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California medical billing company facing work comp fraud charges

The majority of our workers' compensation defense posts discussing work comp fraud have to do with employees accused of engaging in some sort of deceptive behavior in order to secure benefits or employers accused of failing to provide employees the necessary amount of work comp coverage.

However, a recent case out of Santa Clara County accuses neither an employee nor an employer of work comp fraud, but rather a billing company.

Last month, prosecutors filed a variety of criminal charges against Trudy M., the president of a billing company for spinal surgeries called Implantium, and Tigran S., the company's medical director.

Here, Implantium purchases implant devices directly from medical manufacturers and supplies them to hospitals without ever handling them. The hospitals then implant these devices into the backs of injured workers and Implantium recovers its costs/turns a profit by billing the injured workers' work comp carrier.

Prosecutors allege that under California law, billing companies are only allowed to profit by up to $250 per device, but that since 2008, Implantium purposely altered its invoices -- sometimes by as much as tens of thousands of dollars -- to secure excessive compensation from work comp carriers.

Specifically, prosecutors are alleging that the invoices submitted by Implantium defrauded Santa Clara County and the city of San Jose -- both self-insured for workers' compensation -- out of a significant amount of money and that such schemes can drive the cost of work comp premiums up for all employers across the state of California.

"These scams are probably one of the largest cost drivers involving workers' compensation fraud," said Donald Marshall, chairman of the state Fraud Assessment Commission. "Any time a provider or a person bills the workers' compensation system in excess of what should be paid, then it impacts every employer in California because [it] impacts their rates."

An attorney representing Trudy M., however, is confident that his client committed no crimes and that an October 2008 ruling allows non-hospital companies such as Implantium to charge over $250 per device.

Both Trudy M. and Tigran S. are facing nine felony charges each, and could face up to 13 years in prison and up to $450,000 in fines if convicted.

Stay tuned for updates on this case from our workers' compensation defense blog ...

This post was provided for informational purposes only and is not to be construed as legal advice. Names have been withheld to protect the identity of the parties.


The San Jose Mercury News, "Rare charges accuses CEO of over-billing San Jose for spinal implants," Mike Rosenberg, April 26, 2012

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