Workers Compensation fraud costs all of us!
Fraud is a hidden cost of workers compensation insurance that impacts
employers, injured workers and the general public. During 1999, BWC paid approximately
$599 million in medical benefits and approximately $972 million in compensation benefits.
Industry experts estimate that 5 percent to 20 percent of workers compensation benefits paid
are fraudulent in nature. If this is true, $80 to $320 million annually could be paid out fraudulently in Ohio.
Fraud is defined as an intentional act or series of acts resulting in payments or benefits to a person or entity
that is not entitled to receive those payments or benefits. Fraud is committed when a person
Injured workers, employers and health-care providers can commit fraud.
- Knowingly receives benefits which he or she is not entitled to receive by law;
- Makes false or misleading statements for the purpose of receiving money or services;
- Enters into a conspiracy to defraud the Ohio State Insurance Fund or self-insuring employer under the Workers Compensation Act.
BWC is serious about detecting, investigating and deterring fraud.
To protect injured workers benefits and keep employers premiums down, BWC is aggressively attacking fraud.
The special investigations department is committed to detecting, investigating and prosecuting potential employer, injured worker and medical provider
workers compensation fraud.
From the inception of our fraud program in July 1993, through May 2002, from completed fraud investigations, BWC identified savings of nearly $600 million
in workers compensation fraud and obtained 570 convictions.
What does the law state about fraud?
Per ORC 2913.48, a person commits workers compensation fraud if the person:
Receives workers compensation benefits to which he or she is not entitled;
Makes false or misleading statements with the purpose of securing goods or services under the Workers Compensation Act;
Alters, falsifies, destroys, conceals or removes records or documents necessary to
establish the validity of a claim, or necessary to establish the nature of
goods and services for which reimbursement is requested in a claim;
Enters into an agreement for conspiracy to defraud the BWC or a self-insuring employer
by making false claims for disability benefits.
Red flags to spot fraud
Fraud can be detected by looking for patterns in suspected claims. Red-flag fraud indicators
are used to help signal potential fraudulent activities related to claims, employer premium audits,
underwriting and health-care provider issues.
Spotting injured worker claim fraud
Red flag indicators that may signal claim fraudulent activity include:
- Number of days worked and amount of salary are inconsistent with occupation;
- Injured worker disputes average weekly wage due to additional income (i.e., per diem and/or 1099 income);
- Cross-outs, white-outs and/or erasures on documents;
- Injured worker files for benefits in a state other than principle location of the alleged industrial injury or occupational disease;
- Occupation listed for injured worker is inconsistent with the employers stated business;
- Injured worker address is different than principle location of employer (excluding counties bordering state line);
- Injured worker can not be reached due to the fact that he or she is not home to answer phone or is reported to be sleeping and cannot be disturbed;
- Injured worker is seen with calluses on hands, grease under fingernails;
- Injured worker moves out of state or country shortly after filing claim;
- Accident/incident occurs immediately prior to strike, layoff, plant closing, job termination or job completion;
- Injured worker is in line for early retirement;
- Injured worker refuses (or delays multiple times) diagnostic procedures to confirm injury;
- Conflicting descriptions of the accident/incident between employers report and initial medical evaluation;
- Injury is not consistent with the nature of the work or business;
- Date, time and place of accident is unknown;
- Injured worker can not recall specific details of the injury;
- Report of injury not timely and immediate;
- No witnesses were present at the reported accident;
- Coworker reports suspicion that injured worker committed fraud.
Spotting health-care provider fraud
Red flag indicators that may signal health-care provider fraudulent activity include:
- Injured worker doesnt recall having received the billed service;
- Providers medical reports read almost identically, even though they were submitted for different patients with different conditions;
- Much higher health-care costs than expected for the allowed injury type;
- Frequency of treatments or duration of treatment is greater than expected for allowed injury type, especially for older (non-catastrophic) claims;
- Frequent billing in older (non-catastrophic injury) claims;
- Larger volume of prescription drugs billed than expected for the allowed injury type;
- Billing for treatment on consecutive dates of service for minor allowed conditions;
- No change in treatment given regimen or no measurable improvement after an extended period;
- Same provider(s) and attorney(s) are repeatedly associated with questionable claims;
- Unexplained sudden increase in a providers billing and payment levels;
- Provider services are billed (for non-emergency care) for dates of service on weekends or holidays or on dates when the patient was hospitalized;
- Provider bills for dates of service within time periods for which the provider had previously billed and received payment;
- Provider bills for dates of service after the effective date for change of provider of record;
- Managed care organization knowingly participates in schemes intended to cause BWC to pay monies that it otherwise would not pay;
- Documentation does not support service billed and/or is inconsistent with the services billed;
- Frequent delays in the submission of requested records;
- Great distances between the provider and injured worker;
- Submission of bills with non-industrial diagnosis codes – bills resubmitted with codes changed to an allowed diagnosis;
- Billed procedures are inconsistent with allowed conditions or industrial conditions;
- Billed procedures are identified by American Medical Association as being for “one or more areas” billed with multiple units of service;
- Billed procedures are for evaluation and management codes only;
- Provider is actively billing multiple claims for an injured worker;
- Day or date of service is inconsistent with the type of provider;
- Provider billed for services that were not likely to have been performed.
Spotting employer fraud
Red flag indicators that may signal employer fraudulent activity include:
- Business displays or presents a certificate of coverage that contains inaccurate data, such as an implausible period of coverage;
- Cross-outs, white-outs and/or erasures on documents, such as the Application for Ohio Workers Compensation Coverage (U-3) or Payroll Report (DP-21);
- Business name is not consistent with type of work being performed;
- Number of employees, classification and payroll are inconsistent;
- Certificates of coverage issued exceed anticipated exposure;
- New business with significant or multiple state exposures;
- Significant deposit premium made to avoid interim audits;
- Business discourages employees from filing valid workers compensation claims;
- Employees report that the business may be shifting the costs from an employees non-work-related health problem to a workers compensation claim;
- Business requires newly-hired employees to complete 1099 forms, asserting themselves to be independent contractors;
- Business reports significant payroll decreases, even though revenues remain stable or increase (suggesting under-reporting of payroll);
- Principal business location is a post office box, suite number, or room number.
If you suspect fraud, submit a Fraud Allegation Form, or
call 1-800-OHIOBWC, and follow the options.
Whether you submit the Fraud Allegation Form or call the fraud hotline, we will ask you to confidentially
provide all of the information you have pertaining to the suspected fraud, including the following:
- Name and address of the person you suspect is committing fraud;
- Details about the improper or fraudulent activity you suspect;
- Other general information pertaining to the suspected fraudulent activity.