www.baltimoresun.com/news/maryland/sun-investigates/workers-compensation/bs-md-workers-comp-questionable-claims-20140301,0,453244.story

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Local governments confront questionable claims

Baltimore police officer's case was rare prosecution of Md. workers' compensation claim

By Luke Broadwater and Scott Calvert, The Baltimore Sun

8:50 PM EST, March 1, 2014

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Police officers rushed into the downtown parking garage, weapons drawn.

As Detective Anthony Fata sat bleeding from a leg wound, officers scrambled around corners and up stairwells, frantically searching for a "junkie-looking black male." The decorated 14-year veteran who'd made the emergency call — Signal 13: Officer Down — told of a violent struggle in which he was shot at close range. He also said that he had fallen down a flight of stairs while unloading his .40-caliber Glock, dislocating a shoulder.

But within days of the fruitless search for an assailant, doubts arose about Fata's version of events. And in the months that followed, it unraveled completely. After he sought workers' compensation benefits worth about $78,000 for his injuries, prosecutors said he had actually shot himself, and he was convicted of perjury and fraud.

Fata's conviction last year was an unusually high-profile example of abuse in Maryland's workers' compensation system, which made $395 million in awards in 2013. But state officials and other experts say the recurring problem helps drive up costs that Maryland taxpayers ultimately bear.

"Where there's money, there's going to be crime. And where there's government money, it's even more," says Frank G. Scafidi, director of public affairs at the National Insurance Crime Bureau, which represents 1,100 insurance companies. "There are people who know how to game the system, and they're good at it."

A Baltimore Sun analysis of hundreds of documents obtained through Public Information Act requests, as well as court records, showed a number of claims that were found to be fraudulent.

For instance, in recent years, the state won a $42,000 theft case against a city Housing Authority employee who worked a second job while claiming to be unable to perform his city duties due to "feeling a pain in his elbow." In another case, a state Developmental Disabilities Administration employee was caught "double-dipping" on a second job. And a city jail employee who claimed he couldn't work because he'd injured his shoulder lifting equipment was caught moonlighting.

Carmine G. D'Alessandro, assistant vice president of legal services for Chesapeake Employers' Insurance Co., which handles such claims for the state government and private companies, says claims officers frequently must beat back questionable cases. Usually, he says, claims officers are faced with exaggerations, rather than baldfaced lies.

"The general consensus is that only 5 to 10 percent are the bad apples," he said. "Ninety percent are pure legit. It's that 10 percent that muck it up. ... When you're embellishing to get more money, we just try to beat you back. Now, are those little white lies adding up? Of course, those are adding thousands of dollars to the system."

Chesapeake Employers' Insurance also scrutinizes doctors. A review of cases spurred an investigation by the state Board of Physicians that resulted in the revocation of an orthopedic surgeon's license in February.

Local government officials are concerned about rising workers' compensation costs — for example, claims and other program expenses such as attorney fees cost Baltimore $49 million last year, up from $44 million two years earlier. The system is designed to compensate government and corporate workers injured on the job for lost wages, medical expenses and any lasting disability, such as the partial or total loss of a body part.

Local officials say they vigorously fight claims they believe to be false. But they acknowledge that they have little power over payouts ordered in appeals to the state Workers' Compensation Commission — or over Maryland law, which sets rates for awards.

"When somebody gets hurt on the job and things are legitimate, we want them taken care of," said Douglas Kerr, the city's risk manager. "If you're going to play a game or try to work the system, our goal is to try to nip that in the bud and keep our costs down."

Workers' compensation payments can total tens of thousands of dollars. Under state law, employees who are too injured to work can receive two-thirds of their salaries, tax-free, up to $998 a week.

Once workers reach what doctors consider "maximum medical improvement," the law permits payments of up to $167 a week for less severe injuries such as bruises, $333 a week for more significant injuries such as those requiring surgery and $749 for injuries that seriously limit the use of an arm, leg or other body part.

The length of payment varies according to the injury. An injured back entitles an employee to as many as 500 weeks of payments; a damaged arm or leg is eligible for up to 300 weeks; and injuries to a foot, hand or eye can bring payments for 250 weeks.

For example, if a doctor deemed that an employee's foot was 20 percent permanently damaged, that would mean 50 weeks of $167 payments — for a total of $8,350.

Localities can provide more generous benefits for lost wages. In Baltimore, city employees too injured to work receive temporary disability payments equal to 100 percent of their salaries, without taxes deducted. Budget director Andrew Kleine says the city is trying to negotiate a reduction in benefits to two-thirds of an employee's salary, which he says is in line with what other jurisdictions pay.

An agency star

For much of his police career, Anthony Fata was an agency star, earning 14 awards and commendations.

The former Marine worked undercover in the notoriously violent Western District and rose to become a homicide detective. One investigation led to the arrest of Shaidon "Don Papa" Blake, who had boasted to police that he made $180,000 in one night selling heroin on Pennsylvania Avenue, which he called "the heroin capital of America."

But as he racked up arrests and commendations, Fata was also suffering from injuries sustained on Baltimore's streets, he would later say.

In 2001, he was hit by a car while chasing a narcotics suspect. As a result, he had nine surgeries over eight years and was offered a medical retirement at two-thirds of a sergeant's pay.

"I declined the medical pension, passed every physical evaluation that I was presented with and continued on as a detective for the Baltimore City Police Department," Fata said in court documents. Through his attorney, Fata declined to be interviewed for this article.

At his trial, prosecutors presented evidence of a man who knew how to work the workers' compensation system — filing two previous claims that brought undisclosed awards.

On the day of Fata's shooting, police and prosecutors say, something immediately seemed amiss. He told one investigator he'd been shot in a "straight up robbery," but never mentioned the robbery again, prosecutors say. Fata told another investigator that he and the attacker exchanged gunfire five feet from each other. In a third account, Fata said he and the suspect were "directly on top of each other, struggling for his handgun."

"We hope this case is a deterrent to other officers and both public and private employees who attempt to defraud the workers' compensation system," city prosecutor Paul Pineau, who handled the case with K.C. Murphy, the head of the economic crimes unit, said in a recent interview.

Fata's pursuit of a workers' compensation award failed. After prosecutors charged him with a felony, the Police Department suspended his pay.

"I went from making approximately $100,000 a year to making nothing," he wrote to the judge in his case.

Fata received an 18-month suspended sentence, two years' probation and was required to perform community service. He is no longer a member of the department.

Few prosecutions

To crack down on fraud or abuse, local governments spend tens of thousands of dollars a year on surveillance and investigations into suspect claims. Howard County, for instance, spends $20,000 a year on workers' compensation investigations.

But a review of court records by The Sun found that fewer than 20 criminal cases are prosecuted each year across the state — and those stem almost entirely from Chesapeake Employers' Insurance, which spends $1.4 million annually on investigations. Officials say the number of prosecutions is limited because they usually focus on winning the cases or limiting payouts in hearings before the state commission, which acts as a court.

Workers' compensation prosecutions generally fall into two categories: so-called "double-dippers" — people who claim to be too hurt to work but are caught at another job — and those who exploit the system to obtain drugs to sell on the street.

The Fata case opened up a new avenue for prosecutors: Lying under oath to the state commission could be considered a crime by itself.

Records from Baltimore show that typically fewer than 10 percent of workers' compensation claims are denied. Claims that are denied — or reduced — generally involve exaggerations rather than provable lies, claims officers say.

"The guy who says, 'I can't bowl the way I used to,' and we catch him bowling? We get a reduced award and we move on," said D'Alessandro of Chesapeake. "Clearly, he lied. But we use it in the context of that claim.

Chesapeake also scrutinizes the medical bills it pays on behalf of employers.

In 2007, the company — then called the Injured Workers' Insurance Fund — filed a complaint with the Board of Physicians against an Ellicott City medical practice called Maryland Orthopedics. A company billing specialist had described concerns such as alleged "up-coding" for billing and overutilization of certain procedures in workers' compensation cases, according to board records.

Years later, that complaint led to the board's decision Feb. 6 to revoke the license of Dr. William J. Launder and to impose a $50,000 civil fine.

In its revocation order, the board said Launder "repeatedly provided excessive and unnecessary treatment, which he often did not even attempt to justify or describe in the medical records." The board said Launder "was motivated, at least in part, by the financial benefits of excessively treating his patients and that he derived a significant financial benefit."

Launder has appealed in Montgomery County Circuit Court, said his attorney, Conrad W. Varner, who rejected the board's conclusion.

"It's totally false," Varner said, adding that he believed his client was the subject of a "biased prosecution." He also took issue with the notion that Launder benefited financially, saying the doctor made just $6,000 over a decade from the alleged "up-coding" addressed in the board's opinion.

'Is that fraud?'

Local agencies say they rely on the state commission to refer possible fraud cases to the Maryland Insurance Administration. From there, local officials say, cases can be referred to state's attorneys' offices for prosecution.

But documents show that in a given year, only a handful of cases are referred — and those are seldom pursued. Last year, the commission forwarded just six potential fraud cases to the insurance administration.

"We can only make a referral if the facts are brought out during the course of the hearing that there was a potential fraud," said R. Karl Aumann, chairman of the commission. "It's a decision that the commissioner bases on her or his evaluation of the evidence as it's presented."

None of the six resulted in a prosecution. In some cases the insurance administration felt the case was weak, records show. In others, it was stymied because it generally lacks jurisdiction when an employer is self-insured, as the city and many counties are.

P. Matthew Darby, an attorney who represents employees with workers' comp claims, says that because pain and suffering are so subjective, it is difficult to prove that someone is lying.

"Although there may not be as many fraud referrals as one might expect, I think in terms of denial of benefits the commission does a very good job of ferreting out the malingerers and people who shouldn't get it," he said. "When we're talking about [proving] fraud, we're talking about beyond a reasonable doubt.

"If you're a commissioner and somebody says, 'I can't work because my back hurts too bad,' and they bring in surveillance and on Thanksgiving afternoon the person was out playing in a touch football game, is that fraud? Or is it somebody who's exaggerating their symptoms? Or somebody who was in bed for two days after that?"

Amy Lanham, safety and insurance manager for Anne Arundel County, says local officials focus on "the early detection of fraud and stopping payments as soon as possible."

In a recent case, county officials arranged for surveillance of an employee on the day he had a medical appointment. The man entered and left the doctor's office using a cane, and told the doctor that he was in such pain he could barely move, Lanham said.

But surveillance showed that the man didn't use a cane the rest of the day. An investigator recorded him carrying groceries and changing a tire, Lanham said. Based on the video, the doctor revised his opinion that the man was too disabled to work.

He was sent back to work and his benefits were cut, Lanham said, adding that the man no longer works for the county.

Asked why the county does not pursue suspected fraud cases in court, she said one challenge would be attracting the interest of prosecutors. "It would have to be a very blatant case involving enough money to justify that," she said.

Even solid evidence of deceit sometimes is not enough, said Terry Fleming, who retired in 2012 as Montgomery County's risk manager. He recalls the time a private investigator captured seemingly damning footage of a police officer who had reported a serious shoulder injury.

"We caught him building a garage. He was upside down hammering a nail with a shoulder he couldn't use," Fleming said. But at a commission hearing, the officer said he had been feeling fine that day and assured the commissioner that the severe pain resumed a day later. The officer's claim was upheld.

In Baltimore, Kerr says the city's primary focus is on defeating claims it does not deem legitimate by urging the commission to rule that an injury doesn't merit compensation. "We don't pursue the fraud after that," he said.

Another option is to appeal a commission ruling to Circuit Court. Baltimore might take that step when it hopes to reduce an award, Kerr said, or when it does not believe the employee should have received benefits.

The main drawback, apart from legal expenses, is that the city must keep paying benefits during an appeal. If the process takes long enough, the city might pay most or all of an award before the case goes to trial.

"Sometimes I'll say, 'Is it worth appealing since we've already paid it out?'" he said.

Despite the hurdles, Kerr personally reviews every claim that comes across his desk — including Fata's.

"People know if they get a [note] from me, which is daily, these are cases that don't pass the smell test," he said. "Somebody's sitting at the cubicle and gets really dizzy and sick? Just because that happened at work doesn't mean that's a workers' compensation claim.

"I don't just say, 'Here, you're a great guy, here's $50,000.'"

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