DIR Stays 200,000 Liens with Claimed Value of $1 Billion

The Department of Industrial Relations (DIR) announced on January 18, 2017 that it stayed 200,000 liens worth more than $1 billion in an effort to prevent ongoing workers’ compensation fraud. The stays were possible from the passing of SB 1160 (Mendoza), which requires DIR to automatically stay liens filed by providers who have been indicted or charged with crimes until the disposition of criminal proceedings. The stay would only be lifted if a provider is acquitted, or charges are dropped or dismissed.

According to DIR Director Christine Baker, the DIR is increasing its efforts to prohibit criminal providers from committing fraud. She stated, “Removing fraudulent providers and their lien claims from the workers’ compensation system will further improve services to injured workers and ultimately reduce costs in the system.”

In addition to SB 1160, another law that took effect on January 1, 2017 is AB 1244, which requires the Division of Workers’ Compensation (DWC) Administrative Director to suspend any medical provider, physician or practitioner from participating in the workers’ compensation system when convicted of fraud. DWC has adopted provider suspension regulations, and is now issuing notices of suspension to convicted providers.

The DIR is aggressively publicizing its fraud prevention efforts online and publicly sharing information on indicted medical providers. In addition, it is developing financial interest disclosure rules to track ownership interests to stop illegal referrals. The DIR will also use data submitted by medical providers to determine if physicians are consistently overbilling for certain services and performing unnecessary tests and procedures. This data tracking system called the “Anti-Fraud Support Unit” shares and monitors data from system participants. DIR is working with RAND Corporation to produce an independent evaluation and recommendations, including a review of fraud detection in other programs. The study will be released in Spring 2017.