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Happy Anniversary to our Fraud Hotline system!

November 17, 2020 Leave a comment

International Fraud Awareness Week 2020

By Jeff Baker, Program Administrator, Central Operations, BWC Special Investigations Department

Our Special Investigations Department (SID) is celebrating the third anniversary of our Fraud Hotline system this month.

We launched this system on Nov. 14, 2017, during Fraud Awareness Week, and what a successful launch and three years it has been! We’ve received more than 3,900 calls since then from sources suspecting workers’ compensation fraud by injured workers, businesses, and health care providers. That’s an average of more than five each workday.

“Clearly, this important tool is working and we’re glad to have it,” said SID Director Jim Wernecke. “Fraud raises the cost of workers’ compensation for all of us, so the sooner we can stop it, the better.”

If you suspect workers’ compensation fraud in Ohio, give us a call at 1-800-644-6292 or complete a simplified online fraud referral form on our website, We will conduct an investigation and determine the facts.

Together, we are successfully combatting workers’ compensation fraud in Ohio.

Today, and always, we thank you for your support!

Smart phones call for even smarter forensics

July 23, 2012 Leave a comment

Digital forensics unit gravatarEach day, there are at least 10 times more mobile devices being produced in the world than babies being born (Global). Recent research conducted by the Ohio Bureau of Workers’ Compensation Special Investigations Department examined such growth in mobile technology, its uses within the workers’ compensation realm, and its future implications on fraud investigations. Mobile devices are projected to be the most common way Americans access the Internet by 2015, with a compound annual growth rate of 16.6% according to the International Data Corporation (DeGrasse). 

The health information field is leading the growth, with investment in companies that make health information mobile apps rising 78% in 2011 to $766 million (Edney; Bloomberg). In 2012, nearly 420 million smart phones and 44 million tablets will ship worldwide (Canalys). With smart phones and tablets increasingly being used to perform work previously done on a laptop or PC, the workers’ compensation system can expect to see increased use of mobile devices and applications in the daily activities of its healthcare providers, employers, and workers.

Taking advantage of recent trends, the BWC formulary went mobile in April 2012, allowing healthcare professionals immediate access to a formulary at the point of care and helping to ensure prescription safety and accuracy. Epocrates, Inc., available through app stores, can also be utilized by employers and workers. Another app, called PillManager, boasts of “unparalleled connectivity between consumer and pharmacy” where consumers can track their own medications and submit a repeat request for any prescription directly from their handheld device.

Mobile devices can be used outside of the healthcare realm, however, with apps aiding employers and workers during work activities. The U.S. Department of Labor and OSHA teamed up to allow worksite heat index tracking in order to reduce heat-related illnesses for workers outdoors. Using GPS data and information from the U.S. National Oceanic and Atmospheric Administration the app addresses risk levels and advises of rest breaks, fluid consumption, and adjustment of work operations. The NIOSH Lift Calculator app is also within the public domain, utilizing real-time feedback to reduce lower-back injuries; the app uses variables, such as horizontal distance, to calculate stress on the lower back during lifts.

Conversely, workers’ comp officials are concerned that injury exposure may grow as more workers go mobile – 2012 is expected to see nearly 35 million people working from home or other locations (Simpson). Mobile devices, although helpful in many realms, can prove to be a dangerous distraction while walking or driving; if the devices are owned by the employer, injuries while using such devices may present unclear compensability situations.

Mobile phones are being used in virtually all levels of criminal activity, making it easier for investigators to use mobile technology as incriminating evidence in an investigation. Personal surveillance has evolved with social media and mobile technology; as a result, officials can conduct investigations through “open source intelligence”. It has become common for investigators to identify false worker’s comp claims from social media websites like Facebook and Twitter documenting able-bodied activity (Newberry).

In addition, mobile applications create a full electronic audit trail enabling the tracking of people and transactions in both space and time. Within workers’ compensation, claims data can be correlated with information from apps to identify “hotspots” of activity at different pharmacies; problem pharmacies or providers can be identified and investigated more quickly (Savitz; Forbes).

Mobile technology, although helpful in a variety of field investigative aspects, can prove to be a challenge to a digital forensic examiner. The number of operating systems is much greater for mobile devices (>10) than for desktops (3) and each OS differs from the next in the way data is stored and security is provided. DFE’s must have the knowledge and tools to access information from each type of OS. In addition, the move to mobile technology has increased the use of cloud data storage, making it commonplace; Strategy Analytics forecasts U.S. spending on cloud services to grow $50 billion by 2016. Digital evidence has shifted to the cloud, where information may be found in multiple places and on a variety of platforms; also, data processing is decentralized in the Cloud, with a lack of physical access to servers (Grispos, Glisson, & Storer). As a result, traditional approaches to evidence collection are void Investigators must identify that an individual is using the cloud, obtain a search warrant, and overcome the final obstacle that current digital forensics tools are intended for media that is under the investigator’s control. As the transition is made to mobile device storage, investigators must be ready to make the change to better (and more expensive) technology for digital forensics labs.

As technology changes, the BWC Special Investigations Department continues to change its investigative efforts.  While the majority of people use technology to improve business operations or enhance communication, we are prepared to investigate those that use these types of technologies to commit fraud against the Ohio BWC.

To report suspected workers’ compensation fraud, call 1-800-OHIOBWC, visit ohiobwc.com, or visit www.facebook.com/ohiobwcfraud.

Sources:

Apple App Stores. Available from: http://www.apple.com/iphone/from-the-app-store or http://www.apple.com/ipad/from-the-app-store; 2012 [accessed 06.26.12]

“App stores; direct revenue to exceed $14 billion next year and reach close to $37 billion by 2015.” Canalys. Available from: http://www.canalys.com /newsroom/app-stores-direct-revenue-exceed-14-billion-next-year-and-reach-close-37-billion-2015; 2012 [accessed 06.26.12]

DeGrasse, M. “Mobile devices projected to overtake PCs as connections to Internet.” RCR Wireless. Available from: http://www.rcrwireless.com /blog/20110912/devices/mobile-devices-projected-to-overtake-pcs-as-connections-to-internet/; 2012 [accessed 06.26.12]

Edney, A. “iPad-toting doctors spur venture funding in medical apps.” Bloomberg Report. Available from: http://www.bloomberg.com/news/2012-06-18/oprah-aids-doctors-as-app-investments-soar-health.html; 2012 [accessed 6.26.12]

Grispos, G., Glisson, W., & Storer, T. “Calm before the storm: the emerging challenges of cloud computing in digital forensics.” 2009. [accessed 06.26.12]

Hobson, E. “Securing the cloud: digital investigations for the cloud.” Qinetiq. 2010. [accessed 06.26.12]

Newberry, L. “Social media footprint helps Pa. investigators.” Officer.com. Available from: http://www.officer.com/news/10731208/social-media-footprint-helps-pa-investigators; 2012 [accessed 06.26.12]

Ohio BWC Web. [accessed 06.26.12]

Savitz, E. “5 ways mobile apps will transform healthcare.” Forbes. Available from: http://www.forbes.com/sites/ciocentral/2012/06/04/5-ways-mobile-apps-will-transform-healthcare/; 2012 [accessed 06.26.12]

Simpson, A. “As more workers go mobile, workers’ compensation exposure grows.” Insurance Journal. Available from: http://www.insurancejournal.com /news/national/2011/06/01/200720.htm; 2012 [accessed 06.26.12]

Hannah News reported: “State Secures First Pill Mill Conviction of 2012”

January 11, 2012 Leave a comment

On January 6, 2012, Hannah News reported as follows:

‘Another Ohio pill mill has fallen to a multi-agency initiative launched by the Ohio Attorney General’s Office, the Ohio Pharmacy Board and State Medical Board, the Ohio Bureau of Workers’ Compensation, the Regional Agencies Narcotics & Gun Enforcement Task Force (R.A.N.G.E.), as well as local and federal authorities. Dr. Han M. Yang is the latest conviction, pleading guilty Thursday to eight felony counts.

Yang, 69, could get 17 years in jail and $80,000 in fines for his trouble. That would add to $100,000 in drug profits he has already surrendered.

State, local and federal officers raided his Dayton and Bethel Township offices in Montgomery and neighboring Clark counties in October as part of a year-long investigation into prescription drug abuse, medical fraud, and money laundering. (See The Hannah Report, 10/3/11.) Authorities found would-be customers lined up outside for quick prescriptions, though facilities were largely bereft of exam tables and other equipment needed for legitimate medical services. Undercover agents previously witnessed Yang writing prescriptions within minutes of a patient’s arrival, and with no examination.

Formerly affiliated with Good Samaritan Hospital and Miami Valley Hospital in Dayton, Yang was since charged with six counts of trafficking in prescription drugs, including five fourth-degree felonies and one fifth-degree felony; one second degree count of engaging in a pattern of corrupt activity; and one fourth-degree count of theft by deception involving health care fraud. Clark County Common Pleas Court Judge Richard O’Neill accepted Yang’s guilty plea Thursday.

“We are committed to driving pill mills, and their trail of suffering and death, out of Ohio,” Attorney General Mike DeWine said in a statement. “More work remains, but rest assured we will continue the fight.”

In addition to state and federal officials, the investigation involved Clark County Sheriff Gene Kelly, Montgomery County Sheriff Phil Plummer, Clark County Prosecutor Andrew Wilson, and Montgomery County Prosecutor Mat Heck. A local pharmacist had alerted authorities in October 2010 after a woman nine months pregnant showed up with a prescription written by Yang for powerful painkillers.

DeWine said sentencing will be announced later, but indicated Yang faces penalties ranging up to 18 years in prison and fines up to $77,500.

The arrest and conviction follows at least four convictions, investigations and/or license revocations involving Ohio physicians in 2011, including Dr. James Lundeen, Dr. Victor Georgescu, Dr. George D.J. Griffin, and a fourth doctor who colluded in a prescription drug scheme with former Cincinnati attorney Kenneth Lawson, who was stripped of his law license in September. (See The Hannah Report, 4/5/11, 9/20/11, 12/15/11, 12/20/11.)

The governor, state Legislature and DeWine launched the coordinated offensive against pill mills and over-prescribing doctors in early 2011. (See The Hannah Report, 2/8/11, 2/9/11, 2/21/11.)’

For more information about the BWC Special Investigations Department be sure to read our SID FY 2011 Annual Report.

If you suspect anyone is committing workers’ compensation fraud, 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.

Safe and secure: BWC Security ensures we are both

December 1, 2011 Leave a comment

The Bureau of Workers’ Compensation is comprised of 1,985 dedicated professionals providing exemplary workers’ compensation services from 15 customer service offices located in 16 facilities throughout the state. Some of these facilities also host employees of the Industrial Commission (IC) of Ohio, including the hearing officers who conduct all IC claim-related administrative hearings. Moreover, the site of our main headquarters – the William Green Building, 30 West Spring Street, in Columbus, Ohio – furnishes office space to other agencies, such as the Ohio Ethics Commission, Ohio Industrial Commission, Ohio Department of Alcohol and Drug Addiction Services, and Ohio Administrative Knowledge Systems. The William Green Building also hosts many large events throughout the year in its auditorium which seats 375 audience members.

BWC facilities annually experience tens of thousands of visits from employees, customers and members of the general public. Moreover, from these BWC facilities, employees also annually experience hundreds of millions of direct customer service interactions. These include more than one hundred million hits to our e-commerce based Web site, www.ohiobwc.com; and hundreds of thousands of incoming and outgoing telephone calls, more than four million pieces of mail, and countless e-mails. Each employee, customer, and visitor deserves and receives our very best. Most essentially, all interactions must be safe and secure.

Ensuring the safety and security for employees and customers is the mission of BWC Security. To meet its mission, a team of 41 dedicated professionals furnishes security services, threat assessments and investigations for all BWC staff statewide. The team uses dozens of key strategies, including:

  • Co-conduct security and safety training for all BWC employees located in each facility;
  • Conduct audits of each facility’s access control cards;
  • Provide quick reference guides detailing the optimal response to any building emergency;
  • Budget security equipment enhancements for facilities;
  • Monitor the security equipment installations and upgrades in all facilities;
  • Maintain an Automated Critical Asset Management System in conjunction with the Ohio Department of Homeland Security and the Ohio Department of Public Safety for first responders during a building emergency;
  • Initiate an Employee Emergency Notification System due to any business interruption or office closure; and
  • Conduct joint investigations with local and state law enforcement officers.

A Case In Point

The BWC SID safety violations investigation unit (SVIU) received an anonymous voice mail message. The caller threatened to “blow up” the SVIU office. BWC Security worked with the SVIU, Ohio State Patrol, and other Special Investigations Department staff to identify the threatening caller as a management employee of an employer investigated by the SVIU.

In the Franklin County Court of Common Pleas, the management employee was charged with two second-degree misdemeanor counts of telephone harassment and one fourth-degree misdemeanor count of disorderly conduct. The defendant pled guilty to one second-degree misdemeanor count of telephone harassment. The court sentenced the convicted subject to serve one year of community control and to pay $189 in court costs, a $100 fine and a $50 probation fee.

Be on the Lookout

This concludes our fraud awareness series. Be sure to read more about BWC fraud investigations in our SID FY 2011 Annual Report.

If you suspect anyone is committing workers’ compensation fraud, 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.

SVIU: Investigating suspected violations of specific safety requirements

November 28, 2011 4 comments

Most employers are ever seeking to improve workplace safety. Their desire to reduce workplace accidents and illnesses is motivated by so much more than merely reducing the operational costs that result from unsafe workplaces. They desire to protect the health and welfare of each member of the organization. Unfortunately, other employers — perhaps motivated by greed, sloth or both — fail to foster and maintain fundamental workplace safety. In fact, these entities often ignore the best safety practices, even to the point of violating specific safety requirements established by regulation(s).

This is why our BWC SID safety violations investigation unit (SVIU) is so essential. SVIU’s primary function is investigating alleged safety requirement violations that have resulted in a workplace injury, illness or death. Thus, the SID SVIU accomplishes its mission to provide impartial and comprehensive investigations regarding grieved industrial and construction deaths, injuries and/or illnesses for determination by Industrial Commission of Ohio staff hearing officers on alleged violations of Ohio’s specific safety requirements and regulations. To meet the ongoing demand for its services, the SVIU has dedicated staff state-wide, exclusively investigating alleged violations of specific safety regulations (VSSRs).

Compensation via VSSR awards:  If a worker is injured, contracts an illness or is killed on the job because of a violation of a specific safety requirement (VSSR) as outlined in the Ohio Administrative Code, the worker, surviving spouse or dependents may be eligible to receive an additional compensation award, ranging from 15 percent to 50 percent of the injured workers’ maximum allowable weekly compensation rate.

The investigative process:  An SVIU investigation commences when an injured worker or the injured worker’s attorney files an application (IC 8/9) for Violation of Specific Safety Requirement in a Worker’s Compensation Claim within two years of the injury, death or initial diagnosis of illness. Our investigative action steps commonly include:

  • Obtain the injured worker’s affidavit;
  • Contact and interview witnesses;
  • Secure and analyze injury reports, machine maintenance records and other documents;
  • Inspect and photograph the work site, machinery and other evidence;
  • Use high-resolution video to document the sights and sounds of a workplace injury scene; and
  • Re-enact events that led up to a workplace injury or death. Employers, demonstrating good faith, often assist us in these re-enactments.

The SVIU’s investigation concludes when the assigned investigator compiles his or her information in a comprehensive Report of Investigation. The SVIU sends the report to the Industrial Commission (IC) of Ohio and all parties to the claim. The IC then conducts a hearing to determine the eligibility of the worker or surviving dependents to receive a VSSR award. The SVIU Report of Investigation plays a critical role in the IC hearing.

Since 1990, the unit has completed 8,562 investigations.

Outcomes:  The IC hearing culminates in the issuance of an administrative order, granting or denying the additional award. The hearing order may impose upon an employer a penalty, fine and also a requirement to correct specific safety regulation violations.

A Case In Point

On March 28, 2011 an employee died at a demolition site in Montgomery County. The injured worker was a member of a demolition team tasked with razing a vacant industrial facility. SVIU responded to the scene and obtained preliminary information. The SVIU investigation revealed the owner of the company had failed to secure coverage with the Ohio Bureau of Workers’ Compensation. Upon the death of the injured worker, the owner of the company fled from the United States. SVIU met with the injured worker’s widow and other family members. A BWC claim was filed on behalf of the decedent. SVIU worked with BWC to establish an employer policy and the claim was subsequently allowed and charged to the employer’s policy.

Be on the Lookout

Red flags that may indicate the employer is operating an unsafe workplace in violation of specific safety regulations:

  • Employer has placed tarps or large equipment to act as “shields” around perimeters of construction trenching sites to block the view of the public and/or safety inspectors;
  • Employer requires workers to provide their own required personal protective equipment;
  • No trained or qualified “competent person” exclusively oversees the job site;
  • Employer fails to require and/or furnish training or certification to workers prior to permitting them to operate industrial vehicles;
  • Equipment is devoid of any sign or label warning workers of dangerous areas or zones;
  • Emergency quick drench stations are non-operational or in need of maintenance;
  • Employer permits persons within construction sites who are not wearing hardhats and/or other required personal protective equipment;
  • Employer permits workers to work at elevated heights or rooftops without fall arrest equipment;
  • Employer makes no modification or change in response to reported “close calls” / near injuries; and
  • Current BWC certificate of coverage is not posted and/or has been altered.

Look for our next fraud awareness article that will discuss our BWC Security operation. Meanwhile, be sure to read more about SVIU investigations in our SVIU FY 2011 Annual Report.

If you suspect anyone is committing workers’ compensation fraud, 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 digital forensics unit: Ensuring justice for even the smartest criminals

November 15, 2011 Leave a comment

Digital forensics unit gravatar

In our digital age almost all data elements are stored electronically – whether on computers, laptops, servers, digital recorders, iPads or smartphones. Even criminals who think they are too smart to be detected, investigated and prosecuted, routinely use one or more of these electronic devices in the course of their crimes.

To bring these criminals to justice, the SID digital forensics unit (DFU) provides a full range of technical support for special agents conducting workers’ compensation fraud investigations. In fact, the unit’s primary duties include the forensic imaging and analysis of digital data from electronic devices. For example, when executing search warrants, the forensic analysts make exact copies of the storage from these devices. Then, employing specialized training, these uniquely talented professionals use specialized forensic software to filter through a vast amount of information.

During just the last year, the unit has processed 12.88 terabytes of data. This quantity is equivalent to 6,282,923,587 printed pages. These pages, if stacked, would be stretch 397 miles high – or the length of 6,981 football fields.

A Case In Point

Forensic analysts are often required to gain access to proprietary software, such as office billing and point-of-sale software, in order to provide data to investigators. In a recent case, the unit worked with a software developer to successfully gain back-door access to the sales and time keeping software of a long-defunct business. The data provided essential information to SID special agents. The evidence proved to be a very important component of the case, which identified almost $350,000 in savings to the BWC State Fund.

Be on the Lookout

Look for our next fraud awareness article that will discuss our SID Fugitive Task Force. Meanwhile, be sure to read more about fraud investigations in our SID FY 2011 Annual Report.

If you suspect anyone is committing workers’ compensation fraud, 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.

Paying for crime…

October 31, 2011 Leave a comment

iStock_000005139523XSmall

Fraud subjects repaid BWC $8.5 million during fiscal year 2011!

For 18 years we have faithfully fulfilled the mission of our Special Investigations Department. We have effectively and proactively prevented losses to the workers’ compensation system; and deterred, detected, investigated, and prosecuted workers’ compensation fraud. This recovery of money from subjects of investigations protects the BWC State Fund – the fund which is used to collect premiums and pay claim costs. This serves to ensure employers pay their fair share, and those that attempt to get more are punished.

The Special Investigations Department works with the BWC Collections and Legal departments to ensure overpayments and premiums due resulting from our investigations are returned. The following are some of the ways we ensure debts are repaid:

  • Certify accounts to the Office of the Attorney General of Ohio for collection of past due debts;
  • File liens against debtors’ assets;
  • Collect overpayment from future benefit awards;
  • Pursue decertification by BWC for providers that fail to pay back overpayments resulting from fraudulent or inappropriate billing; and
  • Pursue an injunctive relief from courts (i.e., stop work order) against an employer that fails to pay premium.

Restitution also serves to deter prospective criminals from attempting to victimize our BWC State Fund. Criminologists tell us that criminals make a conscious decision to avoid committing crimes against victims whenever there is a high likelihood of being detected, investigated, prosecuted and punished. Accordingly, BWC may administratively order subjects to pay the State Fund more than the actual amount they steal. BWC may impose a financial penalty upon the subjects of closed, founded fraud investigations. For example, BWC may require employers to pay a penalty that is up to ten times of their unpaid premium amount.

Moreover, SID refers its cases to criminal prosecutors at all levels – municipal, county, state and federal. These experienced prosecutors secure appropriate indictments, convictions and sentences. At sentencing, criminal courts often order our convicted fraud subjects to reimburse BWC for the amount of monies stolen and our investigative costs. Therefore, prior to the sentencing of a convicted defendant, SID fraud analysts and special agents submit Victim Impact Statements to the court. In these statements, we ask the court to order the defendant to pay full restitution and our costs to investigate the subject.

Criminal courts often stipulate in their official judgment entries that our convicted defendants must pay BWC restitution according to a monthly payment plan. Indeed, a defendant’s failure to do so could be deemed by the court to constitute a violation of the conditions of probation. The court may then revoke probation and immediately impose upon the sentenced subject a period of incarceration. Thus, to avoid incarceration, our fraud probationers are fairly and appropriately incented are make restitution to BWC.

A Case In Point

During fiscal year 2011, we received, via a U.S. District Court, three restitution checks from a convicted provider subject totaling more than $1.2 million.

In 2006, a jury convicted this provider fraud subject on 56 felony counts, including two counts of wrongful death due to medical malpractice, 21 counts health-care fraud, 8 counts of corrupting another with drugs, 15 counts of mail fraud and 10 counts of wire fraud. After reviewing victim impact statements, the court ordered the provider subject to serve two life sentences, 20 years and 10 years of incarceration. The court ordered the subject to pay $14.3 million in restitution to 15 victims, including $7,275,762 to BWC.

Be on the Lookout

Look for our next fraud awareness article that will discuss the SID digital forensics unit. Meanwhile, be sure to read more about fraud investigations in our SID FY 2011 Annual Report.

If you suspect anyone is committing workers’ compensation fraud, 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.

In summary: SID Health Care Provider Team (HCPT)

October 27, 2011 1 comment

When providers commit workers’ compensation system fraud and other crimes against the State Insurance Fund, the SID Health Care Provider Team (HCPT) responds to ensure compliance and integrity of the system. The team is comprised of dedicated analysts and agents located statewide. SID has recently increased its staffing to combat provider fraud, such as billing for unnecessary or non-rendered services, practicing without an active license, overprescribing narcotics, operating pill mills, trafficking in drugs, operating injury mills, unbundling and/or upcoding.

In the last article, we explained that SID staff members furnish orientation and training to MCOs in how to meet their contractual obligation to detect and report fraud. These SID staff members, who successfully drafted and finalized “Special Investigations – MCO Fraud Reporting and Referral Requirements,” are professionals assigned to HCPT.

To bring criminal providers to justice, these talented HCPT professionals conduct joint investigations with dozens of other agencies, such as the FBI, IRS – Criminal Investigations, U.S. Department of Justice – Drug Enforcement Administration (DEA), and local law enforcement narcotics units, vice units and drug task forces. During the last two years, HCPT made 36 criminal referrals for prosecution to state, county and local prosecutors. During last year alone, their work resulted in the identification of over $8.2 million in savings to the State Insurance Fund.

Be on the Lookout

This concludes our provider fraud awareness series. Look for our next fraud awareness article that will describe how we collect on the debts owed to the BWC State Insurance Fund by subjects of our investigations. In the meantime, be sure to read more about the BWC Special Investigations Department’s strategies and successes in our SID FY 2011 Annual Report.

If you suspect that a subject is committing workers’ compensation fraud, 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.

Managed care organizations (MCOs): Medically managing claims and combating fraud

October 26, 2011 Leave a comment

BWC contracts with managed care organizations (MCOs) to provide several services to both employers and injured workers. The primary service they provide is case management of the medical services the injured worker needs to get better and return to work at the earliest, safest interval. In providing medical case management services, MCOs are in close contact with injured workers, providers of record, and employers to promote the delivery of treatment and a timely return to work.

To provide effective case management, MCOs furnish core medical services, such as:

  • Ongoing contact with the injured worker to assist in finding a physician to provide treatment, to assess their work status, and to help move treatment forward;
  • Ongoing contact with the provider of record (the injured worker’s lead physician) to determine the best treatment plan or plan of care for the injured worker, the status of treatment, and the injured worker’s work restrictions, if any;
  • Ongoing contact with the employer to determine the injured worker’s work status and the availability of light duty or restricted work; and
  • Constant coordination between the provider of record and employer regarding treatment expectations and facilitation of a safe and efficient return to work.

While performing these services, the MCO is in position to identify potential fraudulent activity. After being in close contact with the provider and having knowledge of a specific claim, often the MCO may be alerted to inconsistencies or red flags. Meticulous reviews of the medical documentation and provider billing data may detect errors and fraud. If fraud is suspected, the MCO should timely report such to BWC for investigation. This obligation of each MCO to combat fraud is specified in a signed MCO agreement with BWC. The obligation includes:

“The MCO agrees to identify and report any suspected fraudulent or deceptive behavior committed by injured workers, employers, providers or any other person or entity…”

This fraud detection and reporting obligation is essential. To support each MCO in meeting its obligation, we furnish clear guidance and direction, as specified in an 8-page appendix to the MCO agreement, entitled “Special Investigations – MCO Fraud Reporting and Referral Requirements.” For example, each MCO is required to establish and maintain an effective fraud detection and corrections program. We furnish orientation and training to MCOs in how to meet this requirement because they can and should detect fraud.

A Case in Point

An MCO employee furnished an allegation to the SID Health Care Provider Team (HCPT) pertaining to a provider. The source detected the provider subject was over-prescribing in claims.

HCPT conducted an investigation in conjunction with the U.S. Department of Justice – Drug Enforcement Administration (DEA) and a local law enforcement vice unit. The multi-agency investigation included an undercover operation, a search warrant, and interviews with patients, employees and former employees. The investigation found the subject billed for services not rendered, upcoded bills, tampered with records, and engaged in drug trafficking. Even while under investigation, the subject voluntarily surrendered his DEA certificate. The State Medical Board of Ohio permanently revoked the subject’s license to practice medicine in the State of Ohio.

The case resulted in the identification of savings to the Ohio workers’ compensation system of more than $685,000. The Office of the United States Attorneys for Ohio’s Northern District is currently reviewing the case for prosecutorial merit.

Be on the Lookout

Look for our next fraud awareness article that will conclude this series pertaining to provider fraud. Meanwhile, be sure to read more about provider fraud investigations in our SID FY 2011 Annual Report.

If you suspect that a subject is committing workers’ compensation fraud, 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.

Violating the code: Providers who unbundle or upcode when billing BWC

October 24, 2011 Leave a comment

Some providers commit fraud by billing BWC separately for services that BWC requires to be billed together, as a single or “bundled” service. We refer to this fraudulent act as “unbundling.” For example, BWC requires a provider to cleanse the claimant’s skin with an antiseptic prior to giving him or her any injection. BWC requires providers to bill this as one, single service — for the cleansing of the skin and the injection. Providers are prohibited from unbundling this service. However, a criminal provider, motivated by greed, may attempt to circumvent the bundled billing requirement in order to bill BWC for a greater, total amount.

Some providers commit fraud by billing BWC using a more expensive treatment code than the appropriate code for the service actually performed. The costs of some medical services are based upon the length of time the service is provided. Services are often priced in minute increments. For example, BWC will reimburse a provider for some therapies based upon the number of minutes furnished to a claimant. However, a criminal provider may bill BWC for more minutes of therapy — at a greater cost — than they actually furnished the claimant.

A Case In Point

We detected two brothers — both Illinois psychiatrists, and one an owner/provider of an Ohio psychiatric practice — were upcoding bills they submitted to BWC for psychiatric services. Data analysis by our intelligence unit revealed the psychiatrists billed BWC for more than twenty hours of individual psychotherapy on a single day.

During the course of our investigation, we conducted undercover surveillance, a search warrant, record analyses, subject and patient interviews, and grand jury subpoenas. We obtained evidence to substantiate the allegation that the subjects falsified treatment notes and billed BWC for services not being rendered and upcoded bills for services that were provided. We determined the Ohio provider was spending significantly less time with his patients than he billed to BWC in their claims. The investigation uncovered instances in which the Ohio provider spent less than five minutes with the patient, yet he billed BWC for 45 to 50 minutes of individual psychotherapy. We also proved both brothers billed BWC for services when patients were not even present in the office.

The owner/provider of the Ohio practice pleaded no contest to one fifth-degree felony count of workers’ compensation fraud. The court sentenced this subject to serve 5 years of community control and ordered him to pay $78,573 in restitution and investigative costs to BWC. His brother, the Illinois-based provider, pleaded no contest to one first-degree misdemeanor charge of workers’ compensation fraud. The court ordered this subject to pay $27,423 in restitution and investigative costs to BWC. Subsequently, he made payment in full. An employee of the practice pleaded guilty to one first-degree misdemeanor charge of workers’ compensation fraud. The court ordered this subject to pay a $250 fine.

BWC de-certified both providers; they may no longer provide services to BWC claimants. The convicted owner/provider closed the Ohio practice.

Be on the Lookout

Red flags that may indicate a provider is unbundling or upcoding:

  • Provider inexplicably attempts to explain or justify his/her billing practices to a patient;
  • Provider furnishes services to more patients in a period of time than one suspects is feasible; and
  • Provider furnishes a service for a shorter period of time than the patient suspects is needed for effective treatment.

Look for our next fraud provider awareness article that will discuss the role of managed care organizations (MCOs) in the Ohio workers’ compensation system. Meanwhile, be sure to read more about provider fraud investigations in our SID FY 2011 Annual Report.

If you suspect that a subject is committing workers’ compensation fraud, 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.

Milling about: Providers who operate injury mills

October 20, 2011 1 comment

In the second article of this Provider Fraud Awareness series, we quoted Dr. Louis Lasagna as having taught medical students to meet the following standard of conduct in the modern version of the Hippocratic Oath:

“I will apply, for the benefit of the sick, all measures that are required, avoiding those twin traps of overtreatment and therapeutic nihilism” [non-treatment].”

In the last article we examined examples of overtreatment when we discussed the scourge of criminal providers who overprescribe narcotic drugs. In this article we discuss criminal providers who engage in overtreatment of their patients by overusing multiple, repetitive, often unnecessary and ineffective, medical services. For example, these criminal providers treat patients by performing many diagnostics tests with little or no advance explanation or follow-up interpretation and often for extended periods of time.

Such a practice – from which providers conspire to furnish unnecessary care in order to overbill BWC and/or other insurers – is commonly known as an “injury mill”. In an article entitled “Insurance fraud: How to spot a personal injury mill,” Stephen Barrett, MD, Charles Bender, DC and Frank P Brennan, Esq., describe injury mills as follows:

‘The key players are (a) providers who hope to profit from their expensive services; (b) attorneys who hope to profit from insurance settlements, which often are a multiple of the health-care expense; and (c) patients who may or may not have full knowledge of the conspiracy. Some mills use “runners” to recruit accident victims, but some mills even fabricate their own accidents.’

Clearly, the intent of an injury mill is not to effectively treat the patient’s unique symptoms, to provide a cure, but rather only to maximize billings per patient per visit. Consequently, these criminal providers furnish patients short, incomplete and/or infrequent medical examinations. Injury mill providers ignore the true medical care needs of our claimants.

Be on the Lookout

Red flags that may indicate a provider is operating an injury mill:

  • Provider furnishes unnecessary treatments and/or services, often for extended periods of time;
  • “One-stop shopping” — the provider practice includes multiple provider types, typically at a single location; e.g., medical doctors, chiropractors, physical therapists, and massage therapists;
  • Physical examinations of patients are infrequent, short and incomplete;
  • Provider routinely maximizes billing per patient per visit, for example by performing many diagnostics tests with little or no advance explanation and follow-up interpretation;
  • Provider has close working relationships with attorneys;
  • Provider bills increasing units of service for massage and physical therapy;
  • Provider uses the same treatment even after the patient reports physical health improvement;
  • Patients have multiple claims and frequently receive treatment from the provider; and
  • Patients file new claims shortly after settling their older claims.

Look for our next fraud provider awareness article that will discuss providers who commit fraud by unbundling and/or upcoding bills. Meanwhile, be sure to read more about provider fraud investigations in our SID FY 2011 Annual Report.

If you suspect that a subject is committing workers’ compensation fraud, 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.

Danger — Trafficking area ahead!: Providers who overprescribe narcotics, operate pill mills, and/or traffick in drugs

October 18, 2011 2 comments

In the opening article in this Provider Fraud Awareness series, we noted some providers, acting with hypocrisy, violate their Hippocratic Oath and/or professional commitment to prescribe regimens for the good of patients according to the provider’s ability and judgment and never do harm to anyone. These providers deceive us and commit crimes. In that October 7th article, entitled “Hypocrisy rather than Hippocrates: Providers who harm patients and society,” we wrote: “They harm claimants, sometimes fatally…prescribing unnecessary drugs, operating pill mills and injury mills, or drug trafficking.”

Well, these words are no overstatement, embellishment or hyperbole. Proof of such exists throughout our beloved state and beyond. That is why, in a February 2011 press release, the FBI affirmed it “remains committed to working additional health care fraud investigations … to address drug diversion, Internet pharmacies, prescription drug abuse, and other health care fraud threats.” At that time the FBI reported its agents were nationally working more than 2,600 pending health care fraud investigations. Indeed, during fiscal year 2010 alone, the FBI’s collaborative efforts with law enforcement partners – including our BWC Special Investigations Department – led to charges against approximately 930 individuals and convictions of almost 750 subjects. The FBI concluded these investigations had “dismantled dozens of criminal enterprises engaged in widespread health care fraud.”

In a May 21, 2011, Columbus Dispatch article, entitled “Kasich signs ‘pill mill’ bill,” Ohio Governor John Kasich offered insight and leadership. He noted: “We really are a main artery for the transport of drugs, not just in Ohio, but through Ohio to other places.” Thus, Governor Kasich concluded: “We have to really engage even more in the war on drugs in this state.” As a member of Ohio Governor’s Opiate Drug Task Force, we take decisive action in the war to protect Ohioans from pill mill operators. To eradicate this scourge of criminal providers we continue to conduct joint investigations with other agencies. In addition to the FBI, these agencies include:  IRS – Criminal Investigations, U.S. Department of Justice – Drug Enforcement Administration (DEA), and local law enforcement narcotics units, vice units and drug task forces.

A Case In Point

We received an allegation that a Cuyahoga County doctor was prescribing significant amounts of narcotic drugs. The SID Health Care Provider Team (HCPT) conducted an investigation — with the DEA, local law enforcement, and a local drug task force — that included undercover operations and a search warrant. Our undercover operations revealed the subject prescribed narcotic medications to undercover agents without providing them with proper medical examinations and then billed BWC improperly for their office visits. Moreover, the subject wrote a prescription for an undercover agent who advised the subject she was not experiencing any pain. The investigation found the provider continued to prescribe narcotics to patients who were known doctor shoppers, even after she received warnings from pharmacies, parents, spouses, social service agencies and police departments. Our investigation proved the subject falsified records to indicate she delivered services that she did not furnish and that she falsely elevated pain levels and fabricated tests to justify her continual overprescribing of pain medication to patients.

The subject pled guilty to one count each of attempted theft, attempted workers’ compensation fraud and telecommunications fraud, all felonies of the fifth degree. The court sentenced her to serve two years of probation. The court ordered the subject to pay $5,067 in restitution to BWC and a $2,500 fine. The court further stipulated the subject may no longer be a provider of services to BWC claimants.

Be on the Lookout

Red flags that may indicate a provider is overprescribing drugs, operating a pill mill, and/or drug trafficking:

  • The provider ignores a patient’s or guardian’s questions about the necessity of a prescription narcotic drug;
  • The provider dismisses a patient’s or guardian’s questions about the necessity of a prescription narcotic drug with the excuse: “It will cost the patient nothing. The Bureau or another insurer will cover the expense;”
  • The provider fails to require a patient to complete urinalysis drug testing to confirm the patient is taking the prescribed narcotic drug;
  • The provider writes a prescription for a cash payment by the patient;
  • The provider prescribes narcotic drugs without examining and/or treating the patient; and
  • The provider’s patients sell and/or barter their prescribed narcotic drugs to others.

Look for our next fraud provider awareness article that will discuss providers who operate injury mills. Meanwhile, be sure to read more about provider fraud investigations in our SID FY 2011 Annual Report.

If you suspect that a subject is committing workers’ compensation fraud, 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.

Toledo Man Caught on Camera Roofing While on Workers’ Comp

October 18, 2011 1 comment

Daniel Uribes sentenced in fraud case

A Toledo (Lucas County) man has been sentenced in a fraud case after investigators from the Ohio Bureau of Workers’ Compensation (BWC) captured video not only showing him working a roofing job while receiving benefits, but also leaving the worksite to attend a hearing on his workers’ comp case, and later returning to finish the job. The investigation, conducted by BWC’s Special Investigations Department (SID) resulted in a guilty plea by Daniel Uribes, who was sentenced the Toledo Municipal Court last week.

“It is ironic that our investigators were able to catch Uribes on tape taking a break from his illegal work activity to attend a hearing related to his workers’ compensation case,” said BWC Administrator/CEO Stephen Buehrer.  “It is also telling of the lengths some will go when committing fraud, and a reminder to us of the importance of our work to put an end to it.”

Uribes became the subject of an investigation after SID obtained evidence that he engaged in roofing work with his father while receiving Temporary Total Disability benefits for a workplace injury.  A surveillance operation showed Uribes was performing roofing work at a residence in Toledo.  During the surveillance, Uribes left the job site to travel to downtown Toledo and attend his Industrial Commission hearing on a separate issue related to his incarceration while collecting disability.  After the hearing, the investigators followed Uribes back to the work site, where he returned to work on the roof and more video was obtained. 

Uribes originally pleaded not guilty but withdrew and entered a no contest plea to a misdemeanor charge of workers’ compensation fraud.  The judge sentenced Mr. Uribes to ten days in the Corrections Center of Northwest Ohio, with credit for time served.  Mr. Uribes had already paid his full restitution of $3,254.30. 

If you suspect that a subject is committing workers’ compensation fraud, 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.

https://www.ohiobwc.com/home/current/releases/2011/101811.asp

Unlicensed to steal: Providers who practice without an active license

October 13, 2011 1 comment

Dubious doctor

Nearly all adult Ohioans, certainly those over the age of 15 years and 6 months, know that to legally operate a motor vehicle one must have a valid driver’s license or a temporary learner’s permit. They also understand that other eligibility requirements exist and must be met, including vehicle registration and proof of insurance. These citizens, whether they like it or not, recognize the State of Ohio will impose penalties, fines and even imprisonment upon those who illegally operate a motor vehicle – either without the required, valid driver’s license or learner’s permit or with a suspended license. Nearly all Ohio drivers obey these laws, reasoning they serve to protect the public interest for safety, including their own self-interest in health and well-being.

For the same reasons, these citizens certainly expect each of their medical providers to be licensed by the State of Ohio before they practice medicine in Ohio. These citizens also expect not to be treated by a provider while his/her license is suspended or otherwise inactive.

Yet, as reasonable as this expectation may seem to us, it is a false assumption. While most providers are duly licensed when they practice medicine, some providers commit the crime of practicing without a license or with a suspended license. For example, some have had their licenses suspended by the State Medical Board of Ohio following a hearing wherein their peers found them to be unfit due to an addiction to alcohol and/or drugs.

These criminal providers engage in a pattern of intentional treatment and/or billing in spite of being unlicensed. They often attempt to deceive BWC, and/or other insurers, by submitting fabricated medical reports and bills with the false identity and forged signature of a licensed provider. Fortunately, in handing down guilty verdicts in our criminal prosecution cases, juries see these providers for what they truly are – felons who preyed upon unsuspecting patients.

A Case In Point

The BWC Managed Care Organization Audit Unit and SID Intelligence Unit suspected a provider billing BWC for physical therapy treatments was unlicensed to provide physical therapy in the State of Ohio. The SID Health Care Provider Team (HCPT) interviewed licensed providers, claimants and other witnesses, conducted undercover operations, and analyzed medical records. The investigation found the unlicensed subject attempted to evade detection by submitting falsified documents using the billing identities of two BWC enrolled providers. The subject submitted documents to BWC using the identities and forged signatures of an Ohio licensed physical therapist and an Ohio certified medical doctor without their authorization or knowledge.

The subject pled guilty to one count of mail fraud and one count of tax evasion. Before sentencing, the subject’s home was sold at a Sheriff’s auction. The court sentenced him to serve 37 months of federal incarceration and three years of supervised release, and to perform 80 hours of community service. The court ordered the subject to pay $2,103,188 in restitution to BWC and $92,148 in restitution to the IRS.

Be on the Lookout

Red flags that may indicate a provider is unlicensed to render services in the State of Ohio:

  • The provider who examines and/or treats the patient is not the provider who bills for the service;
  • An “explanation of benefits” statement from BWC and/or another insurer lists a provider who did not examine and/or treat the patient; and
  • A search of the State Medical Board of Ohio’s on-line “License Center” suggests the provider’s license is in a credential status that is not “active”.

Look for our next fraud provider awareness article that will discuss providers who overprescribe drugs, operate pill mills, and/or engage in drug trafficking. Meanwhile, be sure to read more about provider fraud investigations in our SID FY 2011 Annual Report.

If you suspect that a subject is committing workers’ compensation fraud, 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.

Extreme [con] games: Providers billing for unnecessary or non-rendered services.

October 11, 2011 1 comment

Billing document with penMost providers, in faithfulness to their patients and profession, avoid the extremes. Indeed, they accomplish their life’s mission as described in the modern version of the traditional Hippocratic Oath, by Dr. Louis Lasagna, in the profound words:

“I will apply, for the benefit of the sick, all measures that are required, avoiding those twin traps of overtreatment and therapeutic nihilism” [non-treatment].

Admittedly, even the best providers, through simple, human frailty, will sometimes fail. Occasionally, they over treat one patient and under treat another. As unfortunate as these occurrences are, they are certainly not criminal acts.

Yet, still other providers do, in fact, commit a crime when they over treat or under treat. Here’s how. The criminal provider engages in a pattern of intentional over treatment or non-treatment of patient(s). He or she attempts to deceive BWC, and/or other insurers, by submitting fabricated medical reports to justify falsified bills demanding payment for their unnecessary or non-rendered services. In the latter instance, the criminal provider displays brazen arrogance in submitting any bill for a service that was not provided to a patient. Millions of ‘reasonable people on the street’ have no difficulty deeming such acts as criminal. Thus, jurors appropriately hand down guilty verdicts in our criminal prosecution cases.

A Case In Point

We received an allegation from a managed care organization employee that a provider was billing for durable medical equipment not provided to claimants. The SID Health Care Provider Team (HCPT) interviewed patients and analyzed medical records. The investigation found the provider submitted fraudulent patient progress reports to BWC for reimbursement of medical supplies she did not provide to her claimants.

The subject pled guilty to one fifth-degree felony count of workers’ compensation fraud. The court sentenced her to serve one year of incarceration (suspended) and one year of community control, and to perform 80 hours of community service. The court ordered the subject to pay BWC $11,154: $5,577 in restitution and $5,577 investigative costs.

Be on the Lookout

Red flags that may indicate a provider is engaging in billing for unnecessary or non-rendered services:

  • The provider ignores a patient’s or guardian’s questions about the necessity of a treatment;
  • The provider dismisses a patient’s or guardian’s necessity of a treatment questions with the excuse:  “It will cost the patient nothing; the Bureau or another insurer will cover the expense.
  • An “explanation of benefits” statement from BWC and/or another insurer lists services the patient does not recall receiving from the provider;
  • An “explanation of benefits” statement from BWC and/or another insurer lists dates of services on which the patient was not seen or treated by the provider, perhaps due to a canceled appointment; and
  • An “explanation of benefits” statement from BWC and/or another insurer lists non-feasible dates of service, dates when the provider would not have been available, perhaps on a weekend or holiday.

Look for our next fraud provider awareness article that will discuss providers who practice without a valid license. Meanwhile, be sure to read more about provider fraud investigations in our SID FY 2011 Annual Report.

If you suspect that a subject is committing workers’ compensation fraud, 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.

Hypocrisy rather than Hippocrates: Providers who harm patients and society

October 7, 2011 1 comment

Wikipedia explains The Hippocratic Oath is an oath “historically taken by doctors and other healthcare professionals swearing to practice medicine ethically. It is widely believed to have been written by Hippocrates, often regarded as the father of western medicine, or by one of his students.” In the original classic version of the oath, translated into English, the individual established a covenant with patients and society by promising to meet several commitments, including:

“I will prescribe regimens for the good of my patients according to my ability and my judgment and never do harm to anyone.”

Most providers – whether they are physicians, surgeons, chiropractors, pharmacists, or medical professionals in hospitals or urgent care facilities – honor the oath. Further, even those who do not formally take the oath – such as durable medical equipment vendors, members of third-party administrators or managed care organizations – adopt its precepts and meet its intent.

Sadly, however, other providers violate the oath, acting with hypocrisy. They deceive us and commit crimes. They harm claimants, sometimes fatally. They harm insurers, including the BWC State Fund, by billing for services not rendered, not needed, or furnished by an unlicensed provider, manipulating procedure codes to bill for a more expensive treatment than provided, prescribing unnecessary drugs, operating pill mills and injury mills, or drug trafficking. Subsequently, employers are harmed when they must pay additional premiums to cover undetected fraudulent provider costs and manage an impaired work force. Employees are harmed by reduced wages, job loss and workplaces made unsafe by impaired co-workers. Indeed, all of society suffers.

We recognize the impact of provider fraud upon Ohio. In 1994, our department created the Health Care Provider Team to exclusively investigate this type of fraud. In 2005, we expanded the team with dedicated analysts and agents located statewide. During the last two years, the Health Care Provider Team made 36 criminal referrals for prosecution to state, county and local prosecutors. During last year alone, their work resulted in the identification of over $8.2 million in savings to BWC’s State Fund.

During the month of October, we will discuss several of the above provider fraud schemes, introduce other BWC departments tasked with regulating providers and describe strategies that our department uses to detect provider fraud. Look for our next fraud awareness article that will discuss providers who bill for non-rendered or unnecessary services, two of our more common provider fraud complaints.

Meanwhile, be sure to read more about our fraud investigative performance results in the SID FY 2011 Annual Report.

If you suspect that a subject is committing workers’ compensation fraud, 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.

Claimant Fraud: Think you won’t get caught? Think again.

September 12, 2011 Leave a comment

BWC is here for those hard-working people who are unfortunate enough to get hurt on the job.  BWC ensures injured workers receive entitled benefits and quality care so they can return to work.

Unfortunately, there are individuals who think it is okay to get more than they deserve. These individuals falsify information about the extent of their injuries or hide the fact that they are working while they still receive benefits to which they would no longer be entitled. Don’t be THAT guy/gal.

Committing workers’ compensation fraud may result in a felony conviction and jail time.  BWC Special Investigations has agents throughout Ohio to identify, investigate, and prosecute individuals who commit workers’ compensation fraud.  Think you won’t get caught?  Think again.

Since its inception in 1993, the Special Investigations Department has made almost 3,800 criminal referrals resulting in over 1,900 convictions for workers’ compensation-related crimes in Ohio.  Furthermore, over 55,000 investigations have been completed resulting in $1.4 billion in identified savings.

This article kicks off our Claimant Fraud Awareness series.  Throughout the month of September, we will release a series of articles on some of the types of claimant fraud, including drug-related fraud.  Additionally, we will let you know of some things that are being done to identify possible fraud.  This series follows our Employer Fraud Awareness series that was completed in August.

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

Make ‘em pay for it: The Employer Fraud Team

September 1, 2011 Leave a comment

When employers fail to comply with the workers’ compensation system, SID’s Employer Fraud Team responds to ensure compliance and integrity of the system. During the last two years, their investigations have resulted in over 160 criminal referrals and 60 convictions. Be sure to read more about the Employer Fraud Team’s success in our SID FY 2011 Annual Report.

SID has recently increased its staffing to combat employer fraud, such as, misclassifying employees as independent contractors.

Misclassification: A National Issue

BWC, as well as other federal and state agencies, continue to see misclassification as a major issue. Employers that misclassify their employees as independent contractors have an unfair advantage as they compete against employers operating legitimately.

What’s misclassification? Here’s a quick overview:

Misclassification occurs when an employer claims a person as an independent contractor, when they should be classified as an employee.

Workers are generally considered employees when someone else controls how and when they perform their work. In contrast, independent contractors are generally in business for themselves and control how and when they perform services.

In addition to legitimate businesses, federal, state and local governments also lose when employers intentionally misclassify employees. Employers are required to withhold taxes from employees’ pay and also pay taxes, such as Social Security, Medicare, unemployment and workers’ compensation, based on their employees’ wages. Employers generally do not have to withhold or paid taxes for independent contractors.

Misclassification costs the State of Ohio millions. A 2009 report by the Ohio Attorney General estimated that Ohio has 92,500 misclassified workers. This level of misclassification annually costs the state up to $20 million in unemployment taxes, up to $103 million in workers’ compensation premiums and up to $36 million in income tax revenue.

To combat this issue, the Internal Revenue Service (IRS) launched a program last year to randomly examine 6,000 companies over the course of three years to specifically address employee misclassification. The federal government estimates the program will generate $7 billion in 10 years through tighter enforcement.

BWC’s Special Investigations Department continues to pursue exchanging data with partners and reviewing our own data to ensure employers pay their fair share or else we make ‘em pay for it.

This concludes our employer fraud awareness series. Look for our next fraud series awareness series on claimant fraud.

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 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.

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.

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.

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.