According to the Insurance Reform Institute, insurance fraud costs insurance companies up to $30 billion per year.
According to the National Insurance Crime Bureau
the percentage of questionable claims is up by 23% from January 2011 to June 2013.
Fraud is costly to everyone; not only does worker’s compensation fraud cost insurers billions of dollars every year; it results in higher health care costs and insurance rates for US businesses (Risk Control: Managing Worker’s Compensation Fraud). Ralph Burnham, the executive director of the PA state Insurance Fraud Prevention Authority stated “As workers’ comp insurance fraud increases, so do the losses and the premium amounts that businesses must pay; this can be very damaging to any business, but especially small business.”
In July of 2013 the Delaware County District Attorney’s Office filed a criminal complaint charging 35 year old Takia Hasben, with insurance fraud along with several other charges. Hasben was employed by the USPS when she was reportedly attacked while delivering mail. She filed a claim for “traumatic injury” and was diagnosed with Post Traumatic Stress Disorder and Major Depressive Disorder. She and her doctors asserted that she had to remain housebound and was afraid to go outside suffering further from constant pain, poor appetite and chronic headaches. Surveillance was performed which showed Hasben performing many activities inconsistent with her stated restrictions such as grocery shopping, driving, having her hair done and smiling and socializing. Further investigation into her claim showed that she owned several rental properties whose income she failed to report to the Department of Labor (DOL). On May 29, 2013 Hasben’s benefits were terminated after she had received $189,138.66 in total wage loss replacement and medical benefits.
A California man had received $150,000.00 in worker’s compensation benefits as a result of an injury in which he claimed left him unable to lift more than ten pounds and limiting his range of motion. Video surveillance revealed that this claimant continued physically demanding work on a side job where he was working on large trucks. He was charged with insurance fraud after two independent medical experts testified (after viewing the video tape); that he was not impaired by any major injury nor was he functioning with any significant level of pain.
John Tawil and his son Ayoub Tawil of Whitehall PA were both charged with insurance fraud after having made a fraudulent claim on a policy of renter’s insurance. In the claim, more than $8000.00 in property had been reported as stolen during a November 2012 burglary. The claimant provided photographs to Traveler’s Insurance Company of the items stolen. An investigation into the claim revealed that the photographs provided by the claimant had been taken in March 2013, some four months after the alleged burglary.
A New York man claimed “total disability” from a workplace injury in 2004. However, the insurance company video showed this claimant performing strenuous physical labor on multiple occasions. An insurance investigation, launched in February 2012, revealed that the claimant continued to work as a carpenter despite receiving worker’s compensation benefits. He was charged criminally with grand larceny, insurance fraud, perjury and Worker’s Compensation Fraud.
Medical service providers and attorneys are committing insurance fraud in countless ways as well which contributes to the economic burdens faced by insurance companies.
In May 2013 a physician, Chandra Sekhar Golla of Pittsburgh PA was operating an addiction treatment center. Over a three year period Dr. Golla defrauded Highmark of more than $300,000.00 by claiming that more than $617,000 in lab testing services had been provided to persons covered by Highmark health insurance plans. An investigation showed that Dr. Golla’s practice was not a PA licensed laboratory nor had they found equipment necessary to perform the lab tests billed to Highmark. In January Dr. Golla was required to surrender his medical license and to pay $335,000 to Highmark as restitution.
Numerous arrests resulted in a drug ring investigation dubbed “Operation Script King” in which pharmacies in PA, NJ and NY were flooded with Oxycodone prescription from one medical facility in New York. Between September 2011 and February 2013, New Jersey pharmacies dispensed more than 500,000 Oxycodone pills based on more than 4500 prescriptions originating from the one medical facility. The investigating entities discovered that the prescriptions were being “sold” to drug dealers for $500 apiece and the pills were sold on the streets for $20-$30 per pill having an estimated street value of $2.1 million. Ten insurance companies were victimized by this operation including Aetna, Horizon Health and Medicaid.
Fortunately, there is increasing awareness across the country regarding the negative impact of questionable worker’s compensation and disability claims. There have been outreach programs to educate the public about the detriments of fraud. Also, states across the country are taking legislative steps to pass laws raising the level of insurance fraud from a misdemeanor to a felony. Many are also providing immunity from civil liability to those who report suspected activity and providing hotlines for reporting fraud.
So what can claims adjusters do to fight insurance fraud? First, they need to recognize the Questionable Claim Indicators (QCI). While no one QCI would provide sufficient reason for investigation; when you have several tied to a particular claimant the probability of fraud spikes sharply. Investigations can be costly but experts agree that they are the only way to put an end to a fraudulent claim. The Ohio Bureau of Workers Compensation reports that for every dollar spent on investigating fraudulent claims, the state gets back up to five dollars in refunded payments and fees. Other companies report a 3-8 times return on the cost of fraud investigation as a whole.
Ask the Right Questions
When assessing a claim to determine the potential for abuse and fraud, claims adjusters need to ask the right questions. As field investigators, our job effectiveness is enhanced by the provision of certain information.
- Obtaining detailed recorded statements from the claimant is essential in securing the information that can be used to assess the claim and to determine later if their statements are consistent. In addition, it can be utilized as a foundation for either paying the claim or denying it.
- Inquiring about medical history, prior submission of claims, civil suits and medical and legal representation can all provide clues regarding the claimant’s motivation and interest in submitting a questionable claim. For example, a claimant who is treating with a “known” worker’s compensation doctor, while at the same time securing legal representation may warrant further inquiry.
- Asking a claimant about their current marital and living situations can also shed light on potential abuse. If a claimant provides an address that is determined not to be the one in which he resides; this decreases the claimant’s credibility. If a claimant is in the process of a messy divorce or child custody battle, this marital situation information could indicate a financial motivation for abuse.
- Financial considerations should be explored as a prime motivator to secure worker’s compensation benefits.
- A clear picture of the claimant’s hobbies and possible “side jobs” can be gathered via interviews and recorded statements. If a claimant is known to be involved in car repair at his home and “on the side”, this information is valuable in making a determination as to possible fraud as well as providing a possible starting point for surveillance.
Claims Adjusters Communication with Investigators
When a case is being referred by a claims adjuster to an investigator, there are a number of items that increase the likelihood of success. The first is clear communication between the claims adjusters and the investigators. Any and all information that a claims adjuster has on a particular claimant (referral) should be communicated to the investigative staff. For example, be sure to share a photograph or physical description of the claimant if one is available to ensure that the surveillance is being conducted on the right individual. In addition, any information regarding the claimant’s vehicles, doctor’s appointments, family members and personal habits that a claims adjuster is aware of should be provided to the investigator. Also, it is very helpful to know if the claimant is still working and what work schedule they have.
In the absence of such identifying information, field investigators must be creative in making a positive ID on a particular claimant prior to conducting surveillance.
Cyber Search and Pre Surveillance
Through years of experience in claims investigations, we have developed a process that has proven effective. There are certain computer sites that we explore that provide us with the most “bang for out buck” with regard to the information gathering stage of the investigation. Sites such as Accurint, Lexis Nexis, tax assessment sites, Google maps and Google Earth, Twitter and criminal docket searches have proven fruitful in our pre surveillance investigations.
Additionally, social media has impacted everyone in our society, including the claimant. Many are posting videos, pictures and personal information that are intended for their “friends” and family. Photos and videos posted on Facebook showing an active, healthy claimant climbing a mountain on vacation while at the same time collecting worker’s compensation benefits for a back injury have proven detrimental to many workers’ compensation beneficiaries. Facebook, Instagram, YouTube and photo sharing sites are all being used to gather information and evidence in the establishment of confirming a questionable insurance claim.
In addition, “geo-tagging” provides the place, time and date of posted videos and photographs that further allow the determination as to when the activity took place (ie: pre or post injury).
We use cyber search and pre surveillance tactics to maximize our chance for success:
- To confirm or deny the appropriateness of further action in the form of video surveillance.
- We use it to enhance and improve upon the video surveillance by providing starting points or points of reference.
Surveillance can undermine the credibility of the claimant with evidence that is visual and difficult to refute. Even attorney’s engaged in worker’s compensation cases for the claimants recognize the potentially damning effects of good video footage for their clients. Several on-line attorneys’ posts refer specifically to this fact while attempting to “educate” their clients (claimants) on how to “beat the system.”
- “A videotape of an injured worker performing activities could be very damaging to the case. The injured worker may have a hard time proving that he/she is unable to perform the level of activity seen on the tape and may place his/her receipt of worker’s compensation benefits in jeopardy.”
- “Video surveillance can have a devastating impact on a workers’ compensation case. How frequently it occurs is speculative but it is safe to assume that it occurs in nearly every case.”
- “Surveillance is expensive. However, insurers are willing to shoulder that expense in order to disprove compensation claims because their financial bottom-line will wind up better in the end.”
- “As tough as it may be, in order to allow your body time to heal and to avoid damaging your workers’ comp claim, stick to your doctor’s orders. If you are caught doing otherwise, it can be used as evidence to deny your benefits.”
The Power of the Tape
It appears that the visual imagery of an actual video tape that shows the claimant performing activities outside of his/her restrictions can be a powerful tool; even for worker’s compensation judges who tend toward claimant bias and leniency. The case of Sullivan v. City of Satsuma seemed to point to the videotaped surveillance evidence as the reason the claimant lost their benefits.
“The Court finds that the video surveillance is compelling and demonstrates that Shester Sullivan has not suffered the loss of the ability to earn wages as a result of any injury sustained within the course of his employment with the City of Satsuma.”
There are increasing numbers of news story in which claimants are being prosecuted successful for criminal insurance fraud on the basis for videotaped surveillance footage.
- An Ohio man was ordered to pay nearly $7000.00 in restitution and investigative costs for working while collecting worker’s compensation benefits. The Ohio Bureau of Worker’s Compensation caught him on video working while he was supposed to be recovering from an injury. He plead guilty to one count of worker’s compensation fraud.
- Another Ohio man out of Cincinnati was claiming “total temporary disability” and was caught on video operating a dump truck while supposedly recovering from a workplace injury. He later plead guilty to fraud charges and had to pay back the money he received from worker’s compensation.
- The US Postal Service used video cameras to document the activities of two individuals (a couple) who had both claimed they could not sit for more than 15 minutes at a time due to back pain and swelling. The videotaped footage showed the couple driving together, gambling and mowing the lawn among other activities. The couple was criminally charged and convictions were secured for crimes involving worker’s compensation fraud.
- Similarly, a Michigan letter carrier collecting worker’s compensation benefits was regularly videotaped exercising at the local YMCA where she was observed bending, twisting, lifting weights and performing other physically strenuous activities.
The US Postal Service’s Inspector General reported that its worker’s compensation fraud investigations resulted in $65 million in savings.
Our own investigations have yielded results in the following cases:
FL1237- Claimant stated that he could not put weight on his right leg. We followed him to and from his medical appointment. He used crutches while entering and exited the doctor’s office. We continued to follow him observing that he did not use his crutches for his subsequent stops.
PA5060- The insurance company paid over $25,000 in transportation costs for the claimant to travel to and from his medical appointments. The claimant asserted that he had no vehicle of his own nor did he have access to one. Surveillance revealed that his live-in girlfriend did own a car and she did not work. The videotaped footage showed him not only riding in her car; but driving it.
DE1280 – The claimant’s attorney submitted photographs of the claimant’s nicely landscaped yard as evidence stating that this is what the claimant’s yard looked like prior to his injury. He alleged that his client could no longer perform the physical demands related to the maintenance of his yard. Our surveillance displayed the claimant watering his yard and plants and performing other yard work.
Rural locations can make surveillance difficult at best and non conducive at worst. We work around this obstacle in several ways:
- Securing information as to the public and private land lines and use surrounding wooded locations (public lands) to watch
- Determining the most likely exit from the claimant’s residence and watching from that point.
- Driving by the location as opposed to sitting in front of it or near it
- Establishing the subject’s schedule (ie: medical appointment) and following them in conjunction with the scheduled appointment
Attorneys are coaching their clients to become more aware of their activities; particularly in public.
Surveillance should be done when the questionable claims indicators reveal some level of suspicious activity on the part of the claimant. (See Questionable Claims Indicator Index-QCII)
We attempt to document more than one incidence of suspicious activity on the part of the claimant. We can then present a more comprehensive picture of the claimant and the range of physical abilities.
We recommend that surveillance be conducted in tandem with recorded statements and interviews. We secure as much information spoken directly from the claimant’s mouth as possible. Videotaped footage is much more effective when coupled with a claimant’s own statements regarding what he can and cannot do.
Our surveillance can confirm a claimant’s injuries as easily as refute them. If the claimant is seen on multiple occasions as having limited physical abilities and movements; then that will potentially confirm their injuries.
Activity Checks- Alive and Wells
Activity Checks involve the investigation into the claimant’s neighborhood and daily activities. It may involve a neighborhood canvas in which questions are posed to neighbors as to the claimant’s activities and whereabouts. Does the claimant care for the lawn or home? Are they ever seen walking their dog or taking out the garbage? Do they leave and arrive home at the same time each day? (indicating a possible work related schedule). Do they have any known hobbies or associations within the community such as a gym membership or golf club?
Activity checks also are conducted to assess the area in which the claimant lives to determine suitability for future surveillance. If a claimant lives on a dead-end street with little traffic, direct video surveillance may be more difficult. Likewise, a busy street with on street parking may allow for more options to secure video tape of the claimant.
Activity checks also help to establish exactly who the claimant is prior to initiating a surveillance case. If there is no physical description of the claimant and there is no photograph the positive identification of the claimant is imperative. This can be secured through various pre texting methods utilized by the field investigators either directly with the claimant or via neighbors.
Often times activity checks reveal that a claimant is simply never home. It can also show the opposite; that the claimant never goes anywhere. Both scenarios need to be explored and confirmed prior to the initiation of a more cost prohibitive schedule of video surveillance.
And finally activity checks may actually confirm that the claimant is in fact physically disabled with limited physical abilities. This information could be secured via neighborhood canvas or direct observation of the residence.
The goal of activity checks is to ascertain the viability of conducting video surveillance and should be conducted prior to the initiation of any surveillance schedule.