workers compensation fraud by amir33


									Workers’ Compensation Fraud Unit

Illinois is the 19th most expensive state in the nation when it comes to workers’
compensation premiums and Illinois companies pay 40 percent more for workers’
compensation than neighboring states Michigan, Wisconsin and Indiana according
to information provided by the Governor’s office. According to the National
Insurance Crime Bureau, workers’ compensation fraud costs employers $6.5 billion
a year. One other estimate claims that up to 10% of all workers’ compensation
cases are potentially fraudulent.

However, legislation (HB 2137) passed last year strengthens protections for local
businesses against fraud. On July 20, 2005 Governor Blagojevich signed HB 2137
(Public Act 94-0277) into law. This landmark legislation, crafted by representatives
of employers and unions, legislative leaders, the Workers’ Compensation
Commission, and the Governor’s office provided some long overdue reforms to
Illinois’ workers’ compensation law.

A provision of HB 2137 established a workers’ compensation fraud statute. An
investigation unit in the Division of Insurance was created to investigate charges of
workers’ compensation fraud, including uninsured employers, and allows for
reporting of fraudulent claims by employees. New sections 25.5 (a) through (g) of
the Act set forth fraud provisions and the penalties for violating those provisions.
“Any person, company, corporation, insurance carrier, healthcare provider, or any
other entity that violates any of the fraud provisions is guilty of a Class 4 felony and
must pay complete restitution in addition to any fine imposed.”

Insurance Compliance
Illinois law requires employers to obtain workers’ compensation insurance. If an
employer knowingly and willfully fails to obtain insurance, it may be fined up to $500
for every day of noncompliance, with a minimum fine of $10,000. Corporate officers
can be held personally liable if the company fails to pay the penalty and would be
guilty of a Class A misdemeanor. If they are found to have knowingly failed to obtain
insurance, they are guilty of a Class 4 felony.

An employee who is injured during the time the employer was uninsured may sue
the employer in civil court, where benefits are unlimited. In addition, during the trial
the burden will be upon the employer to prove it was not negligent.

Benefit Ineligibility
In subsection (f) of the new Section 25.5, any person convicted of fraud shall be
subject to penalties in the criminal code and shall be ineligible to receive or retain
compensation benefits they were owed or received as a result of the fraud for which
the recipient was convicted.

Civil Liability
Subsection (g) provides that any person convicted of fraud who knowingly obtains,
attempts to obtain, or causes to be obtained any benefits by making a false claim or
who knowingly misrepresents any material fact shall be civilly liable to the payer of
the benefits in an amount equal to 3 times the value of the benefits or insurance
coverage wrongfully obtained or twice the value of the benefits or coverage
attempted to be obtained, plus reasonable attorney’s fees and expenses incurred in
bringing the claim.

Fraud Statutes
Ronald Palmer is the Investigations Supervisor for the new fraud and insurance
non-compliance unit within the Illinois Department of Financial and Professional
Regulation, Division of Insurance. Palmer, a former lieutenant with the Chicago
Police Department, leads the new Workers’ Compensation Fraud Unit, which will
soon have a total of six employees. The Unit has been given the general power of

Because the penalty for fraud includes a Class 4 felony, no anonymous tips are
accepted. Persons reporting an allegation of fraud must identify themselves and
their identity would be revealed to the person being investigated. As suggested by
Palmer, individuals could report claimant fraud directly to the employer to avoid
being identified to the individual. The standard of proof for criminal prosecution

        Workers’ Compensation Fraud Hot Line Toll-Free Number:

requires beyond a reasonable doubt whereas civil prosecution just requires a
preponderance of the evidence.

Tips for Evidence Collection
If you suspect that your business may be a victim of fraud it is incumbent upon you
to act quickly to build your case. The following tips are provided to help you plan to
protect your business from unnecessary and expensive fraudulent claims:

   1. Documentation, documentation, documentation . . . that should always be
      the first rule in preparation of a thorough and detailed accident report.
   2. Obtain written statements from witnesses and injured party. Get signatures.
   3. Investigate the accident site. Include pictures in your report.
   4. Develop your own business triage for reporting and documenting accidents.
      Set up a strict reporting policy for work related injuries.
   5. Conduct a thorough review of medical records
   6. Research any prior workers’ compensation claims to establish a pattern.
   7. Get an independent medical evaluation
   8. Consider hiring a professional private investigator.

David J. Fletcher, MD MPH FACOEM, and co-founder of SafeWorks Illinois, writes
about one particular case in which he was involved that was a successful
prosecution of a workers’ compensation fraud case. In this case of claimant fraud,
the individual was videotaped by an insurance investigator doing heavy work while
he claimed to be permanently disabled. The employee, a truck driver filed for
workers’ compensation claiming that he was disabled and unable to work anywhere.
Dr. Fletcher examined the employee and “could not find any objective reason to
explain his low-back pain and recommended video surveillance and functional
testing. [The employee] claimed he was in so much pain that he could not bend over
to remove his shoes. On the same day however, video surveillance showed him
with his own high-pressure-water cleaning business, bending and pulling a cord to
start a gas generator. A week later, more video surveillance showed [him] lifting an
air-conditioning unit to put in a window.” The claim for $81,000 against his employer
was denied and he was indicted by the grand jury.

The new Workers’ Compensation Fraud Unit is a good step in the right direction.
Contact them at the toll-free number listed above. The website is or
call Ronald Palmer, Investigations Supervisor 312.814.5394, e-mail

For more information contact Andrew Flach, Public Policy Manager, Champaign
County Chamber of Commerce 217.359.1791 or

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