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Section 25.5 of the Illinois Workers’ Compensation Act (820 ILCS 305/25.5) governs workers’ compensation fraud in Illinois. It sets forth nine specific circumstances in which any person, company, corporation, insurance carrier, healthcare provider, or any other entity could violate the law. These include: making or presenting a false claim for benefits, any false or fraudulent material statement or representation to obtain or prevent payment of benefits, preparing or presenting an invalid, false, or counterfeit Certificate of Insurance, any misrepresentation to obtain either a lower premium or self-insured status, making a false statement to the Department of Insurance’s Fraud Unit (“Unit”) in the course of its investigation, and submission or tendering of a bill for medical services that was never rendered. It also applies to anyone or any entity assisting, abetting, soliciting or conspiring with someone engaged in these behaviors.
The fraud statute is not directed toward any particular target. Many of the Unit’s reported prosecutions are either against employers or those who procure insurance.
Violations involving less than $300.00 are a Class A misdemeanor, and in excess of that amount are felonies ($300.00-$10,000.00 are Class 3, $10,001.00-$100,000.00 are Class 2, and over $100,000.00 are Class 1). Additionally, restitution shall be ordered for any financial losses sustained as a result of the criminal act(s).
Suspected violations should be submitted to the Unit. The Unit must address every submission it receives, regardless of the form or length, and issue an initial response to the complainer shortly after receipt. This stage allows the Unit to filter out frivolous, unsupported, and inapplicable accusations. The Unit is comprised primarily of former detectives who then conduct their own investigation. By virtue of the investigators’ background, it is recommended to submit a chronology of events with all supporting documentation and relevant information with the complaint. This can also greatly assist and expedite the Unit’s own assessment and investigation by saving the Unit time, while also leading them “down the path.”
Employees must either 1) file an Application for Adjustment of Claim, or 2) make a written demand for payment of benefits under the Act to which the misconduct relates.
Directors of the Unit relate that the most useful evidence is often testimony given under oath, typically obtained via a trial transcript. The quality of the evidence must be more than a mere falsehood that could be dismissed as exaggeration, embellishment, mistake, half-truth, or similar ilk. Alleged misconduct should be obvious and unequivocal. Moreover, the law requires an act occur, so withholding of information or silence is unlikely to suffice.
A single instance of someone ostensibly exceeding work restrictions given by a physician does not satisfy the fraud statute. Such an action, in and of itself, does not constitute a “material” misrepresentation, and is clearly not a statement.
Additionally, a single instance demonstrating an inconsistency isn’t necessarily enough to justify fraud in Illinois. Instead, one’s inquiry should focus on the person’s overall function ability being vastly different than what limitations reported to the doctor. For instance, in one case a claimant testified at trial that he never drove while under a restriction prohibiting same. Nevertheless, he received a traffic citation while under that restriction. That was entered into evidence at trial, but prosecution was ultimately declined following a referral to the Unit. Perhaps greater evidence of driving would have changed the decision. On the other hand, if a doctor noted someone reported that she’s unable to lift her arm at all above chest height, or that he “can’t even get out of bed” or hold a gallon of milk, those documented representations could open the door to a viable fraud claim, assuming ample evidence exists to demonstrate those representations are clearly untrue. Indeed, if the evidence depicts that the person’s functional ability doesn’t comport with his or her represented condition, such as video showing the person bodybuilding with heavy weights at a gym for a half hour or longer, that could become very compelling for those who prosecute fraud.
The standard of proof is essentially whether the person’s act or statement amounts to a “material” misrepresentation, certainly a subjective standard. Intent is considered (and maybe even highly scrutinized) with great deference given to the accused that there was no intent to defraud. If serious concerns of fraud remain after the Unit makes its initial impression, the Unit can subpoena the accused for questioning under oath. Any false statements made during this interview also fall within the purview of the fraud statute and are therefore prosecutable as separate and new fraud activity. Interviews by the well-informed and prepared investigators alone have proven successful procuring confessions of fraudulent misconduct.
The investigation process can take many months to complete. Due to less than optimal staffing, the Unit has long carried a several month backlog of investigations it has yet to commence beyond a preliminary review at intake. If the Unit finds potential for prosecution, the matter then is sent to the State’s Attorney’s Office with its recommendation. At this stage, another level of review occurs that leads to the ultimate decision whether or not to prosecute and charge the accused person or entity. According to information from the Unit, the State’s Attorney does not exercise blanket deference to the Unit’s assessments and conclusions.
One should be mindful that the statute of limitations for fraud actions is three years from the date of occurrence, or the alleged statement or act. To secure a possible fraud conviction, time is of the essence to get the sworn testimony from trial proceedings, submit to the Unit and allow it to review, and then for the Unit to contact the State’s Attorney’s office, who then begins its assessment to possibly initiate prosecution proceedings. Because of the time required for a complaint from submission to the Unit through reaching a position of prosecution, expedited trial proceedings and immediate submission to the Unit at the earliest possible date are strongly suggested.
Should the time to prosecute fraud expire, or the State’s Attorney’s Office declines, one possible alternative for an explicitly false statement made by an individual under oath, is referring the matter to the State’s Attorney for perjury. Perjury also carries a three year statute of limitations in Illinois, but the timeframe for whether to pursue lies exclusively with the State’s Attorney’s Office, and is much swifter than fraud complaints.
If you have any questions about potential fraud claims arising from a workers’ compensation claim, I invite you to contact me.