Using Public Information as a Fraud-Fighting Tool
Despite the introduction in recent years in the workers' compensation industry of such high-tech fraud-prevention tools as predictive technology and neural networks (e.g., the Vericomp(c) Fraud Manager), workers' compensation fraud remains massive, currently consuming almost 10% of premium dollars. Is there any way to further reduce this type of fraud?
Current efforts focus on screening claims for fraud, first at the claims adjuster level, based on various red flags and behavioral profiles. Sometimes, though, clues can be found with just a few clicks on a computer keyboard. In a recent case a CompSource Oklahoma investigator, following up on a lead from a claims adjuster, simply entered a female claimant's name into a common Internet search engine. The claimant, who was at that time receiving permanent total disability benefits for back injuries from a slip-and-fall accident, and who was supposed to be wheelchair-bound, was listed on the search engine as an officer of an outdoor recreational club. Surveillance later revealed she was an avid mountain hiker and was videotaped carrying heavy items and frequently bending beyond 90 degrees. The claimant was indicted on criminal charges.
By making use of a very commonplace tool – an Internet search engine – the investigator was able to obtain public information which exposed fraud and saved his company many thousands of dollars.
But search engines are just a starting point. Vastly more information can be uncovered using other types of public information, especially governmentally-based public records.
Most claims adjusters and even some SIU pros are not aware of the ready online availability of many types of public records today. Governmental jurisdictions at all levels, county, state, and federal, have been working for years to get their public records online. These records are open to anyone who wants to view them, and can be accessed in minutes.
In the United States our public records are far more open and accessible than in most other industrialized countries, like Canada and England. We have a good reason for this -- the prevention of fraud. By making all types of transactions and records public – from marriages and divorces to real estate appraisals to traffic tickets to criminal convictions – we shed light on facts that are crucial in making decisions about potential marriage partners, new employees, new business associates, new renters/roommates, new suppliers – anyone whose past conduct or transactions will help us avoid becoming victims of fraud, deceit, or misinformation.
But can public records help reduce workers comp fraud? The answer is yes, if used knowledgeably. Public records can be helpful both in pre-employment screening and also, after the employee has been hired, in the investigative phase.
First, consider the pre-employment screening process. Is it possible for a company to screen out employees who will likely “comp” the system (make fraudulent claims)?
It's important to be aware that pre-employment screening in the U.S. is closely regulated by the federal Fair Credit Reporting Act and various state employment laws. The law does of course permit employers to conduct background checks on potential employees, but employers are required to disclose in writing to the job applicant that they intend to do so, and if an “adverse action” is taken due to information found in the background check (i.e., the person is not hired), then the employer has to inform the applicant of this and disclose the specific unfavorable information uncovered.
Oftentimes, such unfavorable information consists of a criminal records finding. A thorough pre-employment check should always include a comprehensive criminal records search. If your job candidate has been convicted of fraud or other serious crimes in the past, this is obviously relevant to your employment decision (although the law requires you to consider each case of a criminal record finding on an individual basis in terms of its seriousness and job relevancy.)
It's also important to be aware that many standard pre-employment screening services do a less-than-adequate job of searching criminal records. They simply don't cast a wide enough net in their searches. Most conduct criminal records searches only in the state-of-residence or even just the county-of-residence of the job applicant. So your applicant may have a fraud conviction, or even a lengthy rap sheet, in another state, but come up clean on the pre-employment check.
Many people with criminal records are quite aware of this shortcoming, and simply move out-of-state when jobhunting.
That's why your screening company should run a national database criminal records search as part of the screening process. Unfortunately, the best national criminal records databases currently available to the public are incomplete. They omit data from numerous counties across the country and sometimes contain out-of-date data. So it's important to supplement the national database criminal records search with onsite searches at county courthouses in your job applicant's counties-of-residence. All reputable pre-employment screening agencies have this capability.
Accepting your screening agency's “standard” pre-employment screening report, if it checks for criminal records only in your applicant's state-of-residence, is clearly inadequate. Your otherwise-impressive applicant may have a history of serious fraud convictions or other crimes in another state.
But even the criminal records searches described above are not enough. To be really thorough, your agency must also check:
- Aliases. Has your job applicant been convicted of a crime under another name?
- Warrants. Is your applicant wanted somewhere in the U.S.? Although you can't legally deny an applicant a job for this reason, you can suggest that he/she reapply once the criminal warrant is cleared up. The same is true if the applicant is out on bail pending prosecution. You can ask the applicant to reapply after appearing in court and clearing the matter. (Note that you can't legally inquire whether you applicant is in a drug rehabilitation program, however, as this may fall under the Americans With Disabilities Act, and compromise your position should litigation ever occur.)
- Federal convictions, such an income tax evasion, mail fraud, drug trafficking, and immigration law offenses.
- International “wanted” lists, such as Interpol's.
- And yes, even terrorist watch lists – why not? -- it's easy to do.
Unfortunately, very few pre-employment screening companies are this thorough. To most, pre-employment screening is a “volume” business and each applicant you submit gets a quick and cursory (not to say “quick and dirty”) once-over. However, if you specifically request the above additional searches, most will comply.
After An Employment Offer Has Been Made
Past workers' comp claims are the most obvious type of public record to research at this stage. You can't legally check to determine if your job applicant has a history of making workers' compensation claims prior to making an offer of employment. Workers' compensation history searches must always be conducted post- offer. However, this type of information can obviously be a valuable tool in your fraud-fighting arsenal. Not only can it identify habitual claim filers, it can also help your company avoid placing new employees in positions that may pose risk of re-injury.
Note, however, that employers may not rescind an offer due to finding claims and must make a reasonable effort to accommodate a previously-injured worker. Even so, a workers' comp history search can be useful at the time a new employee is brought aboard in verifying his/her employment record supplied on the job application. If an applicant has failed to list a previous employer against which he/she filed a claim, this says something about the employee's integrity and likelihood to file future claims.
Currently, workers compensation history data is available in Alaska, Arizona, Arkansas, California, Florida, Idaho, Illinois, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Montana, Nebraska, New Hampshire, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee, Vermont, and Wyoming. California requires prior written approval by the California Department of Industrial Relations, Division of Workers Compensation Electronic Data Exchange (EDEX). Your pre-employment screening agency should be able to provide the needed forms.
Workers compensation searches are not available in: Alabama, Colorado, Connecticut, Delaware, District of Columbia, Georgia, Hawaii, Indiana, Kansas, Maine, Minnesota, Mississippi, Missouri, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Texas, Utah, Virginia, Washington, West Virginia, and Wisconsin.
So criminal records (if thoroughly researched) and workers' compensation histories can be extremely helpful -- what other types of public information might be useful in the investigation of a suspicious claim? There are innumerable categories of records and searches that could be mentioned. Here are a few to consider:
- Civil Suits. You can research civil suits online through most counties' websites. A good listing of county websites and phone numbers is available on Background Check Gateway.
- Facebook, MySpace, and other social networking sites. Is your claimant posting pictures of himself/herself surfboarding off Malibu while collecting disability? Interesting.
- Newsgroups. Did you know that at Google Groups you can search someone's postings to newsgroups (of which there are thousands and thousands nowadays) going back years? Yet many people have no idea their postings are public information which can easily be tracked by their name or email address. What's your claimant talking about these days in the NASCAR Enthusiast newsgroup?
- Blogs. Same principle. If you claimant, like millions of us, keeps a chatty public diary online (i.e., blog), you can listen in via IceRocket.com.
- Career sites. Is your claimant applying for other jobs by posting a resume on Monster.com or other career sites? It might be revealing to find out if he/she is looking for a job while claiming to be injured or sick.
- Real Estate. Has your claimant relocated, and perhaps taken out a mortgage on a new house or condo? You can research this at SearchSystems.net, among many other sites.
- Previous medical treatments. Has your claimant had medical treatment at a local hospital in the past for the very injury or chronic ailment for which he/she is now claiming workers' comp? You can check this out by calling local hospital records departments, or you can use
E-MedicalTrace.com, offered by my company, Washington Research Associates, Inc. (Note: a signed release from the employee is needed to check medical records.)
If you'd like to learn more about the many types of public records useful in backgrounding a subject, a good starting point is either BackgroundCheckGateway.com or SearchSystems.net. Both of these sites pull together thousands of sources into well-organized categories.
Accessing public records used to be an incredibly difficult chore. Your main tool in the “old days” was shoe leather as you plodded from courthouse to courthouse digging out dusty records. Now, with the Internet, it's easy. You can access public records on your job applicant or employee which are scattered nationwide in minutes. Give it a try and you'll soon wonder why you never made full use of public records as a fraud-fighting tool before!
Joseph Ryan is director of Washington Research Associates, Inc., a Washington-D.C. research firm. Among the firm's online services are E-MedicalTrace.com (hospital and pharmaceutical records searches), E-EmploymentScreening.net (pre-employment screening), and
E-MaximumCriminalSearch.com (comprehensive criminal background checks). Note that the above article is for informational use and should not be construed as providing legal advice.
