$17M in workers’ comp overbilling: How’d this happen?
June 20, 2011 by Fred HosierPosted in: criminal charges, Injuries, Investigations, Special Report, Workers' comp
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Two doctors and two of their employees have been indicted on charges involving an alleged $17 million in workers’ comp insurance overbilling. How does something like this happen?
Dr. Sim Hoffman of Newport Beach, CA, is a radiologist and owner of an imaging center and a sleep center. He’s charged with 883 felony counts of insurance fraud and one felony count of aiding and abetting the unauthorized practice of medicine. If convicted, he faces 2 to 892 years in prison.
Dr. Thomas Heric, a neurologist who worked for Hoffman, is charged with 296 counts of insurance fraud and one felony count of aiding and abetting the unauthorized practice of medicine. He faces between 2 and 315 years in prison.
Two other workers involved in billing and collections who worked for Hoffman also face long prison sentences.
How does one doctor mastermind a huge fraud like this, according to investigators?
Law makes it possible
The Orange County District Attorney’s office says part of the problem lies in the state’s workers’ compensation law.
In California, doctors and insurance companies aren’t required by law to communicate with the workers’ comp recipient (the injured worker) about what medical procedures are being claimed for billing. There’s no system in place to verify which services were provided during a medical appointment.
So it’s possible to subject injured workers to unnecessary medical diagnostic tests or even bill insurance companies for medical services that were never provided.
In this case, prosecutors say injured workers underwent nerve testing at Hoffman’s imaging center that was non-invasive and should have been billed at about $35 per test.
Prosecutors accuse Hoffman of billing for an invasive test at $330 per procedure when that type of procedure wasn’t conducted. Sometimes, Hoffman allegedly billed for the invasive test 20 times per patient, despite the test never being done.
Hoffman is accused of inflating insurance billing from what should have been under $2,000 per patient to about $10,000 per patient.
In all, he’s accused of billing insurance companies over $9 million in this part of the alleged scheme.
Hoffman also ran a sleep center. He’s accused of filing insurance claims for 1,247 patients for epilepsy and seizure testing without ever conducting the tests on a single patient. Prosecutors say this center was nothing but a “medical mill” for the sole purpose of insurance billing without providing any legitimate treatment to any of his patients. For all 1,247 patients, Hoffman is accused of billing exactly $6,728 to insurance companies.
The doctor is accused of billing insurance companies over $8.4 million in the alleged sleep center scheme.
Has your company ever experienced medical testing for an injured worker that may have been unnecessary? How about billing for medical tests that weren’t even conducted? You can share your experience (or just your thoughts on this story) with others in the Comments Box below.
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Tags: California, medical imaging, overbilling, sleep center, Workers' comp, workers' comp fraud
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June 21st, 2011 at 7:40 am
I am sure we all know the laws vary from state to state but all of them need some serious changes. They no longer are adequate for this day and age. I handle WC for our company which has locations all over the world (I handle the US). To try and maintain some type of control over dollars spent on medical treatment I requested a monthly payment report form our insurance company. If there are any excessive charges I contact them and request details. It did not state how they caught this guy but it should be an eye opener for all of us to keep an eye on charges sent to the insurance companies.
June 21st, 2011 at 8:10 am
Do you really expect honesty in a dishonest system? You dangle a carrot in front of most people long enough, they will eventually at least think about taking it
June 21st, 2011 at 9:06 am
Chuck C says it all. Have a worker who has had very poor performance including safety violations and is being worked through the progressive discipline stages but now has reported injuries from an incident 5 months previously where no injury was reported. Have professionally taped him palying golf, bowling, and running while being paid WC for back, coccyx, and neck strain. Fortunately I’m two years away from retiring so won’t have to deal with it any more but the system is so corrupt that it will be unsustainable at some point. Just pick up your DEX phone directory and the front and back covers will be plastered with attorney’s trolling for WC cases. Easy pickin’s.
June 21st, 2011 at 11:14 am
If the insurance company had been paying attention to the bills and following up with workers they would have found the fraud sooner. Of course, in California the law may be so convoluted it makes it easy for all parties to cheat-that often happens when you have the heavy hand of government constantly interfering with business and individuals, all in the name of “doing good for everyone”. Of course that means it does “good” for no one.
June 22nd, 2011 at 8:48 am
What amazes me is that people do this stuff and think they will never get caught.
What scares me is that some people probably do this stuff and never get caught.
No wonder California is in the tank. They need a serious revamping of their comp laws.
July 15th, 2011 at 2:00 pm
I worked in the Philadelphia area from 1997 to 2004 and handled WC for alabor force of 900. It was pretty hit and miss regarding what doctors would bill for. I felt there was corruption at hand and actually went looking for a Health Care chain and met with the Sr account manager.
We sat down and agreed on treatments and monthy reports per employee and prescribed treatments. Having it in front of you with the costings really helped out. Frivilous prescriptions for speciality doctors and such is such a scam as for every referral made the doctor gets a % back to him of the billing.
I can understand how easy it would be to cheat the system and pad their personal retirement funds. Docs these days need to be insured for about a decade after they stop practicing medicine.Malpratice suits do linger for years.
Somebody above said it right. Its a corrupt system all around. I am a believer in doctor/patient relationships with a monetary transaction between the 2 for services rendered.Not in this country though as we have too many bottom feeders in the system who get paid forno medical services.
What is the horrendous part of the story is the medical firm intent on criminal behavior and theft on a grand scale.
Hopefully they will be issued with more than a couple years jail but rather a couple decades.
JHS
July 15th, 2011 at 2:02 pm
I apologize for the typing above. Really.
JHS