Some of the more common red flags in cases of fraudulent workers comp claims include:

• Multiple claims – has the claimant filed more than one worker’s comp claim in the past or a number of claims within a short period of time?
• Longer absences than anticipated for minor injuries; an unwillingness to come back to work on partial duty or other jobs within the company.
• The claimant was experiencing financial difficulties and/or domestic problems prior to submission of claim.
• The alleged injury occurs prior to or just after a strike, layoff, plant closure, job termination, completion of temporary work or notice of employer relocation.
• Lawyer’s letter of representation or letter from medical clinic is first notice of claim.
• The claimant reports an alleged injury immediately following disciplinary action, notice of probation, demotion or being passed over for promotion.
• There are no witnesses to the accident, or witnesses to the accident conflict with the claimant’s version or with one another.
• The accident or type of injury is unusual for the claimant’s line of work.
• The claimant frequently changes physician or does so after being released to return to work.

While identifying these red flags can help companies sniff out a lot of potential fraudulent claims, reports from fellow employees—anonymous and otherwise—unveil just as many. In fact, many larger companies offer toll-free number for employees to report suspected fraudulent claims.

“Insurance fraud and the expenses associated with it total more than $8 billion per year. That’s not only paying fraudulent claims that go undetected but how much it costs to catch the abusers. A lot of times, that’s after weeks, months or even years of abuse. By knowing what to look for and detecting it early, companies can reduce that figure dramatically,” said Lyons.

L&W Investigations works with a variety of organizations– insurance companies, third-party administrators, self-insured companies, law firms and municipalities—on fraudulent workers compensation, disability, liability, auto and property claims. L&W’s offerings include: surveillance; statements; activity/disability checks; asset/background investigations; and medical audits/clinic inspections.

With 35 locations nationwide in 23 states, the L&W typically employs three to eight investigators at each office. While many traditional “mom and pop” investigative firms are typically a haven for retired law enforcement officers who treat the job more like a hobby, L&W employs seasoned investigators who specialize in investigating insurance fraud cases. All L&W investigators go through extensive training and have access to the most state-of-the-art surveillance equipment.

But take a look at the black gate and lock that stretches across the front of Shoes N More at 2903 W. Western Ave., and you’ll see a different story.

The scene is a lot quieter here than it was almost two weeks ago, when county officers and private investigators hired by Nike raided this business, along with the Howard Street Food Mart, 416 E. Howard St.

The investigators confiscated more than 3,000 pairs of counterfeit sneakers.

Police said the shoes — knock-off Air Jordans and Air Force 1s — were made in China and sold by an importer in New York City.

Now as Shoes N More stands idle — and the still-open Howard Street Food Mart is rid of the counterfeit shoes — they’re sparking some concerns from those who saw the recent raids as a wake-up call.

At a time when it may be harder to distinguish between what’s authentic and what’s fake, many consumers are wondering exactly how prevalent counterfeit merchandise has become.

But even more importantly, many wonder how to tell whether something they buy is the real deal.

Common occurrence?

The type of raids that hit Shoes N More and the Howard Street Food Mart doesn’t necessarily happen here every day.

“Honestly, we don’t come across this a whole lot,” said Sgt. Bill Redman, St. Joseph County police spokesman. “It’s not a weekly thing or anything like that.”

But when it does happen, it certainly gets people talking.

Investigators from the Chicago-based agency Edward R. Kirby and Associates said the number of shoes confiscated in the recent cases ranks as one of their top 10 raids ever.

And the local raids point to an issue that has become prevalent across the nation.

“We have a pretty active enforcement program across the country that looks out for counterfeit goods,” said Vada Manager, director of global issues management for Nike.

As the economy becomes more global, both the manufacturing and the importing of goods have become more prevalent — moreso than 15 years ago, Manager said. That means legitimate and illegitimate goods alike are moving back and forth across the borders.

And shoes aren’t the only items that tend to be counterfeited.

Besides shoes, several items of sports apparel also were confiscated during the recent South Bend raids. Officers removing shoe boxes from the scene were able to fill the cargo area of a 20-foot U-Haul trailer to capacity.

On the local scene in general, it’s common to see DVDs and CDs counterfeited as well, said South Bend police spokesman Capt. Phil Trent. Next on the list would be computer software, he said. Then there are clothing items and merchandise such as watches and sunglasses, he added.

Name-brand merchandise, such as Nike, have become such targets simply because they have established a strong credibility in popular culture, said Nike’s Manager.

“No one’s going to buy a brand,” he said, “that’s not popular, or not hot.”

And it’s no surprise that counterfeiters tend to strike during the popular shopping seasons — the holidays, the back-to-school rushes, Manager said.

Some consumers know

Of course, even though some consumers might buy counterfeit goods without realizing it, there are some who will cash in the bogus goods on purpose.

“There are a lot of people that are buying things that they know aren’t real,” said Trent of the South Bend police. “It’s a good enough knock-off for them to impress someone.”

But while it might not be a big deal to them, it’s a big deal to law enforcement.

Since the city was working on its own counterfeit cases involving large-scale sales of counterfeit CDs and DVDs, the county was able to step up to help when tips arose regarding the counterfeit shoes, said South Bend police Sgt. Dominic Zultanski.

“We work together on a lot of stuff,” he said.

On the Tuesday morning of the raids, the 35-year-old owner of the Howard Street Food Mart — where 1,950 pairs of shoes were confiscated — was arrested on charges of possessing stolen and counterfeit property. At Shoes N More, an additional 1,100 pairs of shoes were found.

And the situation could be pursued by the FBI or state officials in the future, said Redman of the St. Joseph County police.

Terrorism links?

What many consumers don’t realize, he said, is the danger associated with counterfeit goods. Many counterfeit goods can help fund drug dealers, organized crime and even terrorism.

“Hezbollah has definitely been linked to a lot of counterfeit activities,” said Zultanski of the South Bend police.

Almost five years ago, law enforcement officials testifying on Capitol Hill told a House panel that the booming international trade in phony consumer goods was indeed funding terrorism.

Officials said international property crime, which related to the counterfeiting and pirating of goods, had reached an estimated $500 billion in black market trade globally. The FBI also estimated that counterfeiting had caused businesses in the United States to lose $200 billion to $250 billion per year.

If people today would realize the scope of the issue, Redman said, it might make them think twice.

“I think people would consider it a little more seriously,” he said.

Real or fake?

For consumers who are serious about making sure the goods they buy are authentic, the feat can be a little challenging.

“We can all tell if they’re fake or not,” said Craig Huff, assistant manager at Foot Locker on Grape Road in Mishawaka, who’s heard a lot of talk about the area’s recent raids. “But some of the counterfeits are pretty good.”

As the counterfeiting process becomes more sophisticated than it was in years past, consumers simply have to look a little harder to discern the difference between what’s real and what’s not.

“(But) some of the same signs still do exist,” said Nike’s Manager.

For example, it always helps to look at the item’s price point.

“If the deal seems too good to be true, there’s a good possibility the product could be fake merchandise — or stolen,” said Redman.

The shoes found in the area’s recent raids, which local retailers bought wholesale for about $30, were resold for between $60 and $75. At local sporting good stores, new Air Jordan shoes retail for more than $100.

Similarly, many counterfeiters will charge $20 for knock-off sunglasses, while the high-end authentic versions will cost as much as $150 to $250. In other cases, counterfeiters might charge $20 for a “Prada” purse.

Of course, it’s important to look at more than just an item’s price. Pay careful attention to its color.

“If … you see a product in a color that was never produced by Nike, then it probably is a counterfeit,” Manager said.

Some fake products also will have features such as smeared colors, bad stitching, a crooked swoosh, materials of inferior quality or poor logos. Some fake Air Force 1s, for example, will have Xs instead of the authentic stars, said Huff of Foot Locker.

Many times, fake items will additionally have misspellings on their labels, some of which is done on purpose so that sellers can claim they have made their own version of a popular product, said Redman. It’s always wise, he added, to collect receipts for such purchases and to inquire about warranties and what kind of guarantees come with the product.

Reputable retailers

Of course, a consumer’s best bet, Manager said, is to simply buy goods at an authorized, reputable retailer.

“Everything’s coming directly to us from our distribution center, from the manufacturer,” said Ryan Chupp, store manager at Dunham’s Sports on Miracle Lane in Mishawaka.

Chances are, you just won’t see a small corner store selling genuine Coach purses, Rolex watches or Nike shoes. For many of these stores, it just wouldn’t make sense to carry hundreds of dollars in Nike shoes, said Trent.

“That’s a lot of overhead to carry,” he said.

Consumers just need to be savvy when it comes to shopping for anything, he said.

And so do vendors.

“Just like the consumer, the vendor or store owner needs to be really skeptical that what they are buying is legitimate” — especially when it comes to software, he said.

Now granted, if a store had been ordering legitimate products from a company for years or decades, only to find out later that the goods were counterfeit, it would be hard to blame that retailer, Trent said. But in many cases, counterfeit transactions take place in less conventional ways.

“It’s showing up in the back of a van at 2 in the morning,” Trent said.

If a consumer is aware of a store that is selling counterfeit items, they shouldn’t hesitate to contact the brand name’s company as well as law enforcement, said Nike’s Manager. Some of the best tips come from customers or authorized retailers whose profits are being undercut by the counterfeiters, he said.

And just because a consumer has unknowingly bought a counterfeit item already, that shouldn’t keep them from letting authorities know what’s going on.

“It’s not an issue of going after the purchaser,” Manager said. “Moreso, the manufacturer of that product, as well as the retailer.”

The City of London Police is recruiting for a national fraud crime force, claiming that the impact of the crime is second only to drug trafficking.

The move comes after a report by the Association of Chief Police Officers (Acpo) put UK mortgage fraud losses at £700m a year, and growing.

But the Council of Mortgage Lenders (CML) has disputed the estimate.

The £20bn figure is based on the estimated cost to the UK of stolen assets, lost revenues, and the costs of prevention and investigation.

The new fraud team will be based around the London force’s existing expertise in tackling economic crime.

Its role will include training public and private investigators, assisting in complex investigations around the country and drawing up crime prevention advice.

The Acpo review of mortgage fraud said the high profits and low risk was attracting organised criminals.

It called for a specialist mortgage fraud bureau to tackle the false valuations and bogus mortgage applications used by fraudsters.

The Council of Mortgage Lenders says there is very little reliable data available to estimate the extent of mortgage fraud.

It said the police estimate was likely to have featured some double-counting.

But they welcomed the promise of new guidance for police forces around the country on how to identify and investigate mortgage fraud.

Some 1,621 Wyoming employers were delinquent in premiums to workers’ compensation as of the end of February for a total of more than $1.4 million, according to Gary Child, the outgoing director of the Workers’ Compensation Division. That’s more than 9 percent of all 17,718 employers who pay into the system.

Despite not paying, those employers still enjoy immunity from lawsuits, and their employees still qualify for workers’ compensation benefits.

Fraud is harder to measure. No workers and no employers have been prosecuted for trying to defraud Wyoming’s workers’ compensation system in recent years, Child said. But the agency’s internal vetting and investigating processes continually watch for phony or inaccurate claims.

Workers’ compensation spent an annual average of $229,482 on fraud investigation during the past three years, which often includes hiring private investigators to spy on workers who file claims, according to Child.

Upon request by the Star-Tribune, Child said the agency is statutorily prevented from releasing internal documentation that would demonstrate attempts to defraud the system.

Child did offer his own anecdote in an e-mail to the Star-Tribune:

“An employee filed claiming injury secondary to a minor slip, without falling, that cause(d) the need for a total hip replacement and treatment of low back pain. Evidence subsequently received revealed the hip condition and accompanying back pain was congenital and had been scheduled for surgical correction prior to the alleged work incident.”

Estimates vary about how many claims are compensable, or legitimate. Child has testified before legislators twice in recent months that he can only estimate, based on national figures, that between 10 percent and 20 percent of claims at the division are fraudulent.

The fraud estimate has been quoted by politicians who question the need for broad reform. One prominent lawmaker who has cited Child’s figures, Sen. Charlie Scott, R-Casper, acknowledged the estimate has no statistical backing.

“It was a SWAG — scientific wild-assed guess,” Scott told the Star-Tribune via email.

Worker advocates who champion reforms at Wyoming Workers’ Compensation say they’re concerned that Child and some legislators seem to be perpetuating the notion that a constant flood of fraudulent claims is overwhelming the system.

“Too many people seem to believe that workers who file claims are malingerers or worse, even crooks,” said Dan Neal, executive director of the Equality State Policy Center. “Wyoming’s boom depends on hard working labor. There may be a few who try to cheat the system. But I’d like to see better proof that it’s as high as 20 percent.”

Neal said policymakers in Wyoming don’t seem to be equally concerned about the more than 9 percent of Wyoming employers who are delinquent in their workers’ compensation premiums.

“Employers benefit a lot from the workers’ compensation system. The premiums are fair and it protects them from their own negligence,” Neal said.

Morris’ firm, Hinshaw and Culbertson, hired the investigators about two weeks ago and will report any findings to the school board.

“The board feels that it’s important that the community understands that they are taking it seriously and if anything is wrong, they want to fix it,” Morris said.

The private investigators include a former Chicago policeman and a former FBI agent.

Morris did not have an estimate on how much the investigation will cost because the investigation is in its preliminary stages and the investigators are still defining the scope of the investigation, he said.

In January, two security guards at the Waukegan Ninth Grade Center were charged with felony theft following a six-month investigation by the Waukegan Police Department. The two men allegedly arranged to be paid for time they did not work. Their supervisor, Director of Safety Al Rogers, is on paid administrative leave.

Associate Principal William Newby is currently serving as interim director of safety.

A pre-disciplinary hearing for Officer Nate Orzech took place this week. Firefighter Matt Meyer will have a hearing Friday in the city manager’s office.

Questions arose over the two employees’ behavior after a report written by a private investigator revealed Orzech took a nitroglycerin tablet to pass a blood pressure test and qualify for a “wellness” credit under the city’s health benefits plan.

The report, written by Columbus-based private investigator Robert Schultz, cited numerous employee conduct violations, including dispensing medication without a doctor’s approval or outside of a medical emergency.

Meyer gave Orzech the pill, which he obtained from a city EMS squad, in December 2007, the report stated.

Meanwhile both Meyer and Orzech remain employed in their normal capacities, White said.

Meyer has been a full-time firefighter for three years and worked part time for the department before that, said fire Chief Paul Berlin. Orzech has been with the police department since 1999.

In the report Meyer told the investigator he learned of the practice of taking the pill from a now-retired firefighter.

City employees with health benefits are tested for five wellness credits: blood pressure, nicotine, glucose, cholesterol and body mass index.

If all tests are passed the employee qualifies for an $800 reimbursement on the plan’s $4,000 deductible, White said previously.

The pre-disciplinary hearing process is part of the collective bargaining agreement for employees and will allow the employees to share their side of the story, White said.

The ABI has worked with the Information Commissioner’s Office and the private investigator (PI) industry to publish guidelines on the use of PIs by insurers when investigating potentially fraudulent claims.

The guidance covers when an insurer should consider using a PI, the importance of a formal agreement between the insurer and investigator and the information that the insurer needs from the PI to come to a conclusion.

It also explains who has the right to see the information collected by the PI and how long it should be kept by the insurer.

Stephen Haddrill, director general for the ABI, said: ‘People rightly want to protect their privacy. Insurers need to balance this with the need to expose cheating policyholders.

‘On occasions an insurer may need to use a private investigator if they suspect a claim is fraudulent. And insurers may sometimes use tracing agents to find people who are due payouts from old policies.’

Dr. Farouk Al-Salihi, of Jersey City, admitted making the fraudulent claims in January and February 2006. The patient whose papers Al-Salihi forged turned out to be an undercover investigator from the New Jersey Office of Insurance Fraud.

Al-Salihi will appear before Hudson County Judge Vazquez on June 15 for sentencing. He faces up to 18 months in prison and a $10,000 fine.

Van Nuys Superior Court Judge Michael Kellogg also ordered Jacinto Antonio Barrientos to pay $45,199 in restitution to Unitrin Insurance Co., where the San Fernando Valley man, 35, committed the crimes over a 13-month period beginning in June 2005, prosecutor Loren Naiman said.

“Today’s arrests have dealt a death blow to these elaborately organized schemes. By working together, we’ve crippled their ability to continue their concerted rip-off of the system,” says California Insurance Commissioner Steve Poizner.

The arrests were made in Kern, Kings, Tulare, Fresno and Merced counties.