Author: WorkCompAcademy

ID.me was touted by Gov. Gavin Newsom as a crucial tool in combating unemployment insurance fraud, and the system was credited with being a huge help in doing just that.

Newsom touted ID.me at a September, 2020, news conference where he detailed the findings of his strike team, a blue-ribbon group he created to recommend ways to make EDD more efficient.ID.me can verify someone’s identity by having them take a photo or video of themselves. That is then digitally compared to the documents in their application.

He said the program would allow people “to do selfies, to provide additional verification in ways that we think could substantially, not exclusively, no one’s naive, but substantially mitigate fraud.”

But now, SecurityInfoWatch.com reports that California’s nonpartisan Legislative Analyst’s Office is urging lawmakers to take another look at ID.me. And ID.me, under pressure from Washington lawmakers and others, is saying it will offer alternatives to the controversial facial recognition system.

The analysts said Newsom and his unemployment insurance strike team’s use of ID.me was warranted during the height of the COVID-19 pandemic in 2020 and 2021, “when the magnitude of the claims backlog called for prompt and decisive action.”

In California, ID.me has proven an important way of reducing fraud and making the overwhelmed unemployment system more effective, the analyst’s report found.

“Setting up automated identity verification substantially sped up EDD processes so benefits could be paid promptly during the pandemic,” the Legislative Analyst’s Office said in its report. The system “likely also reduced fraud in the temporary federal programs.”

But, the analyst’s report said, “Now that this critical period has passed, we recommend the Legislature pause and carefully consider the implications of requiring third-party biometric scanning -in this case, facial recognition performed by artificial intelligence.”

The state’s Employment Development Department, which manages the unemployment program, declined to comment. Assemblywoman Wendy Carrillo, D- Los Angeles, who chairs a budget subcommittee on state administration that plans a hearing on EDD Tuesday, did not respond to a request for comment.

And key members of Congress have expressed concern.

“Facial recognition should not be a prerequisite for accessing unemployment insurance or any other essential government services,” wrote Senate Finance Committee Chairman Ron Wyden, D- Oregon, and Sens. Sherrod Brown, D- Ohio, and Elizabeth Warren, D- Mass., in a letter this week to Labor Secretary Martin Walsh.

“It is particularly concerning that one of the most prominent vendors in the space, ID.me, not only uses facial recognition and lacks transparency about its processes and results,” they said, “but frequently has unacceptably long wait times for users to be screened by humans after being rejected by the company’s automated scanning system.”

Daryol Richmond, 31, a Kern Valley State Prison inmate pleaded guilty to conspiracy and aggravated identity theft charges for his role in a $25 million unemployment insurance fraud scheme during the COVID-19 pandemic,

According to the plea agreement, Richmond obtained the personal identifying information for other individuals, including inmates and non-inmates, without their authorization. He then provided this information to his co-conspirators inside and outside of prison through emails and jail calls.

The co-conspirators then filed applications for unemployment insurance with the California Employment Development Department (EDD) that falsely stated that the inmates, minor children, and others previously worked as clothing merchants, handymen, and other jobs, and recently became unemployed because of the COVID-19 pandemic. In the plea agreement, Richmond acknowledged that he was responsible for $1.4 million worth of the fraudulent claims.

Richmond is scheduled to be sentenced by U.S. District Judge Dale A. Drozd on Sept. 19, 2022. He faces up to 20 years in prison and a $250,000 fine for the conspiracy charge. He also faces a mandatory, additional two years in prison for the aggravated identity theft charge. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account several variables.

Charges are pending against the other defendants in this case: Telvin Breaux, 29, an inmate at the California Correctional Institution in Tehachapi; Holly White, 30, of Los Angeles; Cecelia Allen, 33, of Downey; Fantasia Brown, 33, of Los Angeles; Tonisha Brown, 28, of Los Angeles; Fantesia Davis, 32, of Victorville; and Shanice White, 28, of Hawthorne.

This case is the product of an investigation by the Federal Bureau of Investigation, California Department of Corrections and Rehabilitation, EDD, and Department of Labor Office of Inspector General. Assistant U.S. Attorney Joseph Barton is prosecuting the case.

One of the nation’s largest unions has taken aim at America’s largest hospital operator, HCA Healthcare, for practices that “maximize profits at the expense of patient care, working conditions, and responsible corporate behavior” including “apparent Medicare fraud,” the union says. The basis for that last, most explosive claim: HCA’s unusually high emergency room admission rates.

According to the story in Fortune, the allegations, leveled in a 45-page investigative report published last week by Service Employees International Union (SEIU), are based on the organization’s analysis of Medicare data and lawsuits filed by whistleblowers and health professionals against HCA.

That analysis found the company has had an average emergency department admission rate that exceeded the national average by more than 5% between 2014 and 2019 (the most recent data available). In some states, including Texas and California, HCA’s average ER admission rate is 10% higher than the state average. Inpatient admissions receive higher Medicare reimbursement rates, and so the pattern raises concerns, says SEIU, that those higher admission volumes are driven by “corporate efforts to boost their profits” and “without respect to medical need.”

In a statement to Fortune, HCA rejected SEIU’s conclusions.

SEIU’s accusations come at a time when American households continue to struggle with the world’s highest medical costs – with bills for unexpected hospital stays among the biggest pain points – and when unnecessary hospitalizations present a particular health danger.

They also echo past allegations of wrongdoing by hospitals.

Similar trends were observed at for-profit hospital operators Community Health Systems (CHS) and Health Management Associates (HMA) before drawing scrutiny and government investigations during the past decade.

A 2012 investigation by 60 Minutes revealed that HMA (since acquired by CHS) gave its physicians admission targets to hit, for example. Both companies settled false claims charges with the government over those allegations of improper Medicare billing; neither company admitted wrongdoing. (HCA also has a history of settlements with the Department of Justice over alleged fraud.)

While a 5%-higher-than-average admission rate may seem trivial, SEIU contends it enabled HCA to bring in “over $1 billion in excess Medicare payments” in five years. Given HCA’s presence in 20 states, and the consistency of the trend – state by state, the SEIU found HCA’s average admission rate exceeded the state average in all but one – the report’s authors argue the patterns can’t be coincidental.

The Workers’ Compensation Insurance Rating Bureau of California, in collaboration with a number of other workers’ compensation rating bureaus, has released the COVID-19’s Impact on Workers’ Compensation report.

This benchmarking analysis included representation from the following WC bureaus: California, Delaware, Indiana, Michigan, Minnesota, New Jersey, North Carolina, Pennsylvania, Wisconsin and the National Council on Compensation Insurance (NCCI).

This multi-bureau collaboration allowed for the creation of a COVID-19 claims database, which enabled the development of a more comprehensive view of COVID-19 claim characteristics and trends.

Key findings in the report include:

– – In California, COVID-19 claims represent 9 percent of total claim counts and 6 percent of total incurred losses.
– – Indemnity-only claims emerged as a significant share of reported COVID-19 claims.
– – In aggregate, COVID-19 claims that remained open have relatively higher case reserves due to the uncertainty of COVID-19 infections, later than average accident dates and the timing of the various waves of the pandemic.
– – COVID-19 indemnity claims closed more quickly than non-COVID-19 indemnity claims, partly driven by the large share of indemnity-only claims.
– – Despite the higher closure rate, the ratio of paid to paid plus case (incurred) severities on COVID-19 claims is lower when compared with that for non-COVID-19 claims.

And a new COVID workers’ compensation claim study has just been published in the February issue of the Journal of Occupational and Environmental Medicine. The objective of the study was to examine the attributes associated with long duration COVID-19 workers’ compensation claims.

To meet this objective, a study was conducted on 13,153 COVID-19 WC claims accepted by a workers’ compensation insurance carrier between Jan 1, 2020 and November 30, 2021. The authors summarized their findings as follows:

1) Ninety five percent of accepted WC claims were closed within the study period;
2) Five percent of claims had 30-days or longer of lost time accounting for 65% of total paid WC costs;
3) Medical costs increased 8-fold once paid days lost crossed the threshold of 60 -days or greater;
4) Age was the strongest risk factor associated with increased WC costs and prolonged impairment.

The authors concluded by saying “Age at the time of infection was the major factor associated with prolonged impairment and high costs of COVID-19 related WC claims.”

Hogan Lovellls published a synopsis of federal enforcement activity that lead to their conclusion that “the implementation of electronic health records (EHR) and rapid expansion of telemedicine has caught the attention of the Department of Justice (DOJ) and the qui tam relators’ bar, prompting rigorous enforcement actions and increasing False Claims Act (FCA) cases.”

DOJ has traditionally been wary of telemedicine. Even before the COVID-19 pandemic and the accompanying rapid expansion of telehealth, enforcement in the telemedicine industry was on the rise. In 2019, DOJ pursued enforcement actions in the telehealth space that involved claims for durable medical equipment (DME) and for compound medicines.

Through “Operation Brace Yourself,” DOJ targeted an alleged fraud and kickback scheme through which DME companies paid illegal kickbacks and bribes to medical professionals working for fraudulent telemedicine companies. In exchange, the medical professionals referred Medicare beneficiaries to the conspiring DME companies for back, shoulder, wrist, and knee braces that were medically unnecessary.

The DOJ investigation resulted in enforcement actions against 24 defendants associated with five telemedicine companies, as well as the owners of dozens of durable medical equipment companies and three licensed medical professionals. According to DOJ, the fraud schemes involved more than $1.2 billion in loss.

Traditionally, Medicare’s coverage of telemedicine has been extremely limited. As a result of the pandemic, telehealth service providers were granted broad flexibility to provide telemedicine services and this flexibility remains today. The easing of restrictions stemming from the COVID-19 pandemic has prompted a dramatic increase in the use of telehealth.

It seems unlikely that the federal government will reinstate pre-pandemic restrictions on telehealth services given the increased popularity and reliance on telehealth services. Indeed, Congress has introduced several bipartisan bills to address post-pandemic telehealth services, signaling that utilization of telehealth services will likely remain prevalent.

In October of 2020, DOJ announced a telehealth enforcement action for a fraudulent DME billings scheme dubbed “Operation Rubber Stamp.” The scheme involved allegedly paying medical professionals to order DME, genetic and other diagnostic testing, and pain medications without sufficient patient diagnostic interaction, resulting in $1.5 billion in fraudulent billings to government health care insurance programs.

False Claims Act (FCA) violations have been alleged and resolved in an ongoing investigation dubbed Operation “Happy Clickers,” which involves allegations that physicians “approved orders for medically unnecessary braces and cancer genetic testing despite many red flags that these items and services were illegitimate.”

In recent years, DOJ has pursued several FCA cases related to Electronic Health Records (EHR) that have led to large settlements and highlight various FCA risks.

For example, in 2020, Practice Fusion Inc, a health information technology developer, paid $145 million to resolve criminal and civil investigations relating to its EHR software, including a $118.6 million FCA settlement. The resolution addressed allegations that Practice Fusion “extracted unlawful kickbacks from pharmaceutical companies in exchange for implementing clinical decision support (CDS) alerts in its EHR software designed to increase prescriptions for their drug products.”

FCA and other fraud investigations relating to telehealth fraud and EHR are expected to continue. Brian M. Boynton, Acting Assistant Attorney General for the Civil Division at the Department of Justice, recently stated that he expects “a continued focus on telehealth schemes, particularly given the expansion of telehealth during the pandemic.” He also identified fraud relating to EHR as another area that is likely to be a focal point of future enforcement efforts.

The Department of Health and Human Services Office of Inspector General (OIG) has also made clear that it is “conducting significant oversight work assessing telehealth services during the public health emergency.”

Telemedicine and EHR technologies have rapidly changed patient care, introducing opportunities for potential fraud and abuse and exposing gaps in oversight. Claims administrators should expect increased fraudulent activities in these areas going forward and take steps to minimize their risk.