Prosecution Just One of Many Tools in the Fight Against Fraud

By Tim Riley, Vice President of Special Investigations

By Tim Riley, Vice President of Special Investigations

Celebrity gossip, politics, the economy – in the hierarchy of hot-button issues, workers’ compensation doesn’t register a blip on the media’s radar. So when I come across an expert who has strong opinions about the industry, I go from casual reader to loyal follower. 

A recent post by one of my favorite bloggers on all things workers’ comp hit close to home. He argued that fighting workers’ compensation fraud, at least via traditional methods, is futile. He went on to offer that we should instead approach fraud the same way the government went after Al Capone: prosecute on tax evasion.

As a 12-year veteran in the fight against fraud, I have to respectfully disagree with several of this expert’s points.

Point. Workers’ compensation fraud is hard, if not impossible, to prove.

Response. Actually, the concepts are some of the simplest in criminal law, including what may be considered the white collar crimes of health care fraud and premium fraud. When you combine experienced investigators with prosecutors who understand workers’ comp law, fraud is not difficult to prove. In fact, it’s typically easier to prove than tax evasion.

Point. Criminals will always be criminals.

Response. Maybe I have too much faith in humanity, but I don’t believe that’s a fair statement. Even if it is, what the blogger does not consider is the fact that criminals, even the lifelong variety, pick their crimes. In simple terms, prosecution is a deterrent to those who aim to cheat the system. Let’s look again to organized crime as an example. Criminals have abandoned highly prosecuted areas, such as drug trafficking, in favor of areas of limited prosecution, such as health care insurance fraud. Why? Because criminals calculate risk.  In fact, organized crime shifts to insurance fraud in part because of the lower odds of being caught and prosecuted. 

Point. Return on investment is not there.

Response. That has rarely been the case in Texas Mutual’s experience. Admittedly, restitution does not always measure up to the cost of prosecution. But that’s no reason to throw up our hands and accept fraud as an inevitable system cost. Regulatory bodies and insurance carriers have a responsibility to protect employers’ premium dollars. Furthermore, prosecution is just one of many tools at our disposal. Insurance carriers can leverage administrative means, such as pursuing administrative penalties and restitution orders through the responsible state agency, pursuing recoupment actions, and removing fraudulent billers from carrier networks.

I acknowledge that I am speaking from Texas Mutual’s perspective, and our consistent success is unfortunately not universal. I do not believe, however, that fighting workers’ comp fraud is a futile endeavor. When insurance carriers, regulatory agencies and system stakeholders collaborate to attack fraud on all fronts, using all available avenues, we can see positive results. The time, money and manpower we commit are sound investments in a strong, stable workers’ comp system for all stakeholders.

About the author

Tim Riley is vice president of special investigations at Texas Mutual Insurance Company. Tim received his law degree from Rutgers University. After earning his masters of law degree with a specialty in criminal law from the United States Army Judge Advocate General’s School, Tim served as a military prosecutor and defense attorney for nine years. Prior to joining Texas Mutual in 2004, Tim spent six years as an attorney in the hearings division, legal division and enforcement division of the Texas Workers’ Compensation Commission (now the Texas Division of Workers’ Compensation). Tim has had the opportunity to share his workers’ compensation fraud expertise as a speaker at numerous industry events.

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