Solve the Fraud in Workmen's Compensation

By Joe Snyder

Data Collection is the answer.

The problem is three fold: an increase in the number of applicants, an increase in medical cost, and an increase in litigation expense. State Fund data indicates in 1999 there were 4.4 million procedures and in 2002 there were 8.7 million procedures. In dollar terms, $329 Million in cost has grown to over $673 Million in cost, and only $16 Million can be attributed to medical cost. A significant portion of the answer lies in decreasing number of abusive claims being brought by applicant attorneys on behalf of employees.

The root of the problem was highlighted in a grand jury indictment handed down by a Los Angeles Court in late 2003. The indictment found that there was in fact "collusion" between applicant attorneys and doctors. Unfortunately, the system is not equipped to effectively deal with the problem. One District Attorney's office indicated that it receives over 2,000 fraud tips a month. The State Auditor has stated that legislators are trying to fix a problem with data they do not possess. In 1993 the Worker's Compensation Information System was legislated to track such activity yet funding and personnel have not been forthcoming. The legislature recently passed more stringent laws against defrauding the system, yet without enforcement the laws mean nothing.

One solution, which I endorse, is to create a non-profit, non-governmental corporation, funded by industry to track all workmen's comp claims that are filed. Every time an attorney files a workmen's comp claim, a form which indicates the name of the attorney, client, treating physician, diagnosis, and prescribed medical procedure would have to be forwarded to the corporation as well. This would then allow the corporation to screen the data and root out the abusers of the system. This data could then be forwarded to the local District Attorney, who retains prosecutorial discretion, for criminal prosecution.

This would serve as a deterrent to the bad apples driving up costs, and serves as a mechanism for the state and private insurers to take action. The balance of the original bargain has been skewed by abusive applicant attorneys. By providing a measure of relief from this abuse, business can once again put its payroll where it belongs - in the pockets of employees.