Chaos for Workers' Compensation Programs--The Elimination of Social Security Numbers?

The Centers for Medicare & Medicaid Services (CMS) is readying a fraud prevention initiative that removes Social Security Numbers (SSN) from Medicare cards to help combat identity theft and safeguard taxpayer dollars. The question remains whether the elimination will cause chaos in state workers' compensation programs since the SSNs have historically been utilized as personal identifiers.


For decades private and public insurance systems have relied upon SSN as a major identifier for benefits delivery and record keeping programs. The change surely is going to increase industry costs for the actual conversion process and create some bumps in the road going forward. Workers and their attorneys may also experience inconvenience in initially obtaining benefits and researching prior records. Furthermore, investigatory resources will suffer the burden additional costs in an attempt to convert information and have it readily available on demand. A critical issue remains for lawyers who handle this data and their ethical responsibility to maintain confidentiality.

CMS has rationalized that the new cards will use a unique, randomly-assigned number called a Medicare Beneficiary Identifier (MBI), to replace the Social Security-based Health Insurance Claim Number (HICN) currently used on the Medicare card. CMS will begin mailing new cards in April 2018 and will meet the congressional deadline for replacing all Medicare cards by April 2019. Today, CMS kicks-off a multi-faceted outreach campaign to help providers get ready for the new MBI.

“We’re taking this step to protect our seniors from fraudulent use of Social Security numbers which can lead to identity theft and illegal use of Medicare benefits,” said CMS Administrator Seema Verma. “We want to be sure that Medicare beneficiaries and healthcare providers know about these changes well in advance and have the information they need to make a seamless transition.”

Providers and beneficiaries will both be able to use secure look up tools that will support quick access to MBIs when they need them. There will also be a 21-month transition period where providers will be able to use either the MBI or the HICN further easing the transition

CMS testified on Tuesday, May 23rd before the U.S. House Committee on Ways & Means Subcommittee on Social Security and U.S. House Committee on Oversight & Government Reform Subcommittee on Information Technology, addressing CMS’s comprehensive plan for the removal of Social Security numbers and transition to MBIs.

Personal identity theft affects a large and growing number of seniors. People age 65 or older are increasingly the victims of this type of crime. Incidents among seniors increased to 2.6 million from 2.1 million between 2012 and 2014, according to the most current statistics from the Department of Justice. Identity theft can take not only an emotional toll on those who experience it, but also a financial one: two-thirds of all identity theft victims reported a direct financial loss. It can also disrupt lives, damage credit ratings and result in inaccuracies in medical records and costly false claims.

Work on this important initiative began many years ago, and was accelerated following passage of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). CMS will assign all Medicare beneficiaries a new, unique MBI number which will contain a combination of numbers and uppercase letters. Beneficiaries will be instructed to safely and securely destroy their current Medicare cards and keep the new MBI confidential. Issuance of the new MBI will not change the benefits a Medicare beneficiary receives.

CMS is committed to a successful transition to the MBI for people with Medicare and for the health care provider community. CMS has a website dedicated to the Social Security Removal Initiative (SSNRI) where providers can find the latest information and sign-up for newsletters. CMS is also planning regular calls as a way to share updates and answer provider questions before and after new cards are mailed beginning in April 2018.

…

Jon L. Gelman of Wayne NJ is the author of NJ Workers’ Compensation Law (West-Thomson-Reuters) and co-author of the national treatise, Modern Workers’ Compensation Law (West-Thomson-Reuters). 

For over 4 decades theLaw Offices of Jon L Gelman  1.973.696.7900  jon@gelmans.com  has been representing injured workers and their families who have suffered occupational accidents and illnesses.

Follow us on twitter: https://twitter.com/jongelman 

Related Articles of Interest:

Social Security Numbers and Workers' Comp Forms - The Ugly

Cybersecurity is an imminent and costly threat to lawyers and their clients

Updated: 6-5-17 10:53am

Just Published: 2017 Update - Gelman on Workers' Compensation Law

Jon Gelman’s, newly revised and updated 2017 treatise on Workers’ Compensation Law is now available from  by West Group of Egan, MN within the next few weeks. The treatise is the most complete work available on NJ Workers’ Compensation law and integrated with WESTLAW™, the "most prefered online legal research service.'"

• The recent NJ Supreme Court case involving the jurisdictional issue of employment status is reviewed. This supplement reviews the analysis and mandates of the Court concerning the appropriate forum to resolve the concurrent jurisdiction issues. Other new case law, including dual employment status and its application to the Exclusivity Rule is discussed.
• A revised chapter has been added that discusses the responsibilities of a workers’ compensation attorney and ethical considerations while handing claims. The material includes how to identify and protect the client’s interest of protected personal in-formation confidentiality. Additionally, it reviews potential cybersecurity threats in light of the increased technology advancement of the practice and what attorneys should do to protect against and respond to the cyber attacks.
• This supplement analyzes the newly enacted expanded World Trade Center Health Program and the integration with workers’ compensation benefits.
• The section on cancer and the complex smoking defense has been expanded and updated. It now includes a review of current case law and literature encompassing the health effects of environmental tobacco smoke.
• Recent decisions concerning The Federal Influenced and Corrupt Organizational Acts (RICO) and workers’ compensation insurance companies, medical providers, and self-insured are discussed. The current Federal Court decisional activity involving NJ operating pharmaceutical distributors is reviewed.
• The new Centers for Medicare and Medicaid Centers (CMS) Secondary Payer Act Secondary Payer Act (MSP) offset procedures and adopted regulations, implementing The SMART Act are presented in this supplement. The rules for both beneficiary and applicable plans to process and to perfect an appeal, are reviewed. The method and manner of reporting, and communication, with the newly established CMS Commercial Repayment Center (CRC) for workers’ compensation conditional payment is reviewed. Additionally, the newly established procedures and formats for Workers’ Compensation Medicare Set-Aside Arrangements (WCMSA) are discussed.
• Newly proposed rules by the Occupational Safety and Health Administration (OSHA) concerning beryllium are reviewed. Additionally, a list of New Jersey Covered Facilities under the Energy Employees Occupational Illness Compensation Program is provided.
• The NJ Supreme Court decision involving “The Coming and Going Rule” and its application to parking lot cases is discussed. Cardiovascular disability claims are analyzed in accordance with the NJ Supreme Court’s recent decision involving what constitutes “work effort” that would trigger a compensable event.
• The application of the Fraud Prevention Act as a mechanism to bar compensability when information is withheld is reviewed in this supplement. The synergy between tort law and the Workers’ Compensation Act, as expressed in recent case law, is discussed. The recent decision involving the determination of employment status and independent contractors is incorporated in this material.
• New procedures regarding contacting insolvent entities administered by the NJ Product-Liability Insurance Guaranty Association are outlined. The recent Court ruling involving temporary disability benefits and third-party action liens are included in this supplement.
• The new Life Tables are included in this material. The updated Centers for Medicare and Medicaid Services reporting requirements for recoveries for environmental hazards and ingestion of particular substances are discussed.
• The utilization of new procedures for medical provider benefit recovery, motions for emergent medical treatment, counsel fees, and methods to correctly respond to the Court and notice requirements for hearing notice listings are described in this supplement.

Gelman on Workers’ Compensation Law is exclusively integrated into the entire world-wide leading legal research network of West Group-Reuters-Thomson publications.

It is now available, in print, on CD-Rom and online via Westlaw™ and WestlawNext™. [Westlaw Database Identifier NJPRAC].

Now also available an an electronic edition/tablet edition as a ProView™ edition.

Click here now to order your copy.

Jon L. Gelman is nationally recognized as an author, lecturer and skilled trial attorney in the field of workers’ compensation law and occupational/environmental disease litigation. Over a career spanning more than three decades he has been involved in complex litigation involving thousands of clients challenging the mega-industries of: asbestos, tobacco and lead paint. Gelman is the author NJ Workers’ Compensation Law (West-Thompson) and co-author of the national treatise, Modern Workers’ Compensation Law (West-Thompson). He is the former Vice-President of The Workers Injury Law & Advocacy Group (WILG), a charter member of The College of Workers' Compensation and a member of The National Academy of Social Insurance (NASI). Lawyers. Jon is a founder of the Nancy R. Gelman Foundation Inc., which seeks to fund innovative research to cure breast cancer. He is also an avid photographer.

2016 Top Ten Workers’ Compensation Fraud Cases

Today's guest post is authored by Leonard T. Jernigan, Jr., Esq. of the North Carolina Bar. Mr Jernigan's nationally recognized annual employer fraud review highlights "misclassification of employment status" as a major issue. As the "shared economy" continues to expand exponentially the concept of "employment status" becomes increasingly challenged in a workers' compensation system crafted over a century ago.  

Four of the top ten cases in 2016 [valued at $412,000] are from perennial offender California, three from Florida, one each from Massachusetts and Texas, and one involving 20 different states. The misclassification of employees by employers continues to create dramatic financial fraud, with resulting cost shifting, lost tax revenues and hardship to inured employees. As we noted last year, while the “gig economy” pioneered by technology companies has lead to debate about new classifications for workers, these companies remain subject to our laws. We are starting to see widespread litigation and settlements like Uber’s $100 million payment to disgruntled drivers in California and Massachusetts. We’ll keep tracking these new developments in the context of the misclassification and fraud actions that we’ve been tracking for many years.

1. (National) FedEx to Settle Driver Lawsuits in 20 States for $240 Million  (6/16/16) FedEx Ground Systems, Inc. has agreed to pay $240 million to resolve claims by 12,000 FedEx drivers in 20 states. FedEx was labeling the drivers as independent contractors to avoid paying additional taxes, fringe benefits, health care costs, workers’ compensation insurance, and much more. The drivers were also not paid overtime or reimbursed for expenses.

2. (California) Seven People Charged in $98 Million Workers’ Compensation Fraud Case (6/7/16) Seven people have been indicted with 107 felonies in a business scheme designed to commit workers’ compensation fraud. The ringleader, Peyman Heidary, owned or ran numerous businesses, including law firms and health clinics, and used other people to disguise his involvement and create an illegal ownership structure. The clinics were found to have inflated billings to insurance companies by exaggerating patient injuries and treatments. The businesses fraudulently billed more than $98 million to 18 insurance companies, resulting in the businesses receiving over $12.4 million in payments.

3. (Texas) Labor Department “Mole” Helps Business Maintain $30 Million Workers’ Compensation Scam (6/28/16) Lydia Taylor worked at the U.S. Department of Labor in Dallas and used her position to give her family members information about federal workers’ compensation claims and warn them when suspicions arose about their fraudulent billing. Taylor’s uncle, Tshombe Anderson, was the ringleader of the group. Anderson and others formed several businesses that fraudulently billed the federal workers’ compensation program $30 million for unneeded and unrequested medical equipment for rehabilitation patients.

4. (Florida) Fake Construction Company used to Process over $17.4 Million of Fraudulent Payroll (3/28/16) Orquidea Quezada set up Orquicely Construction LLC and used the company to process payroll for subcontractors who employed hundreds of people. In exchange for her services, Quezada kept a five percent fee. The scheme allowed the contractors to avoid paying payroll taxes, workers’ compensation insurance, and to conceal the employment of undocumented workers.

5. (Florida) Fake Construction Company Used to Cash $7.4 Million in Undocumented Worker Payroll (7/7/16) Two men set up a shell company, Sunrise All Contractor Corp., to receive payments and cash checks for a fee on behalf of other companies that would then pay their undocumented workers. The scheme enabled employers to avoid workers’ compensation premiums and payroll taxes. These schemes are popular among employers of undocumented employees because these employees are less likely to blow the whistle on the fraud out of fear of exposing their undocumented status.

6. (California) Insurance Company Agent Misappropriated $7.3 Million and Unable to Pay Workers’ Compensation Claims for California Indian Tribe (8/19/16) The operator of Management Resources Group California LLC, Gregory J. Chmielewski used more than $7.3 million from the company’s reserve accounts for his own personal investments. The company managed another company, Independent Management Resources, which sold workers’ compensation insurance to California Indian tribes. Chmielewski’s actions resulted in the company being unable to cover 117 claims.

7. (California) Contractor Cheated Workers’ Compensation Insurer Out of More Than $5.4 million in Premiums (10/5/16) Michael Harold Kreger, the owner of Michael Kreger Contracting was sentenced to 9 months in jail, 5 years of probation, 1500 hours of community service, and ordered to pay restitution of more than $5.4 million for underreporting his payroll and committing insurance fraud. Mr. Kreger cheated his company’s workers’ compensation insurer out of more than $5.4 million and his employees out of adequate protection for potential workplace injuries.

8. (Massachusetts) Construction Companies Ordered to Pay $2.6 Million for Fraud in Misclassifying Workers (8/2/16) Force Corporation, AB Construction Group, and employers Juliano Fernandes and Anderson Dos Santos were found by the U.S. Department of Labor to have misclassified the bulk of their employees to avoid paying overtime wages, workers compensation insurance, payroll taxes, and more. A consent judgment was entered requiring the companies and employers to pay more than $2.6 million in damages and penalties for their fraud.

9. (California) Company Underreporting Payroll Defrauds Insurer of $2.1 Million (6/7/16) Co-owners Alvin Shih Chen and Fiona Chen of Metro Worldwide, Inc., a trucking company, underreported payroll by $4.7 million. The owners paid their truck drivers in cash to avoid reporting them to the insurer and to reduce their payroll obligation. While the company reported nearly $3 million in payroll to California’s State Compensation Insurance Fund, the actual payroll amount was $7.6 million. An estimated $2.1 million in premiums was lost.

10. (Florida) Construction Company Defrauds Workers’ Compensation Insurer of $1.8 Million by Underreporting Payroll (4/6/16) Maira Chirinos, the owner of construction company Tocoa Builders, Inc. misrepresented information regarding the company’s operations, employees, and payroll when applying for a workers’ compensation policy. The misrepresentations enabled Chirinos to avoid paying at least $1.8 million in workers’ compensation premium payments. An investigation found Chrinos grossly underreported payroll to the insurance company. She reported a payroll of $76,000, but more than $11 million in payroll checks were cashed during the period covered by the policy.