Cracking Down on Workers’ Compensation Fraud

Fraud in the workers’ compensation is increasingly becoming a major concern for both employers and law makers alike.  Recent measures have been taken to crack down on fraud in the workers’ compensation market, especially from the perspective of fraudulent services provided by the medical providers.  California has a $24 billion dollar workers’ compensation system, and this proves too great a temptation to unethical doctors and those looking to profit off of other people’s injuries.

One particularly notorious case involved Michael Drobot, a former hospital executive.  He was the subject of a half a billion dollar kickback structure that involved doctors, health care executives, and a lawyer.  The scheme involved receiving kickbacks for sending patients to surgery and to receive unnecessary tests and medication.  Drobot eventually pled guilty to criminal charges involving bribery, including bribing a state lawmaker to keep open a loophole that would allow medical providers to continue charging insurance companies very high rates for particular spinal hardware.  These and other examples of fraud reaching all the way up to the California state government has prompted action in the state legislature.

One measure is aimed at helping to clear court dockets from the overwhelming amount of liens filed against workers’ compensation claims.  Between 2011 and 2015, over $600 million dollars in liens were filed against such claims.  SB 1160 adds requirements to the filing and pursuing of these liens to make sure the liens are legitimate, and also that if the person filing the lien is charged with certain crimes, the collection of the lien is stayed until the criminal proceeding is over.  Beginning January 1, 2017, those filing liens were required to also file an accompanying affidavit swearing that he or she was eligible to file the lien.

Another measure is AB 1244.  This would require that any medical provider involved in the workers’ compensation field is suspended from participation if he or she is convicted of fraud.  The hope is that this law will exclude those medical providers and doctors who have participated in fraudulent schemes in the past from continuing to perpetrate the crimes on injured workers.

Fraud in the workers’ compensation system is a serious problem, and legislators are taking steps to crack down on fraudulent activities.  If you have questions about workers’ compensation fraud or how the new laws may impact your business, contact me today at (714) 252-7078 for an appointment.

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