The California State Capitol building in Sacramento. Credit: Marcin Wichary/

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A California lawmaker says “something needs to be done” about widespread medical fraud in the state’s workers’ compensation system and called on a state commission Tuesday to launch an in-depth review of the matter.

Sen. Tony Mendoza asked for a review of what the state is doing to combat what he deemed unsettling questions raised by a recent series of articles by Reveal from The Center for Investigative Reporting.

California Sen. Tony Mendoza says “something needs to be done” about widespread medical fraud in the state’s workers’ compensation system and has called on a state commission to launch an in-depth review.Credit: Office of Sen. Tony Mendoza Credit: Office of Sen. Tony Mendoza

“It was actually very disturbing,” Mendoza said in an interview, “just the abuses that occur from individuals who want to make money from the system on the backs of these injured workers.”

The Reveal investigation found that more than 100,000 injured workers in California have encountered medical providers who are currently facing charges for fraud. The workers have undergone risky spinal surgeries spurred by millions in kickbacks and have endured tests and treatments by providers who’ve admitted to prescribing them for profit.

Multiple schemes seek to bypass the state’s system of checks and balances over medical treatment. They do so by soliciting injured workers, many of whom speak only Spanish, to go straight to the clinics of providers who seek payment for services in workers’ compensation courts.

Mendoza, a Cerritos Democrat, asked the California Commission on Health and Safety and Workers’ Compensation to examine whether the state has enough tools, resources and data-analysis capacity to effectively combat the fraud problem.

“It is imperative that that we determine whether there are any regulatory or legislative solutions to fix and prevent such fraud in the workers compensation system,” he said in a statement issued Tuesday.

Mendoza’s call for a review came as Gov. Jerry Brown’s cabinet-level secretary for the Labor & Workforce Development Agency asked the state’s Department of Industrial Relations, which oversees workers’ compensation, to convene a working group to examine fraud in the system.

In a letter sent Tuesday to Christine Baker, the department’s director, Secretary David Lanier cited recent investigations, indictments and convictions that demonstrate “significant remaining challenges” in workers’ compensation. He called on the group to formulate “a set of comprehensive and strategic policy recommendations for consideration by the Governor and the Legislature.”

David Lanier, secretary of California’s Labor & Workforce Development Agency, has asked the state’s Department of Industrial Relations, which oversees workers’ compensation, to convene a working group to examine fraud in the system.Credit: Office of Secretary David Lanier Credit: Office of Secretary David Lanier

Lanier’s spokesman said the secretary declined to comment and would let the letter speak for itself.

In May, Assemblyman Tom Daly, an Anaheim Democrat, asked the state auditor’s office to examine fraud in workers’ compensation, citing some of the specific findings in the recent news series.

Daly’s office said the request, which was dropped from a legislative hearing earlier in May, is expected to go forward in August. A panel of lawmakers will decide whether the questions Daly raises merit an audit costing an estimated $333,600.

In a recent interview with Reveal, Mendoza said he has held hearings about the workers’ compensation system, and the testimony tends to feature a range of interests with varied grievances. Workers decry treatment denials, service providers rail against payment delays and employers complain about fraud.

“It’s a subject that you kind of throw your hands up in the air at times and say, ‘What can we do?’ ” he said. “You could just turn around and walk away, and I don’t want to do that. I do want to be more hands-on and try to solve the problem.”

Reveal examined more than a dozen criminal prosecutions against nearly 100 health providers accused of exploiting injured workers. The cases include one against a company accused of paying doctors millions in kickbacks to dispense unregulated pain creams that allegedly caused the death of a baby. Others accuse alleged medical mills of prescribing hectic schedules of treatment to every injured worker, regardless of his or her injury.

Several cases describe operations that rely on the state’s medical lien system for payments. California’s workers’ compensation system allows health care providers to bill for services outside of the state’s medical review channels and negotiate payment in a string of 24 workers’ compensation courts throughout the state.

The Reveal investigation found that the number of medical liens is back up to the level it was at several years ago, even though lawmakers passed a law to tackle the problem in 2012.

Lanier called on the labor department working group to focus on one particular aspect of liens that lawmakers attempted to address: the sale of the right to bill for medical services.

The 2012 law was meant to virtually eliminate the cottage industry of medical providers selling financiers the right to collect money for medical services they provided to injured workers.

Lanier’s request focuses on whether the sales still are happening in violation of state law.

This story was edited by Fernando Diaz and copy edited by Nikki Frick.

Christina Jewett can be reached at Follow her on Twitter: @By_CJewett.

Christina Jewett

Christina Jewett is a reporter for Reveal, covering labor and workplace issues with a focus on the workers' compensation system. With reporting partner Will Evans and CNN, she exposed widespread fraud and failed government oversight of California’s network of addiction treatment centers for the poor. The stories led to the defunding of more than 200 rehab clinics and changes in state law. The Emmy-nominated series won the 2013 broadcast award from Investigative Reporters and Editors. Jewett – as part of California Watch, a project of The Center for Investigative Reporting – won the 2011 George Polk Award for medical reporting with Lance Williams and Stephen K. Doig. The series exposed outsized rates of rare but lucrative medical conditions at a rapidly growing hospital chain and spurred a federal investigation. She was also a Livingston Award finalist in 2010. Previously, Jewett worked at ProPublica and The Sacramento Bee, where a story she broke about contracting malfeasance led to arrests and convictions. She and a colleague also chronicled jail abuse and medical mistreatment, spurring countywide policy reforms. Those stories were honored with awards from the John Jay College of Criminal Justice and the National Council on Crime and Delinquency. Jewett is based in Sacramento, California.