California Reforms Target Workers’ Compensation Fraud

California is cracking down on graft in the state’s system of medical care for injured workers with two bills recently signed into law by Gov. Jerry Brown.

The reforms will prohibit medical providers who are felons from billing for workers’ compensation care and rein in a court-governed payment system that gave rise to hundreds of millions of dollars in unsanctioned treatment.

Lawmakers who introduced the bills cited an investigation by Reveal from The Center for Investigative Reporting that examined more than $1 billion in alleged fraud in the medical system for injured workers.

Reviewing more than a dozen prosecutions and analyzing state data, the investigation found that alleged scams affected more than 100,000 injured workers. Many were monolingual Latinos who were targeted in aggressive marketing efforts in Southern California. They encountered everything from kickback-fueled spinal surgeries to fraudulent providers to $1,600 tubes of pain cream.

Alleged scammers included felons and doctors banned from billing Medicare for malfeasance. Many fraud defendants exploited a feature of California’s workers’ compensations system that let them file a “lien,” or a demand for payment, for services after insurers refused to pay. They included therapies like shock wave pain treatments or unwanted drugs, such as the pricey pain creams.

The new laws would ban certain medical providers with troubled pasts from treating injured workers and also aim to limit the avalanche of liens that clog the docket in two dozen workers’ compensation courts throughout the state.

Christine Baker, director of the Department of Industrial Relations, which administers workers’ compensation, said she hopes the laws improve care for people who seek help for an on-the-job injury.

“I think both abuses and fraudulent activities prey on the most vulnerable populations and we’re hopeful that appropriate treatment will be provided to workers when needed,” Baker said. The laws “should reduce costs, because a lot of costs are tied to fraudulent activity, and that frees up dollars for the injured workers.”