Suzie Kim had a hunch that something was wrong. Janitors from her Los Angeles cleaning company flocked to many of the same medical providers for work injuries over and over again.

The work is undeniably hard on the body. But as 20, 40 and then more than 80 work-injury cases stacked up at the company with 350 janitors, they began to take a toll on the family business.

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Sky-high medical bills led to sky-high workers’ compensation insurance rates. Increasing Kim’s suspicions, some of the employees had been long gone from Premier Building Maintenance Services by the time they filed their claims.

“We were told by other employees that they were getting calls and people were coaching them” to file cases, Kim said.

Employers like Kim are paying the price for what prosecutors throughout California describe as more than a $1 billion in medical fraud plaguing the state workers’ compensation system. In more than 100,000 cases, workers encountered medical providers who have been charged with or convicted of health fraud, according to a Reveal investigation.

When names of the accused began to emerge in 2015, some were familiar to Kim. But by then, she already had decided to sell the business.

“We wanted to keep these people employed; that’s why we kept going,” Kim said. “But we lost everything as a result.”

Among insurance executives, the dynamics in Southern California are notorious: Firms recruit workers to file claims, then pressure them to refer their co-workers to a small circle of lawyers and doctors.

Robert Hutchinson, an attorney representing a whistleblower in a lawsuit against an alleged medical mill that saw Premier workers, said even if he prevails in court against the medical providers, the damage to firms like Kim’s is undeniable.

“Even if people go to jail, even if we obtain some sizable monetary judgments, you can’t unring a bell once the damage is done,” said Hutchinson, of the Santa Monica office of Cotchett, Pitre & McCarthy. “There’s just no way to undo it.”

Buried in workers’ comp claims

Kim’s father launched the janitorial company in the mid-1990s, working in an office all day and pushing a mop and bucket through other offices at night.

Slowly, the family built the business. By 2010, Kim said the company had landed contracts with Los Angeles County and had about 350 janitors cleaning 80 courts, hospitals and offices. The family finally could “live comfortably for once,” Suzie Kim said.

Then the tsunami of workers’ compensation claims began to overwhelm the company.

Kim knows workers get hurt doing janitorial work. She recalls a worker who slipped on a wet floor while cleaning a courthouse and another who got pricked by a needle while throwing away trash at a hospital.

She said in those cases, the workers went straight to their supervisors to report the injury and kept in touch about coming back to work. They got care within the insurance company’s network of medical providers.

The flood of cases was different, though. Most of them popped up a year or more after an employee had left the company. Company records showed no report of an injury, even though the claims listed trauma to the head, the feet, the back, the eyes, Kim said. And a small cadre of lawyers steered the workers to out-of-network providers who tend to demand payment for their services in workers’ compensation courts.

Insurance documents filed with the actuaries for the state give snapshots of the cases and mounting costs: A worker slipped but did not fall: $95,000. A worker hurt her right wrist while vacuuming: $83,290. Another worker reported an “unknown cumulative injury”: $70,000.

The costs did not come out of the janitorial firm’s coffers. Rather, insurers tracked the costs and used them to calculate crippling hikes in the firm’s insurance rates that reached into the millions of dollars.

Some of it felt personal to Kim. She recalls one worker who filed a claim in January 2012. She saw him every payday. They exchanged smiles and handshakes. She said he seemed hesitant to file a claim, but he already had gone to one of the clinics many of her workers were visiting. Her advice to him was simple, she recalls.

“I said, ‘If you have a real injury, I suggest you go to a real doctor and get proper treatment.’ I said, ‘That’s my best suggestion for you,’ ” Kim said.

That worker, Sergio Jimenez, 37, said he heard there were questions about some workers’ cases, but maintains his was warranted. He said he injured his lower back after falling on a courthouse floor he’d waxed. He called an 800-number, he said, and a representative came out to his home and referred him to the clinic for shockwave therapy, pain medications, a pain injection and a pain-relief device he took home.

“Some people they treat you good, some treat you bad,” Jimenez said. “Some were in a rush. … Right now, I feel better than before.”

By the time his case settled, 20 medical service providers had lined up with $117,000 in claims against the company’s workers’ comp insurance, according to a review of his medical records. The case, though, was only a small fraction of the total bills mounting against the company.

Suzie Kim sifts through workers’ compensation claims at her now-closed cleaning company. Prosecutors throughout California say there is more than $1 billion in medical fraud plaguing the state system. Credit: Annie Tritt for Reveal Credit: Annie Tritt for Reveal

Incomplete medical records

Several of the janitors who claimed injuries, including Jimenez, went to the Pain Relief Health Center and its affiliated clinics. Kim was dubious of the chain, the expensive pain creams and the $2,200 shockwave treatments it provided to workers.

At the time, little did she know that others had begun to share her concerns.

Christina Sills started working at Pain Relief’s Reseda, California, office in late 2011 as a billing and collections manager. The clinic had seven sites at its peak, mostly in Los Angeles County.

Sills said she was told to bill insurers based on the patient care information in spreadsheets. Trouble was, she said, the medical records required to back up the bills were either missing or suspicious.

Among the missing documents were physicians’ signed prescriptions. When she asked about that, she said the signed sheets were produced quickly – a little too quickly. She said thousands of dollars worth of shockwave treatments were documented for every patient, regardless of their injuries, but she “never saw the shockwave machine leave the hallway.”

“There was no way they could have given shockwave therapy to that many patients,” Sills said. “It’s just impossible.”

A supervisor directed her to bill for psychiatric care for each patient, even though reports of their complaints did not ring true.

“They would just change the name on the report; they were all the same,” Sills said.

Sills, who has worked in the medical field since 1977, filed the whistleblower lawsuit in July 2013 against the Pain Relief clinics and their owner, Bahar Gharib-Danesh. One email from Gharib-Danesh, submitted as an exhibit in the case, says: “Bill Bill Bill NO EXCUSE.”

Federal prosecutors confirmed Sills’ suspicions in August when they indicted Gharib-Danesh, and John Terrence, a Marina Del Rey psychologist, on health care fraud. Both have pleaded not guilty in the case.

Gharib-Danesh’s attorney, Richard Moss of Pasadena, said his client is innocent.

“(Prosecutors) have their own spin on what the facts are and what the realities are,” Moss said. “There was no intentional criminal wrongdoing.”

Gharib-Danesh urged her staff to pad bills by adding injuries to parts of the body – a leg here and a neck there – to the list that goes with each worker’s claim, according to the indictment against her. Terrence, the charges say, billed for seeing 14 patients for a total of 291 hours – in one day.

By then, the firm had billed insurers for treating Premier janitorial workers nearly $70,000.

Another firm, whose owner is fighting an indictment for paying kickbacks to induce doctors to prescribe pain creams, sought $63,000 for Premier janitors’ medications. Janitors got MRIs at other centers owned by a doctor who has since been indicted for paying bribes in exchange for patient referrals.

Yet another physician whose firms saw a dozen Premier workers has a checkered history. His workers’ compensation clinics in the Central Valley defeated two workers’ comp fraud indictments by citing procedural issues. His clinics continue to operate in Los Angeles County.

State data shows that medical providers filed more than $3.8 million in liens – or requests for payments – for treating Premier janitors.

Those claims add up.

A fraud investigator for a major workers’ compensation insurance firm acknowledged in court testimony that insurance firms sometimes just throw a bit of cash at suspicious medical operators and let employers foot the bill.

It’s a “business decision” that gets made, given that the alternative – paying experienced attorneys to combat fraud – is more expensive, according to the 2015 court testimony of Gordon Oard, an investigator for the major workers’ compensation insurer Berkshire Hathaway Homestate Cos.

From there, the cost of workers’ compensation fraud is built into insurance policies – and passed on to employers who pay the premiums.

“If work comp insurance is expensive, the employer hires less people, can afford less salary increases,” Oard said, “because he’s trying to pay for his coverage.”

The ultimate victim, he testified, is “the entire state of California.”

Insurance costs skyrocket  

Suzie Kim felt the effects of the soaring medical costs each year when the company went to buy workers’ compensation coverage for workers.

Much like crash-prone drivers, employers tend to pay high workers’ compensation insurance rates if high medical bills suggest their workplaces are hazardous. Insurers reviewing a firm’s medical bills do not take into account a different possibility: that the medical providers were improperly padding the bills.

“Most carriers just declined right off the bat,” Kim said. “I would get a huge list from the broker saying, ‘OK, who did you approach?’ (It was) decline, decline, decline, decline, decline.”

Kim’s firm went from paying $350,000 to cover workers’ compensation costs at the end of 2009 to getting quotes at more than $3 million by the end of 2011. They changed insurers year after year, limiting their ability to get fraud investigators interested in a case.

As the business began to falter, Suzie went to the Los Angeles district attorney’s office for help. She called the California Department of Insurance. She even testified at a public hearing held by the state in 2012.

By 2015, some of Kim’s suspicions were confirmed as criminal charges began piling up against some of the medical providers who treated Premier workers. But it was too late for the family business; Kim already had decided to wind down operations.

She said the high workers’ compensation costs were the No. 1 factor.

“We’ve tapped out our resources, so there’s no more to keep going,” Kim said.

As movers pushed desks and chairs out of the company’s headquarters in August 2015, the day was particularly disheartening to office manager Alma Lietsch. She was losing her job, for one.

But she also was seeing the effects of aggressive marketers preying on Spanish speakers like herself. Lietsch, who is bilingual, said she had gotten many cold calls at home asking her if she had been hurt at work or knew anyone who had.

“It’s really sad, because they’re just making the Hispanic community do things that I don’t think they really want to,” she said.

Going forward, Kim said she hopes to go back to the career she enjoyed before helping her dad with the business in late 2008: fine art photography. She had assisted on shoots of actors Antonio Banderas and Brad Pitt. In a new venture, she said, she plans to go it alone.

“I really don’t think I’ll ever go into business again because of this,” Kim said, “not here.”

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.