State's new fraud unit targets workers' comp abusers

Machine operator Jeffrey Lotesto of Naperville cut his eye on a piece of metal while working at a job site in Hoffman Estates in 2006.

His employer paid his medical bills plus seven weeks of disability pay totaling $3,306. When the disability pay ran out, he filed a claim with the Illinois Workers' Compensation Commission. The IWCC asked for proof that Lotesto was unable to work, so he altered his medical records to exaggerate his injuries and continue receiving benefits, according to court records.

Lotesto changed his doctor's report to say his vision was "20/200" instead of "20/15," and changed the phrase "corneal scar is not affecting vision" to "corneal scar is affecting vision," court records showed.

The state of Illinois' new Workers' Compensation Fraud Unit conducted an investigation and gathered enough evidence for the Cook County State's Attorney to press charges. Lotesto was ultimately convicted of one count of workers' compensation fraud and sentenced to two years in prison.

Then there's the case of truck driver Ghodrat Karami of Franklin Park. He hurt his back on the job, while exiting his truck, and filed a claim with the IWCC so he could receive medical benefits and disability pay. When someone suspected fraud, the Workers' Compensation Fraud Unit investigated and took video of the "injured" Karami working outside on his yard all day, digging up roots with a pick ax, while he collected his disability pay, officials said.

Because of the Workers' Compensation Fraud Unit's findings, Karami plead guilty to insurance fraud in October 2008 and was ordered to pay his employer more than $13,000 in restitution, pay an additional $2,457 in fines, and perform 100 hours of community service.

These cases are just the tip of the iceberg when it comes to bogus workers' compensation claims, which drive up insurance premiums and cost Illinois employers millions of dollars each year. In 2007, the most recent data compiled, 58 cases of fraud totaling about $6.5 million was reported to the state.

Until recently, workers' compensation fraud cases were handled largely by insurance companies. Then the Illinois legislature passed the Medical Malpractice Reform Act of 2005, which made workers' compensation fraud a class 4 felony, and created a state Workers' Compensation Fraud Unit to crack down on these cases.

Currently, it's staffed four investigators, but more are expected to be hired. If this new fraud unit can build a case, it will be turned over to the local state's attorney and criminal charges can be filed.

"You have repercussions now that you didn't have two years ago," said Dennis Powers, of Lamb, Little & Co. in Schaumburg, who gives presentations on this subject to business owners across the suburbs. "There was no criminal prosecution before, so why wouldn't an employee try to get away with it?"

Every employer in Illinois is required by law to have workers' compensation insurance. The amount a company pays for this insurance depends on the business and - just like with car insurance - it will go up based on the number of claims filed.

For this reason, workers' compensation fraud is not committed only by employees, but by medical providers and employers trying to avoid pricey premiums and payouts. They do this in a variety of ways, said Michael McRaith, director of insurance for the Illinois Department of Financial and Professional Regulation.

Sometimes businesses create fake certificates to prove they have workers' compensation insurance or pay medical bills of injured employees under the table rather than filing a claim. Medical professionals sometimes get drawn into the schemes, taking kickbacks for giving specific diagnoses.

"It might be an employee who has an allegedly disabling back injury and we get video of him on the golf course. Or we have a provider who's involved in a massive and complicated scheme, to excessively bill worker's comp claims because of the reimbursement rate," McRaith said. "People will lie and exaggerate."

The state's new fraud unit is cracking down on all of this, which means schemers now face hefty fines and jail time. As word spreads about this fraud unit, the number of cases and prosecutions is increasing every year.

McRaith says the goal it to get claims paid for people who are legitimately injured on the job, and to prevent employers from playing inflated insurance premiums.

"If people try to get away with fraud now - they're rolling the dice," McRaith said.

To report a possibly fraudulent situation, call (312) 814-3294. You will be required to identify yourself and the person or company involved.

Got a tip?

If you know of workers' compensation fraud, what can you do?

Call (877) WCF-UNIT. You can not do it anonymously.

Business owners should contact their insurance company and also the WCF unit.

<p class="factboxheadblack">Got a tip?</p> <p class="News">If you know of workers' compensation fraud, what can you do?</p> <p class="News">Call (877) WCF-UNIT. You can not do it anonymously. </p> <p class="News">Business owners should contact their insurance company and also the WCF unit.</p>