud is the curse of the California Workers’ Compensation system. Contrary to the industry’s declaration in 1995 that Fraud Is Dead; fraud is still very much alive. The reality is that someone will always try to find a way to get something for nothing. We may never see the end of fraud, but you can make yourself less of a victim. Those trying to commit fraud will go where there is lots of money, and it’s easy to get. To protect yourself from fraud, you need to become a “hard” target. When the message is clear “There is no easy money here;” vendors will go after easier prey. There are some simple things that you can do:

  1. Do not pay what you do not owe. Too many times we let vendors convince us or frighten us into giving them money to go away. This is what makes fraud so easy and so rewarding for those seeking to commit fraud.
    1. Always make vendors prove their entitlement to payment:
      1. Medical reports
      2. Diagnostic Test results
      3. Itemized statements
      4. Receipts
    2. Don’t surrender this Burden of Proof defense no matter how good the deal is:
      1. Telephone negotiations
      2. Great deals FAXed over
      3. Lien conferences
    3. Always hold to the facts of the case.
    4. Protection your defenses:
      1. Medical Provider Network
      2. Official Medical Fee Schedule
      3. Utilization Review
      4. Investigations
  2. Find more effective ways to defend yourself. The current philosophy is that it is cheaper to pay vendors to go away rather than litigate the case. Paying for fraud should not become the cost of doing business in California. The only time it is cheaper is when there is only one lien. But it is never just one lien. There are lots of liens from the same vendors on lots of cases. They just come at you one at a time and months apart. Take control and bring the fight to them.
    1. Consider doing consolidated lien cases. It reduces the cost of fighting individual liens.
      1. Pick a certain vendor with lots of liens, high dollar amounts
      2. Find the best defense for this group of liens
      3. Get an aggressive trial attorney
      4. Prepare your case before hearing to trial
    2. Blend the SIU and liens together
      1. Have your SIU people go to the lien conferences and lien trials
      2. Document the scams
      3. File FD-1s on those vendors committing fraud
      4. Use lien trials and deposition as ways of documenting fraud
    3. Become proactive, not reactive on the liens
      1. Don’t wait until the end of the claim to go after the liens
      2. Don’t let the employee off the hook by settling before the liens are resolved
      3. Use the deposition to document the fraud and abuse of the liens
      4. Treat bills and liens as a single issue
      5. Put vendors on notice of the settlements even if they have not filed a lien
      6. Build your defense at the beginning of the case and not the end
      7. Use the Statute of Limitation Defense effectively
    4. Use your resources:
      1. File FD-1 with the Department of Insurance when there is fraud
      2. Litigate when there is abuse
      3. File complaints with licensing boards when there is unprofessional conduct
      4. File with the Medical Unit when AME/QMEs abuse their position
      5. Remove vendors from your MPN that are defrauding and abusing the system
  3. Practice litigation avoidance: Pay attention to those things that push your employees into the arms of an applicant attorney. Know what sends your workers to attorneys and stop doing it.
    1. Focus on effective treatment
      1. Invest in good treating physicians. Pay them what they are worth.
      2. Work at getting employees well
    2. Deal with the downsides of injuries:
      1. Develop an effective return to work program rather than paying disability
      2. Let employees know they are still valuable to you
      3. They still have something to offer to your team
      4. Let employees know that you want them back
      5. Look for projects and task you want to do but lack staff to perform
      6. Make these your modified/alternate employment programs
  4. Be up front and honest concerning workers’ compensation: Let employees know what workers’ compensation can and cannot do. Use the Information and Assistance Officer as much as possible to educate your employees. Help them to understand the workers’ compensation system so they are not overwhelmed or terrified by it.

When your employees stop seeing a need for attorneys to get through the system, they will stop being vehicles for attorneys and vendors to use for fraud. It doesn’t happen over-night. You must be willing to invest two or three years into the program to build it, sell it, adjust it and make it work; but it’s worth it. Without an employee to use for billing purposes, fraud has a hard time taking hold.


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