News

IN DEPTH: MANUFACTURING
Memphis Business Journal (November 21-27, 2003)

District attorneys must now investigate workers' comp fraud
Jane Aldinger

The Tennessee Bureau of Investigation has eliminated its Workers' Compensation Fraud Investigation Unit as a result of state budget cuts.
 
The department with seven agents was dropped on July 1 due to state budget woes.

"We will still maintain here in our department a toll-free number for anyone who has a concern about worker's comp," says Sue Ann Head, workers compensation administrator for the Tennessee Department of Labor and Workforce Development.

Head says the reports will now be referred to the appropriate district attorney's office or, in the case of insurance fraud, to the Department of Commerce.

The removal of the unit will not change the way investigations are conducted, says James Kirby, an attorney with Harris Shelton Hanover Walsh, PLLC. Kirby often represents companies in fraudulent workers' comp cases, and he says he always makes his own investigations anyway.

"It seems to me like the impact is the financial cost that can be incurred by employers if there is not teeth in the law that makes fraudulent claims illegal," he says. "If we conduct an investigation and have good reason to believe it's a fraudulent claim, then that would be reported to the unit. If that unit is not in existence, the question is whether there will be any enforcement that should prosecute those who make fraudulent claims."

The residing district attorney will now be responsible for handling fraudulent workers' comp claims, and the Memphis and Shelby County District Attorney General's office says it will maintain thorough investigations for these issues.

"We'll handle it just like any other fraudulent insurance claim, and it will go through the court system the same way," says Linda Kirklen, lead prosecutor for the Fraud and Economic Crimes unit.

"The issue is whether they have the resources to devote to fraudulent workers' compensation claims considering that office is also required to deal with these other major violent crimes," Kirby says. "That office clearly has its plate full."

Head says there may be concerns over the fraud unit's dismantling, especially among Tennessee employers who feel that there is significant fraud in the system. But the department will continue to receive and process the claims.

"They're being addressed," she says. "The priority that they're given is something that may be a concern."

Other changes to the Tennessee workers' compensation legislation did not make a significant impact to the system, Head says. The weekly maximum and minimum benefit rates were evaluated and adjusted as they are every year.

She says the rates are tied to the state's average weekly wage. This year's maximum weekly benefit rate is $618 while the minimum rests at $92.70.

CONTACT staff writer Jane Aldinger at 259-1727 or by e-mail at jaldinger@bizjournals.com


© 2003 American City Business Journals Inc.