Ohio Bureau of Workers’ Compensation, Special ...



Special Investigations DepartmentFiscal Year 2012 Annual Report571500-50165This report summarizes the BWC special investigations department’s (SID’s) achievements since its inception in 1993 and reviews its performance results during the most recent fiscal year (FY) 2012 that concluded June 30, 2012. The report identifies fraud trends and highlights strategies for FY 2013 and beyond.Summary of FY 2012, trends and future strategies305913311875A Note from the DirectorDepartmental missionTo effectively and proactively prevent losses to the workers’ compensation system; and to deter, detect, investigate, and prosecute workers’ compensation fraud.During the last fiscal year, members of the special investigations department (SID) made significant gains in the fight against workers’ compensation fraud and abuse. The department realized an increase in savings identified, referrals for prosecution and indictments.Departmental visionTo become internationally recognized as a leader in the insurance industry and the criminal justice community.The department and the agency continued a focus on prescription drug fraud and abuse and are active members of the Governor’s Cabinet Opiate Action Team. Our agency’s commitment has contributed to the efforts occurring across the state by a multitude of people addressing the prescription drug problem, not only in Ohio but across the country. During the last fiscal year 26.9 percent of the complaints we investigated were related to drug complaints and the agency made several administrative changes to attack the issue. Special Investigations also continued to identify areas of potential abuse and worked with various business units within the BWC to close the gap and reduce risk. As we worked to identify trends within the system, drug cases, working while receiving benefits, and employer complaints continued to be our three top complaint types investigated.The department is also committed to keeping pace with current technology. During the last fiscal year, we increased staffing in our digital forensics unit, pursued social media for both investigations and promoting fraud awareness, and launched our Facebook and Twitter accounts.During the next fiscal year, SID will continue to identify ways to weed out fraud and abuse and reduce risk to the state insurance fund.SID Performance ResultsSID Performance results to dateSince its inception in 1993, SID has achieved the following:Completed 56,874 investigations;Closed 23,057 founded cases;Identified nearly $1.5 billion in savings;Identified $25,993 per closed case;Referred 3,964 subjects for prosecution; andSecured 2,001 criminal convictions.During FY 2012, SID identified $59,373,483 in savings. SID closed 2,046 cases and 976 – or 47.7 percent – were closed founded (the original allegation was proven). Of these founded 976 cases, 251 – or 25.7 percent – were referred for prosecution. SID obtained 152 indictments and 123 convictions. These 152 indictments were a 9 percent increase over last year. SID received 4,198 allegations and teams are currently investigating 1,106 open cases. The average founded closed case in FY 2012 identified $60,833 in savings to the Ohio workers’ compensation system.Performance Trend AnalysisFY 2012 versus 12 prior fiscal years2nd lowest number of cases open at year end;?2nd highest number of indictments;?5th highest founded percentage;?6th highest number of convictions;?Highest number of referrals in the past four years; and$3 million more overpayment and premium savings identified than in last year.These performance results for FY 2012 are significant. They also compare favorably to the impressive outcomes SID achieved during the 12 most recent fiscal years. Moreover, SID staff members achieved these results while effectively orienting and training more than 25 newly-hired or newly-promoted professionals.Performance Results By Team TypeHere is a breakdown of our SID FY 2012 performance results by team type.SID TeamsProsecution referralsIndictmentsConvictions Identified savingsIntelligence unitNANANA$6,815,970Employer team664634$4,139,868Health care provider team2348$10,250,103Regional claimant SIUs16210281$38,167,542TOTAL251152123$59,373,483Strategic PlanningChange philosophy“It is well established that organizational change is most effective when coupled with an overarching philosophy or conceptual framework on which to base change.”Source – Jerry Ratcliffe, Department of Criminal Justice, Temple University and Ray Guidetti, Regional Operations and Intelligence Center, New Jersey State Police.34925165735In 2009, SID implemented its third 5-year strategic plan. Collectively, a committee of agents, analysts and management peeled back layers of processes, revisited past operational discussions, opened new avenues of thought, and created more efficient operations. Entering the final year of the plan, SID has already successfully completed 75 – or 77 percent – of 98 strategic initiatives. The status of the remaining 23 initiatives is as follows: 3 are in progress; 15 are pending approval; and 5 have been canceled because they are no longer necessary.Thus, SID accomplished its three primary FY 2012 operational goals.Goal (1):Increase employer fraud investigations and criminal referrals for prosecution.Goal (2):Increase health care fraud investigations and criminal referrals for prosecution.Goal (3): Ensure BWC SID is adequately staffed and equipped to respond to the increase in cases involving electronic evidence (e.g., employer payroll records, medical files, etc.), perform forensic examination, and respond to internet fraud, including identify theft.Additionally, SID continues to implement strategies to accomplish two other FY 2012 operational goals.Goal (4):Ensure public believes BWC SID is effective in detecting and investigating workers’ compensation fraud and protecting the state fund.Goal (5):Enhance the effectiveness and efficiency of case investigations.Employer FraudNon-compliant employer allegationsNon-compliant employers – those with “lapsed coverage” or “no coverage” – continue to be the most common employer fraud allegation complaint type. During FY 2012, BWC’s employer compliance department alone referred 207 non-compliant allegations to the SID employer team.Source – Craig Matthews, special agent in charge, SID employer team.24765154940SID’s employer team has dedicated staff located throughout the state, exclusively investigating alleged fraud committed by employers and third party administrators (TPAs). During FY 2012, the team hired its initial external premium auditor and employer services specialist, and filled critical special agent positions.82551517650During FY 2012, SID’s employer team closed 237 cases or 27 percent more than the 186 cases closed in FY 2011. The team closed 142 cases – or 60 percent – founded. These cases generated $4,139,868 in savings identified, or 33 percent more than the $3,108,407 identified in FY 2011. During FY 2012, the team referred 66 subjects for criminal prosecution and realized 46 indictments and 34 convictions.Non-compliant employer convictionsLapsed employer subjects were 47 percent of the team’s FY 2012 convictions. Non-covered employer subjects were 9 percent of such.As the figure (left) shows, non-compliant subjects were the employer team’s most common conviction complaint type during FY 2012.Provider Fraud22860116840SID’s health care provider team (HCPT) has dedicated staff located throughout the state, exclusively investigating alleged fraud committed by providers, pharmacies and MCOs with the most common complaints being services not rendered, up-coding, medical necessity and false billing.During FY 2012, HCPT continued to aggressively combat providers – including pill mills and injury mills – that commit fraud against the state workers’ compensation system. The team acted as both a lead and support agency to identify and investigate provider fraud subjects. Throughout the State of Ohio, HCPT launched joint investigations, including search warrants, with local, state and federal law enforcement agencies.Searching for the truthDuring FY 2012, HCPT planned, led and/or executed nine search warrants.Source – Doug Fisher, special agent in charge, SID health care provider team.At any given time during the fiscal year, HCPT agents were conducting at least six undercover operations.HCPT closed 37 cases, identifying $10,250,103 in savings to the workers’ compensation system; fully $1,955,186 – or 23.6 percent – more than the significant results generated in FY 2011. The team secured 23 referrals for criminal prosecution, 4 indictments and 8 convictions. HCPT is also pursuing civil charges and administrative remedies to secure restitution from subjects of founded, closed cases.Additionally, the team continued to identify and recommend policy and procedure changes that increase cost savings to employers, enhance service to injured workers, and address unsafe medical practices, which impact all the citizens of Ohio.Claimant Fraud3810140970SID regional claimant fraud investigation teams have dedicated staff located in most customer service offices throughout the state, primarily investigating alleged fraud committed by claimants. These regional claimant fraud teams are assigned to one of three regions: Region 1 (Northeast); Region 2 (Southeast); and Region 3 (West).A Case in PointOn April 26, 2010, SID opened an investigation on Robin Hammond in Galion, Ohio based on an allegation that she was not as injured as she reported to be and was engaging in physical activities. The SID conducted surveillance on Hammond for approximately ten months, gathering hours of video evidence revealing that she had full use of all four limbs -- contrary to her physician’s diagnosis. Hammond was regularly observed entering her physician’s office in a wheelchair, yet she would ambulate without assistance afterwards. Additionally, the video showed Hammond’s husband, Randy Hammond, assisting her into a wheel chair on several occasions when she attended a medical exam, but then soon later walking and talking with her as she behaved normally without any apparent injury. When the surveillance videos were shown to Hammond’s physicians they repudiated their previous medical opinions and concluded that she had “faked” her injury and condition.The Hammonds fled the state of Ohio after being interviewed by SID agents. They failed to attend or respond to repeated requests to attend an administrative hearing. An Industrial Commission of Ohio (IC) hearing officer found Robin Hammond committed fraud against BWC and terminated her benefits. As a result of the fraud, the hearing officer found BWC had overpaid Hammond $671,062.On December 15, 2011, Robin Hammond was indicted in Franklin County Court of Common Pleas on one count of workers’ compensation fraud and one count of aggravated theft, both felonies of the third degree. Randy Hammond was indicted in Franklin County on one count of complicity to workers’ compensation fraud and one count of complicity to aggravated theft, both felonies of the third degree. The Office of the Attorney General of Ohio issued a nationwide warrant for the arrest of the Hammonds. With the assistance of the BWC Special Investigations Fugitive Task Force, the BWC Digital Forensics Unit, and the U.S. Marshall’s Service, the Hammonds were located in Hurricane, Utah. On February 13, 2012, the U.S. Marshall’s office arrested the Hammonds at a Hurricane mobile home park. The Hammonds were extradited to Ohio on March 9, 2012 and pleaded not guilty on March 14, 2012. A criminal trial is pending.During FY 2012, these teams closed 1,323 cases, identified $38,167,542 in savings and referred 162 subjects for criminal prosecution. For an example, see “A Case in Point” below.Digital Forensics UnitDFU Primary functionThe unit's primary duties include the forensic imaging and analysis of digital data from electronic devices -- whether on computers, laptops, servers, digital recorders, iPads or smartphones.1206513398512065133985The SID digital forensics unit (DFU) provides a full range of technical support for special agents conducting workers’ compensation fraud investigations. The unit's primary duties include forensic imaging and analysis of digital data from electronic devices. For example, when executing search warrants, forensic analysts make exact copies of the storage from these devices. Then, employing specialized training and using forensic software, this team analyzes the vast amount of information and works with investigators.2725420139700During FY 2012, DFU completed the most productive year since its establishment in 2001. The unit acquired over 13 terabytes of data, nearly 21 percent more than in FY 2011 and 90 percent more than in FY 2010, as shown in the figure (right). The average size of an imaged device during FY 2012 was 300 gigabytes, or twice as much storage than the average device imaged during the prior two fiscal years.DFU supported the SID FY 2009 – FY 2013 strategic plan by becoming fully staffed with the addition of a dedicated forensics intelligence manager and an additional full-time digital forensics analyst.During FY 2012, the unit focused much of its attention on digital forensics training. In a constantly evolving world of digital forensics, training is an absolute necessity to keep analysts current with new technologies and digital devices. This year each DFU member received over three weeks of training; enhancing their ability to conduct more in-depth forensic examinations and better support all other SID teams.The unit also deployed enhanced analysis of social media to increase its support of the investigations conducted by other SID teams. In FY 2012, SID teams submitted 53 requests for DFU to obtain potential evidence via subjects’ social media sites. The unit’s social media analysis assisted SID teams in locating claimants, providers, and employers; proved the employment of claimant subjects; and identified potential suspects, witnesses, and co-conspirators.DFU’s most significant change occurred in late FY 2012, when the unit merged with SID Internal. The merger has allowed the unit to better assist internal investigations by directly providing e-discovery support. Now, a single, dedicated unit acquires and analyzes internal data – such as internet logs, call logs, timesheets, and user data – and appropriately refers cases to BWC Labor Relations, the Office of the Inspector General of Ohio, and/or the Ohio Ethics Commission.Intelligence Unit14605148590During FY 2012, the SID Intelligence Unit (IU) generated significant results. IU detected 1,387 fraud allegations, resulting in the identification of $28,749,637 in savings. Fully 58.0% of the IU cases were closed founded. The unit also completed 3,640 data requests from the SIUs.BWC Centralized DURs in FY 2012“[BWC] centralized the drug utilization review process, helping to identify injured workers who may be on dangerous combinations or doses of prescription drugs with the goal of ensuring the right medicines for the right condition at the right time.”Source – Governor’s Cabinet Opiate Action Team, May 2012 report: “Attacking Ohio’s Opiate Epidemic”.SID’s DUR resultsSince March 2008, SID DURs have resulted in the termination of drugs in 1,871 – or 58.6 percent – of 3,193 closed cases. These founded cases have generated $44,755,243 in savings.Each month IU reviews data pertaining to all claimants receiving BWC-paid prescriptions and refers claims to the BWC pharmacy department for review and determination, including scheduling drug utilization reviews (DURs) by physicians. These reviews either confirm the need for ongoing prescriptions or determine the prescriptions were not medically necessary. During FY 2012, SID DURs resulted in the termination of drugs in 274 cases generating $6,815,970 in savings.During FY 2012, BWC centralized the DUR process. It is expected that this centralization will generate even more operational effectiveness and efficiency.SecuritySecurity incident statsDuring FY 2012, the team effectively responded to 83 incidents, including 38 threats against BWC employees, 24 injured worker suicide threats, 10 cases involving harassment, 10 security alerts and one homicide threat.The team referred 44 incidents to local law enforcement agencies.1270133985Ensuring safety and security for employees and customers is the mission of SID Security. BWC is comprised of nearly 2,000 dedicated professionals across 15 customer service offices located in 16 facilities throughout the state. Some of these facilities also host employees of the IC and, additionally, our main headquarters in Columbus, Ohio furnishes office space to four other state agencies.BWC facilities annually experience over 400,000 visitors regarding their claims or employer training classes; further, employees at BWC facilities experience hundreds of millions of direct customer service interactions through our e-commerce based Web site (), telephone calls, mail and e-mail. Each of these interactions must be safe and secure; SID Security protects its employees and customers against threats and other harmful incidents that may result from these interactions.The team deploys dozens of security services statewide, including: co-conducting security and safety training for all employees in each facility, such as annual fire evacuation drills, floor warden training, and “Active Shooter” response seminars; leading facility risk assessment tours for local law enforcement personnel; creating and distributing quick reference guides with optimal responses to any building emergency; planning and coordinating the installation of security equipment enhancements; managing the Employee Emergency Notification System for any business interruption or office closure; and responding to incidents.Safety Violations Investigation UnitSVIU FunctionSVIU’s primary function is investigating alleged safety requirement violations that have resulted in a workplace injury, illness or death. Since 1990, the unit has completed 8,888 investigations.The SID Safety Violations Investigation Unit (SVIU) has dedicated staff state-wide, exclusively investigating alleged violations of specific safety requirements (VSSRs). If a worker is injured, contracts an illness or is killed on the job because of a VSSR, as outlined in the Ohio Administrative Code, the worker, surviving spouse or dependents may be eligible to receive an additional compensation award, ranging from 15 percent to 50 percent of the injured workers’ maximum allowable weekly compensation rate.5715156210During FY 2012, SVIU conducted 326 investigations pertaining to 8 VSSR-related deaths; 35 instantaneous deaths; and 283 VSSR-related injuries or occupational diseases. The unit increased its percentage of cased closed within 90 days from 82 percent in FY 2011 to 92 percent in FY 2012.Prescription FraudCombating drug abuse since 2001More than a decade ago, SID recognized the trend in drug trafficking and over-prescribing by providers and drug deception by claimants. In 2001, SID’s intelligence unit commenced pro-active detection of drug-related fraud allegations.9290055048250BWC continues to employ significant resources to combat prescription fraud as abuse of these drugs has become an epidemic in Ohio and throughout the nation. As the figure (below right) shows, drug complaints have been SID’s most common closed case complaint type since FY 2009.Still number oneDuring FY 2012, drug complaints were 26.9 percent of all complaints investigated by SID.Work/comp complaints were 26.3 percent of all complaints investigated during the last 12 ernor’s Cabinet Opiate Action Team“This collaborative approach toward reversing the trend of opiate abuse is producing results, but much more work remains.”Source – Governor’s Cabinet Opiate Action Team, May 2012 report: “Attacking Ohio’s Opiate Epidemic”.SID continues to utilize its various teams in conjuction with other agencies to investigate prescription fraud by suspected pill mill providers and claimants using deception to obtain narcotics. BWC is an active member of the Governor’s Cabinet Opiate Action Team (GCOAT), a task force established to address the continuing epidemic of misuse and abuse and overdose from prescription opioids.SID has also teamed with the BWC pharmacy department to address various issues related to the BWC drug program. Accomplishments during FY 2012 include:As recommended by SID, BWC rules now permit BWC to deny payments for prescriptions exclusively because they have been written by de-certified or non-enrolled providers;BWC implemented its first drug formulary with utilization guidelines by drug class and national drug code number. For example, a claimant must now use a less expensive long-acting opioid and demonstrate therapeutic failure before BWC will reimburse a more expensive drug;SID developed an actual daily Morphine Equivalent Dosage (MED) calculator to identify the exact amount of any prescribed narcotic and to enhance SID detection efforts; andBWC Combats pharmacy shopping“[BWC’s] first-ever formulary and coordinated services…[and] pharmacy “lock-in” program are helping BWC better manage prescriptions and prevent pharmacy shopping for dangerous opiates.”Source – Governor’s Cabinet Opiate Action Team, May 2012 report: “Attacking Ohio’s Opiate Epidemic”.BWC implemented a lock-in program and finalized a pharmacy contract in June 2012 allowing BWC to require a claimant to use a single pharmacy and to designate a single prescribing physician as the physician of record (POR). Initial claimants are expected to enter the program during August 2012.Trends and StrategiesBased upon its strategic planning goals, performance and trends, SID continues to implement strategies to increase the investigation and prosecution of all subject types, including:SID hired additional special agents and criminal investigators to meet its core mission and the increasing future demand for fraud prevention services. In June 2011, BWC Administrator/CEO Stephen Buehrer approved SID to post and fill critical vacancies. During FY 2012, SID hired 25 professionals to generate increases in SID performance results in critical need areas; e.g., health care provider team, employer team, and digital forensics unit. Currently, SID is comprised of 123 staff members.A follower’s recent blog“Ohio’s Bureau of Workers’ Compensation is amassing quite a rogues’ gallery of convicted fraudsters.”Source – Washington State Department of Labor & Industries, June 2012.SID kicked off a social media campaign, including Facebook and Twitter accounts, to promote fraud awareness and deterrence with 29 “Fraud Awareness” articles published between August 1st and November 30th, 2011. These websites notify the public of outstanding fugitives, prosecutions, anti-fraud efforts and job postings. Facebook content includes surveillance video footage, booking photos of convicted subjects, and descriptions of common fraud schemes to help the public recognize suspected fraud and report it via a link to an online referral form. With 131 tweets and 137 followers on Twitter, “@OhioBWCFraud” has already been proven successful.In honor of the 1st year anniversary of its social media campaign, SID plans to use Facebook and Twitter accounts to increase public awareness of the SID services that are available to employers, announce scheduled fraud presentations and provide links to other law enforcement and anti-fraud associations.Fugitive Task Force finds those who fleeDuring fiscal year 2012, 24 FTF arrest warrants were resolved, including 18 by arrest and 8 with FTF involvement.SID’s Fugitive Task Force (FTF) works closely with local law enforcement, the U.S. Marshal's Service and the Office of the Attorney General of Ohio to locate subjects with outstanding arrest warrants for BWC related charges. Although SID is a criminal justice agency, it does not have the power to affect an arrest. Therefore, FTF agents conduct surveillance, locate their fugitives and then alert local law enforcement agencies. Local authorities execute the arrests, often with FTF agents present. Frequently, fugitives turn themselves into local law enforcement when they realize flight is futile.Technologically-driven cultural change“[A]ccording to a new report from International Data Corporation…[m]obile devices will be the most common way for Americans to access the Internet by 2015…”Source – Martha DeGrasse, “Mobile devices projected to overtake PCs as connections to the Internet,” posted to RCRWireless, September 12, 2011.SID is implementing strategies to effectively secure and analyze evidence created on mobile storage devices and/or stored via a cloud service provider. For example, SID is securing appropriate new technology and training for its exemplary DFU.ConclusionWhile demand for fraud investigative services may well increase in FY 2013, SID’s commitment to protecting the Ohio State Insurance Fund will exceed the need. ................
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