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!