Crooked providers, lien setup bleed comp system

If you need more proof the workers-comp system in California is a mess, look no further than the report this week that indicted and convicted medical providers filed more than $600 million in liens against workers-comp claims.

The lien system in the state continues to be fertile ground for fraud. Designed as a safety net to ensure injured workers get treated, it’s now a slush fund for crooked medical providers and lawyers.

Fraud and abuse are rife in Southern California, where medical rings are targeting just-retired workers, says one insurance exec who wrote us this week. Runners hang out at Social Security offices and other venues frequented by retirees. They entice the retirees to file claims by offering free medical care and a windfall to supplement retirement income. The retirees are brought to lawyers’ offices, signed up and then shuttled off to medical offices for “treatment.”

The number of worker “injuries” occurring on the last day of the job is rising, this exec says.

Legislation to help weed some of these abusive providers out of the system is cruising through the California legislature. The bill would ban providers who’ve been kicked out of Medicare and Medicaid for over-billing. The bill sponsor says there’s evidence that crooked docs banned from government health plans have turned to workers comp to ply their trade.

The sponsor also says his legislation will target lawyers who sign up comp clients, but never actually interview them, then file claims for them in distant cities and ultimately settle the cases for their fees — often without the workers’ knowledge.

The legislation is a good idea, but much more needs to be done. Workers compensation in California is a huge, complex multi-faceted program. There are no easy answers on how insurers, employers, policymakers and others can hit that sweet spot of minimizing fraud while making sure injured workers get the treatment they deserve. But finding a better way than the lien system might be a good start.

More common ground needed on reporting, acting on suspected scams

I just returned from the NAIC’s summer meeting. It included the antifraud task force meeting, attended mostly by directors of state insurance fraud bureaus. I also met with insurer SIU directors before the NAIC event.

I felt as if I’d entered a time warp. Discussions at both meetings reminded me of a breakout session I chaired at a Coalition summit more than a decade ago on the status of insurance fraud fighting. SIU directors and fraud bureau directors both attended.

The main discussion by insurers then was about the “black hole” of information sharing. Insurers said they send cases to fraud bureaus for investigation, and never hear a word back. The fraud bureaus contend insurers send them weak cases, or ones not well-vetted.

That’s what I heard last week as well. Insurers seemed at a loss about what happens to their cases they refer to fraud bureaus. And, several fraud bureaus grumbled about the lack of good referrals from insurers.

Insurers and fraud bureaus clearly need better dialogue so everyone fully understands each other’s needs.

One fraud bureau chief talked about how a few insurers in his state haven’t reported a suspected scam in years, even though reporting is mandatory. Are those insurers doing such a good job that nobody’s trying to scam them anymore? Doubt that.

Insurance-fraud laws broadly define the crime, though there’s no definition of suspected insurance fraud. Each insurer could have its own definition, which determines which and how many cases it sends to the fraud bureau.

Most insurers don’t report all suspected frauds. We understand that. Besides, fraud bureaus don’t have the staff to handle every case. But for an insurer to say it has no suspected frauds to report does a disservice to the larger fraud-fighting community and our common cause.

Fraud bureau directors and SIU leaders need to come together, develop a greater understanding and find more common ground so they can work jointly to combat fraud in the most efficient and effective ways possible.

We urge both sides to reach out to the other to make that happen.