Fast Business Insurance » Workers’ Compensation

Fraud Opportunities Rise

Editor-ML — Thu, 23 Apr 2009 12:46:39 +0000

“Does a bad economy increase crime? Analysts have debated that question for years, according to Mike McKee, senior special agent for the National Insurance Crime Bureau. While it’s too soon for statistics to confirm whether recent events like the mortgage meltdown and an increase in unemployment truly lead consumers to commit more crimes, McKee said at least anecdotally the economic recession is affecting insurance fraud.”

Different types of fraud and the opportunity to commit fraud has taken a toll on all lines of the insurance business according to fraud bureaus.

Commercial insurance is being hit with the rise in theft of cargo as electronics and other equipment are taken right off the trucks. Circuit breakers are being ripped out and copper wiring is increasingly stolen from commercial buildings.

An increase in vehicle giveups has been reported when owners dispose of a vehicle and then claim that their vehicle has been stolen. Then the owner collects the insurance money and often makes a profit. Employees of car dealerships are sometimes involved in the theft and/or burning of the vehicle. And in turn, the owner may purchase a new vehicle as payoff for the help of the dealership employee.

Workers’ Compensation and health insurance carriers have noticed that people are staying out of work longer and claiming more injuries. Instead of a hurt arm, now it is an arm and a leg, or back and a shoulder. The most attention-grabbing trend is employees extending their claim. In one case, for example, an employee injured his toe, which led to not being able to sleep, then led to sexual dysfunction. As a result, he had to have sleep and sex therapy along with treatment for the injured toe.

The loss or disappearance of classic cars and jewelry has risen. Arson of both homes and vehicles has also increased. Consumers are burning their homes hoping for an insurance bailout. Others are claiming smoke and ash cleanup from wildfires to get insurance payoffs.

Another major inclination is in medical identity theft and provider fraud. In this situation, a person’s identity along with their medical and insurance information is stolen and fraudulent bills are sent to the insurance company. Then the insurance company pays the bills to a fraudulent company, while the true insured and his insurance company are unaware that they are victims of a scam.

And unfortunately, there is a rise in insurance agents who are committing premium theft and diversion. They divert premium checks that are intended for the insurance companies and embezzle them to use for personal use while assuring the insured they are covered.

Source: Insurance Journal, April 2009, Patricia-Anne Tom http://www.insurancejournal.com/news/national/2009/04/14/99585.htm

McDonalds Workers’ Compensation Claim Denial Justified

Editor-ML — Wed, 08 Apr 2009 12:18:32 +0000

According to a Workers’ Compensation expert, the recent denial of a claim by McDonald’s insurance carrier is justified upon analysis of the law despite public outcry.

A McDonald’s employee was shot in Little Rock, AR in 2008 after expelling a man from the store who was battering a customer. The man who was expelled returned with a gun and shot the employee who attempted to prevent his re entry into the store.

The “Course And Scope” rule requires the following three elements before a claim can be compensable:

1) The injury must “arise out of” employment.

2) The injury must be in “the course of employment”.

3) The injury must arise out of the “scope of employment”.

In the case at hand, 3) was not met according to the insurance carrier and the claim was denied. This case will likely go to trial.

Upon first glance, the outcome does not seem fair. However, an insurance policy such as Worker’ Compensation is a contract and the contract dictates the terms of coverage based on the language and case law.

See Full Story: Chris Boggs, Market Scout, http://www.mynewmarkets.com/article_view.php?id=99219

Workers’ Compensation Claim Over Perfume

admin — Mon, 19 Jan 2009 14:14:56 +0000

A New Jersey court ruled that a woman could pursue a Workers’ Compensation claim after alleging that a co worker’s perfume resulted in a disabling injury.

“If you tell people that this is a woman with a chronic medical condition who smells some perfume and gets sick, should people have to pay for that? But I guess the appellate division says they should.”

Sexton was 64 years old at the time of the incident. Since then, DiMuzio Sorochen said her client has been largely dependent on an oxygen tank to breathe and unable to work.

It is interesting to note that the claimant had an existing lung condition caused by smoking a pack of cigarettes a year for 64 years.

As a general rule most courts and Workers’ Compensation commissions will go to great lengths to find that an injury or occupational illness is compensable.

Source: Insurance Journal