Bad Faith Workers’ Compensation Insurance and Its Repercussions
Workers’ compensation insurance that is paid on the basis of a detailed medical records review is a real boon to injured workers. But what if such genuine claims are denied fraudulently?
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As providers of medical review services for workers’ compensation attorneys, we keep up-to-date on all news pertaining to the insurance industry and a recent news item from Australia generated considerable concern. It was about how insurance companies were indulging in fraudulent practices that could damage the workers’ compensation program. WorkSafe is the state body in Victoria, Australia that manages the workplace safety system. It is entrusted with the responsibility of enforcing Victoria’s occupational and safety laws, providing WorkCover private insurance for employers, ensuring rehabilitation for workers injured at the workplace and managing the workers’ compensation program. WorkCover is a 100 billion dollar mutualism program providing compensation to injured workers and around 90,000 workers access the scheme each year. This program was privatized and outsourced in the 1970s, and has become rather notorious for some of its controversial activities. Its remuneration model is considered to be most nefarious. Shocking Findings by a Victorian Ombudsman Following 370 complaints last year, a large number of workers committing suicide and a 37.2% increase in requests for conciliation, a Victorian Ombudsman launched an investigation which brought to light bad insurance practices, and revealed a system that encouraged anti-worker conduct and gave bonuses amounting to $52 million last year. This was indeed bad faith insurance.
Agents used evidence unreasonably in decision making, made decisions that were opposed to medical panel opinions, allowed employers to improperly influence their decision making, maintained unreasonable decisions at conciliation, and provided insufficient internal review processes.
Practices that maximized millions of dollars in financial rewards exaggerated work injuries in a way that was detrimental to the worker as well as damaging to all who bear the social and financial cost.
The Ombudsman calls attention to evidence of the management advising staff to do everything they could to stop claims exceeding the termination timeframes associated with the financial rewards and penalties, underlining the fact that any one of those claims could be worth $100K to the business.
The Ombudsman exhibited a case study of “management providing monetary prizes to staff who terminated the highest number of claims.”
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The Ombudsman investigation revealed a system-wide conflict of interest and highlighted activities such as stalling, fabrication, report meddling/psychological bullying and so on to reap considerable financial benefits. Shocking incidents include an insurance company receiving a significant financial reward from WorkCover for stopping payments to a sexual assault victim; and an insurer obtaining a contract bonus from a termination (however, they were sued after the mentally impaired worker took their own life). This investigation also brought to light long-standing issues of conflict of interest between employers and IMEs (Independent Medical Examiners). The IMEs were found to have manipulated the medical reports. The Ombudsman pointed out that WorkSafe had audited only 8% of rejected WorkCover claims. Following the investigation and its shocking findings, there is already talk about dismissing the WorkSafe Board. Moreover, the WorkCover contract of one of the insurers QBE has already been cancelled. Understanding Bad Faith Insurance Bad faith insurance is highly damaging to the workers and the system. When insurance companies delay or refuse to pay a valid claim unnecessarily, it becomes bad faith insurance. News such as the above mentioned have spurred the legal community to inspect bad faith workers’ compensation insurance more closely. Here are some of the strategies bad faith workers’ compensation insurance companies may use to delay or deny a rightful claim.
Send claimants to doctors whom they pay to be biased in their favour.
Set unnecessary hearings that delay payments.
Arrange for investigators to follow and watch claimants in the hope of alleging that the claimant was not actually hurt while at work.
Unnecessarily begin a fraud investigation.
Bring charges of fraud against a claimant.
A worker suspecting some kind of fraud against him/her should ideally seek the assistance of a competent and experienced workers’ compensation insurance attorney representing claimants. When legal representation is available right from the beginning, there is a better chance of winning the claim. This will ensure expert counselling that is indispensable when it comes to recovering fair compensation.
www.mosmedicalrecordreview.com
(800) 670 2809