It is not unheard of for a claimant to testify in front of a judge that he is completely disabled and unable to perform simple tasks of daily living, much less work. And yet, something does not sit right with the claimant's testimony. Maybe there is medical evidence that contradicts the severity of the claimant's allegations, or a social media search that proves the claimant is leading an active social life or even evidence that the claimant is working.
What can an insurer do to expose fraud and exploit it?
The Pennsylvania Workers' Compensation Act extends penalties for fraud to ALL persons, meaning a fraudulent act may be committed by carriers as well as claimants, fact witnesses, employers and lawyers. All that is required is that the person acts knowingly and with the intent to defraud.
The Act provides a non-inclusive list of fraudulent activities including filing a document with false, incomplete, or misleading information with the Bureau; presenting false, incomplete, or misleading information to an insurance company; and/or conspiring to present false information.
If a person commits fraud pursuant to the Act, the person is guilty of a felony in the third degree and may be subject to a fine not to exceed $50,000. Additionally, a person may be prosecuted under Pennsylvania State insurance fraud laws, 18 Pa C.S. 4117 and required to pay restitution.
To combat fraud, it is important for carriers to regularly send out LIBC verification of employment form (LIBC 760). First, should a claimant fail to return the LIBC 760 form, his wage loss benefits can be stopped until he returns the form. Second, if a claimant returns the form and fails to disclose employment, the form provides substantial evidence against a claimant in a criminal proceeding.
The local District Attorney's Office is usually loathe to take on insurance fraud cases unless there is a large amount of money at issue, or the insurer can provide enough evidence that the DA's Office does not have to invest time and effort. If an insurer feels that a claimant is committing fraud, it should strive to provide the DA's Office with hard evidence, including falsified verification and employment forms, testimony from a claimant that he is not working and surveillance video of claimant, Facebook posts, or fact witnesses indicating otherwise.
Outside of supporting a criminal prosecution, the Pennsylvania Workers' Compensation Act does not provide insurers with many options. The insurer cannot unilaterally stop benefits and cannot automatically get the claimant's case dismissed even if everyone knows that the claimant is lying. The employer/insurer needs to get an order from the workers' compensation judge that permits the stoppage of benefits. If a claimant pleads or is found guilty, paying restitution may be made part of the sentence.
Further, the Act does not prohibit employers from taking action to deter fraudulent behavior. If a large employer is able to successfully establish fraud and criminal penalties can be assessed, the employer should publically expose the situation and post an article regarding the criminal charges to serve as a deterrent to other employees.
Even if a criminal case cannot be proven, fraud can be used as an effective litigation strategy. The best strategy is to use evidence of fraud to attack the claimant's credibility before the workers' compensation judge. The very same hard evidence insurers should seek to provide in a criminal prosecution may be used to discredit a claimant including Facebook, Twitter, LinkedIn, surveillance and fact witnesses.
The moral of the story is judges do not like liars. In many situations, it is worth investing time, effort and money into an investigation. Not only can evidence of fraud be used to discredit the claimant, resulting in a win for the insurer and employer, but it may also be used as evidence in a criminal proceeding under Pennsylvania State insurance fraud laws, which could lead to restitution being paid to the insurance carrier.
By: Caroline Diehl