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$40 Million Workers Compensation Fraud Ring Busted in California

As a business owner, you know that few things are more important to the success of your operation than your employees. That’s why you put so much care and effort into hiring, training and keeping the right people! Part of protecting your team is offering workers compensation in case any unfortunate injuries or illnesses happen on the job.



Whether your employee tweaks their back moving heavy boxes in your warehouse or carpal tunnel threatens your top coder’s typing ability, it’s a relief to know that you have business insurance in place to handle such claims. According to the National Federation of Independent Business, workers compensation coverage is legally mandated, although specifics vary by state.





Most of the time, the insurance industry is straightforward; it operates by the book. That’s why it’s enough to make any business owner—from the “cool as a cucumber” veteran manager to the passionate newbie entrepreneur—do a double take when a dramatic fraud case publicly unfolds. This month, officials in the Golden State uncovered a huge fraud ring involving business owners, pharmacists and doctors in Orange County.



CoverHound has the scoop on this current event, plus the ways in which fraud can end up hurting us all.



The $40 Million Kickback Plot


As Business Insurance reports, a wife and husband team who own several medical billing and management companies “are accused of masterminding a complex insurance fraud scheme of recruiting doctors and pharmacists to prescribe unnecessary treatment for workers comp patients between 2011 and 2015.”



Two pharmacists allegedly conspired with the couple to sell over $1 million in creams that lack FDA approval or proven medical benefits, as CBS Los Angeles writes. The victims in this case? Over 13,000 patients and 27 or more insurance carriers throughout California.



The press release from the California Department of Insurance explains that the couple is accused of manufacturing creams and buying them for $15 to $40 per tube. However, these products were billed to patients’ workers’ compensation insurance carriers for a much higher rate—between $250 and $700 per tube.



The couple is accused of paying physicians to participate. The couple also allegedly repackaged wholesale medication while still billing insurance carriers for the full price. All in all, over two dozen doctors, pharmacists and business owners face charges.



The Price We All Pay


Fraud weakens the overall system, even for those completely uninvolved with a specific case. The Coalition Against Insurance Fraud lists just a few ways that workers compensation fraud can hurt us all:





So there you have it, folks: the good, the bad and the ugly when it comes to workers compensation. Luckily, a vast majority of companies use business insurance as intended to protect their workers and their bottom line.



Is your workers comp policy still working for your growing business? Get a quick, customized quote from CoverHound today!

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