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California workers' compensation fraud scheme uncovered

A California man who previously owned a local hospital admitted his guilt in committing workers' compensation fraud. The U.S. Attorney's Office filed the charges against the man for ongoing fraudulent billing for monetary gain in association with patients referred by specialists to the hospital for spinal surgeries. He pleaded guilty to providing bonus commissions to other parties in association with a federal health care program as well as conspiracy as a part of his deal. Business owners accused of workers' compensation fraud may choose to closely investigate all options for defending themselves against the allegations.

The hospital owner in this specific case provided bonus compensation to colleagues for referrals ranging between $10,000 and $15,000 per surgery at his hospital. The kickbacks were funded through the price increase of surgical hardware beyond necessity. In addition to the millions of dollars illegally siphoned from the government, the man was accused of bribery that was meant to delay legislative changes to the workers' compensation system that would have affected his fraudulent activities.

Records indicate that the hospital owner may have billed the system over $500 million in fraudulent workers' compensation claims. The investigation revealed that over 150 insurance providers were affected by the lengthy illegal activity. Although officials claim this has been the largest case of fraud in the workers' compensation system to date, they believe it will not be the last.

The previous California hospital owner could be sentenced to up to 10 years in a federal prison for his crimes of workers' compensation fraud. Court records show that the man chose to comply with investigators and is providing additional support to government officials which will help with future investigations of this nature. An employer who may be facing serious punishment for poor business choices could likewise discuss deal options to limit personal and business penalties.

Source:, Owner of former Pacific Hospital pleads guilty to workers compensation fraud charges, Andrew Edwards and Eric Bradley, Feb. 21, 2014

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