Price is Right Appearance Exposes Workers’ Compensation Fraud

While media and public attention has been focused on disaster-related frauds, data protection and privacy, and tax avoidance, a recent workers’ compensation scandal involving a contestant on the U.S. game show The Price is Right serves as a reminder that insurance fraud schemes continue to pose significant threats to public and private interests.

June 2013

By Mark Scott, J.D., CFE

 

While media and public attention has been focused on disaster-related frauds, data protection and privacy, and tax avoidance, a recent workers' compensation scandal involving a contestant on the U.S. game show The Price is Right serves as a reminder that insurance fraud schemes continue to pose significant threats to public and private interests.

 

As first reported by local North Carolina television station WRAL, an appearance on The Price is Right led to the downfall of a former postal service employee who has since pleaded guilty to workers' compensation fraud.

 

In 2004, North Carolina postal worker Cathy Wrench Cashwell filed a workers' compensation claim, stating that a shoulder injury she suffered while working left her unable to perform the manual part of her postal duties (i.e., lifting mail trays and carrying bags of letters). She began collecting benefits in 2005.

 

In the claim, Cashwell said she could not, among other things, reach, grip, climb, sit or engage in other activities, but on September 23, 2009, she appeared on The Price is Right, where she spun "the Big Wheel" twice. The September 2012 indictment said that during one spin, Cashwell "raised both arms above her head and gripped the same handle with both hands," and during a second spin, she "raised her left arm above her head and gripped the handle with her left hand," the Daily Mail said.

 

After Cashwell's suspicious appearance in 2009, investigators went to work and obtained evidence that she repeatedly engaged in activities she should not have been able to perform. Cashwell's sentencing is scheduled for September 2013.

 

Workers' Compensation Fraud 

Workers' compensation insurance is a type of insurance that provides medical and disability coverage for employees who suffer work-related injuries and illnesses.

 

While most workers' compensation claims are legitimate, some are inflated or fraudulent. Workers' compensation fraud occurs when someone knowingly makes a false statement or conceals information to obtain workers' compensation benefits or to prevent someone from receiving benefits to which they might be entitled.

 

Workers' compensation fraud, however, is not rampant. Nationwide studies have shown that only a small percentage of workers' compensation claims are fraudulent. Nevertheless, this type of fraud is costly. Not only does workers' compensation fraud cost insurers billions of dollars every year, it results in higher health care costs and insurance rates for U.S. businesses (according to "Risk Control: Managing Workers' Compensation Fraud" published by Travelers Indemnity Company in 2008).

 

Furthermore, amid a sluggish job market, questionable workers' compensation claims are on the rise, according a 2013 report released by the National Insurance Crime Bureau (NICB). The report stated that questionable workers' compensation claims rose 23 percent from 2011 through 2012.

  

The Perpetrators  

While workers' compensation fraud can be perpetrated by any party who participates in the workers' compensation system (e.g., doctors, lawyers, employers, insurance company employees and claimants), studies indicate that claimants, employers and medical providers carry out the majority of these schemes.

 

Despite the many perpetrators of workers' compensation fraud, the remainder of this article focuses on claimant fraud, which, according to the NICB's report, generated the largest number of referrals for questionable workers' compensation claims from 2011 to 2012.

 

Claimant fraud occurs when an individual falsely claims to have experienced an injury or exaggerates a legitimate work-related injury to obtain insurance benefits.

 

How Organizations Can Fight Workers' Compensation Claimant Fraud 

There are several steps that management and HR teams should take to minimize the risk of claimant fraud and the damage it can cause. For one thing, management should develop and maintain a safe work environment to prevent workplace accidents and control workers' compensation claims. For another thing, leadership should develop post-injury management programs that help guide behavior when workplace accidents do occur.

 

Also, managers should adopt zero-tolerance policies regarding fraud, meaning that they will investigate and seriously deal with all suspected incidents of fraud. Furthermore, organizations should work with their insurance carriers' fraud investigation units to stay abreast of potential schemes. Finally, organizations' leaders should educate their employees about the various workers' compensation fraud types, schemes and associated red flags.

  

The Red Flags of Workers' Compensation Claimant Fraud 

As instances of claimant fraud rise, management should be aware of the following red flags that can signal abuse:

 

The claimant is engaged in seasonable work that is about to end.

The claimant is a new employee, disgruntled, on probation, facing layoff or about to retire.

The claimant has a poor attendance record.

The claimant has financial problems.

The claimant waited days or weeks before reporting the accident or injury.

The accident or injury reportedly occurred late Friday or early Monday morning, indicating that it actually occurred off the job over the weekend.

There are no witnesses to the reported accident or injury, or the only witnesses are individuals who have a "close" relationship with the claimant.

The claimant provides vague or inconsistent details about the accident or injury.

The claimant and witnesses provide conflicting details about the accident or injury.

The accident or injury reportedly occurred at a location away from where the claimant normally works.

The claimant's coworkers express doubt about whether the accident or injury actually occurred.

The claimant is unusually pushy about settling the claim.

The documentation presented by the claimant contains irregularities or questionable content.

The claimant is involved in physical hobbies or sports.

The incident report and the medical evaluation contain conflicting information.

 

Conclusion 

Workers' compensation fraud continues to thrive, but management can minimize the risk of such schemes by committing to work safety, implementing post-injury management programs, adhering to zero-tolerance policies, working with insurance carriers and educating employees. And because evidence of illegal activity can come from almost anywhere, as demonstrated by The Price Is Right fraud bust, managers, workers and fraud examiners must be vigilant in their efforts to identify this and similar types of fraud.

 

 

Related book: Insurance Fraud Casebook is an exclusive collection of insurance fraud cases written by the fraud examiners who investigated them. These cases were hand selected from hundreds of submissions and together form a comprehensive picture of the many types of insurance fraud. Read more.