Insurance companies now behaving like everyone's an injured worker

Author Subject: Insurance companies now behaving like everyone's an injured worker
Sam Posted At 01:36:14 05/07/2000
Georgia clobbers Prudential Health Care with a $200,000 fine

Prudential Health Care Plan of Georgia Inc. has become the latest HMO in the state to be penalized for allegedly failing to pay patient claims on time.

Insurance and Safety Fire Commissioner John W. Oxendine on May 1 handed Prudential a $199,894 fine — along with some harsh words. "The HMO industry is going to have to get its act together or face more penalties," he warns. "Our goal is full compliance with the law, and we will continue to monitor the companies to make sure they meet both the letter and the spirit of the law."

Prudential has already paid the fine, says insurance department spokesperson Wayne Whitaker. HMOs do have the option of contesting the charges and requesting a hearing.

The Georgia Department of Insurance has cracked down on HMOs in recent months for allegedly delaying payment of claims, a violation of the state's prompt pay law. Among the HMOs previously fined for various infractions are Aetna U.S. Healthcare, Kaiser Foundation Health Plan, and UnitedHealthcare.

Last updated May 2, 2000
Sam Re: Insurance companies now behaving like everyone's an injured worker (Currently 0 replies)
Posted At 01:37:50 05/07/2000

Lawsuit says Humana encourages treatment denials to gain profit

Humana Inc., one of the nation's largest health insurers, faces another lawsuit claiming it has offered doctors, hospitals, and other medical providers discounts and incentives to deny some medical treatment in order to reap a bigger profit.

The New Orleans-based consumer law firm Herman, Middleton, Casey & Kitchens filed the lawsuit April 20 in the U.S. District Court for the Southern District of Florida in Miami. Lawyers, who brought the lawsuit on behalf of Humana customers nationwide, are seeking class action certification.

ick Brown, a spokesperson for Humana, which has nearly 6 million customers in the United States, says his company has been hit with about a half dozen similar lawsuits since last fall. "These are all plaintiffs' attorneys who are looking to enrich their pocketbooks," he says. "On the face of it, this action is no different than the others that have been filed against Humana. . . . We believe we have done no wrong, and we will vigorously defend ourselves against these charges."

The complaint alleges that Humana, Humana Insurance Co. Inc., and Humana Medical Plans Inc. rewarded health care providers who chose cheaper methods of treatment and diagnosis and who failed to disclose to patients other more costly, and often more appropriate, methods of treatment. The lawsuit also charges that Humana failed to pass the discounts it obtained for itself on to its customers.

The complaint asserts that Humana included "gag orders" in its agreements with medical providers that prohibited doctors and other medical care providers from telling patients about alternative medical treatment. According to the lawsuit, Humana adopted arbitrary claims adjusting and guidelines that denied patients medical care.

Lawyers contend Humana is liable under the federal Racketeer-Influenced and Corrupt Organizations Act for repeated and fraudulent conduct involving material misrepresentations and misleading omissions in disclosures to its customers about how coverage decisions are made.

The lawsuit seeks to force Humana to turn over an unspecified amount of profit. It also seeks damages and legal costs.

Last updated May 2, 2000
Del More Insurance company fraud (Currently 0 replies)
Posted At 16:08:58 05/09/2000

Two HMOs face fines in ongoing claims probe

TALLAHASSEE - As part of an ongoing probe of HMOs, Florida Treasurer and Insurance Commissioner Bill Nelson has announced that two of them face tens of thousands of dollars in fines for not promptly paying claims - and that several others can expect similar penalties. For more information, click here.


Spying incident leads to charges against insurer

TALLAHASSEE -- Florida Treasurer and Insurance Commissioner Bill Nelson has charged one of the state's largest property insurers with attempting to "subvert, manipulate and undermine" insurance regulators and has accused its management with showing a "lack of trustworthiness" when it hired a private investigator to spy on a DOI employee. For more information, click here.


Through extensive research, I've noticed one statistic that stands out. When it comes to workers comp. fraud, an overwhelming percentage of effort is made by individual states to investigate worker fraud, yet very little, or in most cases no effort, is made in respect to employer and insurance company fraud. In fact, only Florida seems to be making any effort.

January 25, 2000


Insurance cases result in more than $52 million restitution

TALLAHASSEE – Florida’s Department of Insurance leads the nation in fraud prosecutions and criminal convictions, according to a new study of the nation’s 44 insurance fraud investigation bureaus.
Conducted by the Coalition Against Insurance Fraud, the study looked at actions taken in fiscal year 1998, when the Department’s Division of Insurance Fraud presented 471 cases for prosecution and contributed to 362 criminal convictions. Florida also held the lead for criminal convictions in the Coalition’s previous study of fiscal year 1997. The state’s fiscal year begins July 1 and ends June 30.
"Over the past four years," said State Treasurer and Insurance Commissioner Bill Nelson, "our convictions resulted in more than $52 million in court-ordered restitution on behalf of consumers and insurance companies."
Since his election as Insurance Commissioner in 1995, Nelson has given high priority to fighting insurance fraud. Florida's insurance department is one of the few to have a sworn law enforcement division, and Nelson hired a director with strong law enforcement credentials. He also roughly doubled the number of investigators.
Additionally, Nelson requested the impaneling of a statewide grand jury to investigate workers' compensation fraud, the collapse of several self-insurance funds, and other forms of insurance fraud. He also persuaded the Legislature to enact new laws strengthening the penalties for certain insurance fraud crimes and giving prosecutors expanded use of the state's racketeering laws in insurance fraud cases.
The Insurance Department earned a Davis Productivity Award, one of state government’s highest public service awards, for a 1997 sting operation dubbed "Operation Cheap Trick," which targeted a deceptive car insurance sales tactic known as sliding. The operation resulted in racketeering-related charges against 30 defendants and an insurance company. The Department gave the Davis award money to the American Red Cross’ Hurricane Relief Fund.

NY does mention briefly, along with other types, insurance company fraud. Their brochure (Adobe .pdf) is here. It says:

    Insurance Carrier Fraud

Occurs when a claims representative purposely misrepresents the truth in order to either deny or support a claim; or offers or accepts any form of consideration for the referral or settlement of a claim.

    Examples of Carrier Fraud

Accepting a gift from a doctor’s office in exchange for an implied promise of patient referrals.
Altering the evidence in a claim in order to support a denial of benefits.

Of course, I've also seen overwhelming evidence that the administrators of New York's work comp system are very corrupt. This includes the WC Director who's charged in a RICO complaint.

Last year at an MLAC meeting, insurance companies proposed an increase in criminal and civil penalties for claimant (worker) fraud. What was missing from this proposal was ANY FINE OR PENALTY WHATSOEVER FOR FRAUD BY INSURANCE COMPANIES.
Del Another example of official misconduct (Currently 0 replies)
Posted At 17:09:52 05/09/2000

For Immediate Release:
February 4, 1999

Contact: Rep. Candy Ruff
(785) 296-7647

Legislator calls for supplementary audit on workers’ compensation fraud

(TOPEKA) -- Calling a recent post audit report unfairly biased against employees, Rep. Candy Ruff, D-Leavenworth, Ranking Democratic Member of the House Business Commerce & Labor committee, today requested a supplementary audit of the Division of Workers Compensation regarding the Division’s duty to investigate employer fraud. [See KSA 44-5120(b) (2)]

In a Post Audit Report to the Legislature on the Division of Worker’s Compensation earlier this week, the Legislative Division of Post Audit used a generic reference to fraud.

"It is impossible to determine if the remarks and recommendations made in the report are directed solely toward the Division’s duties to investigate employee fraud or if they are also directed to the Division’s responsibilities to investigate fraud by employers," Rep. Ruff said. "The report consistently uses the phrase ‘fraud’ without distinguishing the type of fraud being discussed."

According to the Division of Worker’s Compensation Compliance division statistics for 1998, at least 498 out of 2,778 employers surveyed in 1998 were in violation of the Act and were committing fraud by not providing worker’s compensation insurance to their employees.

"If employers’ fraud has been left out of this audit, as it appears, than the audit is not only incomplete, but biased against employees," Ruff said.


In Texas during 1996, nineteen insurance carriers investigated injured worker benefit fraud. It broke down to:
Workers: 4,077 cases (This is an overwhelming percentage)
Health care providers: 205 cases
Employer premium fraud: 343 cases
Attorney fraud: 19 cases

Of the 4,644 cases investigated by the nineteen carriers in 1996, only 28 resulted in a criminal conviction. This works out to 0.6029285099052541 or about SIX-TENTH OF ONE PERCENT.

Of course, nobody in the state investigated the insurance carriers.

This report concluded:

It also appears that most of the attention has been paid to investigating and prosecuting injured worker benefit fraud. While injured worker benefit fraud is the most often investigated form of workers’ compensation fraud, it is far from the most costly. In 1996, only 18 injured worker benefit fraud cases were referred to district attorneys for criminal prosecution by TWCC accounting for $134,351 worth of fraud (an average of $7,464 per case), compared to 46 health care provider cases which accounted for $1,200,952 in 1996 (an average of $26,108 per case). It is clear that more resources should be spent fighting the most expensive and overlooked types of workers’ compensation fraud: employer premium and health care provider fraud.

You'll notice that no mention is made of insurance company fraud.

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