• Meeting the Proof Requirements Under the Anti-Fraud Provision of the Workers’ Compensation Act...An Uphill Battle or Climbing Mt. Everest?
  • March 2, 2015
  • Law Firm: Marshall Dennehey Warner Coleman & Goggin, P.C. - Cherry Hill Office
  • Key Points:

    • The anti-fraud provision of the New Jersey Workers’ Compensation Act sets forth the elements necessary to establish a fraudulent claim for benefits.
    • The terms “purposely or knowingly” contained in that provision require that a “fraudulent statement must be made with a conscious objective to obtain benefits to which one knows he or she is not entitled or with awareness that the intentional falsehood will cause the desired result of fraudulently obtaining benefits.”
    • Even if the proof requirements of the anti-fraud provision are satisfied, denial of the claim is not mandatory.

    The New Jersey Office of the Insurance Fraud Prosecutor launched a new public awareness campaign featuring radio, cable, transit and internet ads declaring “Insurance Fraud=Prison.” Yet, fraud remains a part of every insurance line, including the workers’ compensation system. According to the Association of Certified Fraud Examiners’ (ACFE) 2014 Report to the Nations on Occupational Fraud and Abuse, a typical organization loses five percent of revenues each year due to fraud. The study data was compiled from 1,483 cases of occupational fraud that occurred between January 2012 and December 2013. The study found that the average amount of time between when the fraud commenced until it was detected was approximately 18 months. So it is not surprising that more respondents are raising N.J.S.A. 34:15-57.4, the anti-fraud provision of the New Jersey Workers’ Compensation Act, in defense of suspected fraudulent claims. However, if you read the case of Bellino v. Verizon Wireless, 86 A.3d 751 (App. Div. 2014), it seems that meeting the requirements of N.J.S.A. 34:15-57.4 is more than an uphill battle.

    Bellino concerned an injured worker’s eligibility for temporary total disability benefits and medical benefits and the proof required to establish the elements of the Workers’ Compensation Act’s anti-fraud provision. More specifically, the Appellate Division addressed the evidence the respondent must offer regarding the claimant’s state of mind to disqualify a claimant who makes misstatements about his or her medical history when applying for benefits.

    The petitioner sought temporary total disability benefits and medical benefits for injuries to her back and hand resulting from a work-related accident that occurred on February 23, 2010. Compensability was accepted, and the respondent provided authorized medical treatment until one of the employer’s doctors issued a report indicating that no additional curative medical treatment for her injuries sustained in the accident, including complex regional pain syndrome, was needed. As a result, the petitioner filed a motion for temporary total disability benefits and medical benefits, and a full trial ensued.

    At trial, the respondent alleged that the petitioner provided “fraudulent information to her examining and treating physicians” and, therefore, her claim should be disqualified under the anti-fraud provision of the Act. The respondent contended that several of the petitioner’s statements to both her treating and examining physicians were false, incomplete or misleading, including that the petitioner did not disclose every medication she was taking to each doctor she saw; did not report all prior treatment of her back and hand to each doctor; failed to reveal that she had a prior substance abuse problem and took Suboxone to prevent relapse; and failed to disclose her prior psychiatric issues and treatment. The petitioner denied purposely or knowingly providing false or misleading information. She testified that she tried to answer all of the doctors’ questions truthfully, but pointed out the she had seen many doctors and was not always certain of times and dates of precise appointments. The Workers’ Compensation Judge rejected the respondent’s arguments and concluded that the respondent had not proven, by a preponderance of the evidence, that the petitioner “purposely or knowingly made false or misleading statements for purposes of obtaining benefits.” The judge noted, “[t]he medical records introduced into evidence reflected petitioner’s pre-existing conditions and prior use of medications and were reviewed by treating and examining doctors of both parties.” The respondent appealed.

    The Appellate Division affirmed the trial judge’s decision, noting that under N.J.S.A. 34:15-57.4, the moving party must show that: (1) the injured worker acted purposefully or knowingly in giving or withholding information with the intent that he or she receive benefits; (2) the worker knew that the statement or omission was material to obtaining the benefit; and (3) the statement or omission was made for the purpose of falsely obtaining benefits to which the worker was not entitled. The terms “purposely or knowingly” require that “the fraudulent statement must be made with a conscious objective to obtain benefits to which one knows he or she is not entitled or with awareness that the intentional falsehood will cause the desired result of fraudulently obtaining benefits.” The Appellate Division emphasized, “[t]he anti-fraud provision is intended to root out fraudulent claims, not merely test an injured person’s ability to remember every detail of a lengthy medical history or to accurately determine what may be material for purposes of receiving treatment or other benefits.”

    Interestingly, the court also pointed out that, even if a petitioner’s statements satisfy the requirements of the anti-fraud provision, “denial is not mandatory.” The court stated that where no causal connection exists between a lie and an injury, courts will generally look beyond a false statement and award compensation.

    The Bellino decision illustrates that merely establishing that a petitioner made inaccurate, false or misleading statements is not enough to negate a respondent’s liability under the anti-fraud provision. It is critical that the respondent go a step further and establish “intent” in order for the defense to prevail. Nevertheless, respondents should continue to assert the defense when fraud is suspected. Just be prepared for the steep uphill climb.

    “When you’re climbing Mount Everest, nothing is easy. You just take one step at a time, never look back and always keep your eyes glued to the top.”

    - Jacqueline Susann, Valley of the Dolls