PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. CITY OF CHICAGO COMPENSATION PROGRAM GRANT THORNTON LLP FINAL REPORT MAY 10, 2019 PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Table of Contents I. INTRODUCTION AND ASSIGNMENT OBJECTIVES 1 II. LIMITATIONS AND DISCLAIMERS 2 a. Standards of Performance 2 b. Limitations on Distribution 3 EXECUTIVE SUMMARY 4 IV. BACKGROUND, DEFINITIONS, AND KEY SOURCES OF INFORMATION 5 a. Background 5 b. Definitions 6 0. Key Sources of Information 8 V. FRAUD RISK ASSESSMENT 10 a. Summary 10 b. Procedures Performed 10 0. Findings 14 d. Recommendations 19 VI. DATA ANALYTICS 24 a. Summary 24 b. Procedures Performed 24 0. Findings 28 d. Recommendations 42 VII. CLAIMS TESTING 43 a. Summary 43 b. Procedures Performed 43 0. Findings 45 d. Recommendations 59 PEER JURISDICTION ANALYSIS 65 a. Summary 65 b. Procedures Performed 65 c. Findings 67 d. Recommendations 67 IX. APPENDICES 70 a. Appendix A City of Chicago Workers Comp. Program: Fraud Risk Map 70 b. Appendix City of Chicago Workers Comp. Program: Detailed Claims Testing Results for Civilian Workforce 99 0. Appendix City of Chicago Workers Comp. Program: Detailed Claims Testing Results for Police and Fire Workforce 101 d. Appendix Detailed Testing Results from CCMSI for Federally Funded Civilian 103 e. Appendix Detailed Testing Results from CCMSI for Aviation Employees 105 The contents of this document were prepared solely for the usa of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton t. Appendix Top 20 Claims by Civilian, Police and Fire, Federally Funded Civilian, and Aviation 107 9. Appendix Number of Days Between Injury Date and System Add for Civilian Police and Fire Claims: 109 Appendix City of Chicago Ward Boundaries Legend 112 Appendix I City of Chicago Aldermanic Wards and Zip Codes 113 Appendix Zip Codes by Claims and Active Employees Analysis 115 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton I. INTRODUCTION AND ASSIGNMENT OBJECTIVES Grant Thornton LLP (?Grant Thornton?, ?our?, or ?team?) was retained by the City of Chicago (?City?) Corporation Counsel (?Counsel?) to assist Counsel by conducting a review and audit1 of the Workers? Compensation Program (?Program?) for the City covering calendar years 2017 and 2018. Grant Thornton?s procedures were performed at the direction of Counsel. Counsel engaged us to assist the City with a review of the Program to identify potential patterns or instances of fraud, waste, and abuse within the Program. Our assignment and procedures included: 1) The analysis of workers? compensation benefits administered in 2017 and 2018 to assist the City in determining whether the Program: a. provided workers? compensation benefits in compliance with governing statutes, rules, and policies; b. workers? compensation costs are in line with comparable peer jurisdictions; and 0. provided workers? compensation benefits indicative of FWA by employee claimants, medical providers, and law firms. 2) An assessment of the Program?s operations and processes, including any fraud prevention and detection processes and protocols. The procedures we executed fall within four broad fraud risk assessment, analytics (data analytics), testing (claims testing), and research (peer jurisdictional analysis). The scope of our assignment determined by Counsel as set forth above, did not include investigative procedures designed to determine the root causes or a quantum of potential FWA. We did not conduct interrogative interviews seeking admission of guilt of perpetrating potential FWA against the Program. Grant Thornton also did not conduct electronic discovery computer forensic imaging of Program employee work computers, obtaining forensically sound email populations of Program personnel and conducting a targeted search for information) or attempt to quantify the potential financial impact to the City?s financial statements or the Program of any of our adverse findings and observations as a result of the procedures we performed. 1 The use of the word ?review? or ?audit? in the scope of services of this assignment was not undertaken or performed as any form of assurance or attestation as defined by the American Institute of Certified Public Accountants Grant Thornton as a firm is neither providing an opinion on any financial statements or other information nor providing an attestation or other form of assurance with respect to our work. Further, Grant Thornton did not apply procedures to determine the Program?s financial reporting was in compliance with any specified requirements from the AICPA, generally accepted accounting principles or other pronouncements, regulations, or guidelines on accounting. The parameters of this assignment were determined at the direction of Counsel through a scoping process that identified objectives and the means to measure whether the objectives were met. 1 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used. relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton II. LIMITATIONS AND DISCLAIMERS a. Standards of Performance Our scope of work is as set out in our engagement letter or otherwise agreed to, which is quoted in this report. Our analysis of the affairs of the Program does not constitute an audit, review, or compilation in accordance with auditing and attestation standards and, consequently, we do not express an opinion on the figures included in the report. Because our services are limited in nature and scope, they cannot be relied upon to discover all documents and other information or provide all analyses that may be of importance in this matter. Accordingly, we make no representations regarding the sufficiency of our procedures for your purposes. Our services were provided in accordance with the Statement on Standards for Consulting Services promulgated by the American Institute of Certified Public Accountants and, accordingly, neither constitute a rendering by Grant Thornton LLP or its partners or staff of any legal advice, nor do they include the compilation, review, or audit of financial statements, as defined by the AICPA. Grant Thornton?s project planning was conducted at the direction of Counsel and execution of our work was performed with objectivity and integrity; however, our work was not intended to be performed in accordance with the generally accepted audit standards 2. Unless specifically stated herein, we did not validate the accuracy or completeness of any data or information provided to perform our procedures. The scope of the assignment has been limited to analyses of documents and data, along with information provided in interviews that have all been provided by the City, City employees, or City contractors. As such, we cannot be relied upon to discover all documents and other information or provide all analyses that may be of importance to the operations and administration of the Program. Although Counsel asked us to identify indications of FWA of which we become aware, our responsibility for the assignment was not specifically to conduct an investigation into possible fraudulent activity perpetrated within or against the Program. We neither conclude on the existence of possible fraudulent activity nor do we attempt to define what the whole population of possible FWA occurrences could be. 2 GAAS is intended to serve as the authoritative guidance in an assurance engagement, in which ?the objective of the ordinary audit of financial statements by the independent auditor is the expression of an opinion on the fairness with which they present, in all material respects, financial position, results of operations, and its cash flows in conformity with generally accepted accounting principles? (AU 110 ?Responsibilities and Functions of the IndependentAuditor?). This assignment is a consulting engagement as defined by our professional guidance. The Statement on Standards for Consulting Services (CS Section 100) applies, in particular paragraph .06 which requires as ?Standards for' Consulting Services" the following: a) professional competence, b) due professional care, c) appropriate and adequate planning and supervision, and d) an obligation to seek out sufficient relevant data. Further, CS 100, paragraph .02 defines the following: ?The nature and scope of work is determined solely by the agreement between the practitioner and client.? Further, paragraph .05 sub b) defines ?advisory services, in which the practitioner?s function is to develop findings, conclusions, and recommendations for client consideration and decision making?. This was the guidance Grant Thornton relied upon in conducting the work regardless of the naming convention ?audit?) used by the City in its request for proposal to conduct this engagement. The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used, relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton b. Limitations on Distribution This report contains sensitive and confidential information proprietary to the City. It is restricted for the use and distribution to the parties of our engagement letter, and should not be disclosed to unauthorized third parties. We have not and shall not be deemed to assume any duties or obligations to any third party. This report is privileged and confidential and intended for the sole use by Counsel for whom it was prepared and to whom it was addressed. It is limited to the specific scope and activities agreed to with Counsel. This report may not be copied, reproduced, disseminated, distributed, or otherwise made available to any third party, in whole or in part, without the express prior written consent of Grant Thornton LLP. Grant Thornton LLPs consent may be withheld for any reason. In preparing this report, Grant Thornton LLP used professional care and diligence and relied upon the information provided by the City and other sources for our analysis. No representation or warranty, express or implied, is made by Grant Thornton LLP as to the accuracy or completeness of the information relied upon and included in this report. If the City wishes to disclose or disseminate in any manner any portion of any deliverable, other than the public report that Grant Thornton will assist the City with preparing, to a third party, the City agrees to first provide Grant Thornton LLP with a draft of the proposed disclosure, (ii) obtain Grant Thornton?s advance written approval, and if requested, obtain from the third party and provide to Grant Thornton a non-disclosure agreement and/or release in a form satisfactory to Grant Thornton in its sole discretion. Grant Thornton LLP acknowledges and accepts that all information and records supplied to and created for the City are public records and subject to public disclosure, and in the normal course of its duties, the City may also use this information to prepare related documents that are released to the public. Notwithstanding the City?s permission to use the information provided, any work product, deliverables, or documents delivered by Grant Thornton LLP shall be released only as redacted in accordance with law or with the prior written permission of Grant Thornton LLP. This report is not to be used for any other purpose, and we specifically disclaim any responsibility for losses or damages incurred through the use of this report for a purpose other than as described in our engagement letter. 8 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Ill. EXECUTIVE SUMMARY Based upon the procedures we performed and information made available to us as of the date of this report, the City?s Workers? Program is in need of substantial improvement to operate more effectively as well as prevent and detect potential fraud, waste, and abuse While we were not tasked with nor did we investigate potential instances of fraud, we did identify significant control deficiencies and weaknesses that would create an environment where FWA could be present. Of the workers? compensation claims we tested, the majority were not in compliance with governing statutes, rules, or the Program?s internal claim administration guidelines in varying degrees of severity. Contributing factors to these results included the Program not maintaining its operations based on commonly accepted workers? compensation industry best practices and an inadequately trained workforce. In addition, the Program likely did not consistently provide workers? compensation benefits in compliance with governing statutes, rules, or the Program?s internal claim administration guidelines. We attempted to obtain comparable claims data from 19 peer agencies and jurisdictions, including major metropolitan areas. The data we did receive from seven different sources is not specifically comparable to that of the City?s Program for a variety of reasons detailed in the report. Any attempt to determine whether the City?s workers? compensation costs are or are not in line with those comparable peer jurisdictions would require additional data that was not available to us to analyze. Some jurisdictions provided limited data and others were non-responsive. In all, we interviewed or interfaced with nearly 50 individuals including 28 current or former employees of the Program, City executives and other departmental personnel, third parties providing claims administration services to the Program, and outside counsel to which the Program referred some workers? compensation claims. Without exception, those individuals we interviewed or interfaced with were cooperative. The City should evaluate whether it should invest the resources to substantially improve the Program to enhance its control environment and its operations, or whether the City should invest the resources to outsource the Program?s administration of workers? compensation benefits to a third party that specializes in the administration of workers? compensation benefits. Either course of action will likely result in cost savings to the City over time, but in conjunction with its evaluation of the best course of action to take the City should estimate the likely cost savings and whether that cost savings can be achieved within a timeframe acceptable to the City. 4 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL - PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton IV. BACKGROUND, DEFINITIONS, AND KEY SOURCES OF INFORMATION a. Background As of April 1, 20193, the Program will be administered by the Department of Finance which is a function of the Executive Branch of the City government. Prior to April 1, 2019, the Program was administered by the Committee on Finance of the City Council, which is a part of the Legislative Branch of the City government. The Program administers workers? compensation benefits for four City employee groups Civilian, Police and Fire, Aviation, and Federally Funded Civilian? as follows: . Aviation and Federal/v Funded Civilian personnel have all aspects of workers? compensation claims (hereinafter referred to as ?workers? compensation claims? or ?claims?) administered by a third-party administrator, Cannon Cochran Management Services, Inc. . Police and Fire5 personnel have managed medical and medical claims administered through the Program. Indemnity and life reserves claims6 are administered by the individual departments, the Police Department and the Fire Department, respectively; and, Civilian personnel have all aspects of workers? compensation administered by the Program. The Program employees have functioned under the following organizational structure: a Director of Workers? Compensation, Assistant Director, Civilian Workers? Compensation Manager, Claims Counsel, claims adjusters (segregated by claim type), Investigators, and administrative support. Also, Coventry Healthcare Workers? Compensation, Inc. (?Coventry?) reviewed and adjusted medical bills for Civilian and Police and Fire workers? compensation claims. The City?s Department of Law Torts Division is responsible for handling workers? compensation claims that involve arbitration or litigation proceedings as part of the claim adjudication process. Certain claims are referred to one of several external law firms to assist with the claim adjudication process including subrogation Hennessy Roach, P.C., Coghlan Law LLC, and others). The Program has operated for many years with little to no monitoring and oversight by any other City departments who may have otherwise had the jurisdiction to do so. Some of these departments have requested access to the Program?s records for review, including the City of Chicago Office of Inspector General but it is our understanding the Program or the COF may not have always produced a complete set of responsive information, may have denied the request, or not fulfilled the request. For example, one such request was fulfilled with the caveat that information would be limited to information permissible under the Illinois Freedom of Information Act and the Health Insurance Portability and Accountability Act of 1996. 3 Unless otherwise noted, all Grant Thornton findings and observations within this report are based on the Program?s operations from January 1, 2017 through March 31, 2019. 4 Federally Funded Civilian describes those employees whose salaries are paid through federal funding sources. 5 Police and Fire as a term used in this report is inclusive of sworn police officers and firefighters as well as the civilian employees who work within the Police and Fire Departments, respectively. 6 Claim types are classified as follows: a) indemnity, b) managed medical, c) life reserves, and, d) medical only. 5 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton b. Definitions Average Weekly Wade calculated based on the claimant?s weekly wage in the 52 weeks prior to the date of the injury, per the Illinois Worker?s Compensation Act The Act addresses several factors impacting the calculation such as; disqualifying bonuses and overtime for purposes of the calculation, employees who have been employed by the employer for less than 52 weeks, employees who have lost 5 or more working days during the 52 week period, and employment by another employer which the liable employer had knowledge of prior to the injury. Per the Act, indemnity benefits for TTD (see definition below) are calculated as 66 2/3 percent of AWW. Permanent Partial Disability entitles the claimant to 60 percent of AWW. CCMSI CCMSI manages all claims submitted by employees whose positions are Federally Funded Civilian and those who are employed by the Department of Aviation. CCMSI uses a combination of Program-issued Client Service Instructions and its internal Corporate Claims Best Practices to manage claims. Coventm Using its own medical bill review system called Coventry Connect, Coventry adjusts bills according to Illinois Worker?s Compensation Commission Medical Fee Schedule (?fee schedule?). Coventry also provides Nurse Case Management, Utilization Review and Independent Medical Exam services to the Program. Indemnity claims Claims for medical expenses and Total Temporary Disability or ?Total Disability? or benefits that are due to the claimant (employee) while they miss work because of the subject injury (ies). Insurance Services Office ClaimsSearch ISO ClaimSearch is a third-party service offering that provides statistical and actuarial information along with various advisory services. ISO is widely used in the insurance industry to obtain data about past losses, predict future losses, and satisfy other regulatory requirements such US. Department of Treasury - Office of Foreign Assets Control searches. The claims management system of record for the City of Chicago?s Workers? Compensation Program. Life Reserves claims Claims for lifetime medical expenses due to catastrophic injury. The claimant will most likely be unable to seek any other employment because of the extent of the subject injury (ies). Manaqed Medical claims Claims for complex medical care that require a higher level of care oversight, coordination, and resources. Maximum Medical Improvement MMI is a treatment plateau in each claimant?s healing process. It can mean that the claimant has fully recovered from the injury or that the claimant?s medical condition has stabilized to the point that no major medical or emotional change can be expected in the claimant?s condition. The claimant has, or is, receiving Temporary Total Disability benefits related to the claim. Medical Onlv claims Claims for only medical expenses that are generally related to simple injuries requiring simple medical care and no time off work, meaning no TTD benefit liability. 6 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Pending claims Claims that have been received by the Program but whereby final categorization and disposition are still under review by the Program. Record Onlv claims Claims that are filed with the Program, but do not result in medical expense or TTD liabilities. It is in the best interest of employers to adequately manage Record Only claims in the event the claimant decides to seek medical treatment after the fact, or the injury contributes to complications in the future. Record Only claims should not have any associated benefit payments. Subrogatio This is a term describing a legal right to pursue a third party that caused a loss a workers? compensation claim expense) incurred by the City, which then makes its own claim against others who may have caused the loss, insured the loss, or contributed to the loss. This is done in order to recover the amount of the claim paid by the City for the loss it incurred. Temporary Total Disabilitv and Temporary Disabilitv Benefit put forth by the Act designed to temporarily compensate the injured worker during the duration of his or her disability. 7 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL Gra ntThornton c. Key Sources of Information To understand the organizational structure, processes, and history of the City?s Program, Grant Thornton requested, gathered, and analyzed several sources of information. While this is not an exhaustive list of information obtained and reviewed, the items below represent key sources of information we relied upon during the course of the engagement: 1. An organization chart for the Program as of February 1, 2019, provided by the DOF: Director of Workers Comp (1 Position, FilledDirector Claims Counsel . . . Administrative Manager (1 Position, Filled) (2 Positions, Filled) (3 1 (1 Position. Filled) I I Civilian Workers Police and Fire IOD Clerical Staff Compensation Manager Manager (5 Positions, 2 Filled, 3 (1 Position, Filled) (1 Position,Vacant) Vacant) If I Investigators: Chief (1 Position, Filled) Staff (1 Position, Vacant) Civilian Adjusters Police 8. Fire Adjusters (12 Positions, 11 Filled. (4 Position, 3 Filled, 1 1 Vacant) Vacant) 2. Individuals interviewed by Grant Thornton (unless otherwise noted, all individuals listed are from the Program): Director of Workers? Compensation Assistant Director former Assistant Director two Claims Counsel Administrative Manager Civilian Workers? Compensation Manager Chief Investigator eleven Civilian Adjusters (overseeing indemnity, medical, managed medical, and life reserves claims) i. three Police and Fire Adjusters 8 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used, relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton 12The OlG?s list of workers? compensation claim complaints received and those resultant claim two Clerical Staff one Information Technology employee (System Administrator) three DOL Torts Division lawyers . Inspector General, OIG Deputy Inspector General for Audit, OIG Deputy Inspector General for Investigations, OIG General Counsel for OIG Deputy General Counsel for OIG claims data for Civilian and Police and Fire for 2017 and 2018 CCMSI claims data for Federally-Funded Civilian and Aviation for 2017 and 2018 Coventry medical data for Civilian and Police and Fire for 2017 and 2018 Program employees? payroll data for 2017 and 2018 Current Program employees? resumes The historical list of workers? compensation claims requiring litigation support Hennessy Roach, P.C. list of workers? compensation claims referred to the firm list of claims referred externally for legal services nppaafxm complaints the OIG referred to the Program for its review A sample of an OIG investigative report regarding a workers? compensation claimant Copy of an unsigned agreement between the COF and Coventry from 2008 Correspondence from the COF and Jenner Block LLP regarding the requests for documentation from the Program Program employee list given to the OIG by the Department of Human Resources Background documents provided by the OIG: Collective bargaining agreements for the Police and Fire departments CCMSI policies and procedures for Federally Funded Civilian claims management and Aviation claims management Claims Management Guide utilized by the Program Peer jurisdiction workers? compensation data from select peer agencies and jurisdictions including the City?s Program data from years 2014-2018 (see more details in Section Grant Thornton requested documents that could not be or were not provided as of the date of this report including: The policy on contracting with third parties Coventry?s policy on medical bill review and payment processes Risk Console user guide and sample reports List of claims handled by Coghlan Law LLC and other applicable law firms for legal support and subrogation 9 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton V. FRAUD RISK ASSESSMENT a. Summary Grant Thornton performed fraud risk assessment procedures over the Program to identify potential fraud risks and make actionable recommendations for improvement. Utilizing the five principles introduced in the Committee of Sponsoring Organizations of the Treadway Commission Fraud Risk Management Guide Guide?): Fraud Risk Governance, Fraud Risk Assessment, Fraud Control Activities, Fraud Investigation and Corrective Action, and Fraud Risk Management Monitoring Activities, Grant Thornton determined the Program?s overall fraud risk maturity aligns with Level One (Ad Hoc) of our fraud risk maturity model (see Figure 1). We evaluated and rated the Program?s fraud risk activities across each of these principles and provided detailed findings and recommendations in Section V.c. and Section respectively of this report. b. Procedures Performed In correlation with realignment of the Program from the COF to the DOF, the City determined it needed additional information related to the fraud risks that could expose it to financial, operational, and reputational harm. Framework Methodology. Grant Thornton?s fraud risk assessment framework is based on principles introduced in the C080 Guide. The COSO Guide was published in September 2016 with co-sponsor, the Association of Certified Fraud Examiners The COSO Guide builds on the COSO 2013 Internal Control Integrated Framework that has been accepted as the framework most non-federal government entities and public companies have adopted. Principle 8 of the C080 2013 Internal Control Integrated Framework is, ?The organization considers the potential for fraud in assessing risks to the achievement of objectives.? The COSO Guide applies to all industries and government entities and offers a blueprint for satisfying Principle 8, thus helping organizations to establish an overall fraud risk-management program. Further, it covers key fraud risk management components with suggested activities that result in fraud deterrence. As noted above, Grant Thornton?s fraud risk maturity model is based on the five principles of the C080 Guide. See Table 1 below for the C080 Guide?s definition of the five key fraud risk principles essential to an effective fraud risk-management program. We assessed the City?s Program using these five COSO principles as a benchmark for best practices in effective fraud risk management. 10 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton COSO Principle Description Fraud Risk The organization establishes and communicates a Fraud Risk Governance Management Program that demonstrates the expectations of the board of directors and senior management and their commitment to high integrity Control and ethical values regarding managing fraud risk Fraud Risk The organization performs comprehensive fraud risk assessments to Assessment identify specific fraud schemes and risks, assess their likelihood and significance, evaluate existing fraud control activities, and implement actions to mitigate residual fraud risks. Fraud Control The organization selects, develops, and deploys preventive and detective Activities fraud control activities to mitigate the risk of fraud events occurring or not being detected in a timely manner. Fraud Investigation The organization establishes a communication process to obtain and Corrective information about potential fraud and deploys a coordinated approach to Action investigation and corrective action to address fraud appropriately and in a timely manner. Fraud Monitoring The organization selects, develops, and performs ongoing evaluations to Activities ascertain whether each of the ?ve principles of fraud risk management is present and functioning and communicates Fraud Risk Management Program deficiencies in a timely manner to parties responsible for taking corrective action, including senior management and the board of directors. Table 1: 0080 Fraud Risk Management Guide Categories Current-State Fraud Risk Maturity Assessment Approach. Grant Thornton began by collecting available documentation to understand the current state during the period in scope (2017 and 2018). Following our review of Program documentation made available to us, we developed a detailed fraud risk map to identify potential fraud schemes as well as the actors and channels associated with each of those schemes. The fraud risk map provided a broad view of program vulnerabilities and identified areas to be assessed further during interviews. With an understanding of potential vulnerabilities, we conducted one-on-one or small group interviews with management and staff across the entire Program, including relevant external stakeholders such as the OIG and the DOL Torts Division. The information gathering and interviews provided a significant level of detail that enabled us to identify and classify various fraud risks and make actionable recommendations for improvement. The fraud risk assessment findings relate to both internal and external fraud threats across the entirety of the Program, including claims related to the above-noted employee groups (see Section Grant Thornton evaluated the maturity of the Program against 0080 Guide principles on a continuum from Ad Hoc (1) to Leadership (5). The maturity model continuum is presented below in Figure 1. We 11 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton assessed the Program?s maturity solely against this framework. For each of the five principles, we identified gaps between the Program and established benchmarks. These gaps are presented as findings with detailed recommendations in Section V.c. and Section V.d. of this report. 12 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. GRANT FRAUD RISK MATURITY MODEL FRAUD RISK GOVERNANCE FRAUD RISK ASSESSMENT FRAUD CONTROL ACTIVITIES FRAUD INVESTIGATION CORRECTIVE ACTION FRAUD MONITORING ACTNITIES Undocumented and in - a state of dynamic change, tending to be driven in an ad hoc, uncontrolled, and reactive manner by users or events Fraud risk management processes are disorganized, even chaotic Success is likely to depend on individual efforts, and is not considered to be repeatable because processes would not be sufficiently defined and documented to allow them to be replicated INITIAL LEVEL -TVVO, The organization is aware of the need for a more formal fraud risk management approach Processes are repeatable. possibly with consistent results Fraud risk definitions often vary across the organization. Fraud risk is assessed and/or managed in silos, and enterprise-wide risks are not routinely considered Risks are managed largely in a reactive way REPEATABLE LEVEL THREE There are sets of defined and documented standard processes established. Approaches are standardized and repeatable Fraud risk management is aligned with the organization's external and internal environment and integrates with the organization's enterprise risk program Senior levels and the board of directors receive fraud risk overviews or reports Roles, responsibilities, and performance measurements are defined and documented MANAGED LEVEL FOUR Fraud risk management activities across the organization are aligned with controls and performance indicators Performance and quality are defined and can be measured Information on fraud risks is aggregated and analyzed and is easily available to management. A process for notifying management in changes to fraud risk profiles is established and operating Full integration of the fraud risk principles into management processes has been achieved Figure 1: Grant Thornton?s Fraud Risk Maturity Model LEADERSHIP LEVEL FIVE I The organization's focus is on continually improving fraud risk management through both incremental and innovative changes/ improvements Management discusses fraud risk with a goal of strategic, operational, and profitability improvements Fraud risk tolerance has been established and fraud risk assessments are designed to inform the board and management when thresholds have been exceeded PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton c. Findings Maturity Assessment Results Grant Thornton determined the Program?s overall fraud risk maturity aligns with Level One (Ad Hoc) of our maturity model. This overall maturity level represents the aggregate score across all five COSO principles outlined in Figure 2. We evaluated and rated the Program?s fraud risk activities across each of these principles. Detailed findings and recommendations are below-noted. Fraud Risk Maturity Assessment REPEATABLE MANAGED LEADERSHIP . STANDARDPROCEDURES Management . LEVEL3 LEVELS Principles -- FRAUD RISK GOVERNANCE FRAUD RISK ASSESSMENT FRAUD INVESTIGATION 81 CORRECTIVE ACTION FRAUD MONITORING ACTIVITIES OVERALL . FRAUD CONTROL ACTIVITIES Figure 2: Fraud Risk Assessment Results COSO Principle 1: Fraud Risk Governance The COSO Guide calls for organizations to establish and communicate fraud risk management policies that demonstrate the expectations of senior management and their commitment to integrity and ethical values regarding managing fraud risk. Based on Grant Thornton?s evaluation, we determined the Program was operating at Level One (Ad Hoc) for this principle. Grant Thornton noted the Program had no formalized governance or oversight structure, which contributed to an overall lack of activities and controls to prevent FWA. The following were key findings related to this COSO principle: 14 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton - The Program did not have did not have a comprehensive enterprise fraud risk policy, including defined roles and responsibilities. 0 The Program did not offer antifraud training. 0 The Program did not conduct fraud awareness initiatives. Each of these findings are below detailed. The Program did not have a comprehensive enterprise fraud risk policy, including defined roles and responsibilities. The 0080 Guide states that a fundamental principle of an effective fraud risk management policy is for all personnel to be cognizant that the organization does not accept fraudulent behavior of any kind. The Program had no documented policies or guidelines related to fraud and any antifraud activities we identified were inconsistent in their approach and application. The 0080 Guide states an organization should identify the roles and responsibilities of all personnel as they relate to fraud risk governance. The Program did not have any specific roles or responsibilities that related to fraud risk governance or management of fraud risks. Lack of clear roles and responsibilities introduces ambiguity regarding who is responsible for identifying and managing fraud risks as well as handling allegations of suspected FWA. This ambiguity could allow FWA to go unnoticed and/or unreported and creates significant risk for the Program. The Program did not offer antifraud training. The 0080 Guide calls for organizations to implement an enterprise-wide fraud-focused training course that is required for all employees on a recurring basis. Further, the C080 Guide states this type of enterprise-wide training provides a consistent basis for fraud awareness throughout the organization, which is a fundamental pillar of any fraud risk management effort. Grant Thornton noted the Program lacked any antifraud training material. Any job- specific training performed was conducted by more senior adjusters on an ad-hoc basis, and therefore, was not consistent in who received the training or at what level of detail. The Program did not conduct fraud awareness initiatives. The 0080 Guide states an organization should communicate the importance of fraud risk management at all levels of the organization, with a continued focus on fraud deterrence, prevention, and detection. Grant Thornton noted the Program documented a list of potential red flags within the ?Claims Management Guide? to help claims adjudication staff identify potential issues (including fraud and other common problems) during the adjudication process. However, these red flags were simply provided as additional information and beyond this list of common red flags, Grant Thornton was unable to identify any efforts by the City or Program management to raise awareness about the risk of fraud as it relates to the Program. A lack of awareness about specific Program risks and red flags raises the likelihood that instances of FWA could go unnoticed. COSO Principle 2: Fraud Risk Assessment The 0080 Guide calls for organizations to perform comprehensive fraud risk assessments to identify specific fraud schemes and risks, assess the likelihood and significance of those risks, evaluate existing fraud control activities, and implement actions to mitigate residual fraud risks. Based on Grant Thornton?s evaluation, we determined the Program was operating at Level One (Ad Hoc) for this principle. 15 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton The following key finding was related to this COSO principle: 0 The Program had not performed a fraud risk assessment to identify and respond to fraud risks. This finding is below detailed. The Program had not performed a fraud risk assessment to identify and respond to fraud risks. The COSO Guide states the fraud risk assessment process should be comprehensive and identify specific fraud schemes and risks across the organization. Once an organization has developed a standardized fraud risk assessment process, the organization should establish a fraud risk assessment team that includes the appropriate levels of management. Finally, the COSO Guide states the fraud risk assessment process should be repeated periodically and organizations should consider changes affecting the organization such as changes in operations, personnel, and leadership that can affect fraud risks and may trigger the need for a reassessment. Grant Thornton noted the Program had no standardized fraud risk assessment methodology and had never performed a fraud risk assessment. This presents significant risk to the Program, as the completion of a fraud risk assessment is needed to understand the sources of fraud risk, assess the likelihood and impact of fraud events, and determine appropriate risk responses based on the Program?s risk tolerance and prioritization. COSO Principle 3: Fraud Control Activities The COSO Guide calls for organizations to select, develop, and deploy preventive and detective fraud control activities at various levels of the organization to mitigate the risk of fraud events. Based on Grant Thornton?s evaluation, we determined the Program was operating at Level Two (Initial) for this principle. Grant Thornton assessed the Program at Level Two because it did have some internal controls in place, for example the Program employed segregation of duties controls for the claim adjudication, investigation, and review/approval roles. Additionally, the Program had a documented best practices guide, which included red flags to document indicators to help adjudicators identify potential fraud, waste, and abuse. The following key findings are related to this COSO principle: 0 The Program did not have any documented policies or procedures other than the Claims Management Guide. - The Program had limited fraud control activities. - The Program did not employ proactive data analytics. . The Program was not able to produce and so it can be presumed the Program does not maintain fully executed contracts with third parties. These findings are below detailed. The Program did not have any documented policies or procedures. The COSO Guide states organizations should thoroughly document and implement their control activities through formal policies and procedures. Grant Thornton noted the Program did not have any written policies or procedures except for the Claims Management Guide that included potential red flags and was last updated in 2015. Without thoroughly documented policies and procedures, control activities will not be institutionalized and may not be implemented consistently across the Program. 16 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton The Program had limited fraud control activities. Grant Thornton noted the Program developed and implemented some internal controls and processes to identify and investigate potential FWA in workers? compensation claims and related medical bills. However, we noted the Program did not have adequately documented policies and procedures to ensure consistent application of fraud control activities across all business processes and did not take actions to determine their effectiveness in preventing or detecting potential cases of FWA. Further, the Program did not have a process to assess fraud risks; therefore, it did not take a coordinated approach to identify control gaps and develop preventative and detective controls in response to program risks and gaps. The Program did not employ proactive data analytics. The 0080 Guide states organizations should implement a system of data analytic processes and procedures to identify anomalous transactions or events for further investigation. Grant Thornton noted the Program does not use either software it is currently licensed to use or software readily available in the market to perform data analytics to identify potential FWA. Program management informed Grant Thornton a dashboard is used to track medical claims processing metrics on a basis. However, the Program?s use of analytics was limited to tracking workflow status and did not employ analytic methods to prevent or detect suspicious transactions for further investigation. The Program informed us it utilizes a tool, Risk Console, to assist with some data analytics. We requested samples of reports and the tool?s user guide, but as of the date of this report, the Program has not provided these requested items. The Program was not able to produce - and so it can be presumed the Program does not maintain contracts with third-party service providers. The 0080 Guide calls for organizations to analyze all fraud risks, including external risks, and their impact on the organization?s objectives. This analysis is not entirely possible without fully understanding the rights and obligations related to relationships with service providers. The Program was only able to produce an unsigned copy of its agreement with Coventry. As such, Grant Thornton was unable to examine whether the contracts or the process by which they are awarded would have presented FWA risks to the Program. COSO Principle 4: Fraud Investigation and Corrective Action The C080 Guide calls for organizations to establish a communication process to obtain information about potential fraud and deploy a coordinated approach to investigation and corrective action to address suspected fraud appropriately and in a timely manner. Based on Grant Thornton?s evaluation, we determined the Program was operating at Level Two (Initial) for this principle. The following key findings are related to this 0080 principle: 0 The Program did not maintain an anonymous fraud tip hotllne to facilitate internal or external referrals for potential fraud.7 - The Program?s investigations function did not have documented policies or procedures to ensure consistent, reliable investigations. 7 Grant Thornton noted the Program received anonymous fraud tips related to the Program or claims through the OIG. 17 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton These findings are below detailed. The Program did not maintain an anonymous fraud tip hotline to facilitate internal or external referrals for potential fraud. The Program indicated that any cases of suspected fraud were to be addressed by Program leadership, which could potentially discourage reporting of suspected cases of internal fraud schemes perpetrated by Program personnel. The ACFE noted in its 2018 Report to the Nations that organizations with hotlines identified 46 percent of fraud cases due to tips, versus only 30 percent of fraud cases at organizations without hotlines. Additionally, according to the ACFE, tips are the most common initial detection method, accounting for 40 percent of cases. Internal audit and management review, by comparison, only accounted for 15 percent and 13 percent, respectively. The Program?s investigations function did not have documented policies or procedures to ensure consistent, reliable investigations. Grant Thornton noted the Program operated an investigations function that was staffed by former Chicago Police Department officers with criminal investigation experience. The Program?s investigations personnel collected written and verbal witness statements and conducted surveillance on claimants suspected of exaggerating or falsifying injury claims. These processes were repeatable and offered a proactive way to address potential FWA before a claim was adjudicated and payments began. However, Grant Thornton determined based on interviews, the Program did not have formal, standardized investigation policies or procedures. Program staff also indicated investigation documentation was often inconsistent or incomplete and hindered the claims adjudication teams? ability to make well?informed adjudication determinations. It is also noteworthy the Program did not have a conflict of interest policy prohibiting or instituting controls over the Program?s investigations personnel from investigating Chicago Police Department personnel claims. COSO Principle 5: Fraud Monitoring Activities The COSO Guide calls for organizations to select, develop, and perform ongoing evaluations to ascertain whether each of the five principles of fraud risk management is present and functioning and communicates fraud risk management program deficiencies in a timely manner to parties responsible for taking corrective action, including senior management. Based on Grant Thornton?s evaluation, we determined the Program was operating at Level One (Ad Hoc) for this principle. The following key finding is related to this COSO principle: 0 The Program did not perform monitoring evaluations to determine whether each of the five principles of fraud risk management were present and functioning. This finding is below detailed. The Program did not perform monitoring evaluations to determine whether each of the five principles of fraud risk management were present and functioning. Grant Thornton observed the Program was not performing activities related to principle one (Fraud Risk Governance) or principle two (Fraud Risk Assessment). Therefore, it had not implemented activities to monitor and evaluate the effectiveness of activities related to these principles. Our team noted the Program did perform basic antifraud control activities as well as investigations to support adjudication determinations. However, 18 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL Gra ntThornton the Program did not have standardized monitoring activities to determine the effectiveness of its control activities or investigations process. d. Recommendations The major findings and activities identified during our fraud risk assessment described above, have contributed to Grant Thornton assessing the Program?s overall fraud risk maturity level at Level One (Ad Hoc). Grant Thornton assessed the Program at Level One because its fraud risk management processes were largely missing or undocumented. Further, the activities we identified were being performed in an ad-hoc, reactive manner by Program personnel. Because of this, successful efforts to consistently prevent or detect FWA were highly likely to depend on individual efforts and were not considered to be repeatable because processes were not sufficiently defined and documented to allow them to be replicated. The fraud risk maturity model above set forth is an effective tool to help the Program understand its current state as well as determine an appropriate goal state. It is important to note that the fraud risk maturity model is intended as a guide, and the Program should weigh the relative costs and benefits of achieving higher levels of maturity across the 0080 Guide?s five principles. Not all organizations need to achieve the Leadership level for all principles to see significant benefits from their antifraud efforts. The sections below provide targeted recommendations to help the Program address our specific findings and achieve a higher level of antifraud program maturity to help ensure taxpayer resources are safeguarded against FWA. COSO Principle 1: Fraud Risk Governance Overall, fraud risk governance should be the first focus in developing a fraud risk management program. For the Program to progress in maturity, Grant Thornton recommends the following actions: 1. Fraud Risk Management Policy. a. Establish a comprehensive fraud risk management policy that includes broad policies and principles that guide personnel conduct. b. Document the defined roles and responsibilities of all Program personnel as they relate to fraud risk governance within the fraud risk policy. c. Define and distinguish internal and external fraud definitions within training materials and within the future antifraud program. 2. Antifraud Training. Grant Thornton recommends the Program develop a comprehensive in? person antifraud training and require all Program employees attend the training on an annual basis. The Program should also develop tailored training content for specific roles and levels, such as claims adjudicators and investigators, which require specific knowledge of antifraud policies, processes, and control activities. While Program-wide training provides a solid foundation, more advanced and detailed antifraud training would help ensure Program management and staff understand the relevant fraud risks, red flags, and know how to report suspected FWA. 19 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose PRIVILEGED AND PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton We recommend as a starting point to develop Program-wide training that follows basic best practices including: Define external fraud Provide examples of past schemes, other unethical behavior, and red flags Instruct individuals on how to report potential FWA Inform of disciplinary action for policy violation Develop a training plan which documents: i. Employees and third parties to receive training ii. Which training programs apply to each job function A schedule for training by level and job function 99.0.69 Lastly, the Program should keep records of training completion enabling them to monitor employees who are not compliant. Fraud Awareness Initiatives. Promoting fraud awareness throughout the Program from the top down is vital to creating a strong antifraud culture. It is important to conduct fraud awareness initiatives to demonstrate Program leadership?s commitment to proactively addressing fraud risks. The Program should promote awareness through training, codes of conduct, fraud discussions at recurring team meetings, and frequent communications town hall/department meetings, fraud email newsletters). Additionally, the Program should coordinate with the OIG to publicize information about antifraud efforts and successfully resolved FWA cases to raise awareness about the consequences of committing fraud, which acts as a deterrent to potential perpetrators of fraud. COSO Principle 2: Fraud Risk Assessment For the Program to progress in maturity, Grant Thornton recommends the following actions: 1. Develop and Implement a Recurring Fraud Risk Assessment. The Program should develop and implement a fraud risk assessment methodology based on the following 0080 leading practices: a. Involve appropriate levels of management b. Involve staff from across all roles and levels of the Program 0. Analyze both internal and external fraud risks and their impact on the achievement of objectives d. Consider various types of fraud beyond the typical financial fraud schemes (see the fraud risk map in Appendix A for a list of common workers compensation fraud schemes) Continue to mature and incrementally improve the process with each iteration Estimate the likelihood and significance of risks identified Establish a fraud risk tolerance which considers the balance between risk and reward Develop risk responses based on the Program?s risk tolerance Incorporate controls into the risk assessment and identify and prioritize remediation activities Establish a schedule to reexamine fraud risks periodically or as changes occur that could affect the Program erase-*9 20 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used. relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton The fraud risk assessment forms the foundation for how an organization identifies and responds to its fraud risks. Fraud control activities developed based on the risk assessment should consider both the potential fraud schemes and the individuals within and outside the Program who could be the perpetrators of each scheme. The fraud risk map included in Appendix A provides a starting point for the Program to begin its risk assessment and develop control activities to address known vulnerabilities. As fraud risk management activities, including the fraud risk assessment, mature across the Program, City and Program personnel should revisit the fraud risk map and add new fraud schemes identified through experience, research of similar workers? compensation programs, and cross- departmental fraud risk brainstorming sessions. COSO Principle 3: Fraud Control Activities Grant Thornton noted the Program developed and implemented limited antifraud controls and processes to identify potential FWA in workers? compensation claims and related medical bills. As above noted, the ACFE 2018 Report to the Nations found that internal control weaknesses were responsible for nearly half of fraud cases. Furthermore, the ACFE noted data analytics accounted for losses that were 52 percent lower than organizations that did not employ analytics because analytics led to quicker detection. For the Program to progress in maturity, Grant Thornton recommends the following actions: 1. Periodically Update Current Claims Management Guide. The Program should continue updating the Claims Management Guide with best practices, red flags, and other useful resources checklists, ACFE reference material). Fraud schemes are dynamic in nature and organizations must adapt to new schemes and perpetrators to stay ahead. 2. Incorporate the Use of Proactive Data Analytics. The Program should implement a system of data analytic processes and procedures to identify anomalous transactions or events for further investigation. This includes analyzing medical claims data received from Coventry to identify suspicious billing patterns across service types and providers. The Program should develop a process for investigating and taking action for anomalous transactions including the application of treatments additional reviews for suspicious providers or types of medical services) to reduce the likelihood of FWA. The Program should consider using data analytic software available in the market to detect and prevent potential FWA (see Section 3. Develop Policies and Procedures with Documented Fraud Control Activities. The Program should develop policies and procedure guides for key business processes to ensure consistent application of fraud control activities across all Program staff. The policies and procedures should formally document key preventative and detective control activities. While we acknowledge the City does have some of these control activities, examples of common fraud control activities include the following: 21 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton ACFE Common Fraud Control Activities 1. Rewards for whistleblowers 10. Employee support programs perv Job rotation/ mandatory vacation 11. Fraud tip hotline Dedicated fraud department, function, 12. Independent audit committee or team 13. Internal audit department Formal fraud risk assessments 14. External audit of internal controls Proactive data monitoring and analysis 15. Management certification of financial Surprise audits statements Fraud training for management 16. Management review Fraud training for staff 17. Code of conduct Antifraud policy 18. External audit of financial statements Additionally, the Program should establish a periodic assessment process, including reviews performed by the OIG, to determine whether staff are performing the controls as defined in the policies and procedures and determine their effectiveness at preventing and detecting FWA. The most effective assessment programs include both internal reviews performed by management as well as reviews performed by external oversight bodies, such as the OIG. Periodically Review Contracts with Third Parties. The Program should continually monitor compliance with third party contracts. This will allow City and Program management to identify any risks of FWA that may be result from these relationships. The Program should also ensure that any future procurement be well documented and in compliance with any applicable City ordinance, and/or local, State, and federal law. COSO Principle 4: Fraud Investigation and Corrective Action 1. Develop and Implement an Anonymous Fraud Tip Hotline. Hotlines are consistently the most effective method in fraud detection. Therefore, an effective fraud tip hotline platform should be well-established. Hotline best practices and recommendations include: a. Access information (phone number and/or email address) should be provided to staff and third parties. b. Hotline capabilities should include: 24/7 availability, multilingual capability, multiple channels of reporting phone, email, mail, etc.), and anonymous reporting. 0. Development of the hotline should be accompanied by publication of clear whistleblower protections for any City employees that report internal fraud tips. While we acknowledge the OIG does receive some tips of FWA related to claims the Program handles(ed), the Program should work with the OIG to establish a formal anonymous FWA tip hotline that is either specific to the City?s workers? compensation benefit administration or is integrated into any existing anonymous FWA tip hotlines the OIG maintains and manages. Document Policies and Procedures for Investigations. Grant Thornton noted the Program operated an investigations group that was staffed by former Chicago Police officers with experience 22 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton performing criminal investigations. However, investigations into potential workers? compensation benefits FWA requires special investigative skillsets, processes, and procedures that may not be part of the law enforcement training or experience of former police officers. Furthermore, the Program should consider the benefit of using investigative resources experienced in investigating potential workers? compensation benefits FWA that are not former Chicago Police officers to avoid potential conflicts of interest. Grant Thornton recommends the Program work with the OIG to develop clear roles and responsibilities and document formal policies and procedures related to adjudication interviews and investigations to clearly identify at which point a potential FWA case should be referred to the OlG?s Investigations team and to avoid potential conflicts of interest. The policies and procedures for the adjudication investigations and witness interviews should include clear standards for completeness and quality to facilitate a stronger adjudication determination and documentation process. COSO Principle 5: Fraud Monitoring Activities 1. Incorporate Analytics and Establish Appropriate Measurement Criteria. The COSO Guide calls for organizations to establish measurement criteria to monitor and improve fraud prevention and detection, as well as provide the utilized criteria to the organization?s leadership on an ongoing basis. The Program should explore opportunities to incorporate data from the adjudication process as well as from medical claims and other key areas to develop performance metrics to better monitor effectiveness. In line with the C080 Guide, establishing appropriate benchmarks and metrics to guide Program management?s decision making process will elevate the Program?s maturity level. Consider Factors for Setting the Scope and Frequency of Evaluations. The COSO Guide states organizations should consider factors for setting the scope and frequency of evaluations. This includes the consideration of changes in the organization, its operating environment, and its control structure to determine the appropriate scope and frequency of its fraud risk management monitoring activities. As fraud risks are prioritized, the Program should continuously consider the scoping and frequency of antifraud monitoring activities. For instance, changes in the Illinois State workers? compensation laws would potentially require a limited scope risk assessment to determine the impact of the changes on the Program?s fraud risks. Evaluate, Communicate, and Remediate Deficiencies. The COSO Guide states organizations should assess the results of separate and ongoing monitoring evaluations, communicate deficiencies to those responsible for corrective action, and determine that appropriate remediation activities are implemented in a timely manner. As the Program is still in the early stages of developing and implementing monitoring activities, the process for evaluating, communicating, and remediating deficiencies identified as part of these monitoring activities should be considered. In an ideal state, the processes for evaluating, communicating, and remediating deficiencies identified should be formal and documented in a policy or procedure to ensure roles, responsibilities, and processes are clear and well-defined. Once developed, these processes should be implemented alongside monitoring activities put in place. 23 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties If is not to be used, relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton VI. DATA ANALYTICS a. Summary Grant Thornton was tasked to perform analyses using data and knowledge collected from the Program to determine whether there are any indications of potential FWA. We performed multiple analyses to identify outliers within data extracted from the ICE and claim systems. We developed a set of business rules to guide these analyses based on knowledge gained from interviews with Program and City personnel and Grant Thornton?s collective experience with FWA data analytics and workers? compensation industry expenence. Grant Thornton has provided analyses and visualizations of the claims data as examples of methods that should be undertaken as a standard matter. To this end, Grant Thornton recommends the City and Program perform such analyses regularly in order to identify outliers in their claims data, and further review specific claims that are identified as outliers. Grant Thornton has identified potential anomalies in the existing data, as well as more general recommendations around how the City can continually monitor potential instances of FWA in the Program. b. Procedures Performed Grant Thornton performed data analytics around the Program. We executed several data procedures to build consistency and quality into the results produced, including a thorough review of the data currently maintained relating to the Program. We also identified several examples of analyses the City should consider using in the future to identify anomalies that can then be further reviewed in order to limit losses from FWA. Grant Thornton applied analytic techniques to identify anomalies indicative of suspicious behavior across employee claimants, medical providers, and law firms. The data review period covers workers? compensation claim activity between January 1, 2017 and December 31, 2018. Our focus was on the following five elements: I. Collection and Understanding of Data Development and Solicitation of Data Questionnaire and Request List In order to develop a better understanding of what information the City is capturing with regard to the Program and the necessary processes to do so, Grant Thornton prepared a list of questions for the Program?s lT group. This questionnaire included topics intended to provide Grant Thornton a knowledge base of the data available to perform analyses relevant to the current FWA environment of the Program, including: . Unique identifiers 0 Personal employee data . Claimant data . Claim payment data 24 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL - PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton . Investigated claims data 0 Legal representation data . Medical data . Claim metrics System(s) in which this data is stored In addition to the data questionnaire, we submitted a supplemental data request list for data pertaining to payment of claims, detail of claims, agency/employee group of claimants, legal representation of claims, medical detail of claims, and employee records of claimants. The data request list contemplated variables of interest that are typically used to analyze for potential FWA that could affect the Program. These datasets allowed Grant Thornton to draw observations of the Program?s environment and make recommendations to improve the environment going fonrvard. Review of Data Provided As Grant Thornton received previews of the data contained in the claims data system, each preview was reviewed, with specific consideration given to the time frame of data provided compared to the relevant review period, the variables included compared to the variables requested via the data request list, and the format of the data provided. While the preview data was provided as samples to illustrate what was available, further review indicated the preview data format was not appropriate to support the intended analyses, as confirmed via conversations with the City. Grant Thornton was able to successfully clarify the data format needed from the City for analytics purposes. II. Understand Existing Operations, Processes, and Systems Participation in Interviews Grant Thornton conducted several interviews with employees involved with Program?s claims administration to develop a better understanding of the systems used, procedures in place for processing claims, and other supplemental information regarding workers? compensation claims. Program management suggested a of NOS would be helpful for analytics purposes. Participation in System Demonstration Grant Thornton participated in a demonstration of the claims data system, to aid in the understanding of what claims data exists in this system and how the information could potentially be extracted. Grant Thornton recognized during this demonstration the NOS does not support data extraction in a format conducive to conducting data analytics. Grant Thornton and Program IT personnel subsequently conducted a WebEx virtual meeting to discuss how the claims data in could be produced in a format appropriate for data analysis. 25 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Prepare for Complete Data Retrieval Establishment of Business Rules While awaiting receipt of the data required for analysis, Grant Thornton developed logical business rules to serve as a basis for analysis once the data was received. These business rules were developed within four categories: 1. Claimant based rules 2. Medical provider based rules 3. Claim payment based rules 4. Law firm based rules Grant Thornton created these business rules utilizing information collected in various interviews with Program personnel regarding claim processing and in collaboration with Grant Thornton team members with deep workers? compensation experience to configure the business rules based on specific insights and experience. The business rules are based on analytics best practices for identifying outliers, such as calculated comparisons to mean statistics and best practices within workers? compensation programs. These business rules allowed Grant Thornton to identify anomalies or areas in the Program where additional reviews should be considered for execution to limit FWA loss. IV. Cleanse and Process Data Grant Thornton received data from the Program through three different sources: a The Program?s claim processing system, NOS 0 Coventry data related to its services to the Program . CCMSI data related to its services to the Program and Coventry data only relate to Civilian and Police and Fire claims, whereas CCMSI includes data specific to Aviation and Federally Funded Civilian claims. As we began analysis of the data, we discovered key identifiers to tie the disparate datasets together proved to be insufficient, and the data could not be fully merged for a comprehensive view. Thus, Grant Thornton analyzed data from the aforementioned three sources separately to ensure accuracy of analytic findings. The limitations of the data are detailed in the following section. Data Constraints In preparing the data, Grant Thornton discovered several data challenges and constraints that required additional data cleansing, and in some cases, impacted the types of analyses that could be completed. The challenges and constraints were as follows: . Inconsistent data entry of individuals and entities such as providers, claimants, and law firms Inconsistent formatting of like fields, names of individuals Unique key identifiers that did not match across datasets Insufficient number of records in a population such as a particular claim type To prepare the data Grant Thornton used to develop the analytic reports, we utilized R, an open source programming language and software environment for statistical computing and graphics, to develop code to cleanse the data and maintain consistent formatting. It was during this stage we determined 26 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel In the normal course of discharging their duties It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton that not all unique identifiers were properly maintained across the various systems, thus preventing full integration of the data received, and limiting the associated analytics that could be performed. Grant Thornton was informed that the number in Coventry and ?Document Number? in are key identifiers that could tie data from the two systems. However, Grant Thornton found that the data provided did not properly match. After the data was cleansed, Grant Thornton joined several of the datasets together where unique identifiers existed. In Grant Thornton?s efforts to join claim payment data with claim log data, not unexpectedly, we observed a number of claims incurred in previous years were still being paid out during 2017 and 2018 (Figure 3). With further analysis, we observed that approximately five (5) percent of claims were opened ten (10) years ago or longer and are still receiving payments. Active Claims Receiving Payments by Year Opened 0?3? 1 I Claims Opened Before 2009 1990 1 Claims Opened During or After 2009 1991 2 1992 4 199310 1994 1995 a 5 19% 9 19971 10 1998 0 1999 12 20001 16 2001 24 2002 I 27 2003 I 34 2004 I 37 2005 I 40 2006 I 92 2007 I 56 2009 - 11s 2009 140 2010 199 2011 211 2012 316 2013 403 0 200 400 600 800 1000 1 200 1400 1 600 1800 2000 2200 2400 2600 2800 OI ClaIms Figure 3: Active Claims Receiving Payments 27 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton V. Develop and Perform Analytics With the data cleansed and joined utilizing R, the next step was to derive several variables to represent elements of the business rules such as days between various dates and averages of several numeric fields. Grant Thornton then employed Tableau, a Business Intelligence (BI) platform, to support further analysis and anomaly detection. As we created data visualizations, Grant Thornton continuously re- evaluated the list of business rules previously developed, tailoring them to rules which could be applied to the data available. The logical business rules guided each analysis, giving us a basis for the different fields and measures that should be compared across the Program data. The data visualizations we developed serve to identify anomalies within the data that merit further analysis and should be considered for further review by the City and the Program. Moreover, these should serve as a guide to the Program for future analysis, tracking, and monitoring of claims payments. Grant Thornton performed analyses for each of the four subgroups: Civilian, Police and Fire, Aviation, and Federally Funded Civilian. However, due to the small volume of data for Aviation and Federally Funded Civilian claims compared to Civilian and Police and Fire, anomalous claims could not be as easily extracted through analyses on these datasets. Only analyses for which anomalous activity was detected are included in this report. c. Findings As stated above, the Program should consider establishing consistent review processes and actively monitor claims through the claim lifecycle. Grant Thornton performed the following analyses to provide the City and the Program with example analyses that support the detection of potential signs of FWA impacting the Program. The Program can benefit from conducting similar analyses prospectively to aid in monitoring and reviewing claims throughout their lifespan. For purposes of this report, Grant Thornton has anonymized all personally identifiable information including names of individuals, claim numbers, and accident descriptions. In addition to that anonymization, any initials and claim numbers depicted within this report are not the actual employee initials or workers? compensation claim numbers. Year to Year Analysis A comparison of claims from year to year allows for the identification of unexpected changes over time. Grant Thornton completed an analysis of the difference in number of claims and total amount paid out between the relevant years for analysis in Figures 4 and 5. A 56 percent decrease in the total amount paid out through the Program from 2017 to 2018 for both Civilian Police and Fire and Federally Funded Civilian claims was observed. The City should perform year over year analyses for claims data to identify anomalies or red flags of FWA. When further comparing the change in claims year to year, Civilian and Police Fire data shows certain departments have approximately the same number of claims filed each year, but the overall amount paid out is much higher in one versus the other (Figure 6). 28 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PFIEPAFIED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Total of Claims by Year for Civilian and Police and Fire 201 7 2018 200 400 600 800 1.000 1.200 1,400 1,600 1,800 2.000 2.200 2,400 2.600 #01 Claims Total Amount Paid by Year for Civilian and Police and Fire 2017 2018 $1 BM Total Paid (Millions) Figure 4. Claims by Year for Civilian and Police and Fire Total of Claims by Year for Federally Funded Civilians 2017 2018 2 4 6 81012141618 #ofClaIms 0 Total Amount Paid by Year for Federally Funded Civilians 2017 2018 Figure 5. Claims by Year for Federally Funded Civilians 29 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose. Number of Claims PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Timeframe Anal sis Analyzing claim frequency relative to the calendar year reveals spikes in claims that correspond to the week of or immediately following a holiday recognized by the City, as stated on the City?s website (Figure 7). A high number of claims immediately following a holiday could be considered anomalous, outside of work injuries and is often indicative of FWA in workers? compensation claims. Grant Thornton recommends the City implement controls within the Program specifically targeting the weeks of and following holidays, to identify spikes in the number of claims filed during those weeks as compared to the average. A week of claims that tracks above the average may indicate that further review of claims opened in those weeks is appropriate. Claim Frequency by Week [WeekofCity Holiday 70 60 50 j'll: i':I i? June 2017 September 2017 December 2017 February 2018 May 2018 August 2018 November 2018 Week of Claim Add Date January 2017 March 2017 Figure 7. Claims Opened by Week for Civilian and Police and Fire 31 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Pa ments Anal sis We performed a boxplot analysis (see Figure 8) for each claim type, identifying an individual claim?s percentile ranking, measured by the total amount in dollars paid by claim. We recommend claims with a total amount above the 75th percentile be considered for further review. Due to the large number of claims ranked above the 75th percentile for Managed Medical and Medical Only claim types, for Civilian and Police Fire claims, as well as, Indemnity claim types for Aviation claims, Grant Thornton further analyzed these claim types with scatterplots, as in Figure 9. Indemnity Managed Medical Medical Only Record Only Average=$57335 . FFI 51K 6 0K $4 ll Average $13,751 Av 50K ?ii 50K 50K Figure 8. Total Payments by Claim Type for Civilian and Police and Fire 32 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used, relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton $1 80K Total Amount Pald (Thousands) 540K 50K a Medical Only Scatter Claim Payments Tolal Amount Pald (Thousands) 5240K Managed Medical Scatter Claim Payments Aviation Indemnity Scatter 0 Total Amount Paid (Thousands) (II N. 024681012141618202224 01 Clalm Payments 0 Average . $22,668 220 Figure 9. Civilian and Police Fire Medical Only, Civilian and Police and Fire Managed Medical, and Aviation Indemnity Scatterplots 33 Average 513.751 240 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose. 260 280 PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton The scatterplot analysis reveals a majority of claims for both Managed Medical and Medical Only types are clustered around smaller total payments relative to their respective averages. Analyzing claims via scatterplot allowed Grant Thornton to identify additional outliers observed for both Managed Medical and Medical Only claims. Grant Thornton recommends, where possible, the City develop visualizations to track claim payments and detect potential outliers. Outliers within claim payment analysis should be considered for review because they could potentially identify instances of overpayment, exaggerated injury, and other such suspicious scenarios. Geospatial Analvsis Grant Thornton performed a geospatial analysis of payments made to medical providers through the Program (see Figure 10). Through this analysis we observed over 25 percent of all payments made to medical providers were billed by providers outside of the State of Illinois. This high level is due in part to the Program?s preferred medical prescription company encompassing over 98 percent of payments made to providers in the State of Arizona. However, adjusting to exclude Arizona from the analysis, providers outside of Illinois still accounted for roughly 10 percent of bills paid to medical providers. This geographic makeup of payments to medical providers is consistent across 2017 and 2018. Payments to providers with billing addresses outside of the State of Illinois should be considered for further review. Grant Thornton suggests a system control be created within the Program when a new provider is added with a billing address outside of the State of Illinois. 34 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose, PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Medical Billing by State for Civilian and Police and Fire of State Count. Total Canada 2017 IL 48.678 74.28% AZ 11.405 17.40% TN 1.411 2.15% TX 853 1.30% CA 04 23% OH 569 0.87% OR 499 0.76% IN 398 0.61% GA 354 0.54% MA 180 0.27% FL 135 0.2 MI 71 0.11% WI 66 0.10% CT 40 0.06% . NC 38 0.06% - RI 15 0.02% NY 6 0.01% IA 5 0.01% .. in 313 3 3333: United - VA 1 0.00% States . MO 1 0.00% . .o . CO 1 0.00% 2018 IL 49.110 74.94% - 6 - AZ 10.666 16 28% . . . GA 1.367 2 09% . 0 - TN 1.234 136 0.21% Mexico 0H 110 0.17% MI 43 0.07% NY 40 0.06% M0 30 0.05% CT 29 0.04% AL 27 0.04% NV 8 0.01% 0R 4 0.01% RI 2 0.00% MN 2 0.00% 0K 1 0.00% MT 1 0.00% OpenStreetl?vtap contributors CO 1 88832 Figure 10. Medical Providers by State for Civilian and Police and Fire Grant Thornton performed a separate geospatial analysis to review the total value of claim payments made for claimants residing in the same zip code. Grant Thornton combined this analysis with the City?s Ward boundary data from the City?s Data Portal to provide a relative reference of Wards associated with high claim payment zip codes. Grant Thornton observed for claims in the relevant time frame, the highest payments were made between three geographic clusters in the City: southern region (Ward 19), southwestern region (Wards 13, 14, 22, and 23), and northwestern region (Wards 29, 30, 36, 38, 39, and 45) (see Figure 11). For a detailed map of City Ward boundaries, see Appendix H. The southwestern region of the City receives the most claims for Civilian, Police and Fire, and Aviation claims. This is highlighted in Figures 12, 13, and 14 for Civilian, Police and Fire, and Aviation 35 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton claims, respectively. Further review of claims filed by claimants residing in these areas should be considered as the clusters could be indicative of a trend or a potential scheme amongst individuals living in the same area. Aviation, Civilian, and Police and Fire Claims Geospatial Analysis Total Payment Amount 291 5,918,685 Figure 11. Aggregate Geospatial Analysis We performed further analysis on geographic claim distribution as compared to City employee residential locations to understand whether any unusual correlations about claim distribution could be observed (see Appendix J). Grant Thornton noted geographic claim distribution and city employee residential locations generally correlated, and we did not observe notable outliers. 36 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Civilian Total Claim Payments Police and Fire Total Claim Payments Aviation Total Claim Payments Total Payment Amcunt (S) Total Payrren't Amount Total Payment Amount 678 3,339,325 255 25581193 392 419.371 Figure 12. Civilian Geospatial Figure 13. Police and Fire Figure 14. Aviation Analysis Geospatial Analysis Geospatial Analysis Note: Employee Zip Code Data for Federally Funded Civilian claims was not provided, therefore, a geospatial analysis could not be completed. Adjuster Analysis The average total amount paid per claim across Program claim adjusters for Civilian and Police and Fire claims is $15,090. Comparing each Civilian and Police and Fire adjuster?s individual average amount paid to the overall average identifies several individuals whose average payout per claim is above average (see Figure 15). Similar analyses were completed for Aviation claims, but no similar outliers were identified. Grant Thornton performed an identical, but more granular analysis to analyze average claim payment by adjuster by claim type. Through this analysis, we identified several Record Only claims with one or more payments; however, Record Only claims generally should n_ot have associated benefit payments (see Figure 16). This analysis can assist in identifying adjusters with a potential misunderstanding of the payments requirements as defined by the Program, adjusters with inadequate training or attention to detail, or other suspicious behavior. Record Only claims paid out by an adjuster may indicate an adjuster?s misunderstanding of the payment requirements as defined by the Program. Grant Thornton suggests that the City develop 37 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used. relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton system checks within the Program that indicate when a payment has been made for a Record Only claim (see Figure 16). Claims by Adjuster for Civilian and Police and Fire Adjuster #of Claims NYR Average :51 ?1,090 Average Total Payment (Thousands) Figure 15. Average Total Amount Paid per Claim for all Program Adjusters 38 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL - PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Record Only Claims by Adjuster for Civilian and Police and Fire Adjuster of Claims ALI ODN EER NNV TWR MRT AOA NAA NBW NNE NLE LNY ARA NLV ARI A a d?N ?l [can Aid 933?3 ulq .3 $0 $2,000 $4,000 $6,000 $8,000 $0 $500 $1,000 $1 ,500 Total Paid .- Avg Payment Figure 16. Record Only Claims Paid 39 The contents of this document Were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. it is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Prescription Analvsis Grant Thornton calculated the average value of prescription payments and procedure payments per claim was $289 and $321, respectively, for Civilian and Police and Fire claims. We conducted an outlier analysis for both types of payments, identifying claims that were more than two standard deviations away from the averages. As shown in Figures 17 and 18 below, there were numerous claims which stand out as outliers in regard to average prescription and procedure payment, as shaded in gray. Grant Thornton was unable to perform similar analyses for Aviation and Federally Funded Civilian claims as the medical billing data through CCMSI was unavailable for review. Prescriptions and procedures billed for an amount greater than two standard deviations above the average could indicate inflation of costs by providers or over-prescription of medications to claimants. Grant Thornton recommends the City put process controls in place to periodically test for outlier claims with prescriptions and procedures bill amounts that exceed recent billed amounts average billed amounts over last two years) and consider further review into the claims associated with these bills. Prescription Payment Outliers for Civilian and Police and Fire Claim Number Number of Records 4041 9 1) 5? 79097 1 13 5% 50106 4 1 ,5 64045 2 :g :8 34147 12 13? 85154 8 13- :3 64243 134 . 15153 17 37179 31 5 2222 1 .53 301 9 1% 22.1 99397 6 1a 593 8 9 19192 19 1.. 55357 53 13 35151 31 19' 52320 72 1 99096 19 1 13330 13 56164 19 1 46366 1 1 9093 5 7179 4 37076 20 1' 46262 111 96365 6 1. 59396 16 1 10305 53 33131 147 a 14149 4 1 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000 $5,500 $6,000 $6,500 $7,000 $7,500 Avg. Billed Amount 1% .- Figure 17. Prescription Billing for Civilian and Police and Fire 8 The statistical definition of an outlier is any record that lies greater than two standard deviations away from the mean. 40 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties it is not to be used, relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Procedure Payment Outliers for Civilian and Police and Fire Claim Number Number of Records 73338 2 -1 26365 6 - 3 56361 6 - a ?1 7278 1 53339 1 - r. 72325 44 - 2 3 82123 1 - a 3 55153 4 - 2 64343 42 - 43330 1 .3: ?lug 70007 2 - a 17272 38 - g: 0339 2 - 89394 10 44244 2 - 69090 33 30304 1 16261 1 62225 7 33132 11 12026 4 4247 2 67076 12 7273 1 13331 2 55258 2 43335 2 57171 2 66162 2 17376 15 $0 $1,000 $2,000 $3,000 34,000 $5.000 $6,000 $7,000 $8,000 $9,000 310,000 Avg. Billed Amount :6 Figure 18. Procedure Billing for CiVilian and Police and Fire Legal Spend Through conversations with the City and Program personnel, Grant Thornton learned that Hennessy Roach, P.C. (?Hennessy Roach?) was the law firm most frequently referred workers? compensation claim legal support by the Program; however, this only represents a small portion of all claims requiring legal support. After reviewing the claims year detail of those claims referred to Hennessy Roach, Grant Thornton identified 23 claims filed prior to 2013 for which the related case was opened by Hennessy Roach between 2017 and 2018 (see Figure 19). Based upon the documentation made available to us, it is unclear as to the amount and duration of any legal support for those 23 claims. (Note: Of the external law firms used by the Program we requested data from through Counsel, Hennessy Roach was the only firm to provide data to be analyzed.) In addition to recommendations identified in Section Vl.d. for developing a bidding process for identifying approved third parties, the City should consider developing an approved list of external law firms to which the Program can refer claims for legal support. Additionally, the City should develop a framework for identifying applicable criteria for when claims are referred externally for legal support versus to the DOL Torts Division. 41 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Hennessy Roach Lawsuits for Claims Opened Before 2013 Employee Zip Code Claim Year of Claims Total of Associated Claims Paid 60617 2008 1 $116,080 201 1 1 $119,998 2012 1 $36,656 60634 2012 1 $224.048 60609 2004 1 $107,282 2010 1 $103,619 201 1 1 $10,805 60638 2005 1 $90,812 2009 1 $130,763 60612 2012 1 $204,855 60631 2010 1 $159,883 60608 2012 2 $150,443 60616 2012 1 $126,335 60643 2006 1 $94,294 2012 2 $20,573 60636 2012 1 $92,357 60622 2008 1 $82,878 60656 2009 1 $80,463 60652 2008 1 $15,347 60633 201 1 1 $627 60640 201 1 1 $0 Figure 19. Hennessy Roach Lawsuits for Claims Greater Than Five Years Old d. Recommendations Based on the analyses completed, Grant Thornton identified several instances of anomalous patterns. Grant Thornton recommends the City and the Program perform standard and consistent monitoring and tracking of claims in alignment with the above analyses. These monitoring and tracking processes should be completed immediately after data is pulled from and aggregated with other data available (9.9., CCMSI and Coventry data). More robust analyses of the available data is called for in order to identify claims for further review. Examples of these analyses include routine statistical reporting, outlier alert notifications, and visualizations. Generating summary statistics or quarterly for each claim type would allow Program personnel to validate how the claims within are tracking against expectations. A large jump in the average amount paid out on a number of claims or for one claim type from one calendar quarter to the next could indicate overpayments may have occurred. Developing alerts for figures associated with claim payments greater than two standard deviations above average can allow Program personnel to identify claims that may need further review. Grant Thornton encourages the City to consider using analyses similar to the examples provided in our findings as methods of highlighting areas where anomalous claim patterns from 2017 and 2018 have been identified. Grant Thornton recognizes that the City?s ability to replicate these analyses may be limited due to their lack of access to software similar to those used by Grant Thornton. Grant Thornton believes development and consistent processing of similar analyses in the form of reports and system controls will aid the City in its efforts to identify potential instances of FWA in the Program. 42 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used. relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton VII. CLAIMS TESTING a. Summary Grant Thornton tested 109 claims on a sample basis, made up of both judgmentally and randomly selected samples. We tested these claims against several attributes that aligned to the Program?s Claims Management Guide, rules and regulations promulgated by the Act, workers? compensation insurance industry recognized best practices, and where applicable, processes and procedures in place at CCMSI. All 84 Civilian and Police and Fire claims tested administered by the Program failed at least three (3) attributes failed the test). Otherwise stated, 100 percent of the Civilian and Police and Fire claims tested failed at least three (3) attributes of our testing. Of the 25 claims administered by CCMSI we tested, seven (7) claims passed all of the attributes in our testing. Otherwise stated, 72 percent of the remaining 18 CCMSI claims we tested failed at least one (1) attribute of our testing. Six (6) of the 25 CCMSI- administered, or 33 percent, failed at least three (3) attributes. (See Appendices E) for our testing attributes by claim type.) Grant Thornton identified three broad areas for improvement that may lead to more robust claims administration: (1) developing thoroughly documented policies and procedures that encompass the entire claim administration process and include monitoring and oversight mechanisms, (2) instituting a formalized training regimen for all Program employees, and (3) performing a continual assessment of the systems, protocols, and inter-departmental communication channels for operational effectiveness and efficiency to support the Program?s ultimate goal of returning employees to work as quickly and safely as possible. While the financial impact of implementing these three areas of improvement may initially appear cost prohibitive, the long term financial and operational benefits would be greater than the initial resource investment. Alternatively, the City should consider if maximum benefits would be achieved by outsourcing the Program?s administration of workers? compensation benefits to a third party that specializes in the administration of workers? compensation benefits. b. Procedures Performed To understand the Program?s claims administration process, procedures, and systems, Grant Thornton conducted interviews with key process owners, DOL Torts Division attorneys, and external legal counsel (Hennessy Roach). We performed our testing procedures based on information gathered through the interviews along with information contained in the Claims Management Guide (which the Program considers ?best practices?), and the Police and Fire CBAs. As of the date of this report, the City?s Program uses to administer Civilian and Police and Fire claims. enables the Program to conduct and track claims management, policy administration, case management, events management, and claim payments. Coventry provides bill and UR services to the Program for both Civilian and Police and Fire claims; claimant medical records and medical bills are maintained within the Coventry Connect system. Program management provided Grant Thornton with a of how a claim is processed within and how Program management monitors claims. CCMSI administers Aviation and Federally Funded Civilian claims using its claims management system, Internet Claims Edge Grant Thornton requested, and was given access to Coventry Connect, and ICE to perform claims testing. 43 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Grant Thornton requested and received all Civilian and Police and Fire claims data for calendar years 2017 and 2018. Similar data was requested and received from CCMSI for Aviation and Federally Funded Civilian claims. We then stratified the claims data received into six distinct claims categories: Indemnity Life Reserves Managed Medical Medical Only Pending Record Only 93.019939)? During our scope period of testing, the claim category counts were: Civilian 400 Indemnity claims, two (2) Life Reserve claims, 608 Managed Medical claims, 1,598 Medical Only claims, four (4) Pending claims, and 485 Record Only claims Police and Fire 42 Managed Medical claims, 6,418 Medical Only claims, 10 Pending claims, and 288 Record Only claims Aviation 169 Indemnity claims, 154 Medical Only claims, and 92 Record Only9 claims Federally Funded Civilian - 17 Indemnity claims, 33 Medical Only claims, and nine (9) Record Only claims Grant Thornton also considered other qualitative characteristics for selecting claims to test such as: claims referred by the OIG for further investigation, claims referred to external legal counsel for legal proceedings, claims with a large reserve and/or benefits paid amount as of the date of testing, active claims open for extended periods of times, and closed claims with substantial payments above $1,500) after the claim was closed. Grant Thornton tested 109 claims comprised of the following: 59 Civilian, 25 Police and Fire, 20 Aviation, and five (5) Federally Funded Civilian. We then analyzed the selected claims in ICE, and Coventry Connect for a combination of performance attributes, which varied by claim type. For example, Indemnity claims may be reviewed for completeness and accuracy of retaining and recording litigation matters within whereas a Record Only claim may only be reviewed for appropriate file administration and timely closure. Performance attributes were identified within the testing matrix as federal law, State law, City law/ordinance, Program policies/procedures, and workers? compensation insurance industry recognized best practices (see Appendices - E). Claims administered on behalf of the Police and Fire departments had specific performance attributes due to requirements instituted by their respective CBAs. There were specific performance attributes for administration of Aviation and Federally Funded Civilian claims. 9 CCMSI classifies Record Only claims as Incident Only. 44 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used, relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton c. Findings The content below presents testing results on a summary level by testing attribute. Refer to (Appendices E) for a detailed count of all claims testing results. Not all attributes applied to all claims tested due in part, but not limited to, the nature of the claims (Medical Only, Indemnity, etc.), disposition of the claim (approved, denied, etc.), whether a given claim was litigated, whether the claim was still open at time of testing, and other qualifying characteristics. The summary results presented herein indicate how many claims the subject attribute applied to for all claims tested. Civilian a% Police Fire Claims File Administration The Program?s Claims Management Guide states a Program supervisor should review all new claims and related initial claim data when received to make an initial compensability assessment. Of the 57 Civilian and 25 Police and Fire claims to which this attribute applied, we identified 56 Civilian claim and 24 Police and Fire claim where a Program supervisor?s review was not documented. It is commonly accepted workers? compensation insurance industry best practice to assign a claim to an adjuster within 24 hours of the claim having been received (in this case, by the Program) to expedite claim processing and ensure timely completion of subsequent steps after claim intake. This testing attribute applied to all 84 Civilian and Police and Fire claims we tested. Of these, there were 51 Civilian claims which were not assigned to a Program adjuster within 24 hours. The Program?s Claim?s Management Guide stipulates the claimant?s AWW and TTD benefit amounts should be calculated within two (2) days of the claim being assigned to a Program adjuster. Of the 37 Civilian claims to which this attribute applied, seven (7) claims did not have their AWW and TTD benefit amounts calculated within the two (2) day requirement. Initial File Review The Program?s Claims Management Guide states an initial file analysis should be conducted upon claim assignment to a Program adjuster. Grant Thornton tested IFA documentation against commonly accepted workers? compensation insurance industry best practices that generally allow 24 to 48 hours after the claim is assigned to a Program adjuster for such a review. This attribute applied to all 84 Civilian and Police and Fire claims tested. The timely IFA was not documented for 53 Civilian and 19 Police and Fire claims. The Program?s Claims Management Guide states a recorded statement should be obtained from all claimants. Of the 8110 claims to which this attribute applied, 13 Civilian and all 24 Police and Fire claims did not contain a recorded claimant statement. As the Police and Fire departments? administration of their ?0 One (1) Police and Fire claim and one (1) Civilian claim were death claims, and one (1) Civilian claimant was ?incapable? of providing a recorded statement, and thus the recorded statement would not apply. 45 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used, relied upon or referred to by any other party for any purpose, PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton respective claims before the claims are transferred to the Program was outside of the scope of our engagement, it is unknown if Police and Fire claims require a recorded statement; however, an investigation would be incomplete without a statement being obtained and documented. The Program?s Claims Management Guide contains a best practice to obtain a witness statement on all Medical Only, indemnity, and Managed Medical claims. Of the 50 claims tested to which this attribute applied, 20 of the Civilian and eight (8) of the Police and Fire claims did not contain a witness statement. The Claims Management Guide contains a best practice that an Action Plan/Summary should be documented in The best practice further stipulates a Program supervisor should have executed and review a Notepad11 report for Action Plan/Summary at mid-month for a prior month?s claims and mid-week for a prior week?s claims. Of the 84 Civilian and Police and Fire claims to which this attribute applied, 22 Civilian and 17 Police and Fire claims did not contain an Action Plan/Summary. The lack of this step being taken indicates not only the Program adjusters? failure to create an Action Plan/Summary, but also the Program supervisor?s failure to conduct a thorough periodic review of Action Plan/Summaries, if conducted at all. Some claims tested did contain notes with the topic ?Action Plan?, however, in many cases there was no actual Action Plan within the content of the notes. An Action Plan should provide a proposed strategy or course of action in moving the claim fon/vard to conclusion. It should also be updated throughout the course of an open claim file. The Claims Management Guide contains a best practice that compensability determinations be completed and documented within two (2) business days after claim assignment to a Program adjuster. Further, the best practice stipulates a Program supervisor should execute and review a Notepad report for compensability mid?month for a prior month?s claims and mid-week for a prior week?s claims. Of the 57 Civilian claims to which this attribute applied, 10 claims did not contain documented compensability determination. This lack of documentation indicates not only the Program adjusters? failure to document compensability determinations, but also the Program supervisor?s failure to conduct a thorough periodic review of compensability, if conducted at all. Compensability determinations for Police and Fire claims are conducted by those respective departments and we did not have access to Police or Fire Department claim compensability documentation. Benefit Delivery/Wages Based on interviews with Program staff, it is the Program?s process that Program clerical staff calculate AWW and TTD, and that calculated rates be verified by the assigned Program adjuster. Of the 36 Civilian claims to which this attribute applied, 15 claims did not have a documented AWW verification. The Illinois Workers? Compensation Commission, Title 50, Chapter 6, Part 9110, Section 9110.70 of the Joint Committee on Administrative Rules Administrative Code requires Temporary Disability stop letters be sent to the claimant within 14 days of benefits being stopped. Of the 27 Civilian claims to which this attribute applied, the Program did not send stop letters to 17 claimants. ?1 Notepad is a documentation function within the NOS system used by the Program. 46 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. it is not to be used, relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton We also identified overpayments totaling $14,073.02? for six (6) of 39 Civilian claims tested to which this attribute applied. All overpayments were related to Indemnity benefits being paid after Indemnity benefits were stopped or because of incorrect calculation of Indemnity benefits. Medical Review The Program?s Claims Management Guide stipulates a Program adjuster should conduct an initial and ongoing review of available medical records. The best practice further stipulates this should be documented in a Medical Notepad within and summarized in the Action/Plan Summary Notepad. Of the 77 Civilian and Police and Fire claims to which this attribute applied, 29 Civilian and 23 Police and Fire claims did not contain a documented medical record review. The Program?s Claims Management Guide contains a best practice to obtain a signed medical release (Medical Authorization Request) from the employee. Of the 82 claims to which this attribute applied, 24 Civilian and 24 Police and Fire claims did not have evidence of the medical release being retained or at the very least being initially sent to the claimant. The Program?s Claims Management Guide stipulates a medical canvas for additional records should be conducted and documented in the Medical Notepad and summarized in the Action Plan/Summary Notepad. The Claims Management Guide stipulates beginning March 2015, claims adjusters should be ?completing ISO indexing initially and throughout the life of the claim; preferably every six months? which would include prior claims history for a given claimant. Of the 72 Civilian and Police and Fire claims to which this attribute applied, a medical canvas was not conducted and properly documented for 41 Civilian and 24 Police and Fire claims. The Program?s Claims Management Guide makes reference to the Act?s authorization to employers to conduct a drug and alcohol test on employees after they are involved in any incident that results in a fatality or injury occurring while on duty or while performing acts on the behalf of the employer. The Program?s best practice per the Program?s Claims Management Guide is to record drug and alcohol testing results in the NOS ?Examination Tracking? tab. Of the 75 claims to which this attribute applied, 16 Civilian and 23 Police and Fire claims did not contain drug or alcohol test results. Forms The Act requires employers to file First Report of Injury reports (IL Form 45) for all claims resulting in more than three (3) days of lost wages for the employee. Of the 39 tested claims to which this attribute applied, there was no evidence in the file that a FROI was manually filed with the Illinois Worker?s Compensation Commission as required under section 6(b) of the Act. The Illinois Workers? Compensation Commission Title 50, Chapter 6, Part 91 10, Section 9110.70 of Joint Committee on Administrative Rules Administrative Code requires that delay letters be sent to the claimant if a compensability decision will not be made within 14 days of being notified or when they are aware of a related liability that will delay compensability determination. Of the 46 claims we tested to which this ?2 Overpayments ranged from $80.00 to $11,416.46, and averaged $2,345.50. 47 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton attribute may have reasonably applied due to adjudication taking more 14 days as noted in the claim file, none (0) contained evidence of a delay letter. The Illinois Workers? Compensation Commission Title 50, Chapter 6, Part 9110, Section 9110.70 of Joint Committee on Administrative Rules Administrative Code requires that denial letters be sent to claimants within 14 days of being notified or when they are aware of a related liability if the employer denies liability for payment of temporary total compensation with a written explanation of the basis for denial. Of the 16 denied claims we tested, 12 Civilian and two (2) Police and Fire claims failed this attribute test as there was either no denial letter or the reason for denial was vague and provided no denial reason other than ?Claim is not compensable?. The Program?s Claims Management Guide contains a best practice to document reserves via the Reserving Worksheet in Of the 28 Civilian claims to which this attribute applied, only one (1) contained a Reserving Worksheet that contained sufficient reserves to cover bills paid. The other 27 Civilian claims either did not contain a Reserving Worksheet, or if a claim did contain one, it was not sufficiently filled out to support subsequent benefits and medical bills received and paid. Reserves Per the Claims Management Guide, reserves for applicable claims should be set within two (2) business days from when the claim is assigned to a Program adjuster. Of the 83 claims to which this attribute applied, six (6) Civilian and one (1) Police and Fire claim did not have reserves set timely. It is commonly accepted workers? compensation insurance industry best practice to set reserve exposure for potential ultimate probable cost or expected future indemnity and medical payments. Of the 74 claims to which this attribute applied 11 civilian and 3 police and fire claims contained adequately calculated exposure reserves. 40 Civilian and 20 Police and Fire claims did contain adequately calculated reserves. Grant Thornton observed it is commonly accepted workers? compensation insurance industry best practice reserves be properly set to pay for future and expected bills associated with the claim, and not on an ad hoc basis, or what is known as ?stair?stepping?? According to commonly accepted workers? compensation insurance industry best practices, reserves should be set within two (2) business days. While this was satisfied for most claims due to auto-reserving?, reserves were rarely reassessed until medical bills or indemnity payments were due (stair-stepping). Further, if a claim remains open for one (1) year or longer, a reserve reflecting ultimate probable cost should be set. At least one (1) claim tested that was open for longer than one (1) year did not reflect Ultimate Probable Cost reserves. This information is reflected in the results presented above related to reserve exposure setting. While Grant Thornton did not attempt to quantify the potential stair-stepping effect on the City?s financial statements, it should be noted the effect of stair-stepping can result in the improper asset and liability valuation on an organization?s financial statements. Not properly setting reserves at the onset of a claim 13 ?Stair-stepping? is the practice of frequently raising claim reserves to cover payments that come due. If loss reserves are raised by increments in order to cover the cost of claims expense as they happen, the term stair-stepping comes into to use. If the claim reserves were to be charted, the resulting graph would look like stair steps. ?4 automatically reserves $500 for all claims. 48 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton also hinders the Program?s ability to identify claims for which investigative and/or legal measures might mitigate the amount of loss. To prevent or minimize stair-stepping from the Program, its management would need more monitoring, training, and oversight to ensure adequate reserve setting at the onset and throughout the life of the claim. While reserves will likely never be 100 percent accurate, they should be set appropriately based on claim facts and progress within 12 months of claim receipt. This is referred to as setting the Ultimate Probable Cost on a claim. Subrogation The Claims Management Guide states potential third-party recovery should be assessed for all applicable cases. Of the 11 Civilian claims to which this attribute applied, 10 claims were not properly documented for potential third-party recovery. There were no applicable subrogation cases for Police and Fire claims we tested. Grant Thornton notes that commonly accepted workers? compensation insurance industry best practices suggest all claims be assessed for potential third-party liability and if identified, perform a liability analysis. Because the Program only assessed the third-party liability potential for one (1) claim we tested, this attribute only applied to that one (1) claim and there was no documented liability analysis for the claim. Grant Thornton noted commonly accepted workers? compensation insurance industry best practices suggest that any subrogation recovery received be documented and recorded. The applicable Civilian claim discussed above for which third-party recovery potential was addressed in the file, had documented evidence of a recovery received. Litigation The Claims Management Guide indicates there should be an initial file analysis performed by counsel upon consideration of counsel assignment to a claim. Of the 25 Civilian claims to which this attribute applied, 24 claims did not have a documented file analysis. There were no applicable Police and Fire claims we tested related to litigation. The Claims Management Guide states a budget should be developed for potential exposure value and legal expenses for a claim. Of the 23 Civilian claims to which this attribute applied, Grant Thornton was unable to identify any budget documented for potential value exposure or legal expenses. As noted previously, there were no applicable Police and Fire claims we tested related to litigation. The Claims Management Guide states the Program?s Director must authorize any legal settlements. Of the 18 Civilian claims to which this attribute applied, Grant Thornton was unable to identify documented authorization of legal settlements. Additionally, beginning in 2018, DOL Torts Division attorneys must request and obtain Claim Counsel?s approval to go to trial or settle any claim greater than $100,000.00. Experienced DOL Torts Division attorneys do have the authority to move to pre-trial if the claim is less than $50,000.00, while novice DOL Torts Division attorneys must submit detailed written memos to Claims Counsel to obtain approval to go to trial on any given claim. Closure The Claims Management Guide sets out timing standards in terms of the initial claims handling, investigation, and closure. Best practices in the guide state within two (2) days of claim assignment, 49 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. it is not to be used. relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL - PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton initiation of contacts, action plan/summary, and initial claim set-up should all be addressed within The presence of all of these elements occurring for a claim in the guide?s prescribed timeframe would constitute an ?aggressively? handled file. We determined that for the 82 claims we tested to which this attribute applied, 44 Civilian and 22 Police and Fire claims were not handled in accordance with the Claims Management Guide. The Claims Management Guide sets forth best practice standards for on-going bill monitoring, payment, and tracking. These stipulations should ensure that all bills are paid prior to a claim file being closed; and if bills do arise after a claim is closed, they should be minimal and sparse. Of the 50 claims we tested that were closed and to which this attribute applied, 13 Civilian and six (6) Police and Fire claims were not handled in accordance with the aforementioned best practices. A timely closure process should occur for all claims as indicated throughout the Claims Management Guide. Of the 67 claims we tested to which this attribute applied, 33 Civilian and 13 Police and Fire claims were not closed timely. Based on commonly accepted workers? compensation insurance industry best practices, this would generally be within 30 days after the last reasonably expected benefit liability is paid. Miscellaneous As stated in the in the Claims Management Guide, the goal of disability management is to return employees to work in a timely manner. Of the 31 Civilian claims we tested to which this attribute applied, 16 did not have return to work properly documented and addressed. We did not test this attribute for Police and Fire claims as this aspect of claim administration is handled by their respective departments. Per the Claims Management Guide, the topic of a Special Investigation Unit (SIU) is addressed. It states the SIU should be considered throughout the claim process, from point of intake through closure. Of the 19 Civilian we tested to which this attribute reasonably applied, based on program staff notes and correspondence, six (6) did not address or document SIU involvement. There were no applicable Police and Fire claims we tested involving the SIU. It is commonly accepted workers? compensation insurance industry best practice that a review for Medicare coverage of eligible claimants should be conducted. All 3515 claims to which this attribute applied accounted for Medicare eligibility verification. The Claims Management Guide states as a best practice, thorough and completed diaries16 are critical to claims administration. Of the 84 Civilian and Police and Fire claims we tested, 21 Civilian and six (6) Police and Fire claims did not have accurate and complete diaries. ?5 Medicare does not apply to Medical Only claims as settlements do not take place for Medical Only claims. As such, there is no requirement to protect Medicare?s interest where no settlement has taken place. 16 A ?diary? is the documentation of completion of a given claim management step. For example, the adjuster should document the claimant?s next medical appointment in a diary as a reminder to follow up on work status, next steps, prepare for bill payment, and evaluate continuation of benefits. 50 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any othei party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Aviation Claims File Administration The Program?s Client Service Instructions the City has filed with CCMSI indicates all claims and initial claim data should be reviewed by a CCMSI supervisor when a new claim is received to make an initial compensability assessment. Of the 19 Aviation claims we tested to which this attribute applied, supervisor review documentation was in all of the claim files. As previously noted, it is commonly accepted workers? compensation insurance industry best practice to assign a claim to an adjuster within 24 business hours of the claim having been received to expedite claim processing and ensure timely completion of subsequent steps after claim intake. This testing attribute applied to all 20 Aviation claims we tested and all were assigned to an adjuster within 24 hours. However, it should be noted that Grant Thornton identified seven (7) Aviation claims that were not reported to CCMSI by the Aviation department in a timely fashion. While the Program?s Claim?s Management Guide does not govern practices, for testing comparability purposes we applied the guide?s stipulations against the claims handled by CCMSI that were subject to our testing. As stipulated by the guide, the claimant?s AWW and TTD benefit amounts should be calculated within two (2) days of the claim being assigned to a claim adjuster. Of the 12 Aviation claims we tested to which this attribute applied, all had TD calculated timely. Initial File Review The Program?s Claims Management Guide contains best practices to conduct an IFA upon claim assignment. Grant Thornton tested IFA documentation against commonly accepted workers? compensation insurance industry best practices that generally allow 24 to 48 hours after the claim is assigned to an adjuster for such a review. This attribute applied to all 20 Aviation claims tested. The timely IFA was documented for all 20 Aviation claims tested. The Claims Management Guide contains a best practice to obtain a recorded statement from all claimants. Of the 19 Aviation claims we tested to which this attribute applied, three (3) did not contain a recorded claimant statement. The Claims Management Guide contains a best practice to obtain a witness statement on all Medical Only, Indemnity, and Managed Medical claims. Of the eight (8) Aviation claims we tested to which this attribute applied, five (5) claims did not contain a witness statement. The Claims Management Guide contains a best practice that an Action Plan/Summary should be documented. Of the 19 Aviation claims tested to which this attribute applied, all contained a documented Action Plan/Summary and subsequent supervisory reviews. 51 The contents of this document were prepared solely for 1he use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton The Claims Management Guide contains a best practice that compensability determinations be complete and documented within two (2) business days after claim assignment to an adjuster. Of the 19 Aviation claims to which this attribute applied we tested, three (3) claims did not contain a documented compensability determination. For the 16 claims where compensability was documented, it was done so in a timely fashion. Benefit Delivery/Wages It is the Program?s process that the assigned claims adjuster calculates AWW and TTD, and verifies the calculation against the claimant?s wage statement. Of the 12 Aviation claims we tested to which this attribute applied, one (1) did not have documented AWW verification. The Illinois Workers? Compensation Commission, Title 50, Chapter 6, Part 9110, Section 9110.70 of the Joint Committee on Administrative Rules Administrative Code requires that Temporary Disability stop letters be sent to the claimant within 14 days of benefits being stopped. Of the five (5) Aviation claims we tested to which this attribute applied, CCMSI did not send Temporary Disability stop letters to any of those claimants. We did not identify any overpayments for the 20 Aviation claims we tested to which this attribute applied. Medical Review The Program?s Claims Management Guide stipulates the claim adjuster should conduct an initial and ongoing review of available medical records. The best practice further stipulates this should be documented and summarized. All 16 Aviation claims to which this attribute applied contained a documented medical review. The Program?s Claims Management Guide contains a best practice to obtain a signed medical release (Medical Authorization Request) from the employee. Of the 16 Aviation claims to which this attribute applied, four (4) claims did not have evidence of this medical release being retained or at the very least being sent out to the claimant. The Program?s Claims Management Guide stipulates a medical canvas for additional records should be conducted, documented, and summarized. Of the 14 Aviation claims to which this attribute applied, a medical canvas was not conducted and properly documented for two (2) claims. The Program?s Claims Management Guide makes reference to the Illinois Worker?s Compensation Act?s authorization to employers to conduct a drug and alcohol test on employees after they are involved in any incident that results in a fatality or injury and occurs while on duty or while performing acts on the behalf of the employer. Of the 11 Aviation to which this attribute applied, four (4) claims did not contain drug test results. One (1) of those four (4) claims that did not contain drug test results, did contain evidence a drug test was performed, but the results were not documented in the claim file. 52 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Forms The Act requires employers to file FROI reports for all claims resulting in more than three (3) days of lost wages for the employee. Of the 16 Aviation claims we tested to which this attribute applied, all contained evidence in the file that a FROI was manually filed' with the Illinois Worker?s Compensation Commission as required under Section 6(b) of the Act. The Illinois Workers? Compensation Commission, Title 50, Chapter 6, Part 9110, Section 9110.70 of the Joint Committee on Administrative Rules Administrative Code requires that delay letters be sent to the claimant if a compensability decision will not be made within 14 days of being notified or when they are aware of a related liability that will delay compensability determination. Of the two (2) Aviation claims we tested to which this attribute may have reasonably applied, neither contained evidence of a delay letter. The Illinois Workers? Compensation Commission, Title 50, Chapter 6, Part 9110, Section 9110.70 of the Joint Committee on Administrative Rules Administrative Code requires that denial letters be sent to claimants within 14 days of being notified or when they are aware of a related liability if the employer denies liability for payment of TTD with a written explanation of the basis for denial. Of the two (2) Aviation claims we tested that were denied, both contained documentation of an adequate denial letter being sent to the claimant. Reserves for claims managed by CCMSI are documented within the tabs of the claim file. As such, the reserves worksheet testing attribute would not have been applicable to these claims. However, Grant Thornton noted that all Aviation claims tested contained documented reserves within the claim files in ICE. Reserves It is the Program?s best practice that reserves for all applicable claims be set timely, which the Program defines as two (2) business days from claim assignment to an adjuster. Of the 17 Aviation claims to which this attribute applied, all had reserves set timely. It is commonly accepted workers? compensation insurance industry best practice to set reserve exposure for potential ultimate probable cost or expected future Indemnity and medical payments. Of the 17 Aviation claims we tested to which this attribute applied, all contained adequately calculated reserve exposure. Grant Thornton observed it is commonly accepted workers? compensation insurance industry best practice that reserves be properly set to pay for future and expected bills associated with a claim, and not on an ad hoc basis or ?stair?stepping?. According to commonly accepted workers? compensation insurance industry best practices, reserves should be set within two (2) business days. All Aviation claims we tested had reserves adequately set at the onset of a claim and we did not identify a practice of ?stair-stepping?. Subrogation The Program Claims Management Guide contains a best practice that potential third-party liability be assessed for all applicable claims. This attribute applied to all 20 Aviation claims we tested and all addressed subrogation in the claim file. 58 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used, relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Commonly accepted workers? compensation insurance industry best practices suggest all claims should be assessed for potential third-party liability and if identified a liability analysis be performed. Of the two (2) Aviation claims for which potential third-party liability was identified, both contained documented liability analysis. Commonly accepted workers? compensation insurance industry best practices suggest that any subrogation recovery received be documented and recorded. The subrogation lien was forfeited for one (1) of the two (2) Aviation claims in which third-party liability was identified. The other claim did not have documented evidence of a recovery received. Litigation The Claims Management Guide indicates there should be an initial file analysis performed by counsel upon consideration of counsel assignment to a claim. Of the four (4) Aviation claims we tested to which this attribute applied, two (2) claims did not have a documented initial file analysis. The Claims Management Guide indicates a budget should be developed for potential exposure value and legal expenses. Of the four (4) Aviation claims we tested to which this attribute applied, three (3) did not contain a documented budget for potential exposure value and legal expenses. The Claims Management Guide states that any legal settlements be authorized by a claims director. Of the three (3) Aviation claims we tested to which this attribute applied, one (1) did not contain documented supervisory authorization of the legal settlement. Closure The Claims Management Guide sets out timing standards in terms of the initial claims handling, investigation, and closure. The guide?s best practices state within two (2) days of claim assignment, initiation of contacts, action plan/summary, and initial claim set-up should all be documented. The presence of all of these elements occurring for a claim in the guide prescribed timeframe would constitute an ?aggressively? handled file. Of the 10 Aviation claims we tested to which this attribute applied, we determined all were handled in accordance with the Claims Management Guide. The Claims Management Guide sets forth best practice standards for on-going bill monitoring, payment, and tracking. These stipulations should ensure that all bills are paid prior to a claim file being closed; and if bills do arise after a claim is closed, they should be minimal and sparse. Of the 10 Aviation claims we tested that were closed and to which this attribute applied, all were handled in accordance with best practices set forth in the guide. A timely closure process should occur for all claims as indicated throughout the Claims Management Guide. Of the 13 Aviation claims we tested to which this attribute applied, we determined one (1) was not closed timely. Based on commonly accepted workers? compensation insurance industry best practices, this would generally be within 30 days after the last reasonably expected benefit liability is paid. Miscellaneous As stated in the Claims Management Guide, the goal of disability management is to return employees to work in a timely manner. Of the 12 Aviation claims we tested to which this attribute applied, we determined all of the claims had return to work properly documented and addressed. 54 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used, relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Per of the Claims Management Guide, the topic of a SIU is addressed. It states the SIU should be considered throughout the claim process, from point of intake all the way through closure. Of the Aviation claims we tested, use of the SIU was not applicable. A review for Medicare coverage of eligible claimants should be conducted. All 1717 Aviation claims we tested to which this attribute applied accounted for Medicare eligibility verification. The Claims Management Guide states as a best practice, thorough and completed diaries are critical to claims management. This attribute applied to 17 of the Aviation claims we tested and of those claims we tested, we determined one (1) clam file did not have an accurate and complete diary. Federally Funded Civilian File Administration The Program?s CSI the City filed with CCMSI indicates all claims and initial claim data should be reviewed by a CCMSI supervisor when a new claim is received to make an initial compensability assessment. Of the five (5) Federally Funded Civilian claims we tested to which this attribute applied, supervisor review documentation was in all of the claim files. As previously noted, it is commonly accepted workers? compensation insurance industry best practice to assign a claim to an adjuster within 24 business hours of the claim having been received by the Program; in order to expedite claim processing and ensure timely completion of subsequent steps after claim intake. This testing attribute applied to all five (5) Federally Funded Civilian claims we tested, and all were assigned to an adjuster within 24 hours. While the Program?s Claim?s Management Guide does not govern practices, for testing comparability purposes we applied the guide?s stipulations against the claims handled by CCMSI that were subject to our testing. As stipulated by the guide, the claimant?s AWW and TTD benefit amounts should be calculated within two (2) days of the claim being assigned to a claim adjuster. Of the five (5) Federally Funded Civilian claims we tested to which this attribute applied, all had TD calculated timely. Initial File Review The Program?s Claims Management Guide contains best practices to conduct an initial file analysis upon claim assignment. Grant Thornton tested IFA documentation against commonly accepted workers? compensation insurance industry best practices that generally allow 24 to 48 hours after the claim is assigned to an adjuster for such a review. This attribute applied to all five (5) Federally Funded Civilian claims tested. The timely IFA was documented for all five (5) Federally Funded Civilian claims tested. ?7 Medicare does not apply to Medical Only claims as settlements do not take place for medical only claims. As such, there is no requirement to protect Medicare?s interest where no settlement has taken place. 55 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton The Claims Management Guide contains a best practice to obtain a recorded statement from all claimants. Of the two (2) Federally Funded Civilian claims we tested to which this attribute applied, both had evidence of a recorded statement. The Claims Management Guide contains a best practice to obtain a witness statement on all Medical Only, Indemnity, and Managed Medical claims. There were no Federally Funded Civilian claims we tested to which this attribute applied. The Claims Management Guide contains a best practice that an Action Plan/Summary should be documented. Of the five (5) Federally Funded Civilian claims tested to which this attribute applied, all contained a documented Action Plan/Summary and subsequent supervisory reviews. The Claims Management Guide contains a best practice that compensability determinations be complete and documented within two (2) business days after claim assignment to an adjuster. Of the five (5) Federally Funded Civilian claims to which this attribute applied we tested, all five (5) claims contained a documented compensability determination and it was done so in a timely fashion. Benefit Delivery/Wages It is the Program?s process that the assigned claims adjuster calculates AWW and TTD, and verifies the calculation against the claimant?s wage statement. Of the five (5) Federally Funded Civilian claims we tested to which this attribute applied, all of them had a documented AWW verification. Per the Illinois Workers? Compensation Commission, Title 50, Chapter 6, Part 9110, Section 9110.70 of the Joint Committee on Administrative Rules Administrative Code requires that Temporary Disability stop letters be sent to the claimant within 14 days of benefits being stopped. Of the two (2) Federally Funded Civilian claims we tested to which this attribute applied, CCMSI did not send Temporary Disability stop letters to either of those claimants. We identified overpayment for one (1) of the five (5) Federally Funded Civilian claims to which this attribute applied; however, the overpayment was subsequently recovered. Medical Review The Program?s Claims Management Guide stipulates the claim adjuster should conduct an initial and ongoing review of available medical records, which should be documented and summarized. All five (5) Federally Funded Civilian claims to which this attribute applied contained a documented medical review. The Program?s Claims Management Guide contains a best practice to obtain a signed medical release (Medical Authorization Request) from the employee. All five (5) Federally Funded Civilian claims to which this attribute applied, had evidence of this medical release being retained. The Program?s Claims Management Guide stipulates a medical canvas for additional records should be conducted and documented and summarized. All five (5) of the Federally Funded Civilian claims we tested to which this attribute applied had a medical review properly documented. 56 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties it is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL - PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton The Program?s Claims Management Guide references the Act?s authorization to employers to conduct a drug and alcohol test on employees after they are involved in any incident that results in a fatality or injury which occurs while on duty or while performing acts on the behalf of the employer. None of the five (5) Federally Funded Civilian claims we tested failed this attribute test. Forms The Act requires employers to file FROI reports for all claims resulting in more than three (3) days of lost wages for the employee. Of the two (2) Federally Funded Civilian claims we tested to which this attribute applied, one (1) did not contain evidence in the file that a FROI was manually filed with the Illinois Worker?s Compensation Commission as required under Section 6(b) of the Act. Per the Illinois Workers? Compensation Commission, Title 50, Chapter 6, Part 9110, Section 9110.70 of the Joint Committee on Administrative Rules Administrative Code requires that delay letters be sent to the claimant if a compensability decision will not be made within 14 days of being notified or when they are aware of a related liability that will delay compensability determination. This attribute did not apply to the five (5) Federally Funded Civilian Claims we tested. Per the Illinois Workers? Compensation Commission, Title 50, Chapter 6, Part 9110, Section 9110.70 of the Joint Committee on Administrative Rules Administrative Code requires that denial letters be sent to claimants within 14 days of being notified or when they are aware of a related liability if the employer denies liability for payment of temporary total compensation with a written explanation of the basis for denial. Of the one (1) Federally Funded Civilian claim we tested that was denied, the claim file contained documentation of an adequate denial letter being sent to the claimant. Reserves for claims managed by CCMSI are documented within the tabs of the claim file. As such, the reserves worksheet testing attribute would not have been applicable to these claims. However, Grant Thornton noted that all Federally Funded Civilian claims tested contained documented reserves within claim files within ICE. Reserves It is the Program?s best practice that reserves for all applicable claims be set timely, which the Program defines as two (2) business days from claim assignment to an adjuster. Of the five (5) Federally Funded Civilian claims we tested to which this attribute applied, one (1) did not have reserves set timely. It is commonly accepted workers? compensation insurance industry best practice to set reserve exposure for potential ultimate probable cost or expected future Indemnity and medical payments. Of the five (5) Federally Funded Civilian claims we tested to which this attribute applied, all contained adequately calculated exposure reserves. Grant Thornton noted it is commonly accepted workers? compensation insurance industry best practice that reserves be properly set to pay for future and expected bills associated with a claim, and not on an ad hoc basis or ?stair?stepping?. According to commonly accepted workers? compensation insurance industry best practices, reserves should be set within two (2) business days. All Federally Funded Civilian claims we 57 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton tested had reserves adequately set at the onset of a claim and we did not identify a practice of ?stair? stepping?. Subrogation The Program Claims Management Guide contains a best practice that potential third-party liability be assessed for all applicable claims. This attribute applied to all five (5) Federally Funded Civilian claims we tested and all addressed subrogation in the claim file. Commonly accepted workers? compensation insurance industry best practices suggest all claims should be assessed for potential third-party liability, and if applicable, perform a liability analysis. This attribute did not apply to any of the Federally Funded Civilian claims we tested. Commonly accepted workers? compensation insurance industry best practices suggest that any subrogation recovery received be documented and recorded. This attribute applied to one (1) of the Federally Funded Civilian claims we tested and the claim file contained documented evidence that recovery receipt was pending at the time of testing. Litigation The Claims Management Guide states there should be an initial file analysis performed by counsel upon consideration of counsel assignment to a claim. This attribute did not apply to any of the Federally Funded Civilian claims we tested. The Claims Management Guide states a budget should be developed for potential exposure value and legal expenses. This attribute did not apply to any of the Federally Funded Civilian claims we tested. The Claims Management Guide states that a claims director should authorize any legal settlements. This attribute did not apply to any of the Federally Funded Civilian claims we tested. Closure The Claims Management Guide sets out timing standards in terms of the initial claims handling, investigation, and closure. The guide states within two (2) days of claim assignment, initiation of contacts, action plan/summary, and initial claim set?up should all be documented. The presence of all of these elements occurring for a claim in the guide prescribed timeframe would constitute an ?aggressively" handled file. Of the five (5) Federally Funded Civilian claims we tested to which this attribute applied, we determined all were handled in accordance with the Claims Management Guide. The Claims Management Guide sets forth best practice standards for on-going bill monitoring, payment, and tracking. These stipulations should ensure that all bills are paid prior to a claim file being closed; and if bills do arise after a claim is closed, they should be minimal and sparse. Of the five (5) Federally Funded claims we tested that were closed and to which this attribute applied, all were handled in accordance with best practices set forth in the guide. A timely closure process should occur for all claims as indicated throughout the Claims Management Guide. Of the five (5) Federally Funded Civilian claims we tested to which this attribute applied, all were handled in accordance with best practices set forth in the guide. 58 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used, relied upon or referred to by any other party for any putpose. PRIVILEGED AND CONFIDENTIAL- PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Miscellaneous As mentioned in the Claims Management Guide, the goal of disability management is to return employees to work in a timely manner. Of the five (5) Federally Funded Civilian claims we tested to which this attribute applied, we determined all of them had return to work properly documented and addressed. Per the Claims Management Guide, the topic of a SIU is addressed. It states the SIU should be considered throughout the claim process, from point of intake all the way through closure. None of five (5) Federally Funded Civilian claims we tested had SIU involvement. It is commonly accepted workers? compensation insurance industry best practice a review for Medicare coverage of eligible claimants should be conducted. All five (5)18 Federally Funded Civilian claims we tested to which this attribute applied accounted for Medicare eligibility verification. The Claims Management Guide states as a best practice, thorough and completed diaries are critical to claims management. For the five (5) Federally Funded Civilian claims we tested, we determined each of them had an accurate and complete diary. d. Recommendations File Administration Supervisor/Director Review: Written policies and procedures should be developed, clarifying Program management?s roles within the claims administration process from claim intake to closure. Records should be kept and a queue created detailing new claims received, claims reviewed, and claims still pending. Commonly accepted workers? compensation insurance industry best practices indicate this should be done daily. Program management review could be implemented to ensure accountability. All activity should be noted within the claim file review notes or Notepad. File Assigned within 24 Hours: Claim file assignment to an adjuster should be based on daily incoming case load and staffing levels, with exceptions made for extraordinary cases or circumstances. Commonly accepted workers? compensation insurance industry best practices indicate claim file assignment should occur within 24 hours. A monitoring mechanism should be established to ensure adherence to timely assignment of claims. D: The Program should consider adding a review process on the 3rd business day from date of claim receipt to ensure that AWW and TD rates are calculated and processed timely. Any exceptions should be reviewed, recorded, and tracked for progress or lack thereof. All activity should be noted within the claim file review notes or Notepad. ?8 Medicare does not apply to Medical Only claims as settlements do not take place for medical only claims. As such, there is no requirement to protect Medicare?s interest where no settlement has taken place. 59 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Initial File Review Initial File Analysis within 24/48 hrs. Written policies and procedures should be developed, clarifying Program management?s roles and review requirements within the claims administration process and IFA. Commonly accepted workers? compensation insurance industry best practices indicate this should be done within 24-48 after claim file assignment. Program management review should be implemented to ensure accountability and verification analysis is being performed. All activity should be noted within the claim file review notes or Notepad. Recorded Statement: Program management should establish a documented and robust process surrounding review of the Notepad Activity Report. Any new losses that have zero activity within the Notepad or no documented attempts of contact within the designated timeline (defined in the Claims Management Guide as no later than the end of the next business day following the first business day reported) should be prompt notification to the claim adjuster and requirement to provide status and follow-up. The Program should consider setting follow up diary tasks on an automatic basis which notify Program management if claimant contact is not completed within best practice requirements. Witness Statement: Witness statement forms could be provided to each City department?s Human Resources team for the witness to complete immediately following the injury and the statement could be submitted with the initial notice of injury. Action Plan/Summary Provided: Written policies and procedures should be developed detailing roles and responsibilities of claim adjusters and Program management for completing and reviewing the Action Plan/Summary. Lack of an Action Plan/Summary in combination with an adjuster?s case load could hinder the ability of the adjuster to efficiently and effectively move through the claims administration process to the detriment of the claimant and the claimant?s department as a whole. Program leadership review/oversight should be considered for accountability purposes. Compensability Determination Performed: Written policies and procedures should be developed detailing roles and responsibilities of claim adjusters and Program management for compensability determination. Commonly accepted workers? compensation insurance industry best practices suggest a supervisory report review be performed mid-month for a prior month?s claims. More frequent iterations of the report review should be considered until initial claims handling metrics are brought to appropriate levels. Program leadership review/oversight should be considered to ensure determination is being performed. All activity should be noted within the claim file review notes or Notepad. Benefit Delivery/Wages Stop TD Letters (State Regulation Section 9110.70): Title 50, Chapter 6, Part 9110, Section 9110.70 of the Joint Committee on Administrative Rules Administrative Code requires that Temporary Disability stop letters be sent to the claimant within 14 days of benefits being stopped. Written policies and procedures should be developed and implemented to ensure the Program is Temporary Disability stop letters in compliance with applicable laws and regulations. Overpayment on File: All overpayments we identified were related to Indemnity benefits paid after Indemnity benefits were stopped or because of an incorrect calculation of Indemnity benefits. Periodic supervisory review should be established to ensure claims payments are accurately made and to 60 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL - PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton mitigate the risk of overpayment. Attempt at recovery of overpayments should be made during the course of the claim or at the time of claim settlement in an effort to recover any overpayment made. All activity should be noted within the claim file review notes or Notepad. Medical Review Medical Analysis Completed: Written policies and procedures should be developed to require Program management?s review of claim adjusters conducting initial review and on-going analysis. This could be accomplished by reviewing the Medical Notepad within as well as medical reports and bills housed within Coventry Connect. All activity should be noted within the claim file review notes or Notepad. Medical Authorization Request Sent: Written policies and procedures should be developed to require Program management review to ensure claim adjusters obtain medical release forms, properly document them in the Medical Notepad, and summarize them in the Action Plan/Summary Notepad. Medical Canvas Performed: Written policies and procedures should be developed to require Program management?s review to ensure claim adjusters obtain medical release forms, properly document them in the Medical Notepad, summarize them in the Action Plan/Summary Notepad, and complete ISO indexing. Drug Test Performed: Written policies and procedures should be developed to require Program management periodically review ?Examination Tracking? reports within to verify claim adjusters administer drug and alcohol tests and document results for applicable claims. Forms FROI Report Filed: Written policies and procedures should be developed and implemented to ensure the Program complies with the Act?s requirement to file FROI reports for claims resulting in more than three (3) days of lost wages for the employee. The Program advised Grant Thornton it will be ready for electronic reporting of the FROI, as required by the Act effective June 2019. Failure to file electronic FROI reports will cause the Program to be noncompliant with the Act. Delay Letter Sent Within 14 Days (State Regulation Section 9110.70): Written policies and procedures should be developed and implemented to ensure delay letters are sent to the claimant if a compensability decision will not be made within 14 days of being notified or when they are aware of a related liability that will delay compensability determination. Denial Letter Sent - Within 14 Days (State Regulation Section 9110.70): Written policies and procedures should be developed and implemented to ensure the Program issues TTD payments within 14 days of claim notification, it due. Otherwise, a denial letter should be sent to the claimant within 14 days of claim notification, if the employer denies liability for payment of temporary total compensation. A written explanation of the basis for denial should be sent and should contain more detail than the language currently being used. Settlement/Reserve Analysis: A claim settlement analysis should be completed on any claim that is litigated or where permanent partial disability is due. This analysis should be completed in a timely 61 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton manner (within 30 days of demand or MMI). Authority provided to assigned legal counsel should be followed up on in 30 day intervals in an effort to move the file to conclusion in a timely manner. A reserve analysis should be completed on each claim. The reserve analysis should be noted within the Notepad section of NOS and should present a clear understanding of lost time, potential permanent disability, current medical treatment undenNay, and the potential of future medical treatment related to the injury. The reserve analysis should also account for expenses related to surveillance, litigation, etc. Reserves Reserves Set Timely/Reserve Exposure: Program management should develop and implement a process to ensure claim reserves are appropriately set and maintained throughout a claim?s lifecycle, and not simply adjusted when bills and expenses come due stair-stepping). The Program should train all claims adjusters on how to set reserves for potential exposure. The training should also teach claims adjusters on how to set reserves at ultimate probable cost to minimize the risk of under- reserving, which can ultimately cause significant financial burdens to the Program and City. Subrogation Third-Party Potential Liability Assessed: The Claims Management Guide provides guidance for subrogation handling, but does not include a review process to ensure subrogation was being assessed. Written policies and procedures should be developed in order to ensure that subrogation potential is either maximized or ruled out. Liability Analysis Provided: lf subrogation potential is identified, an analysis should be performed to determine special considerations and the possibility of involvement of subrogation legal counsel to maximize recovery. This should be part of the initial claims handling and investigation notes, which should be documented in the Notepad and the subrogation box in should be checked within the claims file to confirm the claims adjuster has considered subrogation. Program management should develop a process for reviewing claims to determine subrogation is effectively reviewed and pursued or ruled out. Recovery Received: All claims require review for potential subrogation. Once subrogation is identified, the claim adjuster should either send a lien letter or assign the claim to subrogation legal counsel in an effort to maximize recovery. These claim files should be monitored on an ongoing basis until recovery is received. Litigation Initial File Analysis] Litigation Summary: Program management should develop a process to validate an initial file analysis and litigation summary are prepared for claims upon assignment to defense legal counsel. Updates should be obtained on an ongoing basis until the claim is brought to final resolution. Budget: If a claim is litigated, defense legal counsel should prepare a budget which is reviewed by the claim adjuster. The adjuster and defense legal counsel should monitor the budget throughout the litigation process to ensure it is being adhered to and defense legal counsel does exceed the approved 62 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used. relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton budget without written approval from the Program. Defense legal counsel should present the Program with an updated budget and detailed explanation for the requested increase in writing when seeking the Program?s approval. Written policies and procedures should be developed outlining the process for developing the budget, the necessary details when defense legal counsel seeks a budget increase, and how the Program?s decision should be documented and maintained. . Settlement Authorization Requests: Defense legal counsel should provide a claim settlement analysis on their assigned claim file, at the appropriate time MMI, or upon demand from the plaintiff attorney). Program management should review any claim settlement analysis from defense legal counsel within 30 business days and provide settlement approval based upon their review and knowledge of the file in conjunction with their review of defense legal counsel?s analysis. Written policies and procedures should be developed to ensure timely review of all claim settlement requests from defense legal counsel, at all levels, to mitigate FWA risks. The Program should reassess the parameters and all informal procedures currently in place that may be adversely impacting DOL Torts Division attorneys? autonomy leading to waste and abuse. The Program and the DOL Torts Division attorneys should ensure any parameters in place are sensible and regularly reviewed for propriety. Closure File Aggressively Handled: All claim files should be handled in an aggressive manner to ensure timely movement to closure. This is inclusive of Indemnity benefits, medical expenses, and other expenses surveillance). Program management should review claims regularly on a quarterly basis) to ensure they move forward in a timely and effective manner. All Bills Paid: Written policies and procedures should be implemented to ensure bills are paid prior to claim file closure. Most, if not all, bills should be paid while the claim is still open. The claim adjuster should track bill receipt and contact any providers where bills remain outstanding at the time the claim file is ready for closure. Closed Timely: Productivity requirements should be considered wherein there is a 1:1 closing ratio (a commonly accepted workers? compensation insurance industry standard). Claim files that remain open beyond treatment timeframes or MMI may have reserves outstanding that can adversely affect the City financial statements. Program management review should be implemented to ensure claims move toward closure and handled properly. Miscellaneous Return to Work Addressed: To effectively manage disability and workers? compensation, the Program needs to have consistent monitoring and supervisory review surrounding its RTW policies. Work Status tab, Notepad tab, and Claimant contact Notepad within should all be regularly reviewed. Program management should discuss with claims adjusters why early RTW is important as well as the cost savings that can be associated with it. Surveillance Assigned: Written policies and procedures should be developed and implemented to ensure the SIU is being considered throughout a claim?s lifecycle and utilized when appropriate. An RFP process should be developed for any third-party investigative services to ensure prospective third- 63 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton parties are cost-effective, can provide quality product, and service expectations are clearly documented. When appropriate, the Program should also consider collaborating with the OIG for further investigative support. Diaries: Written policies and procedures should be developed and implemented for Program management to review diaries within claims files to ensure accurate, completed claims handling occurs for all claims, by all claims adjusters. 64 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton PEER JURISDICTION ANALYSIS a. Summary Grant Thornton was tasked with collecting, aggregating, and analyzing workers? compensation program data from requested peer jurisdictions and comparing that data to the City?s Program data to determine if insights could be gleaned to develop strategies for increasing the Program?s operational effectiveness and efficiency. b. Procedures Performed Grant Thornton collected and aggregated information and data from select peer jurisdictions. As some jurisdictions were unresponsive to requests or would not provide information requested, Counsel submitted formal Freedom of Information Act requests. Data was requested from several ?sister? City agencies and large metro jurisdictions throughout the United States. See Table 2 below for a list of jurisdictions and the status of our data requests as of the date of this report. Grant Thornton analyzed the data received for a combination of performance statistics for fiscal years 2014 through 2018, including: Total dollar amount of claims paid 0 Total number of claims 0 Average claim amount . Percentage of claims approved denied Number of employees on workforce 0 Percentage of workforce making being awarded a claim . Total administrative costs a Total administrative costs as a percentage of claims paid 0 Average cost to process manage claims (administrative unit cost) 65 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Agency/Jurisdiction Status City of Chicago (Civilian, Police Fire) Data received Chicago Public Schools Data received Chicago Parks District Data received Chicago Transit Authority Data received Denver Data received Sacramento Data received Seattle Data received San Francisco Partial data received Dallas FOIA requested Los?geles FOIA requested New York City FOIA requested Philadelphia FOIA requested Atlanta City unresponsive Boston City unresponsive Houston City unresponsive Miami City unresponsive San Antonio City unresponsive Contact made - Request for Phoenix information submitted Contact made - Request for San Diego information submitted Table 2: Peer Agencies and Jurisdictions 66 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton c. Findings Grant Thornton was unable to determine or confirm from the large metro jurisdictions whether their respective programs included all city workers or if separate programs administered claims for different departments police, fire, aviation, or civilian). As a result of a multitude of factors, findings and observations about peer data comparison could be readily subject to challenge and inconsistent interpretation. Such factors may include, but would not be limited to: varying population sizes, geographies19, municipal services provided via employees covered by local jurisdictional workers? compensation benefit plans, and governing laws and regulations applicable to each jurisdiction. A peer benchmarking exercise involving jurisdictions outside the State of Illinois would likely not provide the City with an equivalent baseline for comparison due to differing State laws, statutes, or rules governing workers? compensation benefits. Furthermore, a comparison between the City?s Program and workers? compensation benefits programs administered by ?sister? agencies presents difficulty when trying to draw comparisons due to varying employee workforce sizes and work performed by those employees. d. Recommendations The City or the Program should establish its own formal peer jurisdiction analytic program to be performed on a periodic basis bi-annual) to allow the City to have a better opportunity to proactively identify unusual patterns or trends that might be indicative of FWA that other jurisdictions are not experiencing or have put more robust controls in place to prevent and detect potential FWA. We also recommend the City form a core group of fiscal leadership with responsibilities related to administering and accounting for the City?s Program that can periodically connect with and network with peers in otherjurisdictions to learn what other jurisdictions are finding to be best practices to prevent and detect FWA. The Program should consider performing a three (3) to five (5) year rolling analysis of the Program?s financial performance with consideration of the above mentioned performance statistics. ?9 Geographies includes consideration for general weather patterns in each metro jurisdiction. For example, jurisdictions in the State of California may encounter less severe weather snow and ice) compared to jurisdictions like Boston, the City, and New York City. 67 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton While this is not an exhaustive list, Grant Thornton identified several general best practices commonly found in municipal workers? compensation programs that the City of Chicago could benefit from and should consider implementing listed below: 0 Establishing specific reporting periods FROI report). For example, ?lnjury must be reported to employer within 21 days of employee injury. After 120 days the injury is non-compensable.? NOTE: Any such City guidelines should be drafted in conformity with governing State of Illinois, federal, and local laws and regulations. . Establishing consistent review processes throughout the entire lifespan of the claim. 0 Actively monitoring the employee recovery period and maintaining contact with the employee. 0 Developing a robust and mandated participation and use of a return to work program. Maintaining reasonable reserves for anticipated future medical costs. 68 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton CITY OF CHICAGO COMPENSATION PROGRAM GRANT THORNTON LLP FINAL REPORT - APPENDICES MAY 10, 2019 69 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton IX. APPENDICES a. Appendix A City of Chicago Workers Comp. Program: Fraud Risk Map Internal General Fraud Sub-Fraud Fraud Risk Entry Underlying Fraud Additional Detail Notes Point Risk (If Applicable) or Fraud Scheme Scheme Actor(s) Category External (If Applicable) An employee might invent injuries or illnesses they don?t have to get time off and financial benefits from the workers compensation program. A worker fabricates . . . Exam Is: An em lo ee makes hearin loss to receive an injury or illness to 9 Asset Falsified Injury Injury on Duty workers? compensation benefits. External Misappropriation Claimant Fraud or Illness City Employee Report obtain workers compensation . . . City. The Program has access to several tools to prevent an benefits. . . . employee from receivmg benefits for too long. Such tools include: witness and supervisor statements, investigative tools and surveillance, Independent Medical Exams and nurse case managers. 70 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal or External General Fraud Category Fraud Scheme Sub-Fraud Scheme (If Applicable) Actor(s) Fraud Risk Entry Point Underlying Fraud Risk A worker exaggerates an injury or illness to increase their Additional Detail Notes (If Applicable) A City employee might exaggerate their illnesses or injuries. The employee might be suffering from a minor injury or illness, but it does not prevent them from working. Example: The employee has a sore shoulder from a minor on- the-job injury. The employee inflates his injury and pretends obtain workers? compensation benefits. External Asset. . Claimant Fraud Exaggerated City Employee Injury on Duty workers? that he cannot use his arm so he can stay home and receive Isapproprlatlon Injury or Illness Report . . compensation benefits. benefits and/or prolong them. City: The Program has access to several tools to prevent an employee from receiving benefits for too long. Such tools include: witness and supervisor statements, investigative tools and surveillance, IMEs, and nurse case managers. An employee can commit workers?Icompensationfr?aud by work?related when it pretending they got Injured on the jOb. when their injury came Asset . Non Work? Injury on Duty is in fact not work from elsewhere. Or, the employee might have an old Injury External Misappropriation Claimant Fraud related Injury or City Employee Report related in order to that resurfaces, and they say they got It while at work. Illness Example: An employee has a skiing injury that injures his back. He pretends to slip on a wet floor to receive workers? compensation benefits. The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal or External General Fraud Category External Collusion Fraud Scheme Claimant Fraud Sub-Fraud Scheme (If Applicable) Falsified Injury or Illness Actor(s) City Employee, Medical Provider Fraud Risk Entry Point Injury on Duty Report, Medical Bills Underlying Fraud Risk A worker in collusion with a medical provider falsifies an injury or illness in order to obtain workers? compensation benefits. Additional Detail Notes (If Applicable) City: While the Program has successfully identified cases of medical providers that over-treat; there is no mechanism to systematically prevent and detect cases of collusion between claimants and medical providers. External Collusion Claimant Fraud Exaggerated Injury or Illness City Employee, Medical Provider Injury on Duty Report, Medical Bills A worker in collusion with a medical provider exaggerates an injury or illness to increase their workers? compensation benefits and/or prolong them. City: While the Program has successfully identified cases of medical providers that over-treat; there is no mechanism to systematically prevent and detect cases of collusion between claimants and medical providers. External Collusion Claimant Fraud Non work- related Injury or IHness City Employee, Medical Provider Injury on Duty Report, Medical Bills A worker in collusion with a medical provider claims an injury or illness is work-related when it is in fact not work related in order to obtain workers? compensation benefits. City: While the Program has successfully identified cases of medical providers that over-treat; there is no mechanism to systematically prevent and detect cases of collusion between claimants and medical providers. 72 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal or External General Fraud Category Fraud Scheme Sub-Fraud Scheme (If Applicable) Actor(s) Fraud Risk Entry Point Underlying Fraud Risk A worker gains secondary employment either part-time or full-time to receive Additional Detail Notes (If Applicable) City: The CBAs for both Police and Fire departments allow sworn officers to maintain secondary employment. While Bills workers? compensation claim. Asset . Secondary City Employee, Approved prior . . secondary employment must be pre-approved by the External Misappropriation Claimant Fraud Employment Police and Fire employment ?30m respective departments, there is no documented mechanism . by which the departments can prohibit or monitor secondary they may continue employment while the claimant is receivmg benefits. receive workers compensation benefits. City: Adjusters review medical bills for purposes of completing A medical provider diaries and to perform overall oversight of claims. . . . . . Injury on Duty bills for services not Coventry also reviews medical bills, provides estimated ranges External . Asset. . Medical PrOVIder F'Ct't!ous Medical Provider Report, Medical rendered related to a of total medical bills for a given injury type, and provides case Misappropriation Fraud SeNices . Bills workers management nurses to oversee care upon request. However, compensation claim. in order for these mechanisms to operate effectively, claims injuries must be documented in detail. A medical provider City: The Program has IMEs and nurse case management at Exiema. Mediee' Provider provider Eif?ims Misappropriation Fraud Services ry. pp systematic mechanism to monitor propriety of services rendered by medical providers. 73 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal or External General Fraud Category Asset Fraud Scheme Medical Provider Sub-Fraud Scheme (If Applicable) Actor(s) Fraud Risk Entry Point Underlying Fraud Risk A medical provider double-bills for Additional Detail Notes (If Applicable) City: Adjusters use the medical visit dates to manage diaries to help monitor upcoming medical visits. Coventry reviews medical bills but only for adjustment to the Illinois fee schedule. There is no systematic, documented mechanism by Fraud Medical Provider services rendered related to a workers? compensation claim. External Misappropriation Fraud Double-Billing Medical Provrder Medical BIHS rs? which the program might be able to prevent and detect com ensation claim duplicate billing. Further, there is no mechanism to prevent bills being paid on closed claims, which might increase the risk of the program processing duplicate bills. In City: There are no controls in place to prevent a medical . Medical Provider Fictitious City Employee . worker bills for provider from fabricating services to over bi? the program. The External Collusnon Fraud Services Medical Provider Medical Bills services not rendered only way this would be identified is through investigation of the related to a workers? medical provider's notes and interviews with the provider's . . staff. compensation claim. gowuescijocnavv?trlfingder In City: The program has IMEs and nurse case management at . . . . its disposal to identify when medical services and procedures External Collusion Medical Provrder Unnecessary C'ty. Employee, Medical Bills worker for . may be unnecessary. However, there appears to be no Fraud Servnces Medical Provnder unnecessary serVIces . . . . . related to a workers? systematic mechanism to'monltor propriety of serVIces compensation claim rendered by medical prOVIders. A medical rovider in City: Adjusters use the medical visit dates to manage collusion wFiDth a diaries to help monitor upcoming medical visits. Coventry worker submits reviews medical bills but only for adjustment to the Illinois fee External Collusion Medical Prowder Double-Billing City Employee, Medical Bills duplicate bills for schedule. There IS no systematic, documented mechanism by which the program might be able to prevent and detect duplicate billing. Further, there is no mechanism to prevent bills being paid on closed claims, which might increase the risk of the Program processing duplicate bills. 74 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL - PREPARED PURSUANT TO THE DIRECTION OF COUNSEL Gra ntThornton Internal or External General Fraud Category Fraud Scheme Sub-Fraud Scheme (If Applicable) Actor(s) Fraud Risk Entry Point Underlying Fraud Risk Additional Detail Notes (If Applicable) A Program employee External parties may include City employees or medical accepts a bribe, or roviders . . . Program Compensability kickback, from an . . Falsrfied Injury . . Internal Collusron Bribery or Illness Employee, Determination, external party to City: Due to the volume of claims workload on Program C'ty Employee Medical BIHS a management, and inherent difficulty in catching collusion . . schemes, this scheme would be extremely difficult to identify. compensation claim. A Program employee General Program 222%: 31:25:23 City: Due to the volume of claims, workload on program internal Collusion Bribery Pro ram Fraud Employee, Multiple in order to assistpin oyr management, and inherent difficulty in catching collusion City Employee . schemes, this scheme would be extremely difficult to identify. hide fraudulent activity. A Program employee accepts a bribe in Inappropriate Program order to provide City: Access to the program offices are controlled by key-card. Internal Collusion Bribery Access to Employee, Program Offices inappropriate physical Access to premises should be reviewed periodically to identify Program Assets City Employee premises access to access anomalies. unauthorized individuals. A Program employee . accepts a bribe In City: Currently, access to the system is controlled by the IT Inappropriate Program stem credential order to prOVIde de artment with access bein directed a documented Internal Collusion Bribery Access to Employee, . inappropriate system p_ Id _y d' . Program Assets City Employee creation access to usmess nee . anagement ou perio Ica monitor . access, roles, and access levels to the system. unauthorized individuals. 75 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal External General Fraud Category Fraud Scheme Sub-Fraud Scheme (If Applicable) Actor(s) Fraud Risk Entry Point Underlying Fraud Risk A Program employee accepts a bribe, or kickback, from an Additional Detail Notes (If Applicable) External parties may include City employees or medical providers. undisclosed conflict of interest. Internal Collusion Bribe Exaggerated EmPIggeIszit Medical Bills eXtema' party to ry Injury or Illness Epm ylo ?e approve and/or pay City: Due to the volume of claims, workload on program an exaggerated management, and inherent difficulty in catching collusion workers? schemes, this scheme would be extremely difficult to identify. compensation claim. A Program employee accepts a bribe, or External parties may include City employees or medical Non work- Program kickback, from an providers. . . . Compensability external party to Internal Bribery relatidnlenslislry or Determination approve and/or pay a City: Due to the volume of claims, workload on program non-work-related management, and inherent difficulty in catching collusion workers? schemes, this scheme would be extremely difficult to identify. compensation claim. A Program employee City: Several people within the Program anecdotally disclosed approves and/or pays their self-recusal from claims in which they were perceived to . . . . Injury on Duty a fictitious workers? have a conflict of interest with the claimant. However there Internal Collusion Clzn?liggff Report, Voucher compensation claim in was no documented policy that required, or mechanism by Creation which they have an which, Program personnel could recuse themselves from claims in which there was a conflict of interest, real or perceived. 76 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal or External General Fraud Category Fraud Scheme Sub-Fraud Scheme (If Applicable) Actor(s) Fraud Risk Entry Point Underlying Fraud Risk Additional Detail Notes (If Applicable) 2 City: Several people within the Program anecdotally disclosed a?gxaggerate their self-recusal from claims in which they were perceived to . Conflict of Exaggerated Program Injury on Duty workers? have a conflict of interest With the claimant. However, there Internal Co u3ion Interest In'u or Illness Em lo ee Report, Voucher com ensation claim in was no documented policy that reqUIred, or mechanism by ry Creation the have an which, Program personnel could recuse themselves from . . claims in which there was a conflict of interest, real or undisclosed conflict of . . perceived. interest. 2? [DESI/girg??T/?grloyjes City: Several people within the Program anecdotally disclosed pp their self-recusal from claims in which they were perceived to . a non-work-related . . I . Conflict of on wor - Program niury on uty workers? ave a con ict 0 interest Wit aimant. owever, are Internal Collusron related Injury or Report, Voucher . . . was no documented policy that reqwred, or mechanism by Interest Employee . compensation claim in . Illness Creation which the have an which, Program personnel could recuse themselves from . . claims in which there was a conflict of interest, real or undisclosed conflict of . . perceived. interest. A Program employee External parties may include workers, medical providers, attempts to influence lawyers, etc. the approval and/or Program Injury on Duty payment of a workers? City: Several people within the Program anecdotally disclosed Internal Collusion Conflict of A Employee, Voucher Creation, compensation claim - their self-recusal from claims in which they were perceived to Interest . . . on behalf of external have a conflict of interest With the claimant. However, there City Employee Medical Bills . . . . . . parties in which the was no documented policy that requrred, or mechanism by internal party has a which, Program personnel could recuse themselves from hidden conflict of claims in which there was a conflict of interest, real or interest. perceived. The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal or External General Fraud Category Fraud Scheme Sub-Fraud Scheme (If Applicable) Actor(s) Fraud Risk Entry Point Underlying Fraud Risk Additional Detail Notes (If Applicable) A Program employee . . . . demands personal External parties may include workers, medical prowders, lawyers, etc. Program or paymenlt rom an Internal Collusion Employee, ?pen.? 'ty externa party as City: Compensability is reviewed by both the Program director Extortion . Determination stipulation for . . . City Employee a roval and/or and Claims Counsel. As long as there is some sort of reVIew SPment of a workers? and monitoring of compensability and claim management, this . . risk might be adequately mitigated. compensation claim. A Program employee demands personal Economic Pro ram payment from another City: Due to the volume of claims, workload on Program Internal Collusion . 9 Multiple internal party as management, and inherent difficulty in catching collusion Extortion Employee . . . . . . . stipulation for not schemes, this scheme would be extremely difficult to identify. reporting inappropriate activity. A Program employee accepts a personal benefit or something External parties may include workers, medical providers, Internal Illegal Gratumes Employee, City Medical Bills the Program City: Due to the volume of claims, workload on Program Employee . . . . . . employee approves management, and inherent difficulty in catching collu5ion and/or pays a schemes, this scheme would be extremely difficult to identify. workers? compensation claim. 78 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal or External General Fraud Category Fraud Scheme Sub-Fraud Scheme (If Applicable) Actor(s) Fraud Risk Entry Point Underlying Fraud Risk A Program employee accepts a personal benefit from another Additional Detail Notes (If Applicable) For example, the internal party may have made a false statement related to the other party's performance to their benefit. Based on this action, the party then provided a personal benefit, such as money, to the other party as a expense is business related. Internal Collusion Illegal Gratuities Medical Bills Program employee as reward for providing the false statement after the fact. reward for completion of an activity that City: Periodic and ongoing communication of the City's ethics violates policy. policies and hotlines should be distributed to aid in mitigating this risk. Businesses typically reimburse their employees for out-of- pocket expenses that their policies identify as reimbursable, such as, travel, lodging and meals. In a mischaracterized expense reimbursement scheme, the perpetrator simply requests reimbursement for an expense that is not actually business-related. A Program employee For example, an employee takes his family on a vacation and requests requests reimbursement for his hotel stay. He submits the Expense . . reimbursement for a receipt and falsifies his expense report to indicate that the Internal Reimbursement MISEZarSrc?zgzed EPnZOSligarene Reiri?iergesgent personal expense by costs incurred were for business purposes. The false report Schemes claiming that the prompts the organization to issue a check, reimbursing the employee for his or her personal expenses which becomes a free vacation for the employee and his or her family. A common element of mischaracterized expense schemes is a failure to submit detailed expense reports, or any expense reports at all. Some companies provide employees with company credit cards and allow employees to spend company funds without providing detailed information justifying the purchase. 79 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used, relied upon or referred to by any other party for any purpose PFIIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal or External General Fraud Category Fraud Scheme Expense Sub-Fraud Scheme (If Applicable) Actor(s) Fraud Risk Entry Point Underlying Fraud Risk A Program employee inflates the cost of actual business Additional Detail Notes (If Applicable) In an overstated expense reimbursement scheme, the employee inflates the cost of actual business expenses. This can be perpetrated in a variety of ways, including modifying receipts or over-purchasing and benefiting from a refund or discount. In many cases, this scheme may not be carried out business expenses or seeking to be reimbursed for personal expenses. Asset . Overstated Program Expense . by the employee but by the colleague who handles or internal Misappropriation Expenses Employee Reimbursement on the" processes expense reports. For example, an administrative reiIanursement to assistant who processes expense reports may alter the increase their a out expense report of his or her co-worker and insert a larger dollar amount for reimbursement. He or she then passes on the reimbursement to the colleague for the amount requested and walks away with the remaining amount. In a fictitious expense reimbursement scheme, an employee A Program employee submits a request for reimbursement for wholly fictitious submits a request for expenses. The individual develops a false expense report and reimbursement for submits it for reimbursement, as opposed to overstating real wholly fictitious business expenses or seeking to be reimbursed for personal Misappropriation Schemes Expenses Employee Reimbursement overstating real An internal party may create fraudulent supporting documents, such as false receipts. Not all companies require receipts to be attached to expense reports. Another way perpetrators use actual receipts to generate unwarranted reimbursements is by submitting expense reports for expenses that were paid by others. 80 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal General Fraud Sub-Fraud Fraud Risk Entry Underlying Fraud Additional Detail Notes ?r Point Risk (If Applicable) External Fraud Scheme Scheme Actor(s) Category (If Applicable) In the case of a multiple reimbursement scheme, the perpetrator submits a request for reimbursement for the same expense multiple times. Most often, the fraudster will submit several forms of documentation as support for the same . expense. For example, an employee purchases a train ticket Multiple Program Expense stlibanIts a :qutefst T: for business travel and submits the receipt generated at the Reimbursements Employee Reimbursement sZmeuefeeane or ticket counter to the supervisor for reimbursement. A month or . so later, he or she submits a second form of proof of payment multiple times. . . . . . such as an email confirmatlon of the reservation or a credit card statement to a different supervisor so that neither would see both expense reports. The organization ends up reimbursing the perpetrator for the travel expense twice. A Program employee Asset Expense Internal Misappropriation 81 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used, relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal General Fraud Sub-Fraud Fraud Risk Entry Underlying Fraud Additional Detail 8! Notes or Fraud Scheme Scheme Actor(s) External categmy (If Applicable) (If The most common method of misappropriating funds from the payroll is the overpayment of wages. For hourly employees, the size of the paycheck is based on two factors: the number of hours worked and the rate of pay. Therefore, for hourly employees to fraudulently increase the size of their paycheck, they must either falsify the number of hours they have worked or change their wage rate. Because salaried employees do A Program employee not receive compensation based on their time at work, in most Sme'tS cases, these employees generate fraudulent wages by Asset . . Program . unauthorized pay rate increasing their rate of pay Internal . . . Payroll Falsmed Wages CIty FMPS Increase, either for Misappropriation Employee themselves or another . program An employee's personnel or payroll records reflect their rate of pay. If an employee can gain access to these records or has an accomplice with access to them, they can adjust the rate so that they receive a larger paycheck. Employees may collude with the payroll clerk to perpetrate this scheme. A cleverer clerk will then return the pay rate to its original level after committing this fraud for just a few pay periods, so that the issue is less easy to spot. This can be detected by matching pay rate authorization documents to the payroll register. employee/accomplice. 82 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal or External General Fraud Category Fraud Scheme Sub-Fraud Scheme (If Applicable) Actor(s) Fraud Risk Entry Point Underlying Fraud Risk A Program employee pads their time sheet or the time sheet of Additional Detail Notes (If Applicable) The most common method of misappropriating funds from the payroll is the overpayment of wages. For hourly employees, the size of the paycheck is based on two factors: the number of hours worked and the rate of pay. Therefore, for hourly employees to fraudulently increase the size of their paycheck, they must either falsify the number of hours they have worked or change their wage rate. Because salaried employees do off, or underreports the time taken off. Internal Asset. . Payroll Unauthorized Program City FMPS an accomplice, sum not receive compensation based on their time at work, in most Isapproprlatlon Hours Employee as recording nine hours when they only cases, these employees generate rau en wages worked eight to Increasmg their rate of pay. Perhaps the most common type of increase their pay payroll fraud is the padding of tIme sheets by employees, usually in small enough increments to escape the notice of supervisors. This is a particular problem when supervisors are known to make only cursory reviews of time sheets. The best control over this type of fraud is the supervisory review. By underreporting personal time off, an employee may end up Internal Asset Payroll A Program City FMPS record personal time using more personal time off than IS allocated to him/her and Misappropriation Employee depriving the City of his/her time spent working on City activities. 83 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal General Fraud Sub-Fraud Fraud Risk Entry Underlying Fraud Additional Detail Notes or Fraud Scheme Scheme Actor(s) External Category Applicable) Pomt Risk (If Applicable) Illicit funds can be generated by funneling phony salary payments to fictitious or former employees ghost employees), or by making extra payments to presently salaried employees who then either return them to the payer or pass them on to the recipient. A ghost employee is someone who is A Program employee on the payroll register but who does not actually work for the creates a fake company. Through the falsification of personnel or payroll employee in the records, a fraudster causes paychecks to be generated to a payroll records and non-employee, or a ghost. The fraudster or an accomplice Asset Program falsifies the payment then converts these paychecks for their own benefit. The Internal Misappropriation Payroll Ghost Employee Emplo ee City FMPS record so that the ghost employee may be a fictitious person or a real individual direct deposit who simply does not work for the victim employer. When the information is ghost is a real person, it is often the perpetrator's friend or replaced with bank relative. For a ghost employee scheme to work, four things account information of must happen: (1) the ghost must be added to the payroll, (2) his/her own. timekeeping (for an hourly employee) and wage rate information must be collected, (3) a paycheck must be issued to the ghost, and (4) the check must be delivered to the perpetrator or an accomplice. Individuals with authority to add new employees and remove terminated employees are in the best position to put ghosts into the payroll. 84 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal General Fraud Sub-Fraud Fraud Risk Entry Underlying Fraud Additional Detail Notes ?r Point Risk (If Applicable) External Fraud Scheme Scheme Actor(s) Category (If Applicable) The payroll staff either creates a fake employee in the payroll A Program employee records or prolongs the pay of an employee who has just left prolongs the pay of the company, and alters the payment record so that the direct an employee who has deposit payment or paycheck is made out to them. This works just left the City, and best in large companies where supervisors have very large Asset Program alters the payment staffs and so do not usually track compensation in sufficient Internal Misappro riation Payroll Ghost Employee Em lo ee City FMPS record so that the detail. It also works well when an employee has left the direct deposit company and has not yet been replaced, so a fraudster can information is create a ghost employee until a new employee is hired. replaced with bank Periodic auditing of the payroll records is needed to spot ghost account information of employees. Another way to spot a ghost employee is when his/her own. there are no deductions from a paycheck, since the perpetrator wants to receive the maximum amount of cash. 85 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL - PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal or External General Fraud Fraud Scheme Category Asset Sub-Fraud Scheme (If Applicable) Actor(s) Program Fraud Risk Entry Point Underlying Fraud Risk A Program employee intercepts a disbursement and alters the payee designation so that Additional Detail Notes (If Applicable) Check tampering is unique among the fraudulent disbursement schemes because it is the one group in which the perpetrator physically prepares the fraudulent check. In these schemes, the perpetrator takes physical control of a check and makes it payable to himself through one of several methods. In this scheme, an internal party may alter the payee designation on a check by inserting the false payee's name in place of the true payee's (the true name might be scratched out or covered up) or by entering into the accounts payable system and changing the payees' names before checks are their personal benefit. Internal Misappropriation Check Tampering Theft Employee Voucher Creation the program generated. employee or an accomplice can Checks can also be altered by changing the name of the real convert the check for payee designation, changing the amount the check is issued their personal benefit. for, or leaving the payee designation blank. City: While all payees must be established via 1099 and or listing FMPS, the City's HR management system, there is no review of vouchers or reconciliation of payments to vouchers to ensure a payee's information matches the voucher listing. A Program employee City: Not applicable as all payments for the Program are Asset . Program redirects an ACH or processed via paper check. Check disbursement is controlled Internal Misappropriation Cheek Tampering Theft Employee wire disbursement for by the City's Comptroller Office. Check payees require either a valid 1099 or listing in FMPS. 86 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose. AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal or External General Fraud Category Fraud Scheme Sub-Fraud Scheme (If Applicable) Actor(s) Fraud Risk Entry Point Underlying Fraud Risk A Program employee Additional Detail 8: Notes (lf Applicable) This type of fraud scheme differs from cash larceny and skimming in that it relates to cash that is kept in a secure place such as a bank vault. Theft of cash on hand is any scheme in which the perpetrator misappropriates cash kept on hand at the victim organization?s premises employee steals cash from a company vault). City: The Program regularly keeps negotiable checks in a locked drawer in the Program Director's office. The Program Asset Program Physical Assets steals prepaid bank . . . Internal . . . Cash on Hand Theft Director IS the sole custodian of these checks. The stock of Misappropriation Employee and Checks/Cash checks is the result of checks to claimants that are returned as undeliverable and awaiting pick up by the claimant. Alternatively, checks may be withheld from mail delivery - which is the primary method of benefit disbursement - clue to extenuating circumstances. The Program Director keeps the key to the drawer hidden and notifies an alternate - usually Claims Counsel - as to the location of the key in her absence. There is no comprehensive mechanism to track and reconcile checks. A Program employee External parties may include employers, workers, medical accepts a bribe, or providers, lawyers, etc. rogram .. . Internal Collusion Bribery Employee Compensability k'CkbaCk? from an . City Employee Determination external party to deny City: There do not appear to be pressures to deny claims. The a workers? compensation claim. higher risk for the City is collusion and bribery to accept an othenivise non-compensable claim. 87 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal or External General Fraud Category Fraud Scheme Sub-Fraud Scheme (If Applicable) Actor(s) Fraud Risk Entry Point Underlying Fraud Risk An external party makes a false Additional Detail Notes (If Applicable) External parties may include employers, workers, medical providers, lawyers, etc. A "statement" includes any writing, notice, proof of injury, or any medical bill, record, report, or test Program . . . result. External Collusion Bribery Employee, City SupggitseoTrI/zxittsness Straetfewgg?ggzr to Employee II'om filin a Ie itimate City: There do not appear to be metrics or pressures for claim 9 someone to prevent someone else from making a claim. The higher risk for the Program is collusion and bribery to falsify statements to increase a claim's likelihood of being accepted. A "statement" includes any writing, notice, proof of injury, or any medical bill, record, report, or test result. A worker makes a City: The Program curreriiltly calculates bcenefits for false statement in eligible claimants ulsmg pay rate per . emnity . Average Weighted . benefits paid to claimants at a higher rate than they are entitled External Asset Claimant Fraud False Statement Cit Em lo ee Wage agiretrg?obtain would require a high level of collusion between the claimant, Misappropriation Calculation, com ensation the adjuster that calculates AWW, and Program management Medical bills that reviews the calculation. There is no documented benefits at an inflated rate. mechanism by which the Program may prevent or detect improper level of benefits. The Program uses a third-party provider, Coventry, to review and adjust medical bills to the Illinois fee schedule. 88 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal or External General Fraud Category Fraud Scheme Sub-Fraud Scheme (If Applicable) Actor(s) Fraud Risk Entry Point Underlying Fraud Risk A worker in collusion with another external Additional Detail Notes (If Applicable) External parties may include employers, workers, medical providers, lawyers, etc. EmployeeMedicaI Provider Determination compensation claim at an inflated rate based on false statements received from the external party or parties. Injury on Duty Program Report, party makes a false A "statement" includes any writing, notice, proof of injury, or External Collusion Claimant Fraud False Statement Em rvi rNVitn statement In order to an medical bill record re ort or test result. . oyee, upe so ess obtain workers? City Employee Statements, om ensation Medical Bills beneFIits at an inflated City: Investigators have been cited for not asking a sufficient rate number of probing questions when collecting statements from witnesses and supervisors. A Program employee accepts a bribe, or kickback, from an External parties may include employers, workers, medical external party to providers, lawyers, etc. A "statement" includes any writing, Program approve and/or pay a notice, proof of injury, or any medical bill, record, report, or test Internal Collusion Bribery False Statement Employee? City Compensability workers? result. City: Indemnity benefits are calculated using pay data from FMPS. A monitoring mechanism for pay rates would enhance the City's ability to detect any instances of inflated benefits. 89 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal or External External General Fraud Category Asset Misappropriation Fraud Scheme Claimant Fraud Sub-Fraud Scheme (If Applicable) False Statement Actor(s) Program Employee, City Employee Fraud Risk Entry Point Investigations Underlying Fraud Risk An external party makes a false statement to the investigation staff during the course of an investigation to achieve some specific fraudulent purpose. Additional Detail Notes (If Applicable) External parties may include employers, workers, medical providers, lawyers, etc. A "statement" includes any writing, notice, proof of injury, or any medical bill, record, report, or test result. City: Investigators have been cited as not asking sufficient or appropriate probing questions to witnesses and supervisors to prevent the effects of third party statements. There would have to be a certain level of collusion between the claimant, witnesses, and/or supervisors in order for this scheme to cause harm to the Program. Internal Collusion Conflict of Interest False Statement Program Employee, City Employee Injury on Duty Report, Voucher Creation, Medical Bills A Program employee accepts or looks past a false statement that would result in inflated workers? compensation benefits for an external party in which they have an undisclosed conflict of interest. External parties may include employers, workers, medical providers, lawyers, etc. A "statement" includes any writing, notice, proof of injury, or any medical bill, record, report, or test result. City: Several people within the Program have anecdotally disclosed their self-recusal from claims in which they perceive to have a conflict of interest with the claimant. However, there is no documented policy that requires, or mechanism by which, Pprogram personnel can recuse themselves from claims in which there is a conflict of interest, real or perceived. 90 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal or External General Fraud Category Fraud Scheme Sub-Fraud Scheme (If Applicable) Actor(s) Fraud Risk Entry Point Underlying Fraud Risk A Program employee demands personal Additional Detail Notes (If Applicable) External parties may include employers, workers, medical providers, lawyers, etc. A "statement" includes any writing, they have a hidden conflict of interest. Injury on Duty payment from an . . . . . Program Report, external party as $3319, proof of Injury, or any medical bill, record, report, or test Internal Collusion Economic False Statement Employee, City Compensability stipulation for . Extortion Determination, accepting or looking . . . . Employee Com ensation ast a false statement City. Medical provrders would be the primary target for such Calzulation fhat would result in extortion. Ethics policies and hotlines should be . communicated to medical providers on first contact and on an inflated workers . . . . . ongomg periodic basrs. compensation rates. For a scheme to be classified as a purchasing scheme, the employee or perpetrator must have some kind of undisclosed A Program employee interest, such as financial or familial, in the third party. An . . directs a purchase to employee or agent who has an undisclosed, potentially . Conflict of Purchasmg Program . . . . . . . Internal Corruption Interest Schemes Employee Purchasmg a company In which adverse Interest In a customer or supplier might be tempted to favor his own or the third party's interests over their employers. The individual responsible for awarding or approving contracts would be in the best position to commit this scheme. 91 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal or External General Fraud Category Fraud Scheme Sub-Fraud Scheme (If Applicable) Actor(s) Fraud Risk Entry Point Underlying Fraud Risk A Program employee attempts to influence the selection of a third party by restricting the pool of competitors Additional Detail Notes (If Applicable) For a scheme to be classified as a purchasing scheme, the employee or perpetrator must have some kind of undisclosed interest, such as financial or familial, in the third party. An employee or agent who has an undisclosed, potentially adverse interest in a customer or supplier might be tempted to favor his own or the third party's interests over their employers. receive from a third party or company in which they have an undisclosed interest. Internal Corruption Conflict Of Purchasmg Program Purchasing from whom b'ds are An employee is in a perfect position to manipulate bids if they Interest Schemes Employee sought - on behalf which have access to the competitors bids or partICIpates in the the Fero ram bidding process. With such access or responsibilities, the employge has a employee can influence the bidding process to ensure that a hidden conflict of particular company Wins the contract. interest. City: Any future procurement on the Program's behalf will need to comply with City requirements. For a scheme to be classified as a purchasing scheme, the A Program employee employee or perpetrator must have some kind of undisclosed approves and pays a interest, either financial or familial, in the vendor. Purchase fictitious invoice for schemes involve the overbilling of a company for goods or . . oods or services that services by a third party in which an employee has an . Conflict of Purchasmg Program Internal Corruption 1 nt st Schemes Employee the City did not undisclosed interest, ownership, or finanCIaI interest. The individual responsible for awarding or approving contracts would be in the best position to commit this scheme. The internal party might perpetrate this scheme to increase profits for the third party or company in which they have an undisclosed interest. The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal Sub-Fraud General Fraud Fraud Risk Entry Underlying Fraud Additional Detail Notes Point Risk (If Applicable) or Fraud Scheme Scheme Actor(s) Category External (If Applicable) Procurement fraud schemes often involve collusion between contractors and the procuring entity's employees. The more power a person has over the bidding process, the more likely it A Program employee is that the person can influence which entity is awarded the convinces their contract. Generally, procurement actions begin with the supervisor and/or procuring entity making a determination of its general needs. director that they These initial determinations include assessments of the types Internal Corru . Conflict of Purchasing Program need excessive or and amounts of goods or services required to meet the entity's ptIon . . nterest Schemes Employee unnecessary products needs. In these recognition schemes, procurement employees or services, often convince their employer that it needs specific or unnecessary receiving a bribe or products or sen/ices. These schemes occur in the pre- kickback from the solicitation phase. third party. Often, in these schemes, purchasing entity employees receive a bribe or kickback for convincing their employer to recognize a need for a particular product or service. 93 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal or External General Fraud Category Fraud Scheme Sub-Fraud Scheme (If Applicable) Actor(s) Fraud Risk Entry Point Underlying Fraud Risk A Program employee approves and pays an inflated invoice for Additional Detail Notes (If Applicable) For a scheme to be classified as a purchasing scheme, the employee or perpetrator must have some kind of undisclosed interest, either financial or familial, in the third party. Purchase schemes involve the overbilling of a company for goods or services by a third party in which an employee has an undisclosed interest, ownership, or financial interest. The individual responsible for awarding or approving contracts hidden conflict of interest at or above market value prices. . Conflict of Purchasing Program . . code or services would be in the best position to commit this scheme. The Internal Corruption Interest Schemes Employee Medical BIHS geceived from a third internal party might perpetrate this scheme to increase profits party in which they for the third party company in which they have an undisclosed have an undisclosed interest. interest. City: This scheme would likely only apply to invoices from a SIU, external legal counsel, or bills from medical providers. However, Coventry reviews all medical bills and adjusts them to the Illinois fee schedule. 28233;? 5:55:29 The'internal party might perpetrate this scheme to increase from a third party in prtofits {or the third party in which they have an undisclosed . Conflict of Program . which the Program In eres Internal Corruption Interest Sales Schemes Employee Purchasmg employee has a City: All future purchasing that might impact the Program will be handled through the City's procurement policies and procedures. 94 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal or External General Fraud Category Fraud Scheme Sub-Fraud Scheme (If Applicable) Actor(s) Fraud Risk Entry Point Underlying Fraud Risk A Program employee causes the program to enter into an agreement for the sale of goods or Additional Detail Notes (If Applicable) There are two principal types of conflict schemes associated with sales of goods and services by the victim company: underselling and writing off sales. The first and most harmful is the underselling of goods or services. Just as a corrupt employee can cause his employer to overpay for goods and continuation of a third party contract relationship. . Conflict of Program . . services sold by a company in which they have a hidden Internal Corruption Interest Sales Schemes Employee Purchasmg ?ning? at or 539.0?, interest, they can also cause their employer to undersell to a prices C.) a company in which they maintain a hidden interest. Also, many company In which the . . . . . Program employee employees who have a hidden interest in outSIde companies has an undisclosed sell goods or sewices to these companies at or below-market interest prices. This results in diminished profits or even a loss for the victim company, depending on the size of the discount. Economic extortion occurs when an employee or official, through the wrongful use of actual or threatened force or fear, demands money or some other consideration to refrain from A Program employee discriminating against a business decision. demands personal payment from a third Economic extortion is the opposite of bribery. Instead of a . Economic Program . . party as stipulation for vendor offering payment to an employee to influence his Internal Corruption Extortion Employee Medical Bills award and/or business decision, the employee demands that the vendor pay him for favorable treatment or to avoid unfavorable treatment. City: Medical providers would be the primary target for such extortion. Ethics policies and hotlines should be communicated to medical providers on first contact and on an ongoing basis. 95 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal Sub-Fraud Fraud Risk Entry Underlying Fraud Additional Detail Notes Point Risk (If Applicable) General Fraud Fraud Scheme Scheme Actor(s) ategory (If Applicable) or External Illegal gratuities are something of value given to an employee to reward a decision after it has been made, rather than influence it before the decision is made. This crime is similar to bribery except that an illegal gratuity does not require proof of intent to influence the employee?s decision-making. Instead f. . of paying an employee to make a decrsion award a ene It or something . of value from a third contract), the third party pays the employee because of a Internal Corruption Illegal Gratuities EProgram Purchasing party after the decrsron the employ?e prevrously made. Illegal gratumes are mployee program employee merely offered as a thank you for something that has been . done. In proving an illegal gratuity, there is no need to show obtains approval for tthe third art intended to influence the em Io ee's the third party?s a. . . contract. actions, It IS enough to show that the employee accepted an award based on his performance. City: Procurement for the Program will be subject to the City's procurement policies and procedures. The Act requires employers (or insurers acting on their behalf) to send FROI reports to the Illinois Workers? Compensation Commission on all accidents involving more than three lost A supervisor makes a work days. FROI reports on fatal accidents are due within two misrepresentation on work days after the death; reports on nonfatal cases shall be External Asset Misrepresentation A City Employee Injury on Duty the accident reporting reported within the month. A supplementary or subsequent Misappropriation of Information Report form to achieve some report should be made if it is determined that a permanent specific fraudulent disability is involved. purpose. City: The Program does not have any documented mechanism by which it submits FROI reports. The City is a self-insured employer. 96 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel In the normal course of discharging their duties It is not to be used, relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Internal or External General Fraud Category Fraud Scheme Sub-Fraud Scheme (If Applicable) Actor(s) Fraud Risk Entry Point Underlying Fraud Risk An insurer makes a misrepresentation on Additional Detail Notes (If Applicable) The Act requires employers (or insurers acting on their behalf) to send FROI reports to the Illinois Workers? Compensation Commission on all accidents involving more than three lost work days. FROI reports on fatal accidents are due within two work days after the death; reports on nonfatal cases shall be some specific fraudulent purpose. External Asset Misrepresentation Insurer Injury on Duty the accident reporting reported within the month. A supplementary or subsequent Misappropriation of Information Report form to achieve some report should be made if it is determined that a permanent specific fraudulent disability is involved. purpose. City: The Program does not have any documented mechanism by which it submits FROI reports. The City is a self-insured employer. A worker makes a misrepresentation on Asset Misrepresentation . Injury on Duty the application for External Misappropriation of Information C'ty Employee Report benefits to achieve some specific fraudulent purpose. A lawyer makes a misrepresentation on Asset Misrepresentation Injury on Duty the application for External Misappropriation of Information Lawyer Report benefits to achieve 97 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL - PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Sub-Fraud Scheme (If Applicable) Internal or External Fraud Risk Entry Point Underlying Fraud Risk General Fraud Fraud Scheme Category Actor(s) A worker and lawyer collude to make a misrepresentation on Additional Detail Notes (If Applicable) External Collusion Misrepresentation C'ty Employee? Injury on Duty the application for of Information Lawyer Report . . benefits to achieve some specific City: Likely not applicable as applications for benefits are fraudulent purpose. submitted directly to the program. 98 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used. relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton b. Appendix City of Chicago Workers Comp. Program: Detailed Claims Testing Results for Civilian Workforce Indemnity/Managed . . Hennessy Medical Medical Only Pending Record Only Roach 33 17 1 2 6 Totals 8 Review Practice File within 24 hrs. Best Practice Average Weekly Wage Disability (TD) Calculated Practice InitIaI_FIle wrthin (IFA) 24/48 hrs. (Best Practice Recorded Statement Practice Witness Statement taken Practice Action Plan Provided Practice Determlnation Performed (Best Rate Verified Best Practice Letters State ulation Section 9110.File Practice Medical Practice Medical Authorization Sent Practice Medical Canvas Performed Practice Test Performed Practice FROI Filed State uirement Delay Letter sent - Within 14 Days (State Regulation Section 9110.Denial Letter sent - Within 14 Days (State Regulation Section 9110.70 0 0 5 12 47 Settlement/Resen/e Practice Reserves Set Timely (5-14 Business Days): Best Practice 0 0 53 6 99 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Medical Only Pending Record Only Heggzs?jTotals Reserve re Set Practice F5:212;iscteeppIng (Set as bills are received) (Best Third Potential Assessed Best Practice Liabi Provided Best Practice Received Practice Practice Practice Settlement Authorization uested Best Practice File Handled Practice All Bills Paid Practice Closed Ti Practice Return To Work Addressed Best Practice Surveillance ned Practice Medicare Verified ederal lation Best Practice 100 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton c. Appendix City of Chicago Workers Comp. Program: Detailed Claims Testing Results for Police and Fire Workforce Medical Only Pending Record Only 17 Totals Supervisor/Director Review (Best Practice) File Assigned within 24 hrs. (Best Practice) Average Weekly Wage (AWW)/Total Disability (TD) Calculated (Best Practice) Initial File Analysis within (IFA) 24/48 hrs. (Best Practice) Recorded Statement (Best Practice) Witness Statement taken (Best Practice) Action Plan Provided (Best Practice) Compensability Determination Performed (Best Practice) Rate Verified (Best Practice) Stop TD Letters (State Regulation Section 9110.70) Overpayment On File (Best Practice) Medical Analysis Completed (Best Practice) Medical Authorization Request Sent (Best Practice) 0 mo-< 0012 101 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Police Fire Indempni?y?ill?lglnaged Medical Only Pending Record Only 5 17 2 Totals Medical Canvas Performed (Best PracticeDrug Test Performed (Best PracticeFROI Filed (State Regulation/Requirementtat tion straw; 25 Denial Letter sent - Within 14 Da 3 State Re ulation Section 9110.70Settlement/Reserve Analysis (Best Practice2:831:21: Set Timely (5-14 Busrness Days). Best Reserve Exposure Set (Best PracticeStair-stepping (Set as bills are received) (Best Practice Third Party Potential Assessed (Best PracticeLiability Analysis Provided (Best PracticeRecovery Received (Best PracticeLitigation Summary (Best PracticeBudget (Best Practice Settlement Authorization Requested (Best PracticeFile Aggressively Handled (Best PracticeAll Bills Paid (Best PracticeClosed Timely (Best PracticeReturn To Work Addressed (RTW) (Best PracticeSurveillance Assigned (Best PracticeMedicare Verified (Federal RegulationDiary Completed (Best Practice102 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose AND CONFIDENTIAL - PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton d. Appendix Detailed Testing Results from CCMSI for Federally Funded Civilian Indemnity/Managed Medical Medical Only Totals Su rvisor/Director Review Best Practice File Assi ned within 24 hrs. Practice Average Weekly Wage (AWW)/Total Disability (TD) Calculated Practice Initial File within IFA 24/48 hrs. Practice Recorded Statement Practice Witness Statement taken Practice Action Plan Provided Best Practice 00 Determination Performed Practice Rate Verified Best Practice TD Letters State Section 9110.70 Ove On File Best Practice Medical Best Practice Medical Authorization uest Sent Practice Medical Canvas Performed Practice Test Performed Practice FROI Filed State ulation/R irement Delay Letter sent - Within 14 Days (State Regulation Section 9110.70 Denial Letter sent - Within 14 Days (State Regulation Section 9110.70 Settlement/Resen/e Best Practice Reserves Set 5-14 Business Best Practice Reserve re Set Practice NNO 000 CON COMO 0000 0001 -b 103 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL - PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Indemnity/Managed Medical Medical Only Totals Stair Set as bills are received Practice Third Potential Assessed Practice Liabil Provided Best Practice Received Best Practice IFA Liti tion Summa Practice Practice Settlement Authorization Practice File ress Handled Practice All Bills Paid Practice Closed Ti Best Practice Return To Work Addressed Practice Surveillance Assi ned Practice Medicare Verified Federal Co ed Practice 104 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton e. Appendix Detailed Testing Results from CCMSI for Aviation Employees . Indeg?tg?lilgzrage Medical Only Incident Only 9 8 3 Totals rvisor/Director Review Practice File ed within 24 hrs. Practice Average Weekly Wage Disability (TD) Calculated Practice Initial File within IFA 24/48 hrs. Practice Recorded Statement Practice Witness Statement taken Practice Action Plan Provided Practice nsabil Determination Performed Practice Rate Verified Practice Letters State ulation Section 9110.File Practice Medical eted Best Practice Medical Authorization Sent Best Practice Medical Canvas Performed Practice Test Performed Practice FROI Filed State rement 9D1e1 i=E1Jy7L0etter sent - Within 14 Days (State Regulation Section Denial Letter sent - Within 14 Days (State Regulation Section 9110.Settlement/Reserve Practice Reserves Set 5-14 Business Best Practice Resen/e re Set Practice 105 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Medical Only Incident Only 9 8 3 Totals Stair Set as bills are Practice Third Potential Assessed Practice Liabil Provided Best Practice Received Practice IFA Summa Practice Practice Settlement Authorization uested Practice File Handled Practice All Bills Paid Practice Closed Practice Return To Work Addressed Practice Surveillance Ass Best Practice Medicare Verified ederal ulation Best Practice 106 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton f. Appendix Top 20 Claims by Civilian, Police and Fire, Federally Funded Civilian, and Aviation The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose, $171,165 $145,435 $1 18,281 $1 16,529 $1 15,145 $103,132 $101,273 $97,987 $97,975 $96,149 $92,189 $85,463 $83,558 $83,539 $81,669 $81,658 $81,642 $81,319 $80,951 $80,764 107 $959,611 $258,068 $224,189 $216,982 $210,145 $207,548 $203,635 $203,483 $196,896 $195,595 $185,668 $185,180 $178,938 $176,479 $175,814 $171,685 $170,966 $169,400 $166,603 $159,713 PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton $94,555 $141,319 $22,341 $120,044 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. $21,504 $19,766 $19,683 $17,871 $17,598 $17,432 $15,908 $13,870 $7,775 $6,516 $6,110 $3,701 $3,321 $3,108 $2,050 $1,631 $908 $805 108 $82,727 $75,092 $74,345 $65,990 $64,233 $63,869 $63,169 $54,867 $52,415 $50,908 $48,338 $48,299 $47,881 $46,961 $43,763 $43,027 $42,768 $42,025 PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton 9. Appendix Number of Days Between Injury Date and System Add for Civilian Police and Fire Claims109 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. it is not to be used, relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL - PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton 110 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose PFIIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton (13-th 111 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton h. Appendix City of Chicago Ward Boundaries Legend The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton i. Appendix I City of Chicago Aldermanic Wards and Zip Codes Ward Alderman Z'p Codes 1 Proco "Joe" Moreno 60612 60618 60622 60642 60647 2 Brian Hopkins 60610 60611 60614 60622 60642 60647 60654 3 Pat Dowell 60605 60609 60615 60616 60621 60637 60653 4 Sophia King 60604 60605 60615 60616 60653 5 Leslie A. Hairston 60615 60619 60637 60649 6 Roderick T- Sawyer 60619 60620 60621 60636 60637 7 Gregoryl.Mitche l 60617 60619 60649 8 Michelle A. Harris 60617 60619 60628 60649 9 Anthony A- Beale 60619 60628 60827 10 Susan Sadlowski Garza 60617 60628 60633 11 Patrick Daley Thompson 60607 60608 60609 60616 12 George Cardenas 60608 60609 60623 60632 13 Many Quinn 60629 60632 60638 60652 14 Edward M. Burke 60623 60629 60632 60638 15 Raymond A. Lopez 60609 60629 60632 60636 16 Toni L. Foulkes 60609 60621 60629 60636 17 David H. Moore 60620 60621 60629 60636 18 Derrick G. Curtis 60620 60629 60636 60652 19 Matthew J. O'Shea 60620 60643 60655 20 Willie B. Cochran 60609 60615 60621 60637 21 Howard B. Brookins, Jr. 60620 60628 60643 22 Ricardo Munoz 60623 60632 60638 23 Silvana Taberas 60629 60632 60638 24 Michael Ji?. 60608 60612 60623 60624 60644 113 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL - PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Ward Alderman Z?o Codes 25 Daniel "Danny? Solis 60605 60607 60608 60616 26 Roberto Maldonado 60612 60622 60639 60647 60651 27 Walter Burnett, Jr. 60607 60610 60612 60622 60624 60642 60651 60654 28 Jason 0. Ervin 60607 60608 60612 60624 60644 29 Chris Taliaferro 60634 60639 60644 60651 60707 30 Ariel E. Reboyras 60618 60634 60689 60641 31 Milagros "Milly" Santiago 60634 60639 60641 60647 32 Scott Waguespack 60614 60618 60622 60642 60647 60657 33 Deborah Mell 60618 60625 34 Carrie M.Austin 60628 60643 35 Carlos Ramirez-Rosa 60618 60625 60630 60639 60647 36 Gilbert Villegas 60634 60639 60641 60707 37 Emma M. Mitts 60624 60639 60644 60651 38 Nicholas Sposato 60630 60634 60641 60656 39 Margaret Laurino 60618 60625 60630 60641 60646 60659 40 Patrick J. O'Connor 60625 60626 60640 60659 60660 41 Anthony V. Napolitano 60631 60646 60656 42 Brendan Reilly 60601 60602 60603 60604 60605 60606 60611 60654 60661 43 Michelle Smith 60610 60614 44 Tom Tunney 60613 60657 45 John s. Arena 60618 60630 60641 60646 60656 46 James Cappleman 60613 60640 60657 47 Ameya Pawar 60613 60618 60625 60640 60657 48 Harry Osterman 60640 60660 49 Joe Moore 60626 60645 50 Debra L. Silverstein 60626 60645 60659 114 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton j. Appendix Zip Codes by Claims and Active Employees Analysis20 Percent Analysis of Active of Total of of Aviation Civilian Number Employees Claims Aviation Civilian of 60655 2 93 396 491 3,231 9.65% 9.90% 1 .75% 5.04% 13.20% 60638 16 145 329 490 2,724 8.13% 9.88% 14.04% 7.86% 10.97% 60634 12 96 253 361 1,836 5.48% 7.28% 10.53% 5.20% 8.43% 60631 9 48 273 330 2,146 6.41% 6.65% 7.89% 2.60% 9.10% 60656 8 32 166 206 1 .273 3.80% 4.15% 7.02% 1 .73% 5.53% 20 Zip code data was not provided for Federally Funded Civilians, therefore a zip code analysis could not be completed for these claims. 2? This analysis was completed based on data available from the OlG?s ?Map: City Active Employees by Ward and Zip Code" dashboard. The OlG?s dashboard is updated weekly, therefore, data used for this analysis reflect current active employees as of May 2, 2019. Zip codes with claims data without employee data in the OlG?s dashboard are displayed as The OIG dashboard does not provide a breakdown of active employees by employee group by zip code. 115 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Claims EmAp?IIaiyzes Percent Analysis of Active of Total of of Aviation Civilian Total Number Employees Claims Aviation Civilian of 60643 2 75 1 19 196 1,517 4.53% 3.95% 1 .75% 4.07% 3.97% 60652 3 78 97 178 1 ,228 3.67% 3.59% 2.63% 4.23% 3.23% 60630 2 28 142 172 1,081 3.23% 3.47% 1 .75% 1.52% 4.73% 60646 3 25 132 160 1 .159 3.46% 3.23% 2.63% 1 36% 4.40% 60628 6 108 46 160 933 2.79% 3.23% 5.26% 5.85% 1 .53% 60617 3 92 51 146 1,058 3.16% 2.94% 2.63% 4.99% 1 .70% 60619 3 101 40 144 889 2.65% 2.90% 2.63% 5.47% 1 33% 60620 2 75 50 127 908 2.71% 2.56% 1.75% 4.07% 1 .67% 60629 2 69 55 126 855 2.55% 2.54% 1.75% 3.74% 1 .83% 60641 .87% 2.32% 1 .75% 2.22% 2.40% 60618 1 22 77 100 657 1 .96% 2.02% 0.88% 1 .19% 2.57% 60609 1 65 31 97 680 2.03% 1.96% 0.88% 3.52% 1 .03% 60608 7 27 58 92 649 1.94% 1 .86% 6.14% 1 .46% 1 .93% 60639 3 50 36 89 523 1.56% 1 .79% 2.63% 2.71% 1 .20% 60651 1 43 27 71 454 1 .36% 1.43% 0.88% 2.33% 0.90% 60616 2 35 33 70 623 1.86% 1.41% 1 .75% 1 .90% 1 .10% 60649 .35% 0.88% 2.44% 0.70% 1 16 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton En?flgy:es Percent Analysis of Active of Total of of Aviation Civilian Total Number Employees Claims Aviation Civilian of 60707 6 18 35 59 384 1 .15% 1 .19% 5.26% 0.98% 1 .17% 60644 0 42 14 56 353 1 .05% 1 .13% 0.00% 2.28% 0.47% 60632 0 34 18 52 443 1 .32% 1 .05% 0.00% 1 .84% 0.60% 60653 .05% 0.88% 1 .25% 0.93% 60659 0 16 32 48 261 0.78% 0.97% 0.00% 0.87% 1 .07% 60636 0 42 4 46 208 0.62% 0.93% 0.00% 2.28% 0.13% 60615 1 20 24 45 381 1.14% 0.91% 0.88% 1.08% 0.80% 60612 1 27 17 45 345 1 .03% 0.91% 0.88% 1 .46% 0.57% 60623 2 28 13 43 388 1 .16% 0.87% 1 .75% 1 .52% 0.43% 60637 1 28 13 42 332 0.99% 0.85% 0.88% 1 .52% 0.43% 60633 0 19 23 42 333 0.99% 0.85% 0.00% 1 .03% 0.77% 60645 1 14 24 39 284 0.85% 0.79% 0.88% 0.76% 0.80% 60624 1 32 5 38 258 0.77% 0.77% 0.88% 1 .73% 0.17% 60625 0 5 32 37 402 1 .20% 0.75% 0.00% 0.27% 1 .07% 60622 2 1 1 21 34 282 0.84% 0.69% 1 .75% 0.60% 0.70% 60621 0 27 6 33 177 0.53% 0.67% 0.00% 1 .46% 0.20% 1 17 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used. relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE DIRECTION OF COUNSEL GrantThornton Claims Percent Analysis of Active of Total of of Aviation Civilian Total Number Employees Claims Aviation Civilian of 60640 0 8 21 29 313 0.93% 0.58% 0.00% 0.43% 0.70% 60607 0 0 24 24 183 0.55% 0.48% 0.00% 0.00% 0.80% 60626 0 6 14 20 244 0.73% 0.40% 0.00% 0.33% 0.47% 60613 1 3 15 19 243 0.73% 0.38% 0.88% 0.16% 0.50% 60660 0 3 14 17 196 0.59% 0.34% 0.00% 0.16% 0.47% 60657 0 4 13 17 226 0.67% 0.34% 0.00% 0.22% 0.43% 60614 0 5 1 1 16 156 0.47% 0.32% 0.00% 0.27% 0.37% 60610 0 4 5 9 133 0.40% 0.18% 0.00% 0.22% 0.17% 60642 0 4 4 8 102 0.30% 0.16% 0.00% 0.22% 0.13% 60605 0 1 6 7 165 0.49% 0.14% 0.00% 0.05% 0.20% 60601 0 0 5 5 55 0.16% 0.10% 0.00% 0.00% 0.17% 6061 1 0 0 4 4 86 0.26% 0.08% 0.00% 0.00% 0.13% 60654 0 1 3 4 138 0.41% 0.08% 0.00% 0.05% 0.10% 60635 0 2 1 3 NA NA 0.06% 0.00% 0.1 1% 0.03% 60661 1 2 3 28 0.08% 0.06% 0.88% 0.1 1% 0.00% 60604 0 2 1 3 6 0.02% 0.06% 0.00% 0.11% 0.03% 60805 0 0 2 2 NA NA 0.04% 0.00% 0.00% 0.07% 118 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties. It is not to be used, relied upon or referred to by any other party for any purpose. PRIVILEGED AND CONFIDENTIAL PREPARED PURSUANT TO THE OF COUNSEL GrantThornton Claims Active Percent Analysis Employees of Active of Total of of Aviation Civilian Total Number Employees Claims Aviation Civilian of 60827 0 2 2 23 0.07% 0.04% 0.00% 0.1 1% 0.00% 60452 0 0 2 2 NA NA 0.04% 0.00% 0.00% 0.07% 60478 1 0 1 NA NA 0.02% 0.88% 0.00% 0.00% 60098 0 0 1 1 NA NA 0.02% 0.00% 0.00% 0.03% 60477 0 0 1 1 NA NA 0.02% 0.00% 0.00% 0.03% 1 19 The contents of this document were prepared solely for the use of the City of Chicago Corporation Counsel in the normal course of discharging their duties It is not to be used, relied upon or referred to by any other party for any purpose