Workers' Comp Fraud

State Law Exacerbates Fraud Among Peace Officers

Workers' comp fraud has been on the rise in California ever since probation officers were included under the state's vexing labor law.
By: | May 29, 2014 • 3 min read

For several years now, California police officers, sheriffs’ deputies and firefighters have been entitled to a full salary with no tax deductions for a year when they’re injured on the job.

Apparently, benefits afforded through California Labor Code Section 4850 [LC 4850] have been tempting enough to result in instances of workers’ compensation as well as long-term disability insurance fraud.

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Since select probation department employees became eligible to receive LC 4850 benefits in 2000, increases in salary-continuation workers’ compensation benefits to individuals claiming they were injured on the job have increased fourfold, according to Alex Rossi, chief program specialist with the LA County Chief Executive office.

That’s led the Los Angeles County probation department to beef up its investigations and begin to make new arrests. These included the arrest of former probation officer Robyn Palmer on May 16.

David Grkinich, bureau chief of professional standards for the LA County probation department, emphasized that he and his colleagues are now more determined than ever to investigate alleged on-the-job injury cases more closely and to prosecute fraud and employee misconduct.

His advice to other law-enforcement officials dealing with similar problems:

“Never lose track of your employees; make sure someone is engaging with them,” he said. “Learn how they’re doing and when they’re going to come back to work.” That can prevent them from “falling between the cracks,” Grkinich said.

Apparently, California’s new labor laws have had a profound impact on benefits payments. County payroll records indicate that in [calendar year] 1999, the probation department paid out approximately $1.7 million in salary continuation benefits due to workers’ compensation claims, Rossi told Risk and Insurance®. By 2001, the payout of salary continuation — in part due to probation’s inclusion under LC 4850 — was approximately $6.8 million, he said.

Besides that, total reported injuries per fiscal year — expressed as a percentage of the total number of employees — was just 11.22 percent in 1999 versus 15.24 percent by 2002, said the County CEO Risk Management Branch.

Snuffing Out Fraud

When dealing with insurance fraud, it’s easier to detect when there is a paper trail, Grkinich explained. In Palmer’s case, for instance, “Our return-to-work staff noticed a discrepancy on some of the paperwork she is alleged to have forged,” he explained.

Palmer had filed for and received disability benefits for an alleged back and shoulder injury she claimed occurred in July 2013 while restraining a minor. Probation records showed that on the alleged injury date, Palmer was not at work and there were no employee records documenting any work-related injury involving Palmer, the probation department stated.

A probation department complex case committee worked closely with the California Insurance Department and Allstate’s the American Heritage Life Insurance Co. unit. “As a result of this collaboration, Allstate submitted the allegation that Robyn Palmer filed numerous fraudulent insurance claims and received disability insurance benefits she was not entitled to for a total amount of more than $29,122,” the department said in a statement.

Palmer was arrested on 14 felony counts for insurance fraud, forgery, wire fraud, and grand theft. She was arrested and transported to the Century Regional Detention Facility in Lynwood, California, where she was booked into custody awaiting arraignment. If convicted, Palmer could be sentenced to state prison or county jail, and was being held without bail as of late May.

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Much harder to detect, said Grkinich, are cases where someone is “fully able to do what they say they can’t do,” and there’s no documentation to prove it. Here, he noted, surveillance and other sorts of deep digging are required.

Within the past year, the county probation department added a special projects team comprised of four supervisory level investigators to get things moving. So far, he said, “Our staff has assisted with the prosecution only two cases,” of insurance fraud, but is investigating several more.

Legal reforms could certainly help, he added. “The biggest problem I see out here is the way our law is written and that it makes it more profitable for some employees to stay home,” rather than do their jobs.

Janet Aschkenasy is a freelance financial writer based in New York. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]