Why CA Fraud Funding Critieria is Flawed

Monday, July 4, 2005 | 0

The following commentary was submitted by Mr. Barry Goldhammer, a consultant, in response to a recent news item published 6/23/05 in WorkCompCentral:

After reading Mr. Sams article entitled, L.A.Co DA Loses $1M in Fraud Fighting Money, with great interest, two issues became very apparent:

First, Fraud Assessment Committee Chairman William Zachry was very wise, and demonstrated true leadership, in calling for an audit of the "numbers" i.e. arrests, convictions etc. which are submitted by participating counties and form the statistical basis for doling out over $20M in funding annually.

Second, as just about any Sacramento statistician will tell you, the reported statistics vary so excessively from county to county as to render them invalid and highly suspect.

What caused these statistics to vary so excessively among counties in so many categories such as arrests, number of complex and very complex investigations?

It is highly probable that the underlying criteria[1] for reporting these statistics is not sufficiently defined, which allows for varying interpretations among counties as to what actually constitutes an arrest, a "very complex investigation" or any other measured category for that matter.

The criteria for claiming credit for one arrest, for example, would require a unique police department or county jail booking number for each arrestee charged with workers compensation fraud. In the case of San Diego County, as cited in the article, 110 unique booking numbers (one for each of the 110 arrestees), all of which are directly linked to workers compensation fraud charges, can be provided to the Fraud Assessment Commission as proof of each of the 110 "arrests" in response to the audit.

Specific criteria such as this can easily be applied to the remainder of the categories measured. Doing so would eliminate a significant amount of confusion.

A contributing factor in the prima facie "appearance" of inconsistent effectiveness among the counties might also be attributed to the lack of a systemwide strategy promulgated by the commission which includes "...objectives, priorities, and measurable targets that can be effectively communicated to the fraud division and the county district attorneys participating in the antifraud program."[1]

Such a strategy would analyze the extent and type of workers compensation fraud in California. This information would ultimately guide the Commission in forming the basis of a model antifraud program which clearly delineates the number, type, and ratio of investigations, i.e. 30% applicant fraud, 30% premium fraud, 30% failure to provide insurance, 10% tax evasion by workers compensation medical providers, which each agency can reasonably be expected to investigate and prosecute based on staffing levels.

At this point, however, the only thing that is clear based on this years confounding "numbers" is that funding decisions are highly susceptible to subjective[1], arbitrary and capricious decisions and agendas as opposed to objective rationale[1] and consistently applied criteria[1]. These types of subjective funding processes create a rather "sticky wicket" for those agencies trying to navigate them forthrightly and with integrity.

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Footnotes:

1. California State Auditor Report 2002-018

By Barry Goldhammer - calbusiness@hotmail.com .

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The views and opinions expressed by the author are not necessarily those of workcompcentral.com, its editors or management.