Setback? I read that word in the title and before even reading the article I got suspicious.  I had this feeling that this was another article by a journalist with an attitude that the government should dictate to the private business sector, in this case the insurers, how they should run their companies and what procedures to employ. The fact that the insurance company sector succeeded in striking out language from a Senate Bill that would have taken away their right to decide upon their own internal policies and procedures for fighting fraud doesn’t strike me as a set-back.  I see it as a victory in the campaign against fraud which will continue to allow the private sector to fight its own battles using its own private weapons.

I think with every company, the procedure and method of fighting fraud is going to be different, relative to their business model. So, the state government is out of line to dictate to insurers a blanket method they must employ in order to do it.  Government, stay out.

This kind of attitude that a new government regulation is going to save us millions of dollars by cutting down on fraud by imposing a mandatory procedure on insurance carriers just grates on my nerves. Insurers have every incentive to fight fraud, and they already spend enormous quantities of money fighting it. That LA Times writer took a quote from a Harvard University corruption control expert, Malcolm Sparrow, out of context and wrote, "Insurance companies should realize that 'you have to spend money to control fraud.'" Malcolm Sparrow, that Harvard expert, stated only the last phrase, and did not state the first part which was the writing of the journalist.  All Sparrow stated in some context was "you have to spend money to control fraud," but his full sentence wasn’t quoted, so it could have originally easily been, "Insurance companies know well you have to spend money to control fraud."  Because they already do know that extremely well!  No journalist partially quoting a Harvard expert out of context needs to tell any insurer it needs to spend money to control fraud.   To go tell a veteran insurer that is rather patronizing and condescending. 

It implies that insurance companies don't know how to fight fraud, when they've been doing just that very valiantly for years and years now. What about Zenith Insurance Company with its class action suits against slimey medical providers? Zenith and Stanley Zax along with other insurers have well spent millions to fight medical mills' fraudulent activities. 

Workers' Compensation carriers are having a hard enough time making a profit in California right now, so the least the state government can do is stay out of their way.  Give them a break and give them some credit.

In another paragraph of that last Wednesday’s LA Times article, the writer wrote, "In the meantime, Disney said it was not waiting for action from the Legislature. The Disneyland Resort unit plans to start mailing notices early next year to 20,000 employees when workers’ compensation bills are paid."  What?  Tell me why Disney would ever possibly wait for action from the Legislature?

Disney is a private company that is fully self-insured, and is even self-administered, to boot. Disney would never wait for any green light from the Legislature to strive for its profitability. How moronic is that idea?   If they did, they certainly wouldn't have had the imagination to create the Matterhorn and Mickey Mouse.

My point is that they have the freedom to choose.  Disney can decide to send out notices to injured workers asking them if they have really had the medical services on the invoices, if they want to employ this method.  If John Riggs, the claims manager of Disney, wants to engage in this action, he’s free to do so. 

My point is that making such a requirement law is not cool.  John Riggs was quoted as saying by the L.A. Times, "Once the provider realizes that someone else is looking at what's being billed, there's a built-in incentive for them to go somewhere else" to commit fraud.  

I agree.  And sending out notices to claimants to get their feed-back is a good idea.  It might really work and have a positive effect upon the bottom line.

But, don't make such an action a requirement by law.  If some or many insurance carriers feel sending out notices is "cost prohibitive", as Steven Suchil, an attorney with the American Insurance Association, stated as many insurers’ view, then they shouldn't be required by law to do so.  If that's their feeling, they should be allowed to act according to their own business models. 

Companies don't need a government mandate to send notices if that's what they want to do," said Nicole Mahrt, another representative of the American Insurance Association. 

"Criminal activities will follow the path of least resistance. If you don't do anything about it, you're just letting yourself be the victim.  If you think you don't have fraud, you've just got your head stuck in the sand," John Riggs also was quoted  in the LA Times article.  And I think most would agree that Riggs is completely correct. 

But, allow each company its freedom to employ its own methods, and to use its own creativity in fighting fraud.  Don't allow government to dictate requirements on the method which must be employed.  Those who think the government is going to solve our economic issues by creating more mandatory forms, are oppressing the creativity of the insurance companies which, in turn, serve to further oppress their competitive spirit.

Readers may write to writer Lonce LaMon at lonce@loncelamon.com