State, private investigators working to rein in fraud

Thursday, Feb. 4, 1999 | 11:38 a.m.

During an investigation into a workers' compensation fraud case, Las Vegas private investigator Larry Boggs came up empty-handed after racking up about $8,000 worth of expenses his client would have to pay in surveillance fees.

Then he got lucky.

While driving down a street, he saw the subject of his investigation -- a woman who supposedly was injured to the point that she could not walk -- and videotaped her walking along a sidewalk.

"That eight seconds of videotape stood up in court," Boggs, an FBI agent for 37 years before he became a private investigator, told a recent gathering of the Employers of Nevada organization.

He indicated that while some investigations require a good deal of patience -- and that can be expensive -- the results often are better than the alternative of paying a huge settlement to someone who doesn't deserve it.

"Employers want us to get that big photo or video that proves the case, but do you know how difficult it is to follow someone?" Boggs said. He noted that a number of employers fail to give his investigators as much as an accurate address for the employee or a picture of the subject they are assigned to tail.

Yet, he said, those same employers tell his investigators to limit their investigations to just a couple of days to save money.

Since 1993, when the Attorney General's Workers' Compensation Fraud Unit was formed, criminal prosecution of such fraud has been pursued aggressively, with 531 convictions through last December.

Still, many employers, fearful that workers are faking injuries and unfairly receiving benefits from the state or a self-insured program, turn to private investigators to build cases.

Kevin Higgins, the chief deputy attorney general in charge of the state workers' compensation fraud unit, says private investigators can play significant roles in helping his office win cases.

"At times they have been very helpful," said Higgins, who is in charge of 15 state investigators. "We had a case of an injured woman worker who supposedly had vertigo. A private investigator gave us a videotape of her free-hand rock climbing and hanging off the side of a mountain by one hand.

"But we've also gotten things from private investigators like 14 hours of videotape of a front door, which I couldn't figure out what they were trying to prove."

Since August 1993, Higgins' office has investigated on average of 1,000 fraud allegations each year.

Boggs said a successful investigation generally leads to one of two conclusions: that the worker is faking the injury or that the employee is truly injured.

"We've had investigations where we find that the guy is really hurt and we tell the employer that," Boggs said after his half-hour address last week before the local employers organization, which met at Palace Station.

"That's why we employers pay into those benefits to help take care of our workers, so we can get them back to work."

During his lecture, Boggs, a partner in the downtown investigative firm of Boggs, Kramer & Associates, said such benefits "are not meant for nonsense. And there is a lot of nonsense going on in workers' comp. I don't see it being on the decline."

Higgins and Boggs say that fraud will be even more of a concern in the near future when three-way insurance goes into effect. For the first time, Nevada employers will have a choice of insurance carriers other than paying into Employers Insurance Co. of Nevada -- formerly the State Industrial Insurance System -- or they could choose to become self-insured.

Former State Sen. Len Nevin, a longtime advocate for workers' compensation reform and the author of the bill that created the fraud unit, said that as the state grows so will the need for private investigators to keep fraud in check.

"While the attorney general's workers' comp fraud unit has been the most important step in addressing the problem, private investigators also have played a big role in building good solid cases," Nevin said.

"They have a lot of expertise at going into the field and seeing what they can find."

Private investigators have been a boon to employers who can afford them, Lynn Grandlund, president of Employers of Nevada, said, especially when workers fake injuries and go for big bucks.

Also, she said, local employers are taking great interest in this year's Nevada Legislature, which undoubtedly will look at the progress made in addressing workers' compensation fraud.

Of 1,385 draft resolutions before the Legislature, 27 deal in some way with workers' comp," Grandlund said. "But until they are introduced, we cannot see them. We will be keeping an eye on them as we get them."

While employee fraud seems to get a lot of attention, employer fraud is just as prevalent, state statistics indicate.

"When we started, it was about two-thirds employees and one-third employers" who cheated, Higgins said. "Now it's running about 50-50."

Between August 1993 and last December, 249 employers and 224 employees were arrested on charges of workers' compensation fraud.

"We do turn in employers," Boggs said, noting that during investigations he has found employees cheating the system by working for companies that were breaking the law by not paying into the state fund.

In the last five years, two health-care providers have been arrested for overcharging the system and one state employee was nabbed on charges of taking kickbacks from disability checks of claimants whose cases should have been closed, Higgins said.

But getting convictions in workers' compensation fraud cases takes patience.

A Las Vegas woman arrested in August 1993 was convicted of workers' compensation fraud just last May. Higgins noted that her case had been bumped off the court calendar 14 times before it came to trial.

"We had to pursue it to its conclusion," Higgins said. "We can't let people get the opinion that if they drag it on long enough we will just go away.

"Before this unit was formed, it was up to area district attorneys to prosecute these cases, but many of them had murders and other higher priorities. We have shown that we will prosecute these cases, and that has made a difference."