Faced with a possible workers' compensation fraud case? You and your casualty insurer might want to investigate the accused employee's medical provider, which could be complicit. You could have a much better chance of recovering losses, and you might even uncover additional crimes.
Reprinted with permisssion from an article in the Aug. 13, 2010, issue of The Legal Intelligencer © 2010 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.
Jake worked in the distribution center of a small paper distributor. One day, when he was unloading supplies, he heard a small pop in his lower back. He continued working, but by quitting time he was hobbling. He gingerly eased into his car seat and drove home. Jake stopped by his mailbox and found three past past-due bill notices. He added them to four more he had received the week before.
Jake had overextended his credit and needed some money. He remembered some employees quietly talking about a doctor on their insurance plan who was "friendly" to those wanting to claim workers' compensation, especially for an extended period. The next day, Jake visited Dr. James who examined Jake and decided that he was not fit for work and signed a form that gave him full benefits for at least two weeks. Every other week, Dr. James extended Jake's lucrative benefits. By the time he went back to work four months later, he was able to pay off his bills. And Dr. James was able to milk the insurer for thousands.
Meanwhile, Sam, a CFE for the paper distributor, smelled a rat. He had had his eye on Dr. James for some time. He suspected that the physician and Jake had a little cozy deal. However, Sam knew that if he went after Jake he probably would not be able to collect much. So Sam, working with the legal department, the company's special investigation unit and the insurer, decided to investigate the employee's medical provider. Sam ultimately discovered that Dr. James had been complicit not only in Jake's case but in scores of other workers' compensation frauds.
This case is fictitious, but most employers and their insurers, at one time or another, have been victims of false or fraudulent claims. Only on rare occasions is the perpetrator caught and prosecuted. Even when the prosecution is successful, often the perpetrator does not have the financial means to pay restitution to the employer and/or its insurer. In some cases, the employee's medical provider is not only the impetus to commit fraud but is complicit in fraudulent conduct.
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