WHAT S OLD IS NEW AGAIN. PROSECUTING WORKERS COMPENSATION FRAUD UNDER THE 2011 AMENDMENTS Presented and Prepared by: William M. Blumthal, Jr. Supervisor, Workers' Compensation Fraud Unit Illinois Department of Insurance Heyl, Royster, Voelker & Allen PEORIA SPRINGFIELD URBANA ROCKFORD EDWARDSVILLE CHICAGO 2012 Heyl, Royster, Voelker & Allen G-1
New Tools for Combating Workers Compensation Fraud Enhanced Enforcement Efforts Under the Recent Reforms William M. Blumthal, Jr. Deputy Director Illinois Department of Insurance Workers Compensation Fraud Overview New Offense Enhanced Sentencing Provisions Enhanced Subpoena Power Changes to Notice Requirements Removal of 120 Day Requirement FRAUD BY MEDICAL PROVIDERS Billing for services NOT rendered G-2
820 ILCS 305/25.5(a) (9) (a) It is unlawful for any person, company, corporation, insurance carrier, healthcare provider, or other entity to: (9) Intentionally present a bill or statement for the payment of medical services that were not provided. 820 ILCS 305/25.5(a)(9) What this means... Medical providers who bill for services that are not provided can be charged under Section 25.55 What this does not mean... Medical providers who bill a service at more than the statutory guidelines allow for can be charged under Section 25.5 Medical providers who bill a service at more than the usual and customary rate can be charged under Section 25.5 ENHANCED SENTENCING PROVISIONS 820 ILCS 305/25.5(b) G-3
Pre Reform Sentencing Under 820 ILCS 305/25.5(b) (b) Any person violating subsection (a) is guilty of a Class 4 felony. Any person convicted of any violation of this Section shall be ordered to pay complete restitution any person or entity so defrauded in addition to any fine or sentence imposed as a result of the conviction. Enhanced Sentencing Under 820 ILCS 305/25.5(b) (b) Sentences for violations for subsection (a) are as follows: (1) A violation in which the value of the property obtained or attempted to be obtained is $300 or less is a Class A misdemeanor. (2) A violation in which the value of the property obtained or attempted to be obtained is more than $300 but not more than $10,000 is a Class 3 felony. (3) A violation in which the value of the property obtained or attempted to be obtained is more than $10,000 but not more than $100,000 is a Class 2 felony. (4) A violation in which the value of the property obtained or attempted to be obtained is more than $100,000 is a Class 1 felony. Enhanced Sentencing Under 820 ILCS 305/25.5(b) (b) Sentences for violations for subsection (a) are as follows: (5) A person convicted under this Section shall be ordered to pay monetary restitution to the insurance company or self insured entity or any other person for any financial loss sustained as a result ofa violation of this Section, including any court costs and attorney fees. An order of restitution also includes expenses incurred and paid by the State of Illinois or an insurance company or self insured entity in connection with any medical evaluation or treatment services. G-4
Illinois Sentencing Generally (730 ILCS 5/5 4.5 10) Misdemeanors: Felonies: Class A Murder Class B Class X Class C Class 1 Class 2 Class 3 Class 4 Relevant Sentencing Provisions (730 ILCS 5/5 4.5 15 et. seq.) Class 4 Felony Previously imposed for all violations of subsection (a) Punishable by: 1 3 years in prison Periodic Imprisonment Impact Incarceration (Boot Camp) Probation / Conditional Discharge Fine up to $25,000 Relevant Sentencing Provisions Class A Misdemeanor Now possible for violations of subsection (a) in which the value is less than $300 Punishable by: Up to one (1) year in jail Impact Incarceration (Boot Camp) Periodic Imprisonment Electronic Home Detention Probation / Conditional Discharge Supervision Fine up to $2,500 G-5
Relevant Sentencing Provisions Class 3 Felony Now possible for violations of subsection (a) in which the value is $300 $10,000 Punishable by: 2 5 years in prison Periodic Imprisonment Impact Incarceration (Boot Camp) Probation / Conditional Discharge Fine up to $25,000 Forgery is also a Class 3 felony Relevant Sentencing Provisions Class 2 Felony Now possible for violations of subsection (a) in which the value is $10,000 $100,000 Punishable by: 3 7 years in prison Periodic Imprisonment Impact Incarceration (Boot Camp) Probation / Conditional Discharge Fine up to $25,000 Relevant Sentencing Provisions Class 1 Felony Now possible for violations of subsection (a) in which the value is more than $100,000 Punishable by: 4 15 years in prison Periodic Imprisonment Impact Incarceration (Boot Camp) Probation / Conditional Discharge Fine up to $25,000 G-6
Relevant Sentencing Provisions Class X Felony Not specifically mentioned in 25.5(b) Possible for offenders who are sentenced for a Class 1 or Class 2 felony violation of subsection (a) AND the offender has 2 prior Class 2 or greater felonies in his or her background Punishable by: 6 30 years in prison Fine up to $25,000 *This will likely be exceedingly rare, as employers are not generally hiring people with 2 prior Class 2 or greater felonies How do the new sentencing guidelines help? Attempt = Completed Offense Restitution explicitly includes Court Costs, Attorney Feesand MedicalCosts for Evaluation or Treatment Stiffer Penalties Greater interest from Prosecutors ENHANCED SUBPOENA POWER 820 ILCS 305/25.5(c) and 735 ILCS 5/8 802 G-7
Enhanced Subpoena Power Under 820 ILCS 305/25.5(c) (c)... With respect to the subject of any investigation being conducted, the fraud and insurance non compliance unit shall have the general power of subpoena of the Department of Insurance, including the authority to issue a subpoena to a medical provider, pursuant to section 8 802 of the Code of Civil Procedure. Physician and Patient Privilege 735 ILCS 5/8 802 8 802. Physician and patient. No physician or surgeon shall be permitted to disclose any information he or she may have acquired in attending any patient in a professional character, necessary to enable him or her professionally to serve the patient, except only (1) in trials for homicide when the disclosure relates directly to the fact or immediate circumstances of the homicide, (2) in actions, civil or criminal, against the physician for malpractice, (3) with the expressed consent of the patient, or in case of his or her death or disability, of his or her personal representative or other person authorized to sue for personal injury or of the beneficiary of an insurance policy on his or her life, health, or physical condition, or as authorized by Section 8 2001.5, (4) in all actions brought by or against the patient, his or her personal representative, a beneficiary under a policy of insurance, or the executor or administratorofhis of orher estate wherein the patient's physical ormentalcondition isanissue, issue, (5) upon an issue as to the validity of a document as a will of the patient, (6) in any criminal action where the charge is either first degree murder by abortion, attempted abortion or abortion, (7) in actions, civil or criminal, arising from the filing of a report in compliance with the Abused and Neglected Child Reporting Act, (8) to any department, agency, institution or facility which has custody of the patient pursuant to State statute or any court order of commitment, (9) in prosecutions where written results of blood alcohol tests are admissible pursuant to Section 11 501.4 of the Illinois Vehicle Code, (10) in prosecutions where written results of blood alcohol tests are admissible under Section 5 11a of the Boat Registration and Safety Act, (11) in criminal actions arising from the filing of a report of suspected terrorist offense in compliance with Section 29D 10(p)(7) of the Criminal Code of 1961, or (12) upon the issuance of a subpoena pursuant to Section 38 of the Medical Practice Act of 1987; the issuance of a subpoena pursuant to Section 25.1 of the Illinois Dental Practice Act; the issuance of a subpoena pursuant to Section 22 of the Nursing Home Administrators Licensing and Disciplinary Act; or the issuance of a subpoena pursuant to Section 25.5 of the Workers' Compensation Act. Physician and Patient Privilege 735 ILCS 5/8 802 8 802. Physician and patient. No physician or surgeon shall be permitted to disclose any information he or she may have acquired in attending any patient in a professional character, necessary to enable him or her professionally to serve the patient, except only (1) in trials for homicide when the disclosure relates directly to the fact or immediate circumstances of the homicide, (2) in actions, civil or criminal, against the physician for malpractice, (3) with the expressed consent of the patient, or in case of his or her death or disability, of his or her personal representative or other person authorized to sue for personal injury or of the beneficiary of an insurance policy on his or her life, health, or physical condition, or as authorized by Section 8 2001.5, (4) in all actions brought by or against the patient, his or her personal representative, a beneficiary under a policy of insurance, or the executor or administratorofhis of orher estate wherein the patient's physical ormentalcondition isanissue, issue, (5) upon an issue as to the validity of a document as a will of the patient, (6) in any criminal action where the charge is either first degree murder by abortion, attempted abortion or abortion, (7) in actions, civil or criminal, arising from the filing of a report in compliance with the Abused and Neglected Child Reporting Act, (8) to any department, agency, institution or facility which has custody of the patient pursuant to State statute or any court order of commitment, (9) in prosecutions where written results of blood alcohol tests are admissible pursuant to Section 11 501.4 of the Illinois Vehicle Code, (10) in prosecutions where written results of blood alcohol tests are admissible under Section 5 11a of the Boat Registration and Safety Act, (11) in criminal actions arising from the filing of a report of suspected terrorist offense in compliance with Section 29D 10(p)(7) of the Criminal Code of 1961, or (12) upon the issuance of a subpoena pursuant to Section 38 of the Medical Practice Act of 1987; the issuance of a subpoena pursuant to Section 25.1 of the Illinois Dental Practice Act; the issuance of a subpoena pursuant to Section 22 of the Nursing Home Administrators Licensing and Disciplinary Act; or the issuance of a subpoena pursuant to Section 25.5 of the Workers' Compensation Act. 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What does that mean for us? 8 802. Physician and patient. No physician or surgeon shall be permitted to disclose any information he or she may have acquired in attending any patient in a professional character, necessary to enable him or her professionally to serve the patient, except... [upon] the issuance of a subpoena pursuant to Section 25.5 of the Workers' Compensation Act. REMOVAL OF THE NOTICE REQUIREMENT Dear Mr. Smith, The Department of Insurance s Workers Compensation Fraud Unit has received a complaint from Michael Jones of 100 Main Street, Lombard, Illinois, alleging that you have committed workers compensation fraud... Notice of Investigation Prior to the recent amendments, employers and employees whose conduct was referred to the WCFU for investigation were entitled to notice of the referral (e)... Upon receipt of a report of fraud, the employee or employer shall receive immediate notice of the reported conduct, including the verified name and address of the complainant if that complainant is connected to the case and the nature of the reported conduct. G-9
Notice of Investigation Prior to the recent amendments, employers and employees whose conduct was referred to the WCFU for investigation were entitled to notice of the referral (e)... Upon receipt of a report of fraud, the employee or employer shall receive immediate notice of the reported conduct, including the verified name and address of the complainant if that complainant is connected to the case and the nature of the reported conduct. Practical Effects / Problems of Notice Potential targets were informed that an investigation was underway Surveillance was all but eliminated as an option in cases involving employee fraud The name and address of the person making the referral were made known to the target Removal of the Notice Requirement Allows for the person reporting the alleged fraud to remain unidentified unless and until a criminal prosecution is commenced Allows for the possibility of surveillance by insurance companies, SIUs, TPAs, and the WCFU Allows the WCFU to conduct an investigation without the target being made aware that a complaint has been filed G-10
REMOVAL OF 120 DAY REQUIREMENT Time s up... turn in your report Investigation Deadline Prior to the recent amendments, investigations were to be commenced and completed within 120 days of receipt of a complaint Reality of the 120 Day Requirement Clock started to run before the complaint was assigned for investigation Not all investigations are the same Many investigations simply cannot be completed that quickly Subpoena compliance took a significant portion of the 120 days allotted for investigation The number of cases referred to the WCFU made compliance with the 120 day requirement impossible Cases were not reviewed until they could be investigated in order to comply with the law G-11
Removal of the 120 Day Requirement Allows for more thorough investigations Allows for collection of all the relevant records Allows for better report writing Allows for more investigations to be open at any given time Gives us a better chance at a successful referral and prosecution HOW DOES THIS AFFECT ALL OF US? Curbing workers compensation fraud Empowerment Improves the likelihood that the general public will actually file a complaint + Provided investigators with more tools and removed limitations thathamperedinvestigations hampered + Provided prosecutors with more reason to charge cases involving workers compensation fraud, and gives them more leverage with regard to resolving cases arising under the Act G-12
What does this add up to? Convictions Fines Restitution Prison Sentences Chilling Effect WHAT DO WE NEED FROM YOU? Referring a case for investigation Workers Compensation Fraud Unit Mailing Address: 100 W. Randolph St. Suite 9 301 Chicago, IL 60601 Hotline: (877) 923 8648 E mail: DOI.WorkCompFraud@illinois.gov Web Site: http://insurance.illinois.gov/wcfu G-13
William M. Blumthal, Jr. Supervisor, Workers' Compensation Fraud Unit Illinois Department of Insurance Mr. Blumthal graduated from the University of Illinois in Urbana-Champaign in 2000 with a BA degree in Liberal Arts and Sciences. He went on to attend DePaul University's College of Law, graduating in 2003 with a Juris Doctor degree and a certificate in criminal law. After graduation, Mr. Blumthal began working for the Cook County State's Attorney's Office as an Assistant State's Attorney. During his time at the State's Attorney's Office, Mr. Blumthal worked in a number of different divisions, including Criminal Appeals, Traffic, Felony Review, Grand Jury, and the Felony Trial Division. In June of 2011, after nearly eight years with the Cook County State's Attorney's Office, Mr. Blumthal left to assume his current position at the Illinois Department of Insurance as Supervisor of the Workers' Compensation Fraud Unit. G-14