Insurance Fraud NEWS
Comp schemes reach record levels in Massachusetts
May 15, 2019, Boston, MA
It was a record year for workers' compensation fraud in Massachusetts last year, where more cases of alleged fraud were referred to prosecutors than ever before.
"Personally, I believe it's because they think that they're smarter than the next guy. They're probably heard someone getting away with this," said Tony DiPaolo, vice president of investigations at the Insurance Fraud Bureau of Massachusetts.
The bureau referred 256 cases to federal, state and local prosecutors in 2018, the most ever in a single year.
"How big of a problem is workers' compensation fraud?" 5 Investigates' Mike Beaudet asked him.
"It is definitely a big problem here in Massachusetts," DiPaolo responded.
5 Investigates dug into the cases of three men who did not get away with it. All three were caught on video by insurance company investigators, and all three pleaded guilty in Massachusetts courts to larceny and workers' compensation fraud.
One man was legitimately injured after falling off a ladder and started collecting workers' compensation benefits.
The surveillance video shows him later on a job site, climbing a ladder.
"So this is someone who's claiming he's too injured to work?" Beaudet asked DiPaolo.
"Correct. He says he can't work. He doesn't have the ability to work," DiPaolo replied.
"Most of them do have injuries, there's some form of injury that happens to that person. The question becomes, how long are they out with that injury?" DiPaolo said.
Court records from the state Attorney General's office reveal he started working again a month after his injury, operating his own window and siding business. The man collected $76,378 in checks from homeowners and contractors while fraudulently receiving $18,668 in workers' compensation benefits.
"Clear case of fraud," DiPaolo said. "He's telling the insurance company he cannot work. He's told independent medical evaluation doctors that he cannot work. And clearly he's working."
Video of another man, also legitimately injured while working in a Massachusetts restaurant, shows him back at work 10 months later in another restaurant even though he continued to collect workers' compensation benefits for his lower back injury for more than a year.
Those fraudulent benefits added up to $31,729, according to court records.
"Very brazen, you know, saying he can't work, telling the insurance company he can't work," DiPaolo said.
Yet another man, a construction worker, was ordered to pay more than $100,000 in restitution after going back to work after a legitimate lower back injury.
"He was going to different homes, going to hardware stores, lumber yards," DiPaolo said.
The worker collected both unemployment and workers' compensation benefits for a full year, all while operating his own construction company.
"He says he can't work," Beaudet said, watching the video with DiPaolo.
"Right," DiPaolo said. "Clearly working, collecting money."
DiPaolo said fraud hurts everyone in the wallet.
"If you have a bunch of fraudulent claims, people inflating the total value of the claim, the insurance company is then going to have to raise their rates," he said.
It's not just workers who cheat the system.
Some companies falsify payroll records about how many employees they have and what jobs they're doing so they pay lower workers' compensation insurance premiums.
Right now, there are 60 active cases against businesses.
Not every dispute over workers' compensation involves fraud. That's where the state Department of Industrial Accidents comes in, running a separate court system dedicated solely to resolving workers' compensation claims. It handles about 12,000 new cases each year.
In one case that played out in front of 5 Investigates, an attorney for an insurance company tried to reduce or stop paying workers' compensation benefits, but the employee's lawyer argued the employee is still injured.
"He hurt his right shoulder while lifting a heavy tote," the employer's attorney said.
"If he uses his arm really for anything, more than just holding it onto his body, he has extraordinary pain that gets up to a six, seven level out of 10," the employee's attorney said.
Omar Hernandez, senior judge at the Department of Industrial Accidents, said a workers compensation case doesn't end up in court unless one of the sides is unhappy.
"Do you see people trying to cheat the system?" Beaudet asked him.
"I do not, because in this era of social media, the insurers are very proactive to really stem that," Hernandez said.
Hernandez said the majority of cases are simply good faith disputes. However, two of the men involved in the cases the Insurance Fraud Bureau shared with 5 Investigates had, in fact, lied to judges at the Department of Industrial Accidents about their ability to work before facing criminal charges.
A spokesperson for the Department of Industrial Accidents said the department is prohibited by law from tracking the number of cases of potential fraud it encounters, but that fraud is immediately referred for potential prosecution any time it's found.