When nobody cares about workers' comp fraud, opportunists take note

Sometime in 2010, it dawned on Kareem Ahmed: No one cares.

It probably dawned on him well before that, but in a secret recording from 2010, outlined in a recent article by Reveal, Ahmed offers up his official position on the workers' compensation system. At lunch with Cyrus Sorat, a businessman who was cooperating with federal investigators in an effort to reduce his own fraud charges, Ahmed pointed to the stark contrast between Medicare and California's workers' compensation system. Submit false claims to Medicare, and government officials would respond forcefully. Bilk the state's under-regulated workers' compensation program, and no one so much as blinked an eye.

Ahmed pointed to the cases of Michael Drobot, the now infamous hospital owner accused of fraudulently billing $500 million for spinal surgeries, and David Wayne Fish, who pleaded no contest to paying kickbacks to hundreds of doctors and filing fraudulent workers' compensation claims, and according to the Claims Journalrecieved three years probation, hardly a slap on the wrist.

"How come nobody does anything to him, man?" Ahmed said of Drobot in the recording obtained by Reveal before drawing his own, simple conclusion.

I would imagine Ahmed is rather surprised with the situation he finds himself in now. He was indicted in 2014, four years after that recording was made, for orchestrating a $25 million scheme in which he allegedly paid off physicians to prescribe compounded creams and then billed the state workers' compensation program. All it took was the death of a 5-month-old boy who ingested one of the creams. (Ahmed is vigorously fighting the government's charges).

Ahmed is just one of the many businessmen and physicians who appear to have benefited from California's lackadaisical politices, which operated on a lien system that served as the proverbial flame to moth-like fraudsters. The fact that no one seemed to mind was perhaps the most attractive part, and opportunists took note.

To say no one cared might be a stretch. More accurately, no one cared enough to change the system despite the warning signs. A 2011 report from The California Commission on Health and Safety and Workers' Compensation indicated that liens were "choking the system." When the commission analyzed liens from 2008 to 2010, it found authorization for treatment was in dispute in seven out of 10 medical liens, and nearly a quarter of liens were filed more than two years after the last date of services.  

"The volume of liens forces the courts to encourage settlement, almost to the point of coercion," the report stated. "The necessity of settlement rewards both unjustified claims and unjustified refusals."

Although Medicare and Medicaid fraud takes center stage, workers' compensation fraud schemes are on the rise. According to the most recent statistics from the National Insurance Crime Bureau (NICB), questionable workers' compensation claims increased 28 percent from 2011 to 2012. While claimant fraud still dominated referrals, NICB saw a significant increase in referrals for attorney activities (200 percent), duplicate billing (194 percent) and inflated medical billing (96 percent).

Workers' compensation claimant fraud gets more attention because it's typically easier to catch and because, frankly, the stories read like they've been fabricated. There's the woman whose appearance on the "Price is Right" ultimately tipped off investigators that she didn't have a debilitating injury, according to the Huffington Post. Or there's the 10-year scam devised by a Florida man and his wife, in which he claimed a workplace accident caused him to talk like a child, an act he impressively maintained even as he was being arrested, ABC News reports.

Provider fraud, on the other hand, is much more sophisticated, and often much more expensive, even in states beyond California. Take Texas, for example, where 28 people were charged last November in a scame where providers colluded with Department of Veterans Affairs and postal workers to fraudulently bill $9.5 million to the state workers' compensation program.

The mess in California is far from over. In January, 13 more individuals were indicted for participating in the $500 million scheme that ensnared two surgeons and a CFO months earlier. Drobot is scheduled for sentencing in June, and the FBI will continue its cases against Ahmed and dozens of others accused or participating in the widespread scheme that went off the rails years ago.

Finally, it appears, someone cares. - Evan (@HealthPayer)

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