Crackdown on workers' comp billing fraud is dealt a setback
Published: 2009-09-17 20:59:04
Author: Marc Lifsher | Los Angeles Times | August 19, 2009
Reporting from Sacramento - California's powerful insurance lobby has quietly scuttled an effort to combat fraudulent medical billing that drains hundreds of millions of dollars from the state's workers' compensation insurance system.
At issue was a proposal aimed at preventing billing scams backed by a task force of public and private employers, including Los Angeles County and Walt Disney Co. It would have required insurers to send notices to injured workers to check whether they actually received all medical services billed.
But insurers balked, complaining about the high cost of increased paperwork. They persuaded state Sen. Roderick Wright (D-Inglewood) to strip the plan from a bill he introduced in February, Wright's office confirmed.
The proposal's setback frustrated employers seeking new tools to battle illegal traffic in medical records.
"It's a massive problem. Hundreds of millions of dollars go down the tube," said David O'Brien, a workers' compensation attorney active in the employers' task force. "It's mind-boggling that the insurance industry says this is just another unnecessary form."
But insurers said they saw no reason to change current practices.
Sending out notices is "prohibitively expensive" and would confuse injured workers, said Steven Suchil, an attorney with the American Insurance Assn. The association said it did not have a detailed analysis of how much the mailings might cost.
There are better and more effective ways to fight fraud, such as providing extra money for law enforcement investigators, said Nicole Mahrt, an association spokeswoman. Companies don't need a government mandate to send notices if that's what they want to do, she said.
In the meantime, Disney said it was not waiting for action from the Legislature. The Disneyland Resort unit plans to start mailing notices early next year to 20,000 employees when workers' compensation bills are paid.
"Once the provider realizes that someone else is looking at what's being billed, there's a built-in incentive for them to go somewhere else" to commit fraud, said John Riggs, the workers' compensation manager for the resort unit.
In many workers' compensation fraud cases, experts say, criminals typically obtain names and data about injured workers and then set up "phantom" medical laboratories. The labs then bill insurers for services that did not occur.
"You feel violated," said John O'Brien, a retired captain in the Los Angeles County Sheriff's Department who is not related to David O'Brien. The retired officer's medical records were stolen and used to bill the county for phony medical tests.
"I was never aware of this, and that's why the crooks were so successful," he said.
In February, task force members concluded that much of the fraud could be eliminated with a simple fix: sending out notices. Injured workers could then blow the whistle if they spotted any bogus billings. Such notices, though standard practice in health insurance, aren't used in workers' compensation insurance.
Full story
Published: 2009-09-17 20:59:04
Author: Marc Lifsher | Los Angeles Times | August 19, 2009
Reporting from Sacramento - California's powerful insurance lobby has quietly scuttled an effort to combat fraudulent medical billing that drains hundreds of millions of dollars from the state's workers' compensation insurance system.
At issue was a proposal aimed at preventing billing scams backed by a task force of public and private employers, including Los Angeles County and Walt Disney Co. It would have required insurers to send notices to injured workers to check whether they actually received all medical services billed.
But insurers balked, complaining about the high cost of increased paperwork. They persuaded state Sen. Roderick Wright (D-Inglewood) to strip the plan from a bill he introduced in February, Wright's office confirmed.
The proposal's setback frustrated employers seeking new tools to battle illegal traffic in medical records.
"It's a massive problem. Hundreds of millions of dollars go down the tube," said David O'Brien, a workers' compensation attorney active in the employers' task force. "It's mind-boggling that the insurance industry says this is just another unnecessary form."
But insurers said they saw no reason to change current practices.
Sending out notices is "prohibitively expensive" and would confuse injured workers, said Steven Suchil, an attorney with the American Insurance Assn. The association said it did not have a detailed analysis of how much the mailings might cost.
There are better and more effective ways to fight fraud, such as providing extra money for law enforcement investigators, said Nicole Mahrt, an association spokeswoman. Companies don't need a government mandate to send notices if that's what they want to do, she said.
In the meantime, Disney said it was not waiting for action from the Legislature. The Disneyland Resort unit plans to start mailing notices early next year to 20,000 employees when workers' compensation bills are paid.
"Once the provider realizes that someone else is looking at what's being billed, there's a built-in incentive for them to go somewhere else" to commit fraud, said John Riggs, the workers' compensation manager for the resort unit.
In many workers' compensation fraud cases, experts say, criminals typically obtain names and data about injured workers and then set up "phantom" medical laboratories. The labs then bill insurers for services that did not occur.
"You feel violated," said John O'Brien, a retired captain in the Los Angeles County Sheriff's Department who is not related to David O'Brien. The retired officer's medical records were stolen and used to bill the county for phony medical tests.
"I was never aware of this, and that's why the crooks were so successful," he said.
In February, task force members concluded that much of the fraud could be eliminated with a simple fix: sending out notices. Injured workers could then blow the whistle if they spotted any bogus billings. Such notices, though standard practice in health insurance, aren't used in workers' compensation insurance.
Full story