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PHILADELPHIA — The red flags indicating potential workers compensation fraud are evolving, and employers and workers comp insurers must be aware of these new indicators, especially the nature of the injuries.
The need to pay attention to these red flags is even more critical considering that the courts are increasingly deferring to the medical evidence presented by injured workers and their attorneys rather than giving equal weight to insurance company experts, according to attorneys representing employers and insurers.
“We have to, in our mind, recalculate the red flags of fraud,” Anthony Natale, Philadelphia-based shareholder with Marshall Dennehey Warner Coleman & Goggin P.C., said at the Philly I-Day conference in Philadelphia in Thursday.
Pennsylvania’s workers compensation law is designed to be remedial in nature, meaning whenever there is an inequity, it is construed in favor of the injured worker, said Niki Ingram, Philadelphia-based director of the law firm’s workers compensation department.
“It’s much harder for the employer or the carrier to prevail in these cases,” she said.
“If you read case law, you will see that the courts will often refer to humanitarian objectives,” Mr. Natale said. “I’m fine with interpretations of the act being construed in favor of the injured worker. Where we have gone awry is most judges have taken that concept … and they have moved it to the evidence, meaning we’re going to give the claimant’s evidence more weight than we’re going to give the employer’s evidence. That is not the law. And that is why we are on a not so level playing field when we go into the courtroom representing insurers.”
The traditional red flags are still relevant, including length of employment in terms of new hires claiming injuries or alleged injuries that occur immediately before or following a vacation, retirement or layoff, Ms. Ingram said. Adjusters should always make sure they get the injured worker’s medical records because they will give a more accurate indication of when the injury actually occurred, she said.
“I think the one instance that drives every employer and carrier crazy is the person who just starts the job and then sustains an injury and is out for two or three years,” Ms. Ingram said. “Obviously, if the person has a definable fracture that’s a different case than a soft tissue injury. But those are cases where you should immediately put your antenna up.”
Disgruntled employees are also a traditional red flag for workers comp fraud, according to the lawyers.
Mr. Natale described a recent case in which a disgruntled employee who was about to retire went to the human resources manager and complained about her treatment and said she was going to do something to get a payoff. Two days later, she slipped and fell at work, landing on her shoulders, alleging bilateral shoulder tears. He found out that eight days before the incident she was treated by her family doctor for a 10-year long arthritic condition in her shoulders that resulted in tears.
While on the surface this could appear to be a “slam dunk” case of fraud, the claimant alleged that the fall aggravated her pre-existing condition, he said.
“This is how brazen a disgruntled employee could be … but in our system, I could have lost that case just as easily as I won if the judge decided to accept the claimant’s doctor as more credible than our doctor,” he said.
Two of the new red flags revolve around the repeated participation of certain doctors and lawyers in workers comp cases, they said.
Companies should track how many claims involve a certain physician, which could be a suggestion that a claim is suspicious and should be denied, Ms. Ingram said.
“Analytics rules now,” she said. “It rules in sports. It rules in insurance. It rules in medicine. Everybody’s predictive. Lots of carriers are tracking this information, and I think we’ll see more and more use of analytics in this area.”
Another new indicator, the nature of the injury, is “the biggest red flag for fraud,” said Mr. Natale, who represents the National Hockey League and the National Basketball Association in workers compensation cases and said at least 25% of his caseload involves concussion or similar types of injuries
“These are injuries that are based on subjective complaints only,” he said. “A doctor can’t say you don’t have a headache. A doctor can’t say you’re not sensitive to light. We have to prove that.”
The Iowa Senate on Tuesday approved a bill that would create a special state prosecutor and workers compensation fraud unit within the Iowa Insurance Division’s fraud bureau to specifically target complaints of workers compensation fraud.