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Suspicious Activity & Fraud: Workers Comp & More
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Labor Research Association, the organization that wrote "The Real Story," has a series of reports on workers' compensation here. We highly recommend visiting this site. Other reports include, "The Next Assault on Workers' Comp" and "Workers' Comp in Oregon May Be in for a Shake-Up." The Next Assault... has been reproduced for printing here.
The Foundation for Taxpayer & Consumer Rights provides details of numerous cases of HMO's abusing the arbitration process. It is stated, "By law, arbitration requires that each side pay their costs when an HMO is involved, regardless of who wins. By the sheer fact that HMOs have endless financial resources, this makes it a cinch for HMOs to prevail."
A consumer group says insurers wrongly blame their own insured. In what may be the least exposed form of insurer abuse, insurance companies often wrongly determine their own policyholders to be "at-fault" in car accidents in order to boost the premium charged to the policyholder.
Former California Insurance Commissioner Chuck Quackenbush has not been indicted one year after his forced resignation for numerous illegal activities. Taxpayers pay his legal bills. The press now ignores that $100,000's were given to his political bank account just days after he proposed an 18.4% increase in workers' comp rates and other workers' comp related accusations. No insurer has been prosecuted. Visit our library files on Quackenbush here. Dozens of articles on the scandal are here.
Riscorp insurance company founder Bill Griffin received a five-month federal prison sentence in August 1998 for his part in a six-year conspiracy involving 800 illegal political contributions worth nearly $400,000 to 27 political candidates who could help his workers' compensation insurance company. Florida Insurance Commissioner Tom Gallagher received the most in illegal campaign contributions and Katherine Harris (now Florida Secretary of State) received more than $20,000 from Riscorp. [Link 2] [Link 3]
The National Insurance Crime Bureau (NICB), funded by the insurance industry, receives the help of the FBI (taxpayer money) to crack down on insurance fraud by consumers after a senior FBI official becomes NICB president. When asked if the FBI would investigate insurance companies who were ripping off consumers, NICB replies: No, that would be a job for state insurance regulators.
View numerous examples of fraud by employers, medical providers, and others at the Labor Research Association Web site. [More]
In Death on the Job, a Newsday investigation shows that scores of injured immigrant workers in New York face an overwhelming fight to get benefits or medical compensation when they are injured on the job. The investigation also found that families of those killed on the job in New York can spend years waiting for death benefits, including funeral expenses.
Bad Faith Case Nets Employer $6 Million in Damages. In August 2001, a California Appeals Court affirmed in Lance Camper Manufacturing Corp. v. Republic Indemnity Co. a $6.3 million award against the insurance company.The employer had accused Republic of inflating reserves, claims mishandling, and destroying files, among other infractions.
Public Fraud Unit Favors Those Who Privately Fund It by the Los Angeles Times. A review of prosecutors' performance involving workers' compensation shows that their decisions--on whom to investigate and on whom to prosecute--have consistently favored those who provide them with money. The money originates with the state's employers and is handed out by employers and insurers.
Californians recover less than half of their injury-related wage losses during the first five years after injury. An August 2000 report released by the RAND Institute for Civil Justice, found that claimants had average total wage losses of $39,500 but received only $19,000 in workers' compensation benefits. The study, funded by the state's Commission for Health and Safety and Workers' Compensation (CHSWC), focused on 68 large companies who were self-insured.
Charles R. Engel, without the aid of an attorney, filed a Petition for Writ of Review in 1998 with the State of California Court of Appeals. He stated that California Law denied him the right to adequately pay an attorney for his worker's Compensation Claim because of the 12% maximum allowed. He says, on the other hand United Parcel Service and Liberty Mutual Insurance are allowed to hire as many attorneys as they can afford to protect themselves.
Fighting Insurance Fraud for Your Client's Sake states, "In this day and age, it is virtually impossible for an injured person in America to receive a fair trial, as a result of the anti-fraud campaign, funded by big businesses, which pollute our jury pools and in some cases our judges." Examples of fraud listed are: In Missouri an adjustor for the Home Insurance Company was convicted of defrauding an injured worker by hiding the results of an IME in order to settle her case for less than full value; In California two former Freemont Insurance Company executives were charged with fraud for back dating claimants' checks in order to minimize the penalties to be accessed by the Department of Industrial Relations; and a defense attorney in St. Louis was charged and pled guilty to misdemeanor fraud in connection with the workers' compensation matter when he withheld a medical report which demonstrated an injured worker was totally disabled.
NAIC Slaps Insurers on Ergo Standard. The National Association of Insurance Commissioners refused to support the workers' compensation insurance industry in their legal challenge to the ergonomics standard issued by OSHA. NAIC commissioners say, "...one can argue that the overall effect of the standard might be to reduce the incidence of occupational injury. Such a result would reduce the cost of workers' comp coverage."
Employers Commit the Real Fraud in Workers' Comp reports on an investigation and prosecution in California that resulted in sentences of eight years and six years for two business owners who falsified payroll data to lower their premiums. Another article, Investigate Employer Fraud, gives examples from various states of premium fraud being committed by employers.
Anti-Fraud Drive Proves Costly for Employees details the decade-old campaign against workers. "It was a crisis, and the insurers needed ways to persuade the legislatures to restrict their costs," said Edward Welch, director of the Workers ' Compensation Center at Michigan State University. "Fraud was one of the images they used to justify narrowing eligibility, changing the way you measure benefits and basically saving money for employers at the expense of injured workers."
"Most thoughtful people who do a lot of research in workers' comp would come to the conclusion that there is not a lot of fraud in the system," said Rand Corp. economist Robert Reville. [emphasis added] "By making a claim that there was a lot of fraud, I think they [insurance carriers] were benefiting at workers' expense [and] discouraging workers from filing claims."
Workers Compensation Claim Management Fraud Awareness is written by a consultant for the property casualty insurance industry. It repeats often-stated business and insurance industry propaganda that 10 to 20% of claims are fraudulent. It also states, "The actual amount of workers compensation fraud remains unsubstantiated." The article later states, "To find the heart of the fraud problem, however, you must follow the money. And money most often ends up in the hands not of workers, but the professionals who live off the system: a relatively small percentage of the nation's doctors, lawyers, insurance adjusters, and dishonest employers. While blame most often falls on the shoulders of the worker, we believe that a small minority of professionals make the most money through fraud."
Screen Patients Quickly For Workers' Comp Fraud. The physician who wrote this article thinks if a worker is disgruntled or been disciplined by management they will fake an injury for workers' comp benefits. He states, "various researchers have determined that between 5 and 15 percent of workers' comp claims are fraudulent–no injury ever occurred–or constitute an abuse of the system in that while an injury did occur, the worker tried to prolong the "free ride."
Battling Bad Faith in Professional Disability Cases discusses how the discovery of several "smoking gun" documents made possible a $36.7 million judgment in an Arizona bad faith suit against a professional disability insurer. It states that damaging documents continue to pile up showing an industry-wide conspiracy to deny legitimate claims.
Attention Wal-Mart workers: Please do not report injuries, an article published by Seattle Weekly, details Wal-Mart's refusal to provide RSD treatment to an employee until such treatment couldn't help her anymore and lists other cases of worker abuse. In the article, officials of Washington's Department of Labor and Industries contend that Wal-Mart mistreats its injured employees in the state. Regulators state that Wal-Mart has managed its program so badly, for so many years, that it should no longer be allowed to self-insure. L&I says the company "repeatedly failed" to respond to worker claims, or pay workers their benefits, in a timely way; that it prematurely cut off employees' replacement wages or "miscalculated" them; that it has shown "consistently poor record keeping," and has even failed to provide "adequate first aid facilities." [Alternate link for printing]

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