CIR Reports on Golden State Comp Fraud

Friday, April 1, 2016 | 0

The Center for Investigative Reporting documented ongoing federal investigations into alleged medical provider fraud rings throughout Southern California in a two-part series about rampant corruption in the state’s comp system.

Reports published Thursday chronicle allegations of one investigation into an kickbacks paid for spinal surgeries in Los Angeles the FBI has dubbed “Operation Spinal Cap,” and another in San Diego the agency is calling “Operation Backlash.” The report also mentions efforts of Orange County prosecutors to bring fraud charges against a man accused of paying kickbacks to doctors who prescribed high-cost compounded creams to injured workers.

The Center for Investigative Reporting described California’s workers’ compensation system as one in which “pay-to-play schemes trump patient care.” But with criminal charges filed against more than 80 medical professionals, “prosecutors are beginning to turn the tide,” according to the report.

CIR cites “prosecutors” as estimating the health care providers facing criminal charges have “burdened the system with more than $1 billion in demands for money intended to help injured workers get back on the job.” And it says the alleged schemes have brought cynicism to an already adversarial system and contributes to California employers paying the highest premiums in the country.

The report also mentions what is allegedly an undercover recording in which Kareem Ahmed, the owner of Landmark Medical, says no one cares about fraud in California’s workers’ compensation system. The federal government is aggressive when it comes to investigating and prosecuting Medicare fraud, he said. But when it comes to workers’ compensation, “Nobody gives a fuck,” Ahmed reportedly said.

The Orange County District Attorney’s Office has charged Ahmed with fraud for paying kickbacks to doctors who prescribed compound creams that were allegedly formulated to maximize profits rather than help injured workers. 

California’s 4th District Court of Appeal on March 10 dismissed all but one count against Ahmed after finding prosecutors materially changed the nature of the fraud counts charged in a grand jury indictment.

The Orange County District Attorney’s Office said it plans to re-file criminal charges.

The Center for Investigative Reporting articles are here and here.