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Providers charged with comp fraud out $1B in liens in California

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The California Department of Industrial Relations has stayed more than 200,000 liens worth a combined claim value of over $1 billion associated with 75 medical providers facing criminal fraud charges, the office said Wednesday.  

The office also released a report on anti-fraud efforts since the 2012 signing into law of Senate Bill 863, which aimed to rein in fraud in the state’s workers compensation system, among other objectives. 

The latest efforts to eliminate medical provider fraud and illegitimate liens follow the enactment of two new laws effective this month: Senate Bill 1150, which requires the department to automatically stay liens owned by providers who have been indicted or charged with crimes until the disposition of criminal proceedings; and Assembly Bill 1244, which requires the Division of Workers’ Compensation administrative director to suspend any medical provider, physician or practitioner from participating in the workers compensation system when convicted of fraud.

According to the report, “provider fraud has garnered special attention lately through high-profile criminal prosecutions of medical providers involved in referral, treatment, and kickback schemes designed to generate billings for unnecessary or sometimes nonexistent evaluations and treatment. In some schemes, workers are solicited to present dubious claims (e.g., for a different body part supposedly affected by a previously resolved injury claim), then referred for evaluation and treatment outside the insurer’s Medical Provider Network and without the insurer’s knowledge, thereby eluding the Utilization Review and (Independent Medical Review) processes and ultimately resulting in the filing of lien claims with the (Workers’ Compensation Appeals Board.)”

A lien filer’s ability to bypass the review processes and aim for the courts can pressure insurers to settle to avoid the expense of fighting a claim, according to the report. 

“Over the past year, we have worked to prohibit criminal and indicted providers from lining their pockets through liens,” said Christine Baker, Oakland-based director of the Department of Industrial Relations, in a press statement. “Removing fraudulent providers and their lien claims from the workers’ compensation system will further improve services to injured workers and ultimately reduce costs in the system.”

More efforts are underway, according to the report, which identified premium fraud as the next frontier. Premium fraud occurs when employers seek to lower costs by underreporting payroll, misclassifying employee or misreporting workers in high-risk occupations as engaged in low-risk occupation.