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Jaws, Part 2003
By Denise Vega - February 10, 2003

Do you hear the music in the background?

It's the theme from Jaws. Just when you thought you were safe in the adjusting waters, the predators return circling around you.

For those of you new to workers' compensation, let me acquaint you with a term: medical mills.

In the early 1990's some medical providers decided to turn a profit at the expense of the defense industry. Their practice involved internal referrals. A claimant literally bounced around their offices consuming various medical services for inordinate periods of time. They saw orthopedists, chiropractors, neurologists, psychiatrists, had x-rays, PT and lab tests for every part of their bodies.

Most services were triggered by post-termination or retaliatory claims. Some workers who applied for unemployment benefits were informed by dubious individuals that they were actually injured on the job. These same helpful characters drove them to providers who endorsed the idea. While many of these claims eventually resulted in nuisance value settlements or found their way into SIU departments, the medical liens were left outstanding and for years they haunted the claim until many of the entities were closed by intervention of various legal systems.

Finally, the reforms of 1994 prohibited by law internal referrals. Post-termination claims diminished in the wake of specific legislation. Cappers were outlawed and psychiatric claims became subject to their own rules.

The community breathed a collective sigh of relief.

Now, new medical groups, under new guises seem to be emerging from the limbo to which the legislature sent them.

For the busy adjuster this presents a multitude of problems. To track the interrelationships is time consuming. To allow legal counsel to do it is expensive. Therefore, a few cages need to be thrown in the water to protect oneself from bites to the behind. The first is identification.

There are a few tell tale signs of which the examiner should be aware. Many of the claims begin as small, admitted injuries to one part of the body, which mushrooms to include everything from hair follicles to toe nails. This "body creep" may be so well hidden that it is not readily apparent.

Only after several months do claims technicians realize they face billings for body parts never alleged in the original claim. Most of the treatment at these locations occurs after the treating physician has rendered a worker permanent and stationary.

Treatment, durable medical equipment and transportation expenses are presented without anyone having sought prior authorization. The billings from these organizations tend to exceed the Official Medical Fee Schedule values at hugely inflated levels. Multiple medical-legal reports will generate a host of liens but it is almost impossible to determine who is the designated treating physician. Charges for reports and transcriptions, which are included in the basic med-legal fee are billed separately.

Once the worker is P&S'd by the subject providers or the claim about to settle, these organizations begin high pressure attempts to settle liens before legal counsel becomes involved.

Representatives of these facilities refuse to discuss issues but rather demand settlements based on a percentage of the inflated billings.

Having identified a suspicious entity how does the examiner determine if there is more at stake than just trying to close a file?

Evidence is required and that takes a little time and effort.

Lien logs which we hoped never to see again need to make a comeback, at least for the present. The examiner should list not only the name but also the address and phone number of the lien claimants. If multiple medical providers appear to be working out of the same location, share a single phone or in some manner appear linked to each other, this should constitute a bright red flag that something is amiss.

Tax identification numbers should also be noted. If entities share an ID number they should not be submitting separate bills. Occasionally the first thing the examiner will note is a similarity in writing styles or even computer generated bills which look suspiciously alike. One great clue is if all the providers share identical patient account numbers.

Such information needs to be conveyed to individual SIU departments for investigation and follow-up. Liens must receive timely objections. All bills must be reviewed for OMFS values. Negotiations, if any, must be predicated on a percentage of the reasonable value of service, not the inflated billing prices.

Spurious liens for such items as unnecessary transportation or durable medical equipment must be justified as having been prescribed by a physician and medically necessary. If the examiner has not authorized transportation services, liens must receive strenuous objections. Many entities are charging as much as $125 to travel one mile. If the physician requests such services a demand must be made for the provider to medically justify the need. If necessary the examiner must seek an independent opinion on the necessity for such items. Pharmacy charges must be screened to determine if prescriptions are appropriate to the injury.

Examiners often overlook one of the great tools at their disposal. The Labor Code requires that a physician be licensed in California in order to treat an injured worker. If there is any reason to question the validity of medical treatment the adjuster can and should make a demand for a copy of the doctor's license at the time treatment was rendered.

Billing groups purporting to represent multiple lien claimants should be asked to provide letters from the individual physician or provider that they are empowered to negotiate and collect on behalf of each and every entity especially if treatment or services appear duplicative.

In a litigated case, the defense attorney needs to question the worker at deposition on what transpires inside the questionable medical facility. While these inquires lengthen the time and therefore the cost of the deposition, they proved to be an invaluable tool in fighting the bills and liens during the "mill" years.

Busy examiners seldom want to hear that they must add another layer to the complex package that is claims management. Nevertheless, rising medical costs must concern everyone. It must be the duty of every claims representative to become aware of abusive practices and protect the employer from having to pay for them. The current providers may be trying to find ways around the Labor Code to achieve their questionable aims. Therefore the community as a whole must become aware of the problem. However, it is the responsibility of the individual claims technician to identify and if necessary to fight.

I never thought that I would ever again have to warn about these perils. As I became aware of the current problem, Yogi Berra came to mind for it is deja vu all over again. “Still it is wise to remember that when swimming with sharks a hard thump on the nose often scares them away.”


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