Workers Compensation Insurance Fraud in California

 

Provider fraud: The toughest nut to crack

In my early days as an SIU investigator, my dream was to crack a Provider case, a medical doctor or chiropractor who was cheating the workers comp system.  AS a claims adjuster, I had experienced frustration with these providers who seemed to employ abusive practices (and maybe fraudulent practices as well).

Over the years, I learned that Provider fraud is the toughest kind of workers comp fraud case for law enforcement to prosecute, due to the complexity of the crimes.  Law enforcement has to call upon multiple insurance companies to provide them with evidence---mostly medical reports and billing invoices from the providers.  Some insurers have technological limitations in providing the documents, especially in the paperless world of insurance transactions.

There are intellectual hurdles in these cases as well.  How do you draw the line between providers who use aggressive tactics to collect their insurance billings and bad actors who try to deceive insurance companies to get paid money they are not entitled to.  Some insurance executives would rather characterize the bad actors’ attempts as “billing disputes” in order to avoid the difficulties of fighting this type of fraud.  Some in law enforcement will avoid the murky world of Current Procedural Terminology (CPT) billing codes.

My first successful Provider fraud case was a simple one—a chiropractor billing for services not rendered.  The chiropractor (I’ll call her Susan Brown DC) operated a single office located in a Southern California beach community.  She saw mostly Workers Comp patients (she told me she preferred WC patients because the insurance companies were required to pay quickly).

Dr Brown came to my attention when I received a call from one of our workers comp claimants—I’ll call her Andrea Johnson.  Ms. Johnson had injured herself while working as a physical therapist. She had treated with Dr Brown and knew that Dr Brown was billing us for more services than she actually provided.  I asked Ms. Johnson how she knew what Dr Brown billed us, because my employer did not send out Explanation of Benefits letters to the claimants.  Ms. Johnson said she did not want to say anything specific but she was adamant that I investigate Dr Brown’s reports and billings from other patients, as well.

Excited to have an interesting Provider case, I reviewed all Dr Brown’s recent billings over multiple workers comp claims.  My first approach was to look for an “impossible day” scenario—Was she billing us for more hours of treatment than she could possibly render in a single day?

I did not find this scenario.  Dr Brown was a relatively small practice with only six active patients from our insurance company.  I did not know how many patients she had from other carriers, but this “impossible day” scenario did not seem to pan out.

Next, I looked at her billing patterns.  I noted every workers comp patient was billed in the same manner.  She billed five CPT codes—one “active modality” (chiropractic manipulation) and four “passive modalities”—Hot and cold therapy, mechanical traction, electrical muscle stimulation and ultrasound therapy.  

I thought it was suspicious that every patients’ treatment was billed the same way.  So, I asked another chiropractor about it—Dr Phillips.  She did Utilization Review for my employer, so I trusted her to give me an honest opinion.

Dr Phillips reviewed Dr Brown’s billing patterns and told me the “1 active and 4 passive modalities” pattern was actually allowed by the Official Medical Fee Schedule.  Therefore, I had hit another dead end.

I contacted one of the claimants, Mr. Jones, to ask him about the treatment he received from Dr Brown.  He said she was an amazing doctor and how dare I question her patient care. He got angry with me and hung up.  

I decided to investigate outside the billing data.  I ran Dr Brown through ISO Claimsearch and noted Dr Brown had filed a Motor Vehicle Accident injury claim with a different insurer.  Intrigued, I called  the auto insurance adjuster.  He told me Dr Brown had been involved in an auto accident nine months prior.  He was handling the claim on behalf of his insured, who was the “at fault” party in the accident.

Working with the auto adjuster, he was able to provide me with a copy of part of the insurance claim file.  I found that Dr Brown had been deposed three months prior and had testified to her injuries from the audit accident and she had been physically unable to perform chiropractic manipulations since the auto accident.

I reviewed the billing again and found Dr Brown had regularly billed us for Chiropractic manipulations during the time frame where she claimed to have been unable to do so.

I circled back to Ms. Johnson and asked if she had received manipulations from Dr. Brown (or anyone) during the critical time frame.  She said she had not seen Dr Brown in the office at all during that time frame.  She said Dr Brown had an assistant who checked the patients in and directed them to self-administer the “passive modalities”.  She said the clinic was set up like circuit training and there was an egg timer at each station.  The clinic was “self-service”.

I gathered all the billing from the other patients “treated” during the critical time period.  I made an eFD-1 referral to the local District Attorneys office and the Department of Insurance.  Later, the law enforcement investigator told me about the search warrant they did at Dr Brown’s large ocean front home (which had been previously owned  by a famous pop singer).  He said they found Dr Bown in an “intimate moment” with one of her male patients.  This patient was Mr. Jones who had hung up on my a few weeks earlier.

The DA’s office filed Felony insurance fraud charges against Dr Brown for billing us for services she did not render.  At the urging of her defense attorney, she entered a guilty plea.  

I remember overhearing a conversation in the hallway outside the courtroom before her sentencing.  Her attorney told her, “Now, the judge will want to hear you say your sorry for what you did…”  Dr Brown said, “No way.  I am not apologizing”.  And she did not apologize.  The Judge ordered her to re-pay $7000 in restitution, sentenced her to 4 years formal probation and to surrender her chiro license for 5 years.

My lesson learned from this case was as follows—In Provider Fraud cases, you have look at all the dimensions—the billing and medical reports, the licensing and ownership of the Provider, any civil or criminal cases involving the Provider, Google searches, patient interviews (if possible), interview former employees of the Provider if you can…

In my experience, there are no hard and fast rules for conducting Provider investigations—you have to use every resource you can to get more info on the Provider—Data mining and traditional investigation approaches.