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Kickbacks, Align, And The Burden Of Workers’ Comp Fraud

July 28, 2017 by Catherine Montgomery

Another week, another round of headlines about California workers’ comp fraud. The latest news? A massive U.S. Department of Justice bust of 412 people accused of defrauding state and federal programs. A handful of California defendants were singled out for their participation in pocket-lining referral or kickback schemes. It’s another sad story, and here’s the worst part: We’re used to seeing news like this now. Desensitized. Fraud is a shameful part of the system. But that doesn’t mean we shouldn’t fight it.

The legislature is already trying to do just that. Under AB 1244, the DWC Administrative Director is required to suspend all medical providers convicted of fraud, effectively cutting them out of the workers’ comp system. SB 1160 was signed last year on the heels of a DIR report that over $600 million in workers’ comp liens between 2011 and 2015 were filed by convicted or criminally indicted parties. Moving forward, liens filed by providers who have been indicted or charged with criminal activity will be stayed until the final settlement of the criminal case. Since January 1, 2017, new liens must be filed with a declaration asserting the lien’s validity under penalty of perjury. Any lien filed without such a declaration will be dismissed.

There’s a flip side to lien restriction, of course – SB 1160 also introduced new requirements to verify the legitimacy of a lien. These rules (and their implementation) were met with widespread confusion, and the state ultimately received supplemental lien forms for just half of all eligible liens. The other half were dismissed, despite the fact that some of them were undoubtedly valid.

It’s also worth remembering that medical providers aren’t the only players in the work comp system who engage in fraudulent or illegal activities. In May, we brought you a story about an illegal email scam[a] circulating throughout California’s comp system. We’ve also devoted considerable coverage in this space to the Independent Physical Therapists of California lawsuit[b] against the entity formerly known as Align Networks[c].

Align, now known as One Call Physical Therapy, presents an especially interesting case. Claims administrators across California hire Align to act as a sort of gatekeeper by assigning Align the responsibility for directing an injured worker’s care. As the gatekeeper, Align is accused of sending injured employees to whichever provider agrees to accept the lowest reimbursement for treatment. The iPTCA lawsuit argues that this creates an illegal profit-driven incentive for Align to disproportionately refer patients to those providers who have succumbed to the steepest discounts.

To make matters worse, Align is accused of masking critical billing and payment information from providers and claims administrators alike. Say a provider sends a bill to Align. Rather than forwarding the provider’s original bill to the claims administrator, Align is accused of creating their own bill to forward to the claims administrator. So the claims administrator remits payment without ever seeing the provider’s bill, and Align pays the provider at a contracted rate, pocketing the change.

Is that the same as a kickback scheme? We’ll let the courts decide on that. In the meantime, it’s inescapably clear that bad actors exist on every level of the California work comp system. They must not be tolerated. Let’s not forget that this system exists to protect the workforce – that lives and livelihoods are often at stake. The workers’ comp system should be about providing injured employees with quality care, period. It’s not a way for a crooked actor to make a quick buck. We need to put the trust, and the integrity, back into this system. It won’t be easy. But it’s the only way forward.


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[a]Link to blog

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