Agent News

We asked Tony Torres, CompWest Investigative Services Unit (ISU) specialist, to highlight the greatest challenges and lesser-known facts about fighting workers’ compensation fraud in California. With 30 years of experience in the field, Tony is an effective asset to CompWest, our agent partners and our policyholders.

What’s the most important thing to know about investigating fraud?

TT: It’s about being patient and objective. To successfully investigate and prosecute a fraudulent claim, it’s not enough to have a suspicion alone – there must be a case. The life of an investigated claim can be long and complex, and instances of fraud must be proven in criminal court with proof beyond a reasonable doubt.

We know and understand employers take fraud extremely seriously, and we want our partners to know we take it seriously too – by doing the right thing and following lawful processes. A case itself will warrant the amount of time and money necessary for investigation. And if there’s a case, we’ll absolutely find it.

How do we determine if a red flag is legitimate fraud?
TT: A red flag is an indicator of unusual circumstances that alerts claims staff to look at a claim and determine whether further investigation is needed. For a red flag to be considered fraud, it must be proven beyond a reasonable doubt that fraud has occurred. We must prove a material representation combined with the individual’s knowledge, intent and lies, and we do that through investigation, surveillance, close review of claim file documents and consultation with medical providers. The process begins when we receive a report of red flags on a file. We assign one of our ISU vendor investigators to conduct witness interviews, complete a thorough report and return all findings to our ISU team for further review. If additional investigation is warranted, we’ll request that surveillance is conducted by the vendor, which generally requires three days of continuous observation. This is where we wait for proof and determine whether or not there is a case. We look to see whether the individual’s activities in the surveillance video are inconsistent with what has been reported to their medical provider.

When CompWest has a reasonable belief that fraud is occurring or has occurred, we have 60 days from the date of discovery to submit a suspected fraudulent claim to the California Department of Insurance and the local prosecutor within the proper jurisdiction. That’s why we don’t officially use the word “fraud” until we have proof beyond a reasonable doubt; the mere use of the word fraud in an email or a claim file can trigger the four years statute of limitation. A district attorney and a criminal defense attorney will look back to find when an insurer or employer first identified a claim as fraudulent.

How likely is prosecution?

TT: When we identify fraud, we are mandated to report the suspected fraudulent claim to both the California Department of Insurance (CDI) Fraud Division and the district attorney’s office. Both agencies review the claim and determine if there is sufficient evidence to open a criminal investigation. The district attorney’s office is the agency that decides if a criminal complaint will be filed based on the facts and evidence in a case — and on their ability to prove a case beyond a reasonable doubt. The large number of insurance carriers operating in California and their thousands of fraud referrals to the CDI and DA offices means not every suspected fraudulent claim can be prosecuted. That’s why we’re extremely diligent in collecting proof and presenting a case that will meet the criteria necessary to successfully prosecute.

What is the most challenging part of this type of work?
TT: Fraud cases are generally not solved quickly. Investigating fraud takes time, patience, experience and objective thinking. Fraud cases can take years to discover, whether involving individuals or organized rings and schemes designed to cheat an insurance carrier out of money.

Despite the challenges, rest assured our team is  educated in identifying and fighting fraud, and we are committed to working with our stakeholders to address issues in a timely manner.

To learn more about our enterprise ISU efforts, visit our website or contact your business development consultant.