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Walters: Fraud 'Rampant' in State's Comp System

  • State: California
  • Topic: WEST
  • - Average time spent on item: 39 minutes
  • - Popular with: Legal
  • -  1 share

Fraud is rampant in California’s workers’ compensation system, Dan Walters wrote in a CalMatters column published Monday.

Dan Walters

Dan Walters
(CalMatters photo)

Walters opens his column by noting Santa Clara County prosecutors charged former Santa Clara police Officer Kenneth Henderson with faking an injury. And he notes that Henderson’s wife, Mandy Henderson, a former lieutenant in the county Sheriff’s Office, pleaded no contest to work comp fraud charges in 2019 for exaggerating an injury.

Having a husband and wife who both worked in law enforcement and are both prosecuted for the same crime is unusual, Walters writes. The former columnist for the Sacramento Bee also said he found it odd that the case involved people from Northern California.

“Fraud in California’s $20 billion a year system of supporting disabled workers is rampant, but the vast majority of it occurs in Southern California,” he writes.

Walters accuses “shady lawyers” of using “cappers” to find potential clients by asking people if they have any pain that could be connected to past employment. This results in cumulative trauma claims that can’t be tied to a specific event. Walters writes that “equally shady doctors” sign off on the claims.

The column cites two reports from the Workers’ Compensation Insurance Rating Bureau. One study found that indicted providers in the Los Angeles area accounted for more than 90% of medical payments to all indicted providers in the state. The other found a higher percentage of cumulative trauma claims in the Los Angeles area compared to the rest of the state.

“Obviously, there’s big money in defrauding the system and it’s a factor in California’s employers paying the nation’s second-highest costs for workers’ compensation insurance, according to a biennial survey by Oregon’s Department of Consumer and Business Services, the widely accepted authority,” Walters concludes. “It also indirectly cheats those with legitimate work-related disabilities.”

8 Comments (2 Replies)

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Steven Dewberry Feb 11, 2020 a 7:02 am PST

What a flimsy article. What a flimsy writer. From two married individuals we are to infer that the system is full of fraudulent claims? Shame on WCC for publishing such pablum.

David Hornback Feb 12, 2020 a 5:37 pm PST

you fall off the turnip truck yesterday?

Steven Dewberry Feb 11, 2020 a 7:02 am PST

What a flimsy article. What a flimsy writer. From two married individuals we are to infer that the system is full of fraudulent claims? Shame on WCC for publishing such pablum.

Charles Cleveland Feb 11, 2020 a 7:02 am PST

Same old song, rehashing the same rhetoric from 2004 before SB 899. Permanent disability awards are abysmally low due to apportionment and the AMA guides over the last 15 years so where's the motive for this rampant applicant fraud? Medical treatment is delayed and routinely denied about 90% of the time through utilization review, only 10% of IMR appeals go towards the injured worker after decision, QMEs were prevented systematically from obtaining/renewing licenses resulting in a desperate shortage of qualified medical evaluators yet this is the fraud he writes about? Most injured workers are close to minimum wage and are two paychecks away from being homeless after any unexpected expense. Using these two individuals to extrapolate a picture of all injured workers is insulting to hard-working Californians.

Erwin Nepomuceno Feb 11, 2020 a 8:02 am PST

I agree that a prosecuted husband and wife fraud team is an unfair extrapolation for the entire system. However, having practiced in workers' compensation defense for 25 years in Southern California and prepared my share of fraud referrals to the local district attorneys offices, the author isn't totally incorrect. Southern California has more than it's fair share of law firms who file a claim with the simple goal of getting attorney fees for a deposition and C&R. We have also observed that there is no shortage of medical providers who will support them.

Don Balzano Feb 11, 2020 a 9:02 am PST

As a result of administering HCO programs for 25 years, I have been to 23 Boards as an expert witness and have seen all types of shenanigans. We will always have some individuals who attempt to game any system. However I too often encounter claimant representation that is not based upon the physical and emotional interests and needs of the injured employee to become cured through timely and appropriate medical care and to be able to return to productive employment. And as Erwin pointed out, this is predominately in Southern California.

George Rothwell Feb 11, 2020 a 11:02 am PST

I have been involved with the Worker's Compensation system in the state of California for over 50 years. First as an injured worker before I became an attorney. Then as an attorney who, at various times, represented both employers and injured worker. I then served as a WCJ for approximately 15 years. At the present time I serve as an arbitrator in the carveout system. I agree that there are people who abuse this system, as wherever money is involved there are certain persons who will attempt to game any system. However, I don't believe that the amount of abuse today, is anywhere near the problems we had in the late 90s when cappers were hitting up persons on the unemployment lines to lure them into filing claims which were settled for minimal sums for the applicant, but with huge medical legal liens. Walters also does not seem to be aware that fraud is not limited to injured workers. In my experience, there is as much fraud committed by employers, as by injured workers. Unethical conduct is not limited to one side of the system. One redeeming factor which should be appreciated is that in today's world there are doctors, lawyers, and employers being charged and convicted of on ethical conduct in this system. This was almost unknown when I first became involved with Worker's Compensation in the state of California.

Ian Fyvie Feb 13, 2020 a 4:02 pm PST

There appears to be universal agreement that the systems does not operate as intended - a benefit delivery system for employee's injured while engaged in activities that benefit the employer. There's money involved so there's an opportunities for greedy individuals involved in any part of the process to show their lack of honesty. This has been proven by criminal indictments issued for injured workers', attorney firms, doctors, treatment and testing facilities and employers. I agree with Judge Rothwell that it seems better than it was 20 years ago but despite the hard work by law enforcement it's still present and as long as there's people involved in the process it will continue. With continued pressure on all involved in the process we can hopefully keep from falling back in to the dismal 1990's. I believe continued and increased funding of law enforcement to investigate and prosecute fraudulent claims is the best answer to the problem. Despite the numerous revisions of the Labor Code over the years the problem continues. Only when the risk and fear of being arrested for fraud becomes deeply rooted in all segments of the process will there be an appreciable decline in fraudulent conduct.

Kathleen Dixon Feb 16, 2020 a 3:02 pm PST

For the right price, a doctor or an atty, will commit slander/libel/perjury. My former atty was paid $100,000 from my Award to, "Fail to Appear," in court X 2. I have yet to receive an Award from 2 identical falls (that ended my career as an RN/NP), in 1993. One IME Dr. signed/dated his report, "Pt may return to her usual job," 2 days before my appoint. date. And, on a Sunday! The day an IW hires an atty, he becomes the, "helpless defendant" in a no-win battle with Corporate America.

Scott Rubel Feb 17, 2020 a 12:02 pm PST

What a one sided "article"! If WCC is going to re-publish an obviously biased article the least they could do is publish commentary by others in the community. Did WCC even attempt to contact CAAA, VIAW or CSIMS about this subject? David DePaolo must be rolling over in his grave!
The reality is that there are no statistics to support this idea that fraud is "rampant" in the WC system. It may be rampant in the Henderson household but that is about it.
The last hard numbers we have show that actually convicted fraud represents about 1 in 10,000 claims. (CWCI) Furthermore, this "article only focuses on injured workers. Employers lie about their employees suffering injury; they lie to insurance companies to get inappropriately low premiums; they lie about employees being independent contractors to avoid work comp coverage all together. These lies cost the premium base millions if not billions every year which means honest employers are paying more.
Our system should be focusing on the need to provide injured workers with necessary medical treatment so they can return to the labor force ASAP. This tired disproven rhetoric should return to the last century where it belongs.

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