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Archive for August, 2011

Make ‘em pay correctly: BWC Premium Audit Department

August 29, 2011 2 comments

Checking balanceBy Michael Glass, Director, Premium Audit Department

BWC’s Premium Audit Department is responsible for ensuring proper payroll reporting and manual classification assignment. By auditing employers’ payroll, the Premium Audit Department strives for a fair and equitable rating structure.

The Premium Audit Department works closely with the Employer Compliance Department and the Special Investigations Department in BWC’s efforts to fight fraud. For example, Special Investigations Department staff may request an audit when an employer subject’s amount of premium is needed to support a criminal case. The Premium Audit Department refers policies to the Special Investigations Department when, in the course of an audit, it is suspected that willful and possibly illegal activity has occurred.

A Case In Point

The Special Investigations Department received a referral from the Premium Auditing Department that a Kenton pizzeria was operating their business with lapsed workers’ compensation coverage. The Premium Auditing Department contacted the employer several times in an attempt to bring the employer into compliance but the employer failed to secure coverage. An investigation by the Special Investigations Department confirmed that several employees work at the business, thus confirming the need for workers’ compensation coverage. Investigators requested that the Premium Auditing Department conduct an audit to calculate premiums owed, however, the owner of the company failed to cooperate with the audit. The owner pled guilty to one second degree misdemeanor count of failure to comply.

If you suspect that an employer is not paying their fair share of premiums, let us know. You may report it online at http://bit.ly/reportfraud or you may speak with a fraud hotline agent by calling 1-800-OHIOBWC.

Make ‘em pay: BWC Employer Compliance Unit

August 26, 2011 Leave a comment

By John Sledd, Manager, Employer Compliance Department

BWC’s Employer Compliance Department works closely with the Special Investigations Department. The Employer Compliance Department’s role is to identify employers who are operating their business without participating in the Ohio’s Workers’ Compensation System. Additionally, the department attempts to determine the causes of non-compliance and assist employers in obtaining or reinstating their coverage.  In some instances, employers who attempt to avoid or evade their worker’s compensation obligations commit criminal acts such as failing to pay their premiums, improperly reporting their employees or forging or altering documents to obtain lower premiums.

When the Employer Compliance Department suspects that a criminal act has been committed, the employer is referred to the Special Investigations Department for a criminal investigation.  In some instances, the Employer Compliance Department may pursue civil remedies, such as an Injunction, to prevent an employer from operating until they have paid their outstanding premium and have obtained proper coverage. Our overarching goal is to help employers identify and use the proper tools to insure coverage for their employees to maintain a safe and financially sound business operation.  

A Case In Point
The Special Investigations Department received a referral from the Employer Compliance Department that a Columbus health services company was currently operating with lapsed coverage. The Employer Compliance Department attempted to bring the subject into compliance but the employer failed to make payments to become compliant. During an interview with investigators, the owner of the company admitted to having five part-time employees. Later, the owner told investigators that she made contact with the Ohio Attorney General’s Office’s Collection Division to pay her past due BWC premiums. Investigators determined that the Collections Division made numerous phone calls to the owner, which were never returned. The owner of the company was convicted of one second degree misdemeanor count of failure to comply.

If you suspect that an employer is operating without workers’ compensation coverage, let us know. You may report it online at http://bit.ly/reportfraud or you may speak with a fraud hotline agent by calling 1-800-OHIOBWC.

Changing It Up: Employers That Avoid Premiums by Risk Shifting

August 22, 2011 Leave a comment

Risk shifting is a scheme where employers cancel their policy and/or create a new policy to intentionally avoid negative claims experience ratings and past due balances associated with their original policy.

A Case in Point
BWC created a policy for a Cleveland area automotive repair company after an industrial injury claim was filed by an employee. In response to the claim, the owner of the company attempted to apply for new coverage in person and was advised by BWC that he could only have one policy as a sole proprietor. Later, the owner attempted to open another policy online for his automotive company online but the policy was rejected after an initial review by BWC. A BWC investigator visited the business workplace to discuss the employer’s non-compliance and observed an updated BWC certificate of coverage. The investigator questioned the owner about the new certificate and was advised that owner sold the business to his wife. After review, the investigator determined that new coverage for this policy was in the owner’s wife’s name but the deposit was paid with the owner’s credit card and the receipt was signed by the owner. The application was not truthful about pre-existing policies associated with the business. The owner pled guilty to one fourth degree felony count of Workers’ Compensation Fraud and one fifth degree felony count of Forgery.

Red flags that may indicate risk shifting include:

  • Multiple policies associated with one address;
  • Businesses with high experience and premium suddenly canceling its policy; and
  • Different policies operating with the same employees.

If you suspect that an employer is risk shifting, let us know. You may report it online at http://bit.ly/reportfraud or you may speak with a fraud hotline agent by calling 1-800-OHIOBWC.

SID Annual Report for Fiscal Year 2011

August 17, 2011 17 comments

FY11 Annual Report CoverWe published our fiscal year (FY) 2011 fraud results, ongoing trends and future strategies. View our FY 2011 Annual Report.

SID concluded FY 2011 by exceeding our operational goals. We increased effectiveness during FY 2011, referring 245 subjects for criminal prosecution or 20.8 percent of all founded, closed cases. Our prosecution referrals generated 276 convictions during FY 2010 and FY 2011 – the highest level of performance on this measure during any two-year period. We increased efficiency during FY 2011, reducing the average lag days from date allegation received to date case closed by fully 27 days or 10 percent. These results contribute to the agency’s priorities — improving operations and providing better service and care for customers.

During the last 12 months, we focused on improving our investigation and prosecution of medical provider and employer premium fraud. The FY 2011 fraud report includes information about these efforts and the condition of workers’ compensation fraud in Ohio. The report reviews results since our department’s inception in 1993 – including that we have closed more than 54,000 cases and identified $1.4 billion in savings to the Ohio workers’ compensation system. The report highlights our achievements during fiscal year 2011, including performance against goals measured via key indicators and summaries of noteworthy cases investigated and/or prosecuted. The report also identifies fraud trends by subject type and highlights future strategies as specified in our department’s five-year strategic plan.

To report fraud online, please visit: http://bit.ly/reportfraud.
To speak with a fraud hotline agent, please call: 1-800-OHIOBWC.

Categories: SID Information Tags: , ,

Making Copies: Employers That Falsify BWC Certificates of Coverage

August 16, 2011 Leave a comment

Every six months, BWC provides a new certificate of coverage for employers to post in a high visible location. Devious employers alter the validation dates on past BWC certificates to make it appear they have maintained current coverage; for example, when a certificate is needed for a bidding process.

A Case in Point
The Employer Fraud Team received an online allegation alleging that a contracting company was operating without workers’ compensation coverage. The investigation revealed that the contractor had provided two false BWC certificates of coverage to their clients, in addition to operating with employees, while reporting zero payroll for eight years. The owners of the company each pleaded guilty to fourth degree felony counts of workers compensation fraud and were ordered to pay $52,245 in restitution to BWC.

Red flags that may indicate a falsified or an altered certificate of coverage include:

  • Alterations to dates or other information on certificates, e.g. cross-outs, type-overs, etc.
  • Name of business is different from the name on workers’ compensation certificate
  • BWC Administrator’s name is incorrect

Anyone is able to determine whether an employer operating in Ohio has workers’ compensation coverage by visiting BWC’s online employer lookup at: https://www.ohiobwc.com/provider/services/mcolookup/nlbwc/default.asp.

We are hiring!

August 15, 2011 Leave a comment

We are hiring various investigative positions throughout the state. Apply to each position below or visit http://careers.ohio.gov/.

Cincinnati

Position

Team

Closing Date

Fraud Investigator

Health Care Provider Team

08/29/2011

Fraud Investigator

Region 3

08/29/2011

Cleveland

Position

Team

Closing Date

Fraud Investigator

Region 1

08/29/2011

Safety Violations Investigator

SVIU

08/29/2011

 

Lima

Position

Team

Closing Date

Fraud Investigator

Region 3

08/29/2011

Mansfield

Position

Team

Closing Date

Fraud Investigator

Health Care Provider Team

08/29/2011

Portsmouth

Position

Team

Closing Date

Fraud Investigator

Region 2

08/29/2011

Categories: SID Information Tags: ,

BWC Investigations Result in Nine Workers’ Comp Fraud Convictions in July

August 12, 2011 Leave a comment

Ohio Bureau of Workers’ Compensation (BWC) Administrator/CEO Stephen Buehrer today announced nine individuals were convicted of or pleaded guilty to charges related to defrauding Ohio’s workers’ compensation system during the month of July. The court actions are the result of investigations conducted by BWC’s Special Investigations Department (SID), which works to deter, detect, investigate, and prosecute workers’ compensation fraud.

“Several of these individuals went to great lengths in their attempts to cheat the system so they could receive undue compensation and access to prescription drugs,” said Buehrer.  “They likely did not anticipate the expertise and dedication our investigators have when it comes to finding and eliminating fraud.”

Following is a sampling of cases that resulted in a guilty plea or conviction during the month of July.

 Charles Watson (Toledo, Lucas County) pleaded guilty to one count of deception to obtain dangerous drugs for fraudulently receiving BWC paid narcotic prescriptions from two different physicians.  Watson was traveling from one physician in Toledo to another physician in Dover (Tuscarawas County) to obtain similar narcotics.  Neither physician knew Watson received narcotics from prescriptions written by the other physician.  Watson was sentenced nine months suspended incarceration and was placed on community control for two years.  As a condition of community control, Watson was ordered to pay restitution of $930.24 and court costs.  The court also suspended his driver’s license for six months. 

Misti Marshall (Elyria, Lorain County) entered a plea of guilty to one count of workers’ compensation fraud for working while receiving benefits. BWC’s Automated Detection and Intelligence unit noted a cross match with the Ohio Department of Job and Family Services (ODJFS) indicating potential fraud.  Investigators found Marshall was receiving wages from Assured Home Health, Rono Investments, Industrial Plastics and Kelly Services while she was collecting Temporary Total Disability and Living Maintenance benefits. Marshall must pay restitution of $18,177.15 and an additional $3,000 for investigative costs. Her sentencing is scheduled for September 22.

Benton Crist (Delphos, Allen County) pleaded guilty to one count of workers’ compensation fraud for working while receiving benefits.  Crist failed to inform BWC that he was working as a truck driver for Martin Transportation Systems, in Byron Center, Michigan (formerly Topline Express out of Lima, Ohio) during the time he was applying for and collecting Non-Working Wage Loss benefits.  The investigation began after a BWC claims service specialist recognized signs of possible fraud in his claim documents. Crist was sentenced to five years of community control and ordered to pay court costs and restitution of $ 42,876.34.  He was also sentenced to 12 months suspended incarceration.

Donald Fisher (Clermont County) pleaded guilty in Clermont County to one count of deception to obtain a dangerous drug, a fourth degree felony. Investigators found that Fisher was having his granddaughter use and sell narcotics prescribed by his BWC physician.  Between May 2010 to March 2011, Fisher gave his adult granddaughter 10 Opana and 10 Percocet pills each week to traffic on the street in exchange for sexual favors. Rebecca Fisher sold the Opana for $50 per pill and the Percocet for $12 per pill and split her profits with Fisher.  Both confessed to selling the BWC prescribed narcotics during the same period Fisher received Permanent Total Disability benefits. Fisher’s sentencing is pending.

http://www.ohiobwc.com/home/current/releases/2011/081211.asp

To report fraud online, please visit: http://bit.ly/reportfraud.
To speak with a fraud hotline agent, please call: 1-800-OHIOBWC.

Rippin’ Off the Pot: Employers That Misreport Their Payroll

August 12, 2011 Leave a comment

Misreporting payroll is another scheme employers use to avoid paying their fair share of premiums to BWC.

Commonly used methods include:

  • Underreporting payroll by misclassifying the type of work being performed by the employees;
  • Underreporting payroll by misclassifying employees as independent contractors; and
  • Failing to disclose any or all payroll.

How Premiums are Calculated

To ensure that employers pay a fair share, BWC assigns manual classifications that correspond with the work being done and the risk of injury due to hazards associated with that work. For example, the manual classification for an office worker carriers a lower rate than the manual classification for a construction worker. This is because there is less hazard and risk of injury for the office worker. Thus, claims costs for office workers are typically lower than claims costs for construction workers.

Misclassifying the Type of Work Being Performed

The manual classification rate can vary greatly based on the type of work being done. Dishonest employers falsely report to BWC less expensive manual classifications (e.g., clerical and office work) rather than the more expensive manual classifications in which their employees actually work (e.g., construction and industry).

Penalties for intentionally misclassifying payroll can cost an employer up to 10 times the difference between the premium owed and the amount paid. In addition, the employer could face criminal liability.  The criminal charge is based on the amount of premium avoided by committing the crime and becomes a felony at $500. 

 A Case in Point
The Employer Fraud Team investigated a company that intentionally misclassified laborers as clerical employees. The investigation revealed that the company avoided paying over $300,000 in premiums over the course of two years by intentionally misclassifying these employees.

 
Misclassifying Employees as Independent Contractors

Misclassifying employees as independent contractors is another way employers attempt to avoid paying the correct amount of premium. Here, dishonest employers falsely report to BWC that an employee is an independent contractor. This relieves the employer from paying applicable workers’ compensation premiums, as well as other employer-employee responsibilities such as: unemployment insurance premiums; local, state and federal income taxes; and Social Security and Medicare taxes. Employees often realize that they are improperly classified as an independent contractor when it’s too late… they file a workers’ compensation claim and it’s denied.

If the employer controls the working hours, the selection of materials, the traveling routes, and the worker’s performance reviews, an employer-employee relationship exists, and the employer must provide workers’ compensation coverage for the worker.

Failing to Disclose Payroll

Finally, there are employers that have secured coverage, but fail to report their entire payroll. This also includes employers that report zero or no payroll being paid.

A Case in Point
The Employer Fraud Team received information from BWC’s Premium Audit Department alleging that a Canal Winchester, OH landscaping company had falsely reported zero payroll to BWC. Employees had filed four claims against the employer’s policy. The investigation determined that for three years the landscaping company had failed to disclose its employees’ payroll wages to BWC. The owners of the company pled guilty to three felony counts of workers’ compensation fraud and were subsequently ordered to pay BWC $34,984 in restitution.

Be on the Lookout

Red flags that indicate that an employer might be misreporting payroll include:

  • Large variances in payroll reported;
  • Amount of payroll reported in classifications are inconsistent with its line of business;
  • Variances in the payroll amounts reported to multiple agencies; and
  • Employees receive a 1099-MISC form instead of a W-2 form.

If you suspect that an employer is misreporting payroll, let us know. You can report it online at http://bit.ly/reportfraud or you can speak with a fraud hotline agent by calling 1-800-OHIOBWC.

Businessman Guilty of Filing Bogus Claim Against His Own Workers’ Comp Policy

August 11, 2011 Leave a comment

Middletown man’s girlfriend also sentenced in scheme to obtain prescription narcotics

A Middletown business owner and his girlfriend have been sentenced in a case related to their scheme to file false workers’ compensation claims against his company’s policy in order to obtain narcotics and medical care.  Jeff Davis, owner of Davis Trucking, and Tabitha Taylor, pleaded guilty to workers’ compensation fraud after their wrongdoing was discovered through an investigation conducted by Ohio Bureau of Workers’ Compensation (BWC) Special Investigations Department (SID).

“Most employers are concerned with maintaining a safe work environment and lowering their premiums, making it hard to believe someone would file a false claim against their own policy,” said BWC Administrator/CEO Stephen Buehrer.  “When Mr. Davis chose to perpetrate fraud, he not only risked his own livelihood, but also added costs to the whole workers’ comp system, negatively impacting all Ohio businesses.”

BWC investigators found that Davis initiated the scheme by assisting his girlfriend, Taylor, in filing a workers’ compensation claim against Davis Trucking.  The couple claimed Taylor sustained an injury on the job while working for Davis Trucking, although she had never been an employee.  It was later revealed that her injury actually occurred as a result of a domestic dispute between Taylor and a prior boyfriend.

Davis eventually admitted that he was the mastermind behind the filing of the false claim, instructing Taylor on what to say to the doctors, how to act, and how to complete paperwork claiming a workplace injury.  Taylor cooperated in the prosecution of Davis and explained that he persuaded her to file the claim as a means for obtaining free medical treatment for her injury and narcotics for them both.  

Davis was sentenced in June to a 10 month suspended prison sentence and was placed on community control for five years. Taylor was sentenced yesterday to 180 days suspended incarceration and five years of community control. The pair is jointly liable for paying restitution in the amount of $8,064.07 and investigative costs of $4,000.

http://www.ohiobwc.com/home/current/releases/2011/081111.asp

To report fraud online, please visit: http://bit.ly/reportfraud.
To speak with a fraud hotline agent, please call: 1-800-OHIOBWC.

Turning a Blind Eye to the Pot: Employers That Operate without Coverage

August 10, 2011 Leave a comment

Financial PlanningOhio law requires employers with one or more employees to obtain workers’ compensation coverage.

When it comes to employers operating without coverage, we typically see the following scenarios:

  • An employer is operating and has never obtained coverage.
  • An employer is operating and has obtained coverage, but failed to maintain it (also known as lapsed coverage).
  • An employer knowingly submits a non-sufficient payment in an attempt to secure coverage and a new certificate of coverage, with their coverage being false.

Claims can be filed against non-compliant employers, aggravating the loss to the “pot” (the State Fund). This additionally impacts the premiums of compliant employers. Noncompliant employers are responsible dollar for dollar for claims costs incurred during a non-covered period. Noncompliant employers may be subjected to criminal and civil proceedings, such as felony workers’ compensation fraud charges, liens and injunctions.

After other BWC departments have made repeated attempts to bring noncompliant employers into the compliance, they typically refer these employers to SID’s Employer Fraud Team. Here are two examples:

A Case in Point: Lapsed Employer with Claims

SID was advised by BWC’s Premium Auditing Department that a Harrison, OH business has been operating with lapsed coverage, has had multiple claims filed against its policy and failed to respond to several inquiries from their staff. An investigation by the Employer Fraud Team concluded that the company had a total of eight claims filed against its policy and owed approximately $73,000 in past due premiums, in addition to non-compliant claims costs. The investigation was referred to the county prosecutor which resulted in a fourth degree felony conviction against owner of the business.

A Case in Point: Lapsed Employer That Issued a NSF Check

SID received information from BWC’s Collection Department that indicated a Mansfield, OH employer submitted a $4,400 check in order to reinstate its coverage. The employer advised BWC that he needed a valid BWC certificate in order to obtain a new contract he was bidding. This check was later returned due to insufficient funds. The Employer Fraud Team referred their investigation to the county prosecutor for passing a bad check, theft, and workers’ compensation fraud charges. The employer was convicted on all three charges, each a fifth degree felony.

SID previously completed an investigation which proved that this employer submitted an altered BWC certificate in order to obtain work. Based on that investigation, the owner of the business was prosecuted in Richland County and found guilty of forgery and tampering with records.

Did you know?

Coverage is required for domestic household employees (e.g., cooks, gardeners, housekeepers, babysitters, etc.) who earn $160 or more during a calendar quarter.  Many home owners are not aware of this coverage requirement until it’s too late… someone gets injured on their property and files a claim.

For more information about employer coverage issues, including how to file for coverage online, visit: https://www.ohiobwc.com/employer/.

What you can do.

You can determine if an employer operating in Ohio has workers’ compensation coverage by visiting BWC’s online employer lookup at: https://www.ohiobwc.com/provider/services/mcolookup/nlbwc/default.asp.

If you suspect that an employer is operating without workers’ compensation, let us know. You can report it online at http://bit.ly/reportfraud or you can speak with a fraud hotline agent by calling 1-800-OHIOBWC.

Employer Fraud: When your competition isn’t paying… you pay more!

August 8, 2011 Leave a comment

Twenties and Coins

Fraudulent employers hurt honest employers. When employers cheat the system, honest employers have to pay additional premiums and are placed at a competitive disadvantage. Here’s how:

BWC maintains a State Fund to pay for services provided to injured workers. This fund can be seen as a pot of money that must be filled by Ohio’s employers. For every dollar dishonest employers don’t contribute, honest employers are forced to pay an extra dollar. Fraudulent employers are then able to undersell honest employers due to their lower labor costs.

We recognize the impact this causes to Ohio’s employers. In 2005, our department created the Employer Fraud Team to exclusively investigate this type of fraud. During the last two years, the Employer Fraud Team made 160 criminal referrals for prosecution to state, county and local prosecutors. Also during the last two years, their work has resulted in the identification of over $7.5 million in premium and penalties owed to BWC’s State Fund.

Since their existence, the Employer Fraud Team has identified the following common employer fraud schemes:

  • Employers operating without workers’ compensation coverage or ceasing to pay for their workers’ compensation coverage;
  • Underreporting payroll by misclassifying and misrepresenting types of employees;
  • Falsifying a BWC Certificate of Premium Coverage to appear to be compliant; and
  • Shifting payroll to different policies to avoid negative experience ratings.

During the month of August, we will be discussing each of these common employer fraud schemes, introducing other BWC departments tasked with regulating employers and describing projects that our department’s Intelligence Unit undertakes to detect employer fraud.

Our next article will discuss employers that operate without coverage and employers that fail to maintain workers’ compensation coverage, our two most common employer fraud complaints.

To report fraud online, please visit: http://bit.ly/reportfraud.
To speak with a fraud hotline agent, please call: 1-800-OHIOBWC.

Intro to Our New Fraud Awareness Series

August 4, 2011 Leave a comment

SID Badge and SealBy Tom Wersell, Director of Investigations

We are starting a series of articles to highlight our team’s activities. These articles will contain common fraud schemes, red flags, examples of cases we’ve investigated and special projects. For the month of August, we will focus on employer fraud, followed by claimant fraud in September and health care fraud in October.

Our department is comprised of several types of teams:

  • Three regional claimant fraud special investigation teams operate in most customer service offices;
  • The health care provider team (HCPT), employer team and safety violations investigation unit (SVIU) are each comprised of team members located throughout the state;
  • The intelligence unit; digital forensics unit (DFU); and BWC security services operate through BWC’s central office.

We intend for these articles to be educational and interactive, so we welcome your comments and feedback. We hope others will share their knowledge and experience, as well as, report fraud if they know a person or business is doing something similar.

To report fraud online, please visit: http://bit.ly/reportfraud.
To speak with a fraud hotline agent, please call: 1-800-OHIOBWC.

Morrow School Bus Driver Sentenced for Workers’ Comp Fraud

August 2, 2011 Leave a comment
Pamela Meyers Booking Photo

Pamela Meyers

A Warren County woman must repay more than $13,000 following an investigation by the Ohio Bureau of Workers’ Compensation (BWC) that revealed she was working while collecting workers’ compensation benefits.  Pamela Meyers pleaded guilty to a felony count of workers’ compensation fraud related to her work as a bus driver while receiving disability payments for a workplace injury she sustained while working as a driving instructor.

“BWC investigators’ careful monitoring of claims again proved successful in identifying abuse of the system,” said BWC Administrator/CEO Stephen Buehrer.  “Employers are overwhelmingly supportive of their injured workers and work hard to maintain safe workplaces, and we will not allow fraudulent activity to unfairly raise their premiums.”

BWC’s Special Investigations Department opened an investigation after detecting that Meyers was collecting wages while on Temporary Total Disability.  Investigators found she worked as a driver the Little Miami School District in Morrow from July 20, 2006 to September 4, 2006, and from March 12, 2007 to September 16, 2007, in violation of the rules associated with receiving those benefits. 

Meyers was sentenced in a Franklin County courtroom to five years of community control, ordered to pay restitution in the amount of $11,396.10, court costs and investigative costs totaling $2,000.  Meyers will serve 12 months in prison if she violates community control.  She made a payment of $7,000 toward restitution on the day of sentencing.

To report fraud online, please visit: http://bit.ly/reportfraud.
To speak with a fraud hotline agent, please call: 1-800-OHIOBWC.

http://www.ohiobwc.com/home/current/releases/2011/080211.asp