inside

• Editor's 2 Cents: The CIGA Express
• Legal Update: Stop the Presses!
• Joan Lloyd: Readers Respond to "Crack At Work" Column
• Fraud Watch: It Might Be Fraud...if

• Newsflash: July Deadline for Adjuster/Bill Reviewer Certifications
• Job Alert: New: Work Comp Liaison Position in San Jose
• Events Calendar: What's Happening in July
• Poll: Should CIGA Be Held to the Same Standard as Other Carriers?
• Poll Results: Should An Employer Provide "How to Dress for Work" Training?
• The Last Laugh

Adjusting World welcomes emails/letters to the editor and comments on any of our articles. Emails/letters should not exceed 250 words in length and can be sent to the individual email address listed on the article or to: comments@adjustingworld.com.

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The CIGA Express

William Nathans
Editor

bill@adjustingworld.com  

 

I am sitting here trying to figure out what to write about this month. I was in training session today, yes we do get training! It got me thinking about the state of workers compensation post SB-899.

We in the industry are being told that we are in a soft market. What I am hearing from people in marketing is scary. It seems that some of the carriers entering the market didn't learn from the carnage that began when open rating came to pass.

Open rating turned the carriers loose in the candy store. Everyone started pricing policies so low that one serious claim would be ruinous. All carriers thought the same thing, we will entice with cheap prices and keep them with service. If you asked an employer what their preference would be, cheap prices or great service; price wins out. Well that is what came to pass. I am afraid that is what is going to happen again.

I believe that there are carriers out there who are going to wind up on the CIGA express. This will be another drain on our already deficit-riddled state economy. All of the players in the system are going to need to work together to prevent

another work comp disaster

  

Comments, questions, e-mail me at bill@adjustingworld.com

Stop the Presses!

Stephen L. Kline, Esq.
Armstrong Law Firm
stephenk@arm-law.com

   

Okay so by the time your reading this, the case won’t be as hot as it is tonight … but it still makes for some very interesting analysis.

 

The Third District Court Of Appeals in a published decision, Barr v WCAB, decided on June 23, 2008, to interpret Labor Code §5811(a).   The pertinent part of that section states, “In all proceedings under this division before the appeals board, costs as between the parties may be allowed by the appeals board.”  

 

So what are allowable costs?     This has been a challenging question as some applicant attorney’s have engaged out-of-work vocational rehabilitation consultants to render an opinion trying to rebut the presumption of the 2005 Permanent Disability Schedule. 

 

In the Barr case, the Subsequent Injury Fund (SIF) sought to have a vocational rehabilitation expert’s costs disallowed.  They argued that since the matter was resolved by Stipulation with no testimony and that the report was not admitted into evidence, they should not have to pay for these costs.

 

According to the Justices, “Because these costs are not defined by statute, the WCAB and Subsequent Injury Fund (SIF) venture far and wide to resolve our narrow issue.”  They chastised the SIF for its impassioned arguments which they felt were asking the Court to be the Legislature and not the arbiter of the law.

 

The Court affirmed that the WCAB has discretion to award costs pursuant to the aforementioned Labor Code section.  They continued “Labor Code §§ 5708 and 5709 do provide the context within which it exercises its discretion.”  Thus, the discretion is not unfettered.

 

Specifically, “Section 5708 provides that the WCAB ‘shall not be bound by the common law or statutory rules of evidence and procedure, but may make inquiry in the manner, through oral testimony and records, which is best calculated to ascertain the substantial rights of the parties and carry out justly the spirit and provisions of  this division.” 

 

“Similarly, section 5709 provides:  “No informality in any proceeding or in the manner of taking testimony shall invalidate any order, decision [or] award [of the WCAB].  No order, decision, [or] award [of the WCAB] shall be invalidated because of the admission into the record, and use as proof of any fact in dispute, of any evidence not admissible under the common law or statutory rules of evidence and procedure.” 

 

When these sections are taken together, the WCAB has considerable discretion to conduct its business in a manner quite unlike civil litigation; in fact, the WCAB is unencumbered by formality or traditional rules of evidence and procedure.”  Thus, the discretion given to the Judges is fairly broad, but not unlimited. 

 

SIF argued “that the WCAB’s en banc decision in Costa v. Hardy Diagnostic (2007) 72 Cal.Comp.Cases 1492 (Costa) demonstrates the danger of according the WCAB unfettered discretion.”  The Justices said quite the contrary, Costa shows how the WCAB has limited its discretion.

 

The Court agreed with the WCAB’s Costa, ruling that costs are tempered by the same principles that guide medical-legal costs. For example, “medical- legal costs are not recoverable with respect to reports, for example, that are incapable of proving or disproving a disputed fact, or whose conclusions are totally lacking in credibility, reports and testimony of a vocational rehabilitation expert must at least have the potential to affect a permanent disability rating in order for their costs to be recoverable.”

 

Thus, SIF completely failed in its argument and the resulting published opinion expands the opportunity for applicant mischief making with Labor Code §5811 costs.

 

However, all was not discordant with the rulings this month.  The First District Court of Appeals upheld the 24 visit limit for chiropractic treatments against a constitutional challenge in the Facundo-Guerrero v. WCAB, 73 Cal Comp Cases -----. 

 

Most importantly, the WCAB, en banc, ruled in the Boughner v WCAB case that when the 2005 Permanent Disability Rating Schedule Guidelines was created by the Administrative Director, she did not act in an arbitrary or capricious manner as San Francisco Judge Duncan had ruled last year.  Consequently, the 2005 Schedule withstands, at least at the WCAB level, any challenge to the Administrative Director’s enactment of the Schedule based on her actions.  Next stop according to CAAA sources will be the First District Court of Appeals. The battle rages on.

 

Thanks for your attention.  Enjoy the summer!

Don't miss Steve's Legal Update at the SBICA Luncheon in August 22nd. 

See the events calendar for more information......

Have a question for Steve?

Don't hesitate to ask.  Email it to: steve@adjustingworld.com and get it answered right here.

 

It Might Be Fraud...if

David Dindak

Coast to Coast Data Search

david@2mypi.com

Fraud is on the rise.  Well, in truth, it’s always on the rise.  Especially now when the country is facing tougher economic times coupled with the fact that many of us do not see the harm in a little insurance Fraud. 

Culturally, larceny is tolerated in our insurance system, which is not surprising when you see what our friends at the Insurance Information Institute found in some of their polling. 

•  60% polled said they would commit insurance Fraud if risk was low and reward was great enough
• 10% would commit insurance Fraud if they simply knew they could get away with it 
• 25% said it is okay to defraud an insurer
• 2 out of 5 people said they were not very likely to report someone who ripped off an insurer

This poll is clearly a wake up call to the Work Comp community, that we still have a great deal of work to do in terms of how we approach and combat Fraud. 

But as Fraud threatens to grow in strength like the Incredible Hulk on a bad day, we need to be more aggressive with our Fraud education, information sharing and working together to make a bigger impact against a rising menace.

How do you know it’s Fraud?

The first line of defense is the adjuster and employer.  That’s why it is crucial that both have a strong understanding of Fraud and how to identify it. Communicate your suspicions, discuss a course of action together and don’t be afraid to call an investigator for advice on how to proceed.

Now that we have awareness that Fraud is probable, let’s start with identifying possible offenders through motive; which fits into three categories: financial, personal, revenge/spite.  Your Fraud alert radar should be flashing ruby red, if you encounter some of these scenarios.

Financial

• No medical coverage
• Financial problems, foreclosure, credit debt, gambling
• WC comp benefits equals or approximates to regular income
• Alternate source of income – side jobs – home healthcare, child care service, waitressing, volunteering (i.e. coaching helping in after school activities)
• Received or applied for SDI – double dipping
• The Claimant believes he/she is entitled to large settlement as the result of a third party case being processed concurrently     

Personal

• Needs time off to tend to ill family member
• Used up all available time off, PTO, vacation, sick-time
• Attending school
• Needs time off to start their business
• Age – nearing retirement.
• Negative home situation – Abusive spouse, alcoholic spouse/domestic problems
• Spouse also disabled
• Recent family crisis
• Pronounce mood or behavior changes
• Pre-existing injury 

Revenge/Spite

• Disgruntled or unhappy employee.  (That’s obvious, Some people just don’t think they have to work, and when required to, lash out.
• Recent or several disciplinary actions at work
• Unfavorable review
• Poor attendance record
• Recent hire
• Unwitnessed injury
• Waited a long time to report injury

Remember, that if you do find some of these circumstances in your files, this is not a conviction of Fraud, but a starting place for a deeper investigation to rule it out.

If you have any questions about Sub Rosa, AOE/COE, Fraud or Investigation, email me. at david@2mypi.com   

David Dindak is the CEO of Coast to Coast Data Search, an investigation firm that has successfully serviced the insurance industry for the past 20 years.  He is a licensed PI and a continuing education trainer in Investigation and Fraud. The above article is from the 2008 Investigation & Fraud Training Series. 

This training series is a free and is provided to companies onsite.

For additional information on Coast to Coast Data Search and/or how to bring the 2008 Investigation and Fraud Training Classes to your company. Visit the website at: www.2mypi.com or call (800) 282-6278.

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