Taking Advantage of the Worker

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Construction worker has an accident while working

A San Diego-based fraud ring cheated the California workers’ compensation system and private insurance companies out of more than $200 million in a massive Workers Compensation fraud effort.

Disregarding all oaths of ethics, dozens of doctors, lawyers and medical service providers conspired with marketers to prey predominantly on seasonal, migrant workers who travel back and forth between California and Mexico. Their work in heavy labor industries, such as agriculture, can sometimes result in injuries.

When injured workers thought they were calling a hotline to help them navigate the workers’ compensation system, what they got instead was more pain. The fraud ring conspired to buy and sell patients – and their body parts – like commodities for insurance and workers’ compensation purposes. They also subjected patients to unnecessary, and sometimes painful, medical procedures and corrupted the doctor-patient relationship. (So much for the Hippocratic oath).

For instance, once the worker was directed to a corrupt doctor, that “gatekeeper” physician repeatedly referred that patient for tests and medical equipment, even if it was not medically necessary. For example, a patient with a simple knee injury might be referred for urine tests, DNA tests, sleep studies, unnecessary medical equipment, and numerous MRIs on body parts in addition to the injured knee. (It’s exhausting just to think about.) This happened with hundreds of patients.

Participants met surreptitiously, often in parking lots, to exchange hidden cash—not the way honest medical professionals and attorneys typically do business.

“These trusted professionals were operating like street criminals,” according to Jeffrey Horner, special agent, FBI San Diego.

“A doctor was given cash stuffed in a children’s magazine,” Horner said. “An attorney received an envelope of cash for a spine surgery referral in a coffee house. Another doctor received a wad of cash concealed in a baby shower bag during a meeting in a restaurant parking lot. (Sounds like they may have watched too many episodes of Starsky and Hutch.)

Thanks to an investigation by the FBI, the San Diego District Attorney’s Office, and the California Department of Insurance, many of the fraudsters have been convicted and sentenced, including Fermin Iglesias and Carlos Arguello, who set up various patient recruiting and scheduling companies in Central America and Mexico to direct patients to medical service providers.  To date, 32 people and companies have pleaded guilty and five have been convicted in this Workers Compensation fraud scheme, receiving prison sentences as high as 10 years. In February, Iglesias was sentenced to five years in prison, and in April, Arguello was sentenced to four years. To date, more than $1.2 billion in suspect billings have been frozen.

Today’s “Fraud of the Day” is based on the article, “Fraudsters Took Advantage of Injured Workers,” posted on Insurance Fraud News on July 2, 2019.

Injured workers in California thought they were calling a hotline to help them navigate the workers’ compensation system. What they got instead was more pain. Rather than getting the help they needed, callers were set up with a group of corrupt doctors, attorneys, and patient brokers who lined their own pockets at the expense of injured workers.

For years, dozens of marketers, doctors, lawyers, and medical service providers conspired to buy and sell patients—and their individual body parts—like commodities for insurance and workers’ compensation purposes. The San Diego-based fraud ring cheated the California workers’ compensation system and private insurance out of more than $200 million. They also subjected patients to unnecessary, and sometimes painful, medical procedures and corrupted the doctor-patient relationship.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.