Workers’ Compensation Fraud: Unexpected Culprits, Costs, and Links to Health Care Fraud

Picture a case of workers’ compensation fraud. Chances are if you are like most Americans, the image in your head is a worker who claims to be injured and unable to work, but then goes trail running, competes in weight lifting competitions, and single-handedly builds his own house. Contrary to this popular image, the world of workers’ compensation fraud goes far beyond worker/claimant fraud and the most costly schemes are those involving employers and/or healthcare entities. In addition to being a concern in its own right, these complex workers’ comp fraud schemes often also involve fraud on a state or federal health care program and our Northern California government fraud attorney is committed to stamping out all forms of fraud on our government programs.

Charges Filed Against “The Godfather” (of Workers’ Compensation Fraud)
Known to some as “The Godfather,” chiropractor Peyman Heidary stands accused of leading an insurance fraud case that, according to a recent article in The Orange County Register, included fraudulent workers’ compensation claims. Heidary also goes by the alias “Number One,” a well-suited title since he is listed as the top person in numerous companies, including entities in the health care and legal fields. The Riverside County District Attorney’s Office has charged with Heidary with masterminding a scheme and leading a criminal group that established medical clinics and a law firm to facilitate the submission of thousands of workers’ compensation claims based on nonexistent or exaggerated medical conditions. Per the charges, the scheme also involved recruiting injured workers for Heidary’s companies followed by the preparation and submission of claims to insurance companies and the state worker’s compensation fund.

Ultimately, the scheme is thought to have billed insurance companies for close to $50 million, although the companies paid out a lesser amount. Investigators say they have also documented a $5 million loss by the State Fund through July 23. Along with Heidary, three of his employees stand charged with making fraudulent claims seeking payment of a health care bill over $950. Additional claims filed in relation to the scheme include practicing medicine without a license, practicing law without a license, and conspiracy claims. One of the court documents, focused on the medical clinics in the scheme, explains that the “main purpose is to milk money out of Workers’ Compensation Insurance Companies.”

The Reality of Workers’ Compensation Fraud…cash2.jpg
Last year, The Claims Journal, an insurance industry magazine, reported the results of a website survey in which respondents ranked employee fraud as the costliest form of workers’ compensation fraud. To the contrary, however, the report concluded that employer and healthcare fraud actually cost the system more than fraudulent claims by employees. Notably, the economic downturn did not actually lead to an increased number of employees making false claims, in part because employees were so desperate to keep their positions.

…and the Potential Link to Health Care Fraud
Workers’ compensation fraud, or at least the costliest cases, may not look the way many of us have always assumed. In reality, it often involves complex, multi-faceted schemes, plots that may also involve fraud on Medicare, Medi-Cal or other public health organizations. If you’ve become aware of a scheme defrauding government programs, you will need teammates to help you fight against the wrong. The team at our San Francisco whistleblowers’ law firm can be the partners you need.

See Related Blog Posts:
Where Health Care Fraud and Government Contracting Fraud Intersects
On Labor Day San Francisco Personal Injury Lawyer Reflects on Workers’ Compensation, Workplace Safety