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Convicted and indicted providers in California filed $600M in comp liens

August 22, 2016, Sacramento, CA — Criminally indicted or convicted providers and physicians filed an estimated $600 million in liens against injured employees' claims for workers' compensation benefits between 2011 and 2015, according to the California Department of Industrial Relations and its Division of Workers' Compensation.

The current system presents fertile ground for presenting fraudulent claims, the Department of Industrial Relations said. California is pursuing legislation to prohibit criminal and indicted providers from lining their pockets through liens, DIR Director Christine Baker said in a statement Friday.

That legislation would stay the liens of physicians or providers who are criminally charged with workers' compensation fraud, medical billing fraud, insurance fraud, and Medicare or Medi-Cal fraud, the DIR said.

California's workers' compensation law allows certain claims for payment of services or benefits provided to or on behalf of injured workers to be filed as a lien against an employer.

Of 68 businesses comprising the top one percent of lien filers, two of the business owners are indicted and three others have pled guilty, the DIR said.

The 68 businesses represent more than 273,000 liens filed, totaling $2.5 billion in accounts receivable on adjudicated cases between 2013 and 2015, the DIR said.

The filing of a lien generates collateral litigation between the lien filer and defendant, or insurer or employer, over the validity of the claim and the value of the services provided. The parties may settle on an amount due or adjudicate the dispute in a lien trial before the Workers' Compensation Appeals Board.

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DIR's review of filing dates indicates that lien claimants tend to wait until after the primary case is settled rather than seeking early resolution of medical necessity.

"The assignment of liens by service providers to those who file and collect on liens are, in essence, the buying and selling of injured workers' treatments and fertile ground for presenting fraudulent claims," the DIR said.

Even if lien claimants – especially those who bundle and buy or sell accounts receivables – only make pennies on the dollar, returns can still be high.

The Department of Industrial Relations and the Department of Insurance convened working groups in June to gather stakeholder input and evidence of fraudulent activity in the system.

At the direction of the Secretary of the California Labor and Workforce Development Agency, the DIR will be preparing a report on further recommendations to the governor and legislature by the fall of 2016.

Source: Healthcare Finance

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