Category Archives: News

Fraud and Loathing in Buena Park

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Who could have thought that a medical office could possibly defraud insurers in a California Workers’ Compensation scam?  Fortunately, the insurance company and the Orange County District Attorney did.  Recently, several sources confirmed that Dr. Sim Carlisle Hoffman of Newport Beach, and three others from his office, were engaged in a $17 million Workers’ Compensation insurance fraud scheme.

Ibtimes.com, Patch.com and Adjuster.com confirm that Hoffman has been accused of over-billing, hoping that insurance companies, or self-insured entities, would let the unnecessary charges go unnoticed.  These involved both unnecessary procedures and procedures never performed.

The facilities involved?  Advanced Professional Imaging, Advanced Management Services and Better Sleeping Medical Center (all in Buena Park).  Amongst those indicted is a neurologist, a radiologist and a hearing representative who would press for these bills to be paid in lien trials.

I, for one, extend a heartfelt thanks to Orange County District Attorney Tony Rackauckas and the deputy district attorneys that, under his leadership, are seeing this matter through.  Although I practice in San Francisco, I salute these efforts to curb the fraud that, sooner or later, unnecessarily brings up costs for consumers.  Far too often self-insured employers and insurance companies are defrauded by false billing practices and over-treating physicians.

In such cases, it seems unlikely that prosecutors or the insurance company will find $17 million worth of goods to recover for their loss, although I would check under the mattresses just to be safe.  Nor will the D.A.’s office or the insurance company recover the costs of investigation, reporting and prosecution, which in such cases is a lengthy, difficult and therefore expensive process.

The only hope insurers and self-insurers have of curbing their losses is through vigilance, bill review, and cooperation with law enforcement to catch the frauds and (hopefully) put them out of business.

Other ways to defend against this are the use of Utilization Review procedures and a Medical Provider Network.  But these have their own limitations.

If a fraudster becomes familiar with the allowable treatments under UR, he need only bill for procedures that would be allowed, even without performing them.  Similarly, an MPN can eliminate a doctor who commits fraud, but only after the fraud has been committed.  The very nature of fraud is that, for the longest time, it is not detected.

In the meantime, we can all enjoy the bite of increased premiums and costs due to fraud.  Cheers!

Florida To Cut Down on WC Expenses (In California)

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UPDATE (6/23/11):  The bill has been signed and is now law.  Will this signal a trend that other states will follow?  Only time will tell.

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It appears that Florida might be riding to the rescue to ease some of the burden on California’s Workers’ Compensation system.  While taking a break from hunting alligators and providing the single most popular way of getting out of serving on a criminal case jury (trust me, just tell the judge or prosecutor that you watch CSI: Miami and you’ll be home in time for the intro sequence), the Florida legislature has presented a bill for Governor Rick Scott’s signature.

This new bill would require all employees of Florida companies injured while working  for the employer (temporarily) in another state to press their claims in Florida and under Florida’s Workers’ Compensation laws.

Why would someone from Florida want to have their Workers’ Compensation claim adjudicated under the laws of another state, such as California?  To put it gently, California is somewhat more generous with employers’/insurers’ coffers, than many of the other states, Florida included.

If Governor Scott signs this bill, claims ranging from boredom-induced psyche injuries for visiting convention attendees all the way to training and game injuries (fantasy league pride-stinging included) for professional football and hockey players will have their claims adjudicated in their home states, where their employers and their employer’s insurance companies can retain counsel with previously negotiated and volume-based reduced hourly rates and keep the costs of adjusting the claim to a minimum based on already-possessed knowledge and expertise.

As a California defense attorney, I hate to see less business walk through my doors, especially business glowing with Florida tans and generous with Disney World tickets.  But at the same time, I would be glad to see a less cluttered and overburdened calendar down at the Board, and I am also happy to see employers treated fairly within their own state.  Do I dare dream that California’s will one day experience the same?

In the event that Governor Scott doesn’t sign this bill, or some angry mob of applicant’s attorneys threatens to boycott Florida Orange Juice, I will still happily help any out-of-state defendants run the gauntlet of California’s Workers’ Compensation system.

Drayage truck drivers to remain free operators (for now)

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Keith Goble of Land Line Mag has an interesting article today on the freezing of a new bill which would have effectively stopped the owner-operator business model of drayage trucking:  Assembly Bill 950.  AB 950 would “deem drayage truck operators as employees of those persons who arrange for or engage their services, with the exception of public agency employers.”

With employment, of course, come various forms of liability, including workers’ compensation liability under Labor Code § 3700.  No doubt this increased liability would translate to higher consumer prices and lower contract amounts for the individual drivers.

By falling under the category of independent contractors, drayage truck owner-operators escape the jurisdiction of the California workers’ compensation system.  The independent contractor exception is one of the last few safe harbors remaining for individuals to retain control over their small businesses.

Fortunately, this bill has been ordered to the “inactive” file.  Hopefully, it will be some time indeed before there is another encroachment from Sacramento onto the interactions between private citizens doing business.