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Audit of California comp system requested

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The chairman of the California Assembly Insurance Committee is requesting an audit to rein in possible fraud in the state’s workers’ compensation system, according to a recent letter to the state’s Joint Legislative Audit Committee. 

“I am requesting an audit of the system of preventing, detecting, and prosecuting fraud,” reads a copy of the two-page letter signed by state Assemblyman Tom Daly, D-Anaheim, and dated March 3, but provided to Business Insurance on Tuesday. “The financial cost of fraud to employers and the human costs to injured workers of unnecessary treatment is unacceptably high.”

The letter highlights the efforts made by lawmakers in the state to help curb fraud but that “despite all efforts, there is ample evidence that the system remains rife with fraud and waste in connection with providing care and related services to injured workers.” It asks that the state look at larger fraud schemes, rather than focus on individual cases. 

Assemblyman Daly outlines several issues in his letter for auditors to address, including: how efforts are coordinated between government agencies; how investigations are deployed and prosecuted; how efforts are coordinated with insurers and self-insurers to detect and prevent fraud. 

He is also asking that auditors evaluate the current system, identify solutions for changes, review the process for recruiting and retaining investigators, and examine how other large states handle workers compensation fraud investigations. 

A spokesman in the Assembly Insurance Committee Office said the formal request is the first step in the audit process and could not provide a status.