Garamendi Getting Handle On Fraud
By Steve Lawrence, Associated Press - April 14, 2006SACRAMENTO (AP) __Responding to a critical state audit, Insurance Commissioner John Garamendi said Wednesday that he's already taken steps to improve his department's handling of workers' compensation fraud cases.
"Many of the recommendations (in the audit) dovetail with efforts we put in place and were underway," he told the Senate Labor and Industrial Relations Committee.
The audit, released late last month, said the commissioner and the Fraud Assessment Commission hadn't taken adequate steps to determine the extent of fraud, develop a plan to reduce it or ensure that anti- fraud funding was being spent effectively.
Garamendi said he appointed a new head of his fraud division and created a workers' compensation fraud unit within that division when he began his second term as commissioner in January 2003 after being out of office for eight years.
At the time of the audit, he said, his staff was already developing a "credible approach to measure the amount of fraud in the system." His office is also "in the process of increasing the accountability of district attorneys" who get anti-fraud grants from the state, he added.
"In no area of the department were the efforts and changes more immediate and comprehensive than in fighting fraud," he said.
Garamendi said the number of fraud cases referred by his investigators to district attorneys for prosecution is up 117 percent since he took office the second time.
But the committee's chair-man, Sen. Richard Alarcon, D-Van Nuys, questioned why the audit found that 87 percent of the potential fraud cases referred to the Department of Insurance for investigation never made it to a DA's office.
He suggested that workers' comp insurers need better instruction in how to identify fraud to reduce the number of "bogus referrals" they send to Garamendi's office for investigation.
"We absolutely need to find out what they are referring and why so many cases are not being prosecuted," he said.
Garamendi said he didn't want to limit the number of referrals to avoid losing information that might be useful in other investigations.
"We can use that information to target our investigations on those individuals or providers or businesses that come up repeatedly in referral," he said.
David Guthman, who said he had spent 12 years involved in fraud prosecutions for the Los Angeles district attorney's office, told the committee it was meaningless to compare the number of cases referred to Garamendi for investigation and the number that end up going to prosecutors.
"It's like comparing every call to 9-1-1 with how many cases the police refer to the DA for prosecution," he said.
Garamendi said what the state really needs to track fraud is to build a database that lists all workers' comp claims and the employees, employers, lawyers, medical providers and amount of treatment involved in those claims.
And he asked lawmakers to approve a series of anti-fraud bills, including a measure allowing prosecutors to file felonies against employers who refuse to buy workers' compensation insurance to cover their employees.
Mark Gerlach, a consultant for the California Applicant Attorneys' Association, a group of lawyers who represent injured workers, said the extent of fraud committed by employees is often exaggerated and that "real cost" is created by employer fraud. | 
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