Don't stumble into criminal charges with workers' comp fraud

Authorities don't usually target providers, but be careful

Your clients are depending on you to spot and deter workers' compensation fraud, but don't forget that someone also may have an eye on you. Federal and local law enforcement agencies are taking a tough stand on workers' comp fraud these days, and they're quite willing to haul you in if there is any indication you participated in the employee's fraud.

With so much attention paid to all types of health care fraud in the past year, it is only natural that occupational health providers would wonder how authorities might seek to prosecute them for involvement in workers' comp fraud. Everyone knows workers' comp fraud is a pervasive problem; it's a certainty that you have patients who are committing fraud. So how much risk of prosecution are you facing?

In most cases, the fraud is perpetrated by the employee without the occupational health provider's knowledge or assistance. Any outright, intentional fraud by providers involving workers' comp obviously puts you at risk of prosecution. (Occupational Health Management won't waste space telling you why intentional fraud is a bad idea.) But the more frightening prospect involves an occupational health provider unwittingly becoming involved in fraudulent activities, or slowly crossing the line into fraud by aggressively billing.

You'll know fraud when you see it

The good news is that, for the most part, it's hard to commit workers' comp fraud without really intending to do so, says Kirk Wiedemer, JD, chief deputy attorney general with the insurance fraud section of the Pennsylvania Attorney General's Office in Harrisburg. Wiedemer is heavily involved with prosecuting workers' comp fraud in the state, and he tells OHM that any provider who faces criminal charges should have known that the activity was fraudulent. When charged, however, it is not uncommon for them to claim that they were providing medical care in good faith even if the worker was intentionally committing fraud.

There are two scenarios in which an occupational health provider can be found criminally liable for involvement in workers' comp fraud, Wiedemer says. In the first scenario, the patient has a bona fide workers' comp claim and receives legitimate medical care, but then the provider gets involved in what Wiedemer calls "the classic false billing schemes." Those would include billing for services not provided, upcoding, and billing for more care than was provided.

"That's classic health care fraud in the context of workers' comp services," Wiedemer says. "If there's any pattern, that shows an attempt to defraud the workers' comp carrier."

Finding a pattern of such billing impropriety is crucial to bringing criminal charges against the provider, he says. Law enforcement authorities are not very interested in prosecuting a few cases of upcoding; they want to find a pattern that proves the billing cannot be attributed to simple mistakes.

The second scenario involves "aiding and abetting workers' comp beneficiaries in improperly and fraudulently receiving compensation." Traditional schemes would involve an occupational health professional declaring the worker is disabled when he is not, or otherwise providing false statements that are used to obtain remuneration from the workers' comp insurer. Those are issues that make some providers wonder if they could be aiding and abetting fraud just by being too lenient. If an employee pleads for a few more days off work or insists, contrary to the findings of your examination, that he or she is not able to perform all the functions of the job, are you committing fraud if you relent?

That's a gray area. Certainly it is possible to commit fraud by consistently giving in when a worker trying to commit fraud begs for a favorable assessment, but Wiedemer still says you would have to step pretty far over the line to attract the attention of law enforcement.

"The criminal prosecutions I know of are pretty clear cut," he says. "We intentionally avoid the cases where people can argue that they didn't intend to do anything wrong. We're interested in the cases where we can show that the fraud was committed knowingly and willingly."

Keep in mind, however, that an attorney general's idea of "knowingly and willingly" may differ from yours. Prosecutors can argue you should have known you were committing fraud, while you may think you were just dancing on the edge by billing aggressively for your services. On the other hand, there is one thing you don't have to worry about much: The authorities are not going to be interested in arguing with your clinical decisions.

"This isn't going to get into judgment calls about medical issues," Wiedemer says. "We won't try to say that you saw the patient weekly when you could have just seen him every three weeks. That's a medical question and we don't want to get into that whole argument."

Case shows that providers not main target

As an example, Wiedemer points to a recent case of workers' comp fraud that his office is prosecuting. Pennsylvania Attorney General Mike Fisher, JD, recently announced the arrests of 12 suspects from across the state who are charged with widespread workers' comp fraud. One of the men said he was totally disabled from a back injury but was working as a constable. Another man was paid more than $37,000 by claiming he had received 435 chiropractic treatments over a two-year period. The investigation revealed that the doctor had sold his practice early in the alleged treatment period and had provided no care to the man.

In another case, three members of Steamfitters Local 420 were participating in a picket line at the main gate of Tinicum Industrial Park in Tinicum Township, when they claimed they were hit by a truck and injured. They were treated at a local hospital and filed insurance claims for treatment. But a surveillance camera at the work site proved none of the three men had been hit by the truck. The insurance carriers paid out more than $17,000 for the alleged injuries. One provider, Pennsylvania Rehab of Swarthmore, billed insurers for $6,090 for treating one of the men over a five-month period.

After an investigation by the state attorney general's office, the three men were charged with insurance fraud, theft by deception, false swearing, false reports to law enforcement authorities, and workers' comp fraud.

But of the dozens of health care providers involved in treating the suspects for their alleged workers' comp injuries, exactly zero face charges. Wiedemer says there was no evidence of collusion with the suspects. While it may be possible to debate some of the medical conclusions, Wiedemer says the case is a good example of how the authorities are interested in whoever is clearly, intentionally committing fraud, not just whoever may have been drawn into the situation unwittingly.

Watch for warning signs of fraud

The occupational health provider is not likely to get involved in fraud without knowing it, but you should be on the lookout for patients trying to scam the system, says Charles Prezzia, MD, MPH, FACPM, president of Occupational Care Consultants of Toledo (OH). The goal is to avoid cooperating with a patient in a fraudulent claim against the employer or the workers' comp carrier.

"In most states, the prosecutor's going to have to show that you were cooperating with the individual to help commit the fraud," he says. "Just treating a patient committing fraud isn't the same as cooperating in the fraud, however. The patient can mislead the physician into thinking there is something legitimately wrong when there isn't."

That kind of unwitting participation in the fraud is unlikely to result in any criminal prosecution. But if the authorities or the insurer can show you knew or should have known that the patient was committing fraud and you continued to provide treatment without making any reasonable effort to detect the fraud, then you could be held liable. To avoid that result, Prezzia says you only have to exercise a moderate degree of skepticism and be on the lookout for some of the fraud warning signs.

The most danger comes from overlooking what a prosecutor might later call blatant indicators of fraud. Prezzia suggests that one of the most obvious reasons to suspect fraud would be disproportionate complaints in relation to subjective findings, such as when a patient claims to have pain or loss of function that is far beyond what you know is typical from the type of injury the worker suffered.

Another red flag is the implausible mechanism of injury. If a worker claims he hit his hand on some machinery at work on Monday morning, the injury should look fresh. If you see the patient before lunch on Monday and the bruise already is green and yellow, that bruise is too old to result from an injury that morning. If you treat the injury without noting the inconsistent findings and reporting them to the employer and insurance carrier, it could be argued that you are participating in the fraud.

Whether that amounts to enough to result in an action against you is arguable, but you don't want to become known as an occupational health provider who is willing to go along with whatever tale the patient provides. A reputation like that, and the repeated treatment without reporting the inconsistent findings, could create a pattern that would result in criminal prosecution. Lackadaisical prescribing of pain medications is an especially good way to attract the attention of law enforcement authorities and your state licensing board.

"That's where you're more likely to get into trouble with fraud, by overlooking those warning signs and just going ahead with whatever treatment the patient expects you to provide," Prezzia says. "But that's not good health care either. That's just going through the motions so you can submit the bill."

Obligation to report is unclear

Wiedemer says the law does not clearly obligate the occupational health provider to report fraud, but he notes that, if the goal is simply to avoid cooperating with the fraud attempt, it often is unnecessary to make a formal accusation against the patient. In many cases, it is sufficient to simply note the appropriate facts and leave the rest to the employer and the insurance carrier.

"There's no state statute in Pennsylvania that requires you to report fraud, and I'm not familiar with any statutes like that in other states," he says. "I would hope that your professional code of conduct would compel you to report the fraud in some way, but I don't see any legal obligation to report the attempted fraud to authorities."

Simply reporting the facts in the medical record and in the routine reports to the employer and insurance carrier is the best way to handle suspected cases of fraud, says Judy Colby, RN, COHN-S, CCM, program director of The Workplace at Simi Valley (CA) Hospital and Healthcare Services. That allows you to get the right message across to the concerned parties, and to avoid cooperating in any fraud attempt, but without sticking your neck out too much. You can state the subjective findings, such as the reported mechanism of injury, and the objective findings, such as the apparent age of the bruise, and note that they don't correlate.

That will get the message across and avoid any collusion without having to come right out and make a charge of fraud against the patient. You also might want to consider discussing the issue by phone instead of putting anything on paper. One doctor in Texas got himself in a great deal of trouble by writing a letter charging a patient with trying to "milk the system for as much as it's worth." A jury awarded the patient $88,000 for libel, breach of fiduciary duty, and tortious interference with contract.1 (For more on that case, see the story in OHM, March 1997, p. 25.)

"If you're intentionally involved in workers' comp fraud, you have a serious problem," Prezzia says. "Otherwise, you're not likely to get involved in fraud if you're practicing good medicine and keeping an eye out for things you shouldn't condone."


1. James D. Papa v. James O. Royder, DO, FAAO. Tarrant County (TX) District Court, Case No. 352-156844-94. n

Kirk Wiedemer and Mike Fisher, Pennsylvania Attorney General's Office, Strawberry Square, 16th Floor, Harrisburg, PA 17120. Telephone: (717) 787-5211.

Charles Prezzia, Occupational Care Consultants of Toledo, 2600 Navarre Avenue, Oregon, OH 43616. Telephone: (419) 698-7493.

Judy Colby, P.O. Box 801164, Santa Clarita, CA 91380. Telephone: (805) 583-3200.