The head of the Maryland Insurance Administration fraud division is exploring a change to state law giving immunity to those testifying in workers’ compensation fraud cases before the State Workers’ Compensation Commission.

Carolyn Henneman

Speaking at the Insurance Roundtable of Baltimore recently, Carolyn Henneman, fraud division chief for the MIA, said regulators cannot prosecute some fraud referrals because  “a little known provision” in the state’s workers’ compensation statute confers immunity on anyone ordered to testify before the commission.

“It’s terrible…until we get this immunity provision clarified and hopefully narrowed, our hands are tied,” Henneman said. “It’s not because there isn’t fraud; it is because our hands are tied and we can’t prosecute it.”

While handcuffed now, Henneman said she thinks her background may provide the key to change.

“One of the advantages of putting a career prosecutor in charge of the fraud division is that I’m not taking it lying down,” she said.

Henneman plans to gather information, and investigate cases to challenge and interpret the provision with the hope of arguing it should only apply in limited circumstances, she said, such as when a witness “is recalcitrant and had to be ordered to testify, but not across the board in every hearing.”

Henneman said the challenge is that there is no case law on the topic, so she hopes to gather information to recommend to Maryland Insurance Commissioner Ralph S. Tyler to seek future legislative clarification and to support the MIA in working with the WCC and others “to identify methods to best combat workers’ compensation fraud.”

This story originally appeared in the December 2009 print edition of Insurance & Financial Advisor.