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 subpoena. 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: 877.923.8648 (877.WCF.UNIT) 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 www.idfpr.com or call Ronald Palmer, Investigations Supervisor 312.814.5394, e-mail firstname.lastname@example.org. For more information contact Andrew Flach, Public Policy Manager, Champaign County Chamber of Commerce 217.359.1791 or email@example.com.