BINGHAMTON — Background checks for employment and medical-fraud avoidance purposes are a hot topic. 

The U.S. Equal Employment Opportunity Commission has brought suit for the improper use of background checks of employees against high-profile defendants such as BMW North America and Dollar General. 

Attorneys have also brought class-action law suits against employers that fail to follow the requirements of the Fair Credit Reporting Act (FCRA). Recent settlements of FCRA alleged violations include K-Mart, which agreed to pay more than $3 million; US Xpress, which paid $2.75 million; Domino’s Pizza, which paid $2.5 million; and Swift Transportation, which paid $4.4 million to settle the claims of 10,000 applicants seeking employment. Whole Foods and Disney are contesting their suits.

The rash of law suits has captured the attention of employers, who are not only concerned that they have to conduct these investigations to protect against accusations of an “unsafe workplace,” but also have to conduct them in a manner that complies with strict federal and state regulations. 

The legal exposure of all employers is a bonanza for agencies such as Evolution Consulting, LLC (Evolution), headquartered at 49 Court St. in downtown Binghamton. Founded in 1994 by Anthony (Tony) P. Elwood, Evolution began as a one-man specialty drug-screening and background-investigation firm.

“Tony started this business in his home,” says Tia Allen, the company’s vice president of operations. “Early on, he used to drum up [drug-screening] business by watching trucks drive down the street and recording the [company’s] contact information. His more than two decades of training and experience in law enforcement with the New York State Police were instrumental in growing the business. 

“The company grew rapidly beginning in 2009 when it expanded into the medical-fraud area. In 2011, Elwood created his second corporation — OIG Compliance Now, LLC. (OIGCN) — as a third-party administrator to help health-care employers prevent Medicaid/Medicare fraud in their organizations and to protect themselves against the loss of reimbursements from government health-care programs. 

Today, the two companies employ 45 people in one location at the Metro Center where they lease about 9,000 square feet. Both firms are privately owned. The Business Journal News Network estimates that the companies generate about $5 million annually in consolidated revenue. Evolution and OIGCN together serve several hundred clients.

Background checks

The idea of negligent hiring dates back to 1908 when the legal precedent was established that employers have an affirmative duty to provide a safe workplace. The concept included the hiring and retaining of safe employees. It wasn’t until the late 1970s, however, that negligent-hiring claims became common as a cause of action in cases of workplace violence. Employers soon learned to screen not only employees, but also prospective business partners, vendors, board members, and even volunteers. Background checks also became highly regulated with the passage of the FCRA in 1970, which was followed by myriad federal and state rules. The law now provides consumers with a number of provisions to protect their privacy rights, including not just the obtaining and use of information but also the distribution of this information by consumer-reporting agencies.

“It’s no surprise, then, that background-checking in the workplace has exploded in the last 10 years,” says Allen, “with employers finally realizing that the cost of these background checks is small when compared with exclusion from reimbursement and defending a law suit plus paying damages, fines, and penalties. Since 9/11, the threat of terrorism [by a lone wolf] has only added to employers’ concerns. Background screening is here to stay, and it’s not just for sensitive or high-level positions; it’s for everybody, including minimum-wage workers and volunteers.” 

The National Association of Professional Background Screeners estimates that the industry’s revenues are in the multi-billion-dollar range. Evolution’s first big contract was with Ascension Health — a leading voice for Catholic health care in the U.S. that employs 330,000 health-care associates nationwide.

Evolution offers a menu of services from which clients can choose. “Pre-employment background checks include Social Security number verification, criminal and civil records search, government-watch search, sex-offender registry check, military DD214 verification, professional licenses, references, verification of education and employment, and comprehensive sanction screening,” says Allen. “A la carte services include specialty criminal searches (e.g., state police criminal records), e-verify (memorandum of understanding), motor-vehicle record search, financial/credit profile, international background checks, education GPA verification, international degree verification and equivalency, and corporate-criminal investigations. However, we do not conduct private investigations (e.g., matrimonial or property disputes).” 

Evolution has added other services, such as professional caregiver/nanny checks, tenant-screening for property managers, and DNA paternity testing. Every health-care background check includes OIGCN sanctions screening and validation.

Evolution attracts clients from the corporate world, professional organizations, educational institutions, and anyone else who has exposure as an employer.

Sanctions screening

Fraud perpetrated against government-sponsored, health-care programs is rampant. Estimates just for Medicaid fraud range as high as $70 billion annually. “The Department of Health and Human Services Office of Inspector General (OIG) has a mission to root out fraud, waste, and abuse in the department’s programs,” asserts Allen. “The OIG has the authority to exclude individuals and entities from participating in federally funded programs, including Medicaid, Medicare, the State Children’s Health Insurance program, and all federal, health-care programs. 

Any conviction for program-related crimes, health-care fraud, patient-abuse, failure to repay [Health Education Assistance] loans, fraud against non-health-care programs, license suspension or revocation, and a misdemeanor health fraud are all grounds for exclusion. No payment for any items or services can be made to an excluded provider under these programs. Submitting any claims in which any portion is attributed to an excluded individual or entity can be considered fraudulent and subject to strict monetary penalties. 

The burden for compliance is squarely on hospitals and other health-care providers. To compound the problem, they must review not only federal lists of excluded parties but also lists from multiple states. It’s no surprise that sanction-screening requirements are a high priority now for corporations and institutions with both the Centers for Medicare and Medicaid Services and individual states mandating monthly screenings. OIGCN sanction-screening services help clients develop a proactive approach to screening compliance so that when they are audited, they can avoid fines/penalties,” Allen continues.

OIGCN’s target clients include hospitals, physician practices, senior-living centers, home-health-care agencies, educational institutions, clinical laboratories, third-party billing companies, durable-medical-equipment companies, hospice facilities, ambulance suppliers, pharmaceutical/biologic/device manufacturers, government agencies, and other providers of health-care products and services. Evolution and OIGCN have clients across the U.S., Canada, Puerto Rico, and the Virgin Islands.

Technology

“Technology has increasingly become integral to the screening business,” notes Allen. “You need enterprise-level software that can integrate with multiple databases, including client and vendor platforms. This is no longer a manual, fax-based process with people handling a lot of paper. We want to develop software and systems that truly meet the needs of our clients and supersede what is available by the government alone. OIGCN researches and updates more than 300 screening sources on a weekly basis. We have invested more than $500,000 to develop and maintain our proprietary software and systems. To give you an idea of the size of the health-care fraud problem, we currently store 425,000 names of excluded parties in our secure database. We have embraced technology not only to manage the volume of data to be screened for excluded individuals but also to make the process easier for our clients. 

For example, we have the capability to screen a list of 30,000 names and complete our investigations in five business days. For Evolution clients, we just developed an online consent form that has forced fields and even includes the capability for the applicant to provide a ‘wet’ signature using a computer mouse or a finger on a smart phone. But it’s not just about the machine technology; there is also the human technology. We need to develop employees who exhibit a variety of traits: They must be persistent, cooperative in solving problems, capable of determining the truth, adept at research and detail oriented, committed to continual learning, and enjoy talking on the phone. This is one of those industries where you have to be on the job to learn it … All of our training is done internally with our own investigators and technicians,” Allen continues.

Competition

Evolution and OIGCN are thriving in a highly competitive field. 

“There are a number of national [and even international] firms that offer background checks and act as third-party administrators for sanction screenings. Names like PreCheck, GoodHire (10,587 clients), Pinkerton (founded in 1850), PrivateEyes, MBI [Worldwide], Amrop (84 offices in 56 countries), and HireRight [Has 45,000 customers including one-third of the Fortune–500 companies] come to mind,” Allen says. “What makes us unique is that we are a licensed, private-investigative firm that also completes sanction-screening. It’s not enough just to gather large volumes of data; you have to have the investigative culture to know what to do with it. That’s what lets us utilize our technology, tools, and huge data repository to provide accurate information to help guide our clients in making intelligent hiring decisions. Add to this our accurate and timely reporting; our knowledge of compliance; competitive pricing; and outstanding customer service: That’s how we compete.”

Elwood, 61, the CEO of Evolution, spent more than two decades with the New York State Police before he retired. Among his responsibilities as a trooper, he was a certified drug-recognition expert capable of detecting drugs and alcohol in a person’s system through observation only, without the need for any type of chemical test. He is a licensed, private investigator who has multiple certifications. Elwood attended Broome Community College, majoring in psychology with a minor in sociology. 

Allen, 46, was born in Endicott. She received her bachelor’s degree in chemistry from Canisius College in 1990, a master’s degree in chemistry from Princeton University, and has completed her course work for a Ph.D. She worked as a chemist at Wyeth Pharmaceuticals, Inc. and later held positions as an executive recruiter at Korn Ferry in New York City and at Lamalie (now Amrop International). Allen returned to the Binghamton area in 2001 to open her own executive-coaching and recruiting business. In 2009, she became global director of resources at Universal Instruments in Binghamton. Her move to Evolution occurred in 2011. At that time, the company employed 15 people. In her spare time, Allen is active in greyhound rescue, home improvement, and is an avid baker.

Evolution and OIGCN rely on local professionals for a variety of support services: Community Bank, N.A. for financing: Hinman, Howard & Kattell, LLP, and Levene, Gouldin & Thompson, LLP for legal work; Payco for payroll services; The Partners Insurance & Financial Services for risk management and investments; Davidson Fox & Co., LLP for accounting; and ICS Solutions Group for computer support.

Allen is optimistic about continued growth for the companies. “We are a finalist with Premier [Inc.], a group-purchasing organization (GPO) with 100,000 customers, including 2,700 hospitals, and $46 billion in buying power. Premier currently has four sanctions-screening vendors on its contact list, and I’m optimistic that … Evolution and OIGCN will be added. This alone could more than double our business. In anticipation, Tony and I are already talking about buying our own building with adequate room to expand. Longer-term, with the U.S. Department of Justice finding more employer liability and government adding more regulations and oversight to corporate operations, demand for our services will only continue to grow.”