Ohio letter carrier indicted for worker’s compensation fraud

A federal grand jury returned a two-count indictment charging Nicole M. Gates of Wickliffe, with false statements and fraud to obtain federal employees’ compensation, said Carole S. Rendon, Acting United States Attorney for the Northern District of Ohio.

The indictment alleges that Gates, a mail carrier employed by the U.S. Postal Service, falsely represented her physical limitations in connection with her receipt of workers’ compensation benefits.

US-Department-Of-Justi_fmtAssistant United States Attorney Megan R. Miller is prosecuting the case following an investigation by the U.S. Postal Service Office of Inspector General.

If convicted, the court will determine the defendant’s sentence after a review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense, and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum. In most cases, it will be less than the maximum.

Maryland letter carrier pleads guilty to workers comp fraud

Greenbelt, Maryland – U.S. Postal Service employee Doreen Allen, age 51, of Temple Hills, Maryland, pleaded guilty today to theft of government property arising from a scheme to fraudulently obtain over $25,000 in worker’s compensation benefits.

The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Paul L. Bowman of the U.S. Postal Service, Office of Inspector General.

uspsoigAccording to her plea agreement, Allen was employed by the United States Postal Service as a city carrier at the Capital Heights, Maryland, Processing and Distribution Facility.  On September 27, 2002, Allen filed an injury claim which qualified her for Worker’s Compensation.  Allen began receiving benefits in November 2002 from the Office of Worker’s Compensation Programs (OWCP), including reimbursement for travel expenses for medical treatment related to her injury.

Between July 2012 and September 2015, Allen received reimbursement for travel expenses for medical care related to one of her injury claims.  This compensation was based on vouchers that Allen submitted for 721 trips to receive medical care.  Allen admitted that approximately 27 of those trips were for medical care, while the remaining 694 were unrelated.  Allen submitted numerous forms to OWCP falsely certifying that she had driven round trip from her home in Temple Hills to a doctor’s office in Laurel, Maryland for medical treatment related to her injury. As a result, Allen fraudulently received $27,639.10 in travel reimbursements.

Allen faces a maximum sentence of 10 years in prison.  U.S. District Judge Paula Xinis scheduled Allen’s sentencing for September 13, 2016, at 9:30 a.m.

OIG: Department of Labor’s lax handling of compounded prescription drugs costs USPS millions

Background

Enacted in 1916, the Federal Employees’ Compensation Act (FECA) provides medical, compensation, death, and vocational rehabilitation benefits to civilian federal employees who sustain injuries or disease. In fiscal years (FYs) 2014 and 2015, FECA provided over $1 billion in annual workers’ compensation benefits to U.S. Postal Service workers.

The U.S. Department of Labor (DOL) Office of Workers’ Compensation Program (OWCP) administers the FECA for the Postal Service and the federal government, including costs for medical treatment and drugs. The Postal Service reimburses the DOL for benefits paid out for a chargeback year (CBY) starting from July of the preceding year to June of the current year. The Postal Service pays about 39 percent of the federal government’s total workers’ compensation administrative expenses.

OWCP allows charges for compound drugs, which are created when licensed pharmacists, physicians, and others acting under the supervision of licensed pharmacists combine, mix, or alter ingredients of drugs to tailor them to individual patients. The Food and Drug Administration (FDA) does not monitor or approve compound drugs, or test their effectiveness or safety.

Our objective was to assess the Postal Service’s worker’s compensation compound drug costs.

What The OIG Found

The Postal Service’s workers’ compensation compound drug costs escalated to over $98.7 million for CBY 2015, a $68.6 million increase over CBY 2014. During the same period, the Postal Service’s administrative expenses for compound drugs increased to $5.1 million, a $3.6 million increase. The costs for compounds have continued to escalate. For the first 6 months of CBY 2016 (July 2015 through December 2015), the Postal Service has incurred $85.7 million in compound drug costs, with another $71 million forecasted through the end of the year. These unprecedented increases were due to the higher costs of compound drugs, the rising number of compound drug prescriptions, and fraud.

Generally, compound drugs are more costly than other drugs. In 2012, the National Council on Prescription Drug Programs permitted pharmacies to separately bill for each ingredient in a compound drug. Subsequently, more pharmacies began compounding drugs, which created shortages in ingredients and increased the cost. In CBY 2015, the total number of Postal Service employees with compound drug prescriptions increased to 50,204 — nearly three times the number in CBY 2011.

In response to the dramatic increase in compound drug costs nationwide, various government agencies and private entities began to examine these costs and implement best practices for managing them. The U.S. Department of Defense evaluated these costs and made an alarming discovery: Doctors were prescribing and charging for compound drugs without seeing patients. In a massive workers’ compensation scheme in California, doctors were paid to prescribe compound drugs that patients did not need. In one case, a 5-month-old baby died after coming in contact with a compound transdermal cream prescribed for his mother.

In 2015, TRICARE, the military health insurance program, restricted compound drugs in an effort to curtail fraud, reduce costs, and provide more consistent and safe drugs for its beneficiaries. Similarly, state and private entities have implemented restrictions such as: 1) reimbursement caps on prescriptions, 2) fee schedules for compound drugs, 3) mandatory use of pharmacy benefits managers, 4) formularies (lists of prescription drugs covered by prescription drug plans), and 5) pre-authorizations for payment.

The Postal Service experienced escalated compound drug related costs because the DOL did not implement best practices to manage these costs. As a result, we estimated the Postal Service incurred over $81.8 million in excessive compound drug costs and nearly $4.1 million in excessive administrative fees for FYs 2014 and 2015. We also estimated that if the DOL does not implement best practices to control compound drug costs, these costs and the related administrative fees could accumulate to over $1.2 billion and over $60.3 million, respectively, over the next 3 years.

Although the Postal Service has expressed that it would like to reduce and better manage compound drug costs, it is limited because it is mandated to use the DOL to handle workers’ compensation drug costs. For its part, the DOL has full authority to implement all of the best practices mentioned above. But, the DOL has no incentive to do so, and DOL officials have not been receptive to adopting these or other best practices. In addition, DOL stated if a doctor approves the compound drug they assume it is necessary and will reimburse the costs.

The Postal Service is so concerned about rising drug costs and DOL’s inaction that, in October 2015, it requested an adjustment and withheld $68.6 million in payment for its workers’ compensation chargeback bill. According to Postal Service officials, the $68.6 million represented compound drug cost increases potentially attributable to fraud and abuse that OWCP had a duty to prevent. In December 2015, the DOL denied the Postal Service’s request. While Postal Service officials disagreed with the DOL’s determination, they paid the outstanding $68.6 million.

Until the DOL implements best practices to manage drug costs and ensure safe drugs, the Postal Service will continue to incur excessive and unnecessary costs and injured workers could be at an increased risk of harm.

What The OIG Recommends

We recommend the chief human resources officer and executive vice president continue to coordinate with the DOL to identify and implement best practices for controlling compound drug costs and authorizing payments for only FDA approved drugs. In addition, we recommend Human Resources, in coordination with Government Relations, inform and educate Congress on the impact of DOL’s failure to address escalating compound drug costs on the Postal Service.

APWU: Expect More Attacks on Injured Workers

This article first appeared in the March-April 2016 issue of The American Postal Worker magazine.) 

Over the last decade, attacks on injured federal employees and postal workers, led primarily by Sen. Susan Collins (R-ME), have been relentless.

But she isn’t the only one who has tried to dismantle the comprehensive coverage provided by the Federal Employees Compensation Act (FECA).

apwulogoOver the years, proponents of cuts have become more cunning. They claim their proposals will minimize fraud, remove “disincentives” to return-to-work, and make benefits more equitable.

The Government Accounting Office (GAO) has demonstrated that their claims are meritless, but this has not deterred them from efforts to gut benefits.

Although President Obama’s fiscal year 2017 budget request excluded negative FECA measures, and Secretary of Labor Perez rejected proposals to slash FECA benefits, we fully expect Sen. Collins and her partners to wage future attacks on FECA.

What’s at Stake?

Proposals to amend FECA are expected to include cuts to wage loss compensation (WLC), reductions in benefits when claimants reach retirement age, a Fraud Task Force, more second opinion examinations (SecOps), and additional requirements for vocational rehabilitation.

According to the USPS Office of Inspector General (OIG), less than 1/6 of one percent of FECA claimants has been found guilty of fraud – including misdemeanor offenses. This is hardly evidence of a systemic problem warranting a task force.

Requiring claimants to get second opinions when fraud is virtually non-existent constitutes a witch hunt – one that comes with a $387 million price tag. OWCP already has the authority to order these exams as it deems necessary.

FECA dismantlers also want to reduce the current compensation rate for claimants with dependents, from 75 percent to as little as 66 2/3 percent. And when claimants reach a prescribed retirement age, they intend to reduce compensation to 50 percent, alleging the benefit is more generous than workers’ earnings or retirees’ annuities.

However, according to a July 2013 study by the Government Accountability Office (GAO), workers collecting WLC bring home 7.4 to 14.4 percent less than they would if they were working. Another GAO study revealed that the median FECA benefit package is significantly less than regular retirement benefits.

Under the ill-conceived proposals, FECA benefits would be 22 to 35 percent less than the median FERS retirement package. Keep in mind, those who receive compensation do not earn leave or contractual pay raises. Their benefits are locked in, based on the pay they earned when they were injured. They cannot contribute to their Thrift Savings Plan or receive matching funds.

Leonard Howie, director of the Office of Workers Compensation (OWCP) testified on May 20, 2015, before a House Committee that “less than 2 percent of the injured workforce covered by FECA remains on the long-term compensation rolls more than two years after sustaining their injury.” His statement clearly demonstrates that it’s unnecessary to require employees with temporary medical restrictions to participate in OWCP’s vocational rehabilitation program.

Changes to FECA will affect all of us, whether we’re injured or not. It will affect our family and friends. It will negatively affect state compensation programs. It will burden many health care and human services providers.

– See more at: http://www.apwu.org/news/deptdiv-news-article/expect-more-attacks-injured-workers#sthash.QDm5UbIa.dpufSource: Expect More Attacks on Injured Workers | APWU

New York Letter Carrier Charged With Federal Disability Fraud

SYRACUSE, NEW YORK – Lynn M. Allen, 47, of Marcy, New York, appeared today in federal court in Syracuse on charges stemming from a scheme to defraud the United States Postal Service and the U.S. Department of Labor of more than $94,000 in federal disability compensation payments, announced United States Attorney Richard S. Hartunian and Eileen Neff, Special Agent in Charge, United States Postal Service Office of Inspector General (USPS OIG), Northeast Area Field Office.

Allen was arrested earlier today in Utica, New York, while at work at the New York State Workers’ Compensation Board. Following her court appearance before United States Magistrate Judge David E. Peebles, she was released pending trial.

US-Department-Of-Justi_fmtThe five-count indictment charges Allen with wire fraud, theft of government money, federal employees’ compensation fraud and includes a forfeiture allegation seeking a money judgment in the amount of $94,253.95. The indictment alleges that Allen received federal disability benefits after claiming that she injured her shoulder, back, and neck while working for the Postal Service. According to the indictment, Allen supported her disability claim by reporting that her injuries prevented her from grasping objects or reaching above the shoulder and that she could not engage in any repetitive reaching, bending, stooping, or movements of the wrists and elbows. The indictment further alleges that Allen continued to certify that she was disabled and unable to work for the Postal Service while playing in several recreational softball leagues in Rome, New York, and that in one instance, she played in a competitive softball game hours after claiming that she could not reach above her shoulder at all. If convicted, Allen faces up to 20 years in prison and a maximum fine of $250,000. Sentences are imposed by a judge based upon the particular statute the defendant is charged with violating, the United States Sentencing Guidelines and other factors.

New Jersey: CCA Letter Carrier charged with workers comp fraud

Acting Bergen County Prosecutor Gurbir S. Grewal announced the arrest of CHRISTOPHER S. CASSESE, a 44 year old Bergenfield, New Jersey man, on insurance fraud and theft by deception related charges. The arrest came about as a result of an investigation conducted by members of the Bergen County Prosecutor’s Office (BCPO) White Collar Crimes Unit under the direction of Chief Carmen MARTINO and the United States Postal Service Office of the Inspector General (OIG).

In December of 2015, members of the BCPO White Collar Crimes Unit were informed by agents of the United States Postal Service, Office of the Inspector General that they were conducting an ongoing investigation into the activities of a United States Postal Service employee who worked out of the Bergenfield Post Office. The employee, who was identified as Christopher CASSESE, had been out of work on injury leave and had collected injury related compensation in an amount greater than $20,000. The OIG investigation revealed that Mr. CASSESE was working at his own pest control business, Semper Fi Pest Control LLC, while out on injury leave. Continue reading

Ohio letter carrier charged with worker’s compensation fraud

A letter carrier for the U.S. Postal Service has been charged with defrauding the Department of Labor, law enforcement officials said.

Douglas A. Joachim, 51, of Wadsworth, concealed and falsified his medical condition and physical abilities to the Labor Department’s worker’s compensation program. He is employed as a letter carrier and, on numerous occasions, was receiving disability payments through the worker’s compensation program. He willingly made false, fictitious and fraudulent statements about his medical condition, which resulted in these benefits being paid, according to the information.

uspsoigThis case is being prosecuted by Assistant U.S. Attorney Henry F. DeBaggis following an investigation by the U.S. Postal Service Office of Inspector General.

If convicted, the defendant’s sentence will be determined by the court after reviewing factors unique to this case, including the defendants’ prior criminal records, if any, the defendants’ roles in the offenses and the characteristics of the violations. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.

A charge is not evidence of guilt. Defendants are entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

Ohio letter carrier charged with worker’s compensation fraud

A letter carrier for the U.S. Postal Service has been charged with defrauding the Department of Labor, law enforcement officials said.

Douglas A. Joachim, 51, of Wadsworth, concealed and falsified his medical condition and physical abilities to the Labor Department’s worker’s compensation program. He is employed as a letter carrier and, on numerous occasions, was receiving disability payments through the worker’s compensation program. He willingly made false, fictitious and fraudulent statements about his medical condition, which resulted in these benefits being paid, according to the information.

uspsoigThis case is being prosecuted by Assistant U.S. Attorney Henry F. DeBaggis following an investigation by the U.S. Postal Service Office of Inspector General.

If convicted, the defendant’s sentence will be determined by the court after reviewing factors unique to this case, including the defendants’ prior criminal records, if any, the defendants’ roles in the offenses and the characteristics of the violations. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.

Dallas: 28 Charged in $9.5 Million Scheme to Steal Money from Workers Comp

DALLAS — Twenty-eight defendants, from the Dallas-Fort Worth metroplex, have been charged with various crimes related to their roles in a massive health care fraud scheme that involved bribes, unnecessary medical treatment, fraudulent billing, and the falsification of medical documents to fraudulently bill the federal government, through the Department of Labor’s (DOL) Office of Worker Compensation Programs (OWCP), more than $9.5 million. U.S. Attorney John Parker of the Northern District of Texas made the announcement today.

The criminal felony Information filed today charges 21 claimants, four doctors or medical providers, a senior claims examiner at DOL, a claims representative, and a medical provider’s employee in the scheme. Signed plea papers were filed today for each of the 28 defendants indicating their intent to plead guilty. Arraignment dates have not yet been set for those pleas. Continue reading

OIG: Curbing Workers’ Comp Abuses

From the USPS Office of Inspector General:

uspsoigDisability programs are vital for a nation that supports its citizens. In the United States, federal employees, including postal workers, who suffer employment-related injury or illness are entitled to workers’ compensation under the Federal Employees’ Compensation Act (FECA).

The U.S. Postal Service funds workers’ compensation benefits for employees who sustain job-related injuries. In fiscal year (FY) 2014, the Postal Service incurred over $1.3 billion in workers’ compensation expenses. In addition, the Postal Service estimated its liability for future workers’ compensation costs at nearly $17.1 billion. The U.S. Department of Labor’s Office of Workers’ Compensation Programs (OWCP) administers the workers’ compensation program and then bills the Postal Service for reimbursement.

While most compensation claims are legitimate, fraud and abuse do occur. The U.S. Postal Service Office of Inspector General (OIG) focuses resources on identifying claimants and providers who defraud the system. In FY 2014, OIG investigations saved the Postal Service more than $275 million in future workers’ compensation costs, and arrested 82 individuals for workers’ compensation fraud.

One recent successful case highlights the type of cases our agents investigate:

A postal letter carrier had been receiving workers’ comp benefits since 2001 after claiming total disability from a back injury at work. Investigators, however, discovered he had started a landscaping company shortly after his claimed injury and was routinely working at that company. Agents observed the individual driving a dump truck, operating a riding lawn mower and a tractor, and directing the activities of other individuals at customer properties. Undercover investigators also hired the former carrier to perform landscaping work for them, which they video recorded and presented as evidence to prosecutors and the Department of Labor (DOL). These activities exceeded the former employee’s stated limitations and he failed to inform the DOL of his involvement in this business, both of which resulted in his conviction and the termination of his benefits.

This successful investigation alone saved the Postal Service approximately $664,000 in future workers’ compensation payments. What suggestions do you have for preventing workers’ compensation fraud? And if you suspect fraud by either a Postal Service employee or provider, please contact our office at 888-877-7644.

Source: Curbing Workers’ Comp Abuses | Office of Inspector General