Synopsis: IL WC Fraud Mystification Personified-Big News, Sparse Details in the Story of a Normal, IL Man Sentenced to 8½ Years for IL Workers Compensation Fraud. Analysis by Joe Needham, J.D.

Editor’s Comment: As defense practitioners we are happy to see our IL WC fraud law growing some teeth, but lament the IL WC Commission’s secrecy continues. We also like to point out to readers, clients and the entire IL Workers’ Comp community the person who demanded our state have a WC Fraud provision in our Act was none other than our former-Gov-Behind-Bars, you guessed it, Rod Blagojevich. Most folks think Crooked Blago was grandstanding when he demanded a provision on WC fraud be added to get his hairdo into the headlines, as the 2005-6 IL WC Act amendments were being finalized.

Similar to that sort of grandstanding, veteran observers have to wonder if there are political motivations behind this conviction, as it comes in the middle of a gubernatorial campaign. Perhaps this stinging and lengthy jail term is going to herald our current administration being “tough on WC fraud” when it involves a single claimant in a state with hundreds of arguably similarly fraudulent WC claims.

For our readers who are familiar with the odd 1st District Appellate Court ruling inCountry Financial v. Roberts, you may note the State of IL had no problem initiating and completing criminal investigation and conviction without any requirement the Commission first hear the claim and find claimant to be a WC fraud. In Country Financial, the Appellate Court judicially created a condition precedent where the Commission has to first decide a given claimant is a WC fraud before you can sue them for WC fraud in our Circuit Courts. Assuming there is strong evidence of WC fraud, we see no reason a company/employer might have to wait to try to get their money back from a scammer. We also have yet to see Cook County State’s Attorney Anita Alvarez office aggressively prosecute a WC fraud claim.

The recent Illinois Department of Insurance prosecution and conviction of erstwhile claimant Elbert Rayford Jr.has quickly become big news in the Illinois Workers’ Compensation community for its unprecedented prison sentence of a man ruled guilty of workers’ compensation fraud. Remarkably little details remain known about the substance of the fraud or the evidence against him. Rayford pled guilty to a charge he defrauded his employer in an attempt to secure $45,000.00 in Workers Compensation benefits to which he wasn’t entitled. He will also be required to pay the trivial sum of $585.38 in restitution and serve two years of supervised release. Take a look online at:

http://www3.illinois.gov/PressReleases/ShowPressRelease.cfm?SubjectID=1&RecNum=11911

The details remain shrouded, and all articles located on the internet rehash the same story without elaboration or investigation. Reports reveal Rayford “exaggerated his complaints” to treating physicians in order to secure medical treatment and disability benefits to which he wasn’t truly in need and therefore not entitled. We have literally no idea what “exaggerated complaints” might be or how and when you are going to be tossed into jail if you do so. It is not clear how strong the evidence was against Defendant Rayford, but surveillance efforts must have been fruitful. Reports indicate Rayford pled guilty based on surveillance evidence revealing his deception insofar as the unknown activities he was performing were contrary to his undefined abilities claimed to medical professionals to secure unstated benefits. We have seen numerous instances in the past where IL WC Arbitrators and Commissioners have not given strong weight to surveillance evidence—we hope this new conviction may herald a new era where our administrators now give it the value and impact it deserves. It would also be nice to have more than one WC Fraud conviction each decade.

Our intense investigation into the substance of Rayford’s case yields little information. The only active claim on file with the IL WC Commission between Elbert Rayford and TG Gum Trucking lists case number 11 WC 19644, filed May 23, 2011 alleging a date of loss of April 16, 2011. Attempts to confirm this filing through a search of the Commission’s physical file revealed an almost empty file jacket—it would appear this public record has been surreptitiously erased. The IWCC Case Information computer screen shows this filing to be continued at arbitration, while computer records reflect a motion to dismiss this Application September 7, 2012, but the case remains active. Copies of the pending motion were absent from the court file. Curious but not uncommon is this lack of information concerning actions by and before the IWCC. The case remains active, and yet the Commission’s physical file is purged of all pleadings.

Efforts to reach TG Gum Trucking’s attorney for verification of the claim and details on the substance of the evidence were also unsuccessful as of the time of this writing. Efforts to reach TG Gum Trucking for comment turned up an internet publication with contact information including a telephone number no longer in service. We can’t find almost any information about this trucking concern which appears to be tiny and may be situated between Bloomington and Champaign IL. Rayford’s WC attorney was not contacted due to anticipated privilege preventing the attorney’s disclosure of facts harmful to his client’s interests.

Because of the inability to view the pleadings filed before the Commission or to discuss the matter with the informed parties, the specific evidence against Rayford is not well delineated. As practitioners we would like to know the exact degree and quality of video surveillance evidence which so clearly established Rayford’s fraud, as defense practice before the IWCC often reveals a different view of surveillance evidence when interpreted by our Commission. What is known is whatever was revealed by the video, it showed Rayford performing activities that impeached deceptive statements made to his treating physicians and therapists concerning the degree of his injury and the level of resultant disabilities. In short, his statements made to secure WC benefits were proven deceptive by the surveillance video; the definition of WC fraud. Easy enough, right?

But the case is curious in two further respects: the length of Rayford’s sentence and the fact he was prosecuted at all. An 8½ year sentence is reportedly the harshest penalty doled out by the Illinois courts for workers compensation fraud since the 2005 enactment of a special unit within the Illinois Department of Insurance dedicated to WC fraud cases. Research into recent criminal prosecutions reveals Illinois has secured convictions on at least 10 workers’ compensation claimants in addition to Rayford, with the next longest sentence being four years. With the exception of one 10-day jail term, every other sentence involved probation without jail time. See:

http://insurance.illinois.gov/WCFU/condata.asp

But to this author and perhaps the defense community at large, the greater curiosity is – Why Rayford? While we see absolutely nothing wrong with this prosecution as reported, we have to wonder why Rayford was hit with such a harsh sentence despite pleading guilty, knowing Illinois had routinely overlooked and even rewarded similar deception. It begs the question; Is the current Commission going to start coming down harder on individuals who are clearly lying about the extent of their ability? We’ve reported for years in seminars on a multitude of cases wherein surveillance revealed a claimant’s deception and benefits were swiftly awarded:

For some brief examples we are aware of

· In 09 WC 16718 Petitioner secured medical restrictions from lifting overhead greater than 20-pounds due to a shoulder injury, while video surveillance showed claimant performing some pretty impressive recreational weightlifting, including overhead incline bench-presses drastically exceeding 20-pounds. Denied benefits for his deception in securing unnecessary medical restrictions? No. Prosecuted for fraud? No.

· In case number 06 WC 8939 Petitioner provided sworn testimony in which he volunteered the statement he was incapable of lifting so much as a case or drinking water, immediately after which surveillance video was aired to show him repeatedly lifting cases of drinking water. Petitioner admitted it was him on the video lifting cases of water, revealing his admittedly perjured testimony, yet our Commission at the time awarded full benefits on the finding the video did not reveal activities contrary to his claimed disability.

However, our more recent litigated claims have seen the Commission take a far more sensitive view of video surveillance and appreciate the glaring contradiction between what the claimant says he can do and what he demonstrates on film. For example, we have a more recent claim where Petitioner was caught secretly driving a truck for a different employer while off work as a truck driver for our client. Surveillance caught him curling 55lbs. in each hand. The Arbitrator denied the claimed TTD accordingly. The Arbitrator did not find him to be a WC fraud or seek prosecution and years of incarceration for his actions. Is this the job of the arbitrator who does not have the protections and in-court security of a Circuit Court judge?

So if Petitioners in other cases wherein video establishes claimants’ deception are not prosecuted, why 8½ years in jail for Rayford? Is it that we must go to central Illinois to find prosecutors willing to work a WC fraud case? Or is it simply easier to establish fraud beyond a reasonable doubt in criminal court than it is to get our Commission to take an honest view of defense evidence by the preponderance standard? For more information about Workers’ Compensation Fraud, including matters that may involve fraud perpetrated by a claimant, visit the DOI website at http://insurance.illinois.gov/WCFU/default.asp.

We appreciate your thoughts and comments. This article was researched/written byJoe Needham, J.D. and his staff.

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Synopsis: IL WC Appellate Court holds the IL Commission does not have authority to resolve cases involving breach of attorney referral agreements in workers’ compensation cases. Analysis by Sean Brogan, J.D.

Editor’s comment: In Ferris, Thompson, and Zweig, LTD v. Anthony Esposito, 2014 IL App (2d) 130129, Plaintiff law firm referred two workers’ compensation cases to the defendant by written agreement whereby Plaintiff was to receive 45% of all attorney fees recovered in the cases and Defendant the remaining 55%. The cases were resolved in November 2010 for a total of $4,554.19 but Defendant refused to pay Plaintiff. Accordingly, Plaintiff sued Defendant in Circuit Court for breach of contract. Defendant moved to dismiss, arguing the claim should have been filed with the IL WC Commission and not in the Circuit Court relying primarily on Section 16a(J) of the Workers’ Compensation Act which provides

[a]ny and all disputes regarding attorneys' fees, whether such disputes relate to which one or more attorneys represents the claimant or claimants or is entitled to the attorneys' fees, or a division of attorneys' fees where the claimant or claimants are or have been represented by more than one attorney, or any other disputes concerning attorneys' fees or contracts for attorneys' fees, shall be heard and determined by the Commission after reasonable notice to all interested parties and attorneys.

820 ILCS 305/16(a)J (West 2012)

Essentially, Defendant argued, because the case concerned a dispute about attorney fees owed in a workers’ compensation case, the matter had to be resolved by the Commission, not the Circuit Court. The Circuit Court denied the motion to dismiss and, following a trial, awarded Plaintiff the fees it was owed plus interest ($4,965.25). Defendant appealed the Circuit Court decision arguing the Court lacked subject matter jurisdiction over the case.

The Appellate Court, Second District, affirmed the Circuit Court decision. Interpreting pertinent provisions of Section 16 of the Act, the Court noted the Commission has the power to determine the amount of fees that should be awarded to an attorney who represents or formerly represented a claimant in a case that was brought before the Commission and to resolve disputes regarding the amount of those fees. Here, Plaintiff never represented the workers’ compensation claimants before the Commission; therefore, the Commission’s authority did not extend to the issue concerning a breach of a referral agreement delineating the percentage of the awarded fee that should be allotted to the attorney who represented the claimant before the Commission and the attorney who referred the claimant to that attorney.

This article was researched and written by Sean C. Brogan, J.D. Please feel free to provide your thoughts and comments to Sean at sbrogan@keefe-law.com.

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Synopsis: When Are WC Claims Handlers, Attorneys, NCM’s and Risk Managers Required to Use Email Encryption for Electronic Transmission of PHI or Personal Health Information?

Editor’s comment: We were asked this question by a reader and wanted to share our thoughts and research. We also have dealt with numerous balky encryption systems and frankly, can’t stand any of them. The need to implement encryption of PHI appears to require an assessment of risk. If you don’t feel there is a risk, following an assessment, it doesn’t appear required by the feds. We ask how many

Ø Medical records/charts,

Ø Nurse’s notes,

Ø Voc rehab reports,

Ø IME reports and

Ø Medical background letters containing PHI

are sent to and from you, your company and your vendors every day, year, month? Have you ever had one hacked? Do you have any indication anyone you work with or for has been hacked? It is hard to imagine your firm or our firm has to move to the troubled and truly clunky nature of encrypted email unless and until we have any concerns about being hacked.

Here is the applicable law:

Security Standards for the Protection of Electronic PHI: Technical Safeguards, Section 164.312 As Contained in the HHS HIPAA Security Rules, HHS Security Regulations as Amended January 2013, Security Standards for the Protection of Electronic PHI: Technical Safeguards - § 164.312

A covered entity or business associate must, in accordance with § 164.306:

Standard: Access control. Implement technical policies and procedures for electronic information systems that maintain electronic protected health information to allow access only to those persons or software programs that have been granted access rights as specified in § 164.308(a)(4).

Implementation specifications:

Ø Unique user identification (Required). Assign a unique name and/or number for identifying and tracking user identity.

Ø Emergency access procedure (Required). Establish (and implement as needed) procedures for obtaining necessary electronic protected health information during an emergency.

Ø Automatic logoff (Addressable). Implement electronic procedures that terminate an electronic session after a predetermined time of inactivity.

Ø Encryption and decryption (Addressable). Implement a mechanism to encrypt and decrypt electronic protected health information.

Standard: Audit controls. Implement hardware, software, and/or procedural mechanisms that record and examine activity in information systems that contain or use electronic protected health information.

Standard: Integrity. Implement policies and procedures to protect electronic protected health information from improper alteration or destruction.

Implementation specification: Mechanism to authenticate electronic protected health information (Addressable). Implement electronic mechanisms to corroborate that electronic protected health information has not been altered or destroyed in an unauthorized manner.

Standard: Person or entity authentication. Implement procedures to verify that a person or entity seeking access to electronic protected health information is the one claimed.

Standard: Transmission security. Implement technical security measures to guard against unauthorized access to electronic protected health information that is being transmitted over an electronic communications network.

Implementation specifications:

Integrity controls (Addressable). Implement security measures to ensure that electronically transmitted electronic protected health information is not improperly modified without detection until disposed of.

Encryption (Addressable). Implement a mechanism to encrypt electronic protected health information whenever deemed appropriate.

http://www.hhs.gov/ocr/privacy/hipaa/faq/securityrule/2001.html

Again, from HHS: Is the use of encryption mandatory in the Security Rule?

Answer: No. The final Security Rule made the use of encryption an addressable implementation specification. See 45 CFR § 164.312(a)(2)(iv) and (e)(2)(ii). The encryption implementation specification is addressable, and must therefore be implemented if, after a risk assessment, the entity has determined that the specification is a reasonable and appropriate safeguard in its risk management of the confidentiality, integrity and availability of e-PHI. If the entity decides that the addressable implementation specification is not reasonable and appropriate, it must document that determination and implement an equivalent alternative measure, presuming the alternative is reasonable and appropriate. If the standard can otherwise be met, the covered entity may choose to not implement the implementation specification or any equivalent alternative measure and document the rationale for this decision.

In our view, if you aren’t getting hacked and don’t know of vendors or others you work with that are at risk to be hacked, you don’t need to encrypt/decrypt emails with PHI in them. If that changes, we may all have to go to encryption.

We appreciate your thoughts and comments. Please post them on our award-winning blog.

KCBA Blog

2-10-14; Mystification Personified in IL WC Fraud Conviction by Joe Needham, JD; Sean Brogan, JD on Where to Litigate WC Referral Fees; When Do You Have to Encrypt PHI and more