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2017 Top 10 Workers’ Compensation Fraud Cases

Each workers’ compensation fraud case is unique unto itself. Individuals, doctors, clinics, patients, lawyers, pharmacies, businesses, and countless others have created both elaborate and simple schemes to defraud the workers’ compensation system and the people who truly rely on it.

Of the 10 top workers compensation cases in 2017, seven occurred in California, two in Texas and one in Tennessee.

Orange County, CA – An example of attorneys conspiring to defraud the workers’ compensation system includes a case in California involving 10 attorneys and 6 so-called cappers, individuals working for the attorneys to recruit clients the attorneys can use to commit the fraud. The cappers, who are not attorneys, seek out prospective clients for the attorneys without any overt participation by the lawyers. The fraudulent attorneys would then use these fake clients to promote a scheme to defraud the system. The caper grossed $300 million. Because using cappers is illegal, all of the insurance payouts made to these fraudulent attorneys are considered part of the scheme.

Dallas, TX – Another scheme in Texas involved alleged pharmacies that marketed creams that are used to treat scars, other wounds and pain. The pharmacies enticed doctors with money, free rent, and other bait to fraudulently prescribe the creams to phony patients. The plot led to about $158 million in false claims and $82 million of that total was actually paid.

Santa Ana, CA – Another example of a workers’ compensation fraud scheme in California involved men who owned a medical equipment company that rented one hot/cold medical equipment machine designed to lessen patients’ inflammation and pain issues. The firm defrauded an insurance company by claiming that it rented two machines for a price of $18,000 when they actually rented out one that had a value of less than $500. That company submitted a claim to workers’ compensation Insurance carriers worth $70 million.

Oakland, CA – In a case in California, seven medical providers were involved in a plethora of frauds related to workers’ compensation liens. The scheme included mail fraud, kickbacks, and the reference of patients for care that was not necessary.

Orange County, CA – In California, a husband and wife recruited doctors and pharmacists to prescribe creams that have no medical purpose and are not approved by the U.S. Food And Drug Administration (FDA). The husband and wife acquired the creams for between $15 and $40 a tube and then invoiced insurers between $250 and $700 for each tube. The husband and wife billed insurers a total of $40 million.

San Francisco, CA – A California woman who owned three companies falsified documents and underreported payroll to her workers’ compensation insurance company for seven consecutive years. During that time she collected $32 million and was ultimately convicted of 19 felonies.

Powell, TN – A Tennessee woman who owned a business stole $10.4 million in payroll taxes and $5.4 million in workers’ compensation insurance premiums from other small businesses. After pleading guilty, she was required to pay a restitution fee of $15,776,417 and was sentenced to eight years in jail for tax evasion and mail and wire fraud.

Houston, TX – In Texas, a brother and sister who owns a wellness center made false claims with the Federal Office Of Worker Compensation from 2010 to 2017 for services that were not performed or were “upcoded” and invoiced at a higher rate. The false claims totaled $9.1 million.

San Diego, CA – A California husband and wife hid the existence of at least 800 housekeepers and janitors to avoid paying workers’ compensation insurance and payroll taxes.

Contra Costa County, CA – Another California case involving eight owners and managers of four Asian restaurants who did not pay their employees minimum wage and did not properly pay their workers’ compensation premiums. As a result, the perpetrators committed $4.5 million in wage thefts and cheated the state out of another $2 million in taxes. Five defendants pleaded guilty and three escaped prosecution and ended up in China.

Facts About Workers’ Compensation Insurance

While most claims are legitimate, studies have shown that 1% to 2% or more of all workers’ compensation insurance claims are fraudulent.

More than 94% of American businesses carry workers’ compensation insurance. That accounts for more than 135,000,000 workers in the United States. The most common types of workers’ compensation fraud include:

• False claims.

• Working while collecting benefits.

• Exaggerated claims.

• Underreporting of payroll

• Employee misclassification by the employer.

Workers’ compensation insurance fraud is a serious matter. If you have been charged with such a fraud, you will need an attorney. The Eichholz Law Firm is able to help.

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