Employee pleads guilty to workers' comp fraud

An employee of Wendy's in Springfield has pleaded guilty to a misdemeanor charge of workers' compensation fraud, a crime that costs Missourians $6 million a year, according to Dick Dare, an insurance fraud investigator.

Sonya Bell, who allegedly fell at Wendy's on North Glenstone last spring, altered the physician's note to extend her disability leave, said Dare, manager of the special investigative unit of the Missouri Employers Mutual Insurance Company. Bell was sentenced with probation and a $100 fine in Greene County Associate Circuit Court on March 26, Dare said.

Also in March, the owner of a plastering company in Dawn, near Kansas City, pleaded guilty to workers' comp fraud, Dare said. Although the employer claimed he had no employees to avoid paying a higher premium, he actually had several employees. Michael Sykes, owner of Midwest Plastering, received five years' probation and was ordered to pay $561 restitution, only a small portion of the estimated $4,400 in premiums that he owed, Dare said.

Dare estimates that 1.5 percent of all workers' comp claims are fraudulent. It's his job to investigate them and send them to the Fraud and Noncompliance Unit of the Department of Labor and Industrial Relations.

The Division of Workers' Compensation is a part of the Department of Labor and Industrial Relations. Once the workers' comp fraud unit has investigated, a complaint is filed by the Attorney General's Office in the county where the fraud allegedly occurred.

There were 154 allegations made to the state fraud unit from May 1999 to February 2001. Of those, 101 came from MEM, Dare said. In the past five years, his company has referred 657 claims, with 19 convictions, two of them the in Springfield area.

Besides the Bell case, the other Springfield area case was in Wright County in 1999, Dare said. Jason Green, an employee of Hardcastle Construction in Hartville, reported he had been struck in the face by a falling two-by-four only 18 days after he was hired.

The investigation showed that he had really been injured in a fight where he had been struck in the head seven times, Dare said. Green, a convicted felon, was in jail at the time of his conviction and received a one-year prison sentence, Dare added.

MEM was created by statute in 1993 when workers' comp was reformed, Dare said, and competes with private insurers. The largest workers' comp insurance provider in the state, MEM writes about $120 million in policies for close to 16,000 Missouri employers, or about 16 percent of all employers in the state, said Jennifer Hollingshead, company spokesperson.

MEM takes fraud seriously, Dare said. Although it insures 16 percent of Missouri businesses, it made 66 percent of the fraud referrals last year and teaches classes during the year to educate business owners about fraud. It held its Claims 101 class in Springfield the last week of March, attracting between 70 and 80 employers, Dare said.

Of the recent fraud conviction, he said that Wendy's was a "smart employer" because it checked up on the disability slip provided by Bell. Dr. David Paff, who had examined her, gave her less than three days disability for the injury. But when the slip was presented to the employer, it had been altered to give her more than a week's leave. Disability payments under workers' comp start after three days of disability, according to statute.

"In the last four or five years, we've had two other convictions from altered medical reports or slips," Dare said.

Once suspected fraud is reported to the insurance company by the employer, Dare's three-man office goes to work to investigate the claim. A former private investigator with 41 years in the insurance fraud claim field, Dare said an employer only has 60 days to report suspected fraud.

Once his team finds evidence, it is turned over to the state, which reviews the information to see if it is sufficient to file a claim with the attorney general's office, which prosecutes suspected offenders.

Wendy's quickly discovered the discrepancy in the medical leave slip. The alleged accident happened on April 26, 1999, and was reported on April 28. Bell alleged she had clocked out and was leaving, but slipped on a puddle landing on her knees and back. There were no witnesses, Dare said.

She claimed she sought medical treatment on her own and was placed in a cast and given crutches. But when she came to work the next day, she had neither, Dare said. Wendy's "started suspecting that all wasn't right with this claim," Dare said. When the disability slip was handed to a employee in the drive-up window by a male friend of Bell, the company was really suspicious and contacted Dr. Paff, who had seen Bell April 29.

Dr.Paff stated he had given her medical leave until April 30, not May 7 as the slip stated.

Dare said his 1.5 percent fraud estimate is conservative. The Federal Bureau of Investigation places it at closer to 10 percent, he said. In a U.S. Chamber of Commerce publication in April 1998, the figure for fraudulent claims from 1985-1994 was about $60 billion, Dare said.

Workers' comp fraud is a first class misdemeanor, but a second conviction is a felony.

MEM's hotline to report suspected workers' comp fraud is 800 442-0592. The company often hears from neighbors of persons on temporary disability that the alleged disabled person is out fixing his roof, or is employed framing a house for a construction company, Dare said. Such calls begin a surveillance process by the company which would include gathering evidence of paychecks from a separate employer.