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Suspicious Activity & Fraud: Workers Comp & More
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Insult to Injury is a lengthy and thorough special report by "The Press Democrat" in Santa Rosa, California. They report that a 1995 study by the "insurance industry" found that insurers delayed accepting 43% of permanent injury claims. "There are insurers who as a matter of practice will contest virtually every claim," said James Ellenberger, assistant director of the AFL-CIO Department of Occupational Safety and Health in Washington. "I've talked to hundreds of people who say that this is not an unusual practice."
A lobbyist for various insurance companies, Clayton Jackson, was convicted of racketeering, conspiracy to commit mail fraud and money laundering, and mail fraud. He was convicted of bribing then state senator Alan Robbins who chaired the California Senate Insurance Committee. Jackson offered Robbins a $250,000 bribe related to a pending workers' compensation bill. He then solicited funds from insurance company executives saying the money would be used to form a political action committee. Jackson was later disbarred.
Denials Made: Lawsuit Alleges Insurers "Hit List" was published in the California Workers Comp Advisor. Some two-dozen insurance companies are accused in a $200 million civil lawsuit of holding a clandestine meeting that resulted in a "hit list" of medical companies that the industry wants to drive out of business. The insurers deny the allegations, which their lead attorney says amount to a "creative pleading" designed to inflate a simple billing dispute that belong in the workers' compensation legal system.
Allstate superior's order agents to violate state laws on discrimination. A top-selling salesmen at Allstate blows the whistle and as a result, Allstate is forced to pay what was then the largest insurance fine in Texas history. The agent is stalked and chased by private eyes for periods spanning six months, according to internal company documents and Allstate takes away his business.
Paper Chase Part I aired on NBC's Dateline June 23, 2000. In 15-month investigation, they interviewed more than 250 people, reviewed more than 70,000 pages of documents, and examined two companies that State Farm did business with involving "independent medical reviews." They state, "What we found was a disturbing pattern in the way State Farm handled thousands of accident claims." [Link 2]
Paper Chase Part II was broadcast on July 25, 2000. The Dateline show added to the original report (above) in significant ways. It stated that additional insurance companies were using the same illegal and unethical tactics previously highlighted. The show presented additional examples of fraud. The transcript at the Web site is not the complete report that aired on the TV broadcast though.
"Boeing to Ill Workers: It's All In Your Head" is an investigation of Boeing. The workers in this report suffered Multiple Chemical Sensitivity (MCS) disorders. It's been a difficult struggle for workers to get workers compensation carries and employers to recognize MCS illnesses as it has been with Carpal Tunnel Syndrome.
RICO: The U.S. Supreme Court. In a unanimous decision in January 1999 involving health care insurance payments, the Court held that the McCarran-Ferguson Act does not protect insurance companies from liability under the Racketeer Corrupt Organization Act (RICO).
The Idaho Supreme Court upheld a decision by a jury in 1999 requiring State Farm Insurance to pay an Idaho woman $9.6 million after the insurer allegedly used a biased medical review company to evaluate her injury claim. The jury ruled that State Farm referred Cindy Robinson's medical file to Medical Claims Review Service (MCRS), knowing that the company would return a "favorable review" to State Farm and give the insurer grounds to deny her claim. NBC's Dateline also questioned State Farm's medical-claims handling practices in June 2000. State Farm sells workers' compensation insurance.
Insurers Seek to Uphold Agreements. Five companies that cut millions of dollars in settlement deals with former state Insurance Commissioner Chuck Quackenbush have filed court papers trying to prove the agreements are legally binding. If the companies fail, they will face a fresh investigation into allegations that they low-balled hundreds and possibly thousands of people while paying damage claims linked to the 1994 Northridge earthquake.
Seventeen members of California's Department of Insurance Fraud Division filed a whistleblowers' lawsuit against the insurance commissioner. They charged, among other things, that DOI leadership conspired with insurance carriers to ram fraud cases through the courts "without meaningful review."
Quackenbush Under Fire... is a Los Angeles Times investigation that details various acts by California's Insurance Commissioner. This includes political contributions from insurance companies for the commissioner's wife's who was running for the Senate. There was a $93,350 deposit into a political bank account just nine days after Quakenbush proposed a 18.4% increase in workers' compensation rates. Millions of dollars were involved in various activities. Quackenbush eventually resigned but has not been prosecuted. Much more information on this can be found here.
Superior National Insurance Group, one of California's largest workers' compensation insurers, was seized by the California Insurance Commissioner. It's downfall was "supposed" to be the result of fierce competition and an adverse history of claims. Yet Superior was poorly managed and made unwise growth decisions including the purchase of Business Insurance Group, Inc. It later sued the group for, among other things, FRAUD, negligent misrepresentation, intentional interference with prospective economic advantage, and VIOLATION OF BUSINESS & PROFESSIONS CODE § 17200. Kemper Insurance later bought the insolvent company.
Public Citizen published "Battle Over Anti-Worker Asbestos Liability Relief Legislation Illustrates How Corporations Use Money, Influence to Gain Special Favors. New Report Documents Conflict of Interest, Huge New Lobbying Expenditures."
Anti-Fraud Drive Proves Costly for Employees reports that the decade-old campaign against workers' compensation fraud in California is part of a much broader national effort to save money for employers and insurers at the expense of workers. Among the legal scholars and researchers quoted is Rand Corp. economist Robert Reville who says, "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." Under "Major Changes in the Law," Oregon's increased legal standard to prove a workplace injury is briefly discussed.
Commercial Union ( CGU Group ) Consumers' Forum is devoted to consumer rights, corporate governance and ethics in the insurance industry. Advice for Insurance Claimants required to submit to their insurance company's "INDEPENDENT MEDICAL EXAMINATION. Click the above link if you have questions about an IME exam.
ABC's 20/20 reported how Allstate Insurance Company, in settling claims stemming from the 1994 earthquake in Los Angeles, "played hardball with desperate homeowners, relying on questionable experts and falsified reports, and defrauding policyholders of perhaps tens of millions of dollars."
Two HMOs Face Fines; Others Under Scrutiny State insurance and health-care officials in Florida began looking into various practices of the managed-care companies. Insurance Commissioner Bill Nelson issued a warning to the state’s HMOs about not paying claims on time. In a bulletin, he noted that insurance regulators had evidence of some HMOs denying certain kinds of claims for no reason, a practice prohibited by state law.
Spying Incident Leads to Charges Against Insurance Company is a press release by Florida's Treasurer and Insurance Commissioner. He charges one of the state's largest property insurers with attempting to "subvert, manipulate and undermine" insurance regulators and has accused its management with showing a "lack of trustworthiness" when it hired a private investigator to spy on a Florida Department of Insurance employee.
Doctors Admit Falsifying Insurance Claims details a recent study that suggests doctors are increasingly using manipulation so that their patients can receive the care they need. It states that more than 25% of the doctors said they believed it is necessary to manipulate reimbursement rules in order to provide high-quality care. We believe it's unfortunate that this is occurring because insurance companies, HMO's, and MCO's put profits ahead of patient's health.
"Protecting your auto insurance settlement from your health care provider" discusses how some hospitals are illegally laying claim to portions of consumers' auto insurance liability settlements by billing both the health insurer or HMO and consumer.
What If the Company Won't Pay? by Kiplinger's Magazine talks about claim denials and foot-dragging by insurers. This practice, quite profitable for carriers in workers' comp claims, is now being utilized in other types of claims. The article is lengthy and quite detailed in how consumers can protect themselves.
Insurance Horror Stories includes dozens of accounts of fraudulent activities by insurance companies including Allstate. The main page of this Web site is here.
Insurance Company Bad Faith contains information on how to fight insurance companies who harm you. They also list court judgments against insurance companies such as Travelers, State Farm, Essex, and Aetna.
Farmers Insurance News-Alert updates consumers with publicly available information concerning the Farmers Insurance Group. This includes news reports, consumer complaints, lawsuits, multi-million dollar court decisions, and other legal actions.

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