Fraudulent Workers Compensation Claims Challenge Local Governments

A March 1 Baltimore Sun article reported on the challenges local governments face with respect to fraudulent workers’ compensation claims.  The investigative article highlighted the recent workers’ compensation fraud case of Baltimore City Police Detective Anthony Fata, who was convicted of shooting himself  in order to seek roughly $78,000 in workers’ compensation benefits.

Fata’s conviction last year was an unusually high-profile example of abuse in Maryland’s workers’ compensation system, which made $395 million in awards in 2013. But state officials and other experts say the recurring problem helps drive up costs that Maryland taxpayers ultimately bear.

“Where there’s money, there’s going to be crime. And where there’s government money, it’s even more,” says Frank G. Scafidi, director of public affairs at the National Insurance Crime Bureau, which represents 1,100 insurance companies. “There are people who know how to game the system, and they’re good at it.”  …

Carmine G. D’Alessandro, assistant vice president of legal services for Chesapeake Employers’ Insurance Co., which handles such claims for the state government and private companies, says claims officers frequently must beat back questionable cases. Usually, he says, claims officers are faced with exaggerations, rather than baldfaced lies.

The article explored how local governments must try to determine which claims are honest and worthy of compensation versus exaggerated or outright false claims in the face of rising workers’ compensation costs and additional challenge of being bound by decisions of state’s Workers’ Compensation Commission and State mandated award amounts.  Other challenges noted by the article included doctors who support fraudulent claims and the subjective nature of awards for “pain and suffering.”

Local government officials are concerned about rising workers’ compensation costs — for example, claims and other program expenses such as attorney fees cost Baltimore $49 million last year, up from $44 million two years earlier.  …

Local officials say they vigorously fight claims they believe to be false. But they acknowledge that they have little power over payouts ordered in appeals to the state Workers’ Compensation Commission — or over Maryland law, which sets rates for awards.  …

Even solid evidence of deceit sometimes is not enough, said Terry Fleming, who retired in 2012 as Montgomery County’s risk manager. He recalls the time a private investigator captured seemingly damning footage of a police officer who had reported a serious shoulder injury.

“We caught him building a garage. He was upside down hammering a nail with a shoulder he couldn’t use,” Fleming said. But at a commission hearing, the officer said he had been feeling fine that day and assured the commissioner that the severe pain resumed a day later. The officer’s claim was upheld.


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