The owner-operator of a fish farm in Chenango County, N.Y., reeled in $66,100 in fraudulent workers' compensation benefits from the New York State Insurance Fund before being caught.

Edward Panus, 59, of Afton, N.Y., claimed the benefits in a long-running scheme, investigators allege. He submitted signed attestations to a state agency that he had not worked or had any income following a job-related back injury in 1988. However, a six-month investigation by the New York State Insurance Department (NYSID) Frauds Bureau and the New York State Police revealed Panus had been self-employed since 1996 as the owner of Ponderosa Fish Farm.

Panus is now charged with 13 counts of offering a false instrument for filing and one count of committing a fraudulent practice under the Worker's Compensation Law, all felonies. Arrested by state police in February, he faces up to a maximum of four years in state prison for each charge.

Like many states, New York is aggressively pursuing allegations of insurance fraud. The NYSID prosecuted 150 such cases in 2008, according to a recently released report. Burdened with the unwieldy title of "2009 Workers' Compensation Data Report to the Governor from the Superintendent of Insurance and Chair, Workers' Compensation Board, Summarizing and Benchmarking Workers' Compensation Data and Examining Progress on Prior Recommendations for Improvements in Data Collection," the lengthy report presents a comprehensive picture of the state's $5.7 billion workers' compensation insurance industry.

The mandated report is a byproduct of the state's Workers' Compensation Reform Act, passed two years ago in March 2007. That far-reaching reform package sought to control escalating insurance premiums, increase benefits, improve the claim process, enhance enforcement of workers' compensation coverage, reduce fraud, and increase cooperative activities among the various agencies.

According to the report, two state agencies are responsible for workers' compensation fraud investigations: NYSID and the WCB's Office of Fraud Inspector General (OFIG). NYSID requires mandatory reporting and receives data and filings from carriers with more than 3,000 policies. NYSID has the broader mandate of investigating all suspicious and fraudulent activities as they relate to insurance; the OFIG has a concurrent mandate to investigate only those activities that relate to workers' compensation fraud. Unlike NYSID, OFIG also has authority to oversee the self-insured trusts composed of public and private employers. (New York employers have three options for workers' compensation coverage: private insurance carriers, the State Insurance Fund, or self-insurance.)

Given their differing areas of responsibilities, NYSID and OFIG maintain separate databases. NYSID's database consists of the mandatory reporting of suspicious and fraudulent activities by carriers and whistleblowers; the OFIG database identifies an employer's workers' compensation coverage by carrier, with attendant history.

Nonetheless, the report stated that increased cooperation and data sharing among the various offices and agencies has led to decreased duplication of services and stronger fraud prevention. It noted that the OFIG and NYSID combined efforts resulted in referring almost 300 cases for prosecution.

OFIG-specific data cited in the report showed that in 2008 the office:

? Identified 1,534 cases for investigation;

? Closed 2,865 cases (including cases from prior years);

? Detected $3,591,074 in fraudulent actively;

? Prevented $4,644,123 in fraud, i.e. funds the insurance carriers had set aside to pay claimants that they no longer need to set aside because of the discovery of the fraud;

? Returned $1,212,354 in restitution to victims; and

? Imposed $321,207 in fines.

Special Reports /

A Fishy Claim

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