The Call for Integrity: Gaming the Workers’ Comp System?


California’s workers’ compensation system has been in a cyclical state of reform and re-reform. In the late 1990s, the system began to experience massive cost increases. But cost increases are a shadow of deeper issues as allegations of workers comp fraud seem to be increasing. Most workers comp fraud stories that get the attention of the press are on the employee claims side. The reality is that workers comp fraud exists, on the worker, administrator, provider, and employer sides of the equation.

Employee misclassification, shell companies, exaggerated injuries by employees, and kickbacks for referrals are among the many schemes to advantage employees, employers, and providers. Such practices increase system costs, shrink quality care and worsen return-to-work statistics.

As a major step to combat fraud in the workers’ compensation system, AB 1244 added Section 139.21 to the Labor Code, which requires the Division of Workers’ Compensation to suspend certain medical providers from participating in the workers’ compensation system, including those who are convicted of a felony or misdemeanor involving fraud or abuse of any patient, the Medi-Cal or Medicare programs, or the workers’ compensation system itself.

But we continue to see profiteering by some players attempting to “game” the system. Bob Wilson, CEO at in Florida was quoted in a recent article as saying “The problem is that workers’ comp fraud is a crime, but all too often it is treated as a minor indiscretion.”

According to the California Department of Insurance “Workers’ compensation insurance fraud occurs in simple and complex [white collar] schemes that often require difficult and lengthy investigations … Insurance companies “pick up the tab,” passing the cost onto policyholders, taxpayers and the general public.”

Some providers have inadvertently waived access to DWC protective regulations by agreeing to some misleading services contracts.  Compensatory measures in exchange for referrals? Incentivizing referrals to providers agreeing to certain deep discounts? Intentional miscoding? Fraudulent activities indeed.

What can be done to uncover, adjudicate and mitigate the occurrence and recurrence of impropriety across the system?

  • More diligent attention to contract language.
  • Aggressive action against perpetrators large and small.
  • Alignment with service providers who have demonstrated not only service excellence, but integrity, honesty, and patient centricity.
  • Engage with services companies that care about people, and whose core values and behaviors support transparency in pricing and it’s processes.

DWC processes are designed to protect injured workers, carriers, and employers, and rightly judge misuse and manipulators. And the rest of us should get more intentionally behind “doing the right thing” !!

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