Four men will be arraigned on an indictment today for defrauding over $36 million from insurance companies in an overbilling scheme. Jeffrey Edward Campau, 39, Yorba Linda, Abraham Khorshad, 62, Beverly Hills, and Landen Alan Mirallegro, 38, Yorba Linda, are charged with 22 felony counts of submitting multiple fraudulent claims, 22 felony counts of manufacturing documents in support of a fraudulent claim, one felony count of conspiracy, and sentencing enhancements for aggravated white collar crimes for loss over $500,000 and special loss over $3.2 million. If convicted on all counts, they each face a maximum sentence of 53 years in state prison. The defendants are out of custody on $1.5 million bail each.

Ryan Nathanil McCracken, 29, Rancho Cucamonga, is charged with one felony count of conspiracy and faces a maximum sentence of five years in state prison if convicted. He is out of custody on $20,000 bail.

They are scheduled to be arraigned today, Jan. 22, 2014, at 9:00 a.m. in Department C-30, Central Justice Center, Santa Ana.

In 2005, Campau, Mirallegro, and Khorshad are accused of forming a durable medical equipment (DME) company named Aspen Medical Resources, LLC (Aspen). Between 2005 and 2013, the defendants are accused of renting out a DME machine similar in function to an ice pack or heating pad, which provided both hot and cold modalities to alleviate inflammation and/or pain for patients. The three defendants are accused of fraudulently overbilling insurance carriers for this DME in two ways: for rental of one machine as two separate hot and cold machines, and for renting the hot and cold units which were valued at less than $500 for as much as $15,500 to $17,500 per patient.

Campau, Mirallegro, and Khorshad are accused of submitting hundreds of claims to the State Compensation Insurance Fund, Liberty Mutual, AIG (Chartis), Zenith Insurance, Birkshire Hathaway Homestead Companies, County of Orange, County of San Bernardino, County of Riverside, American Claims Management, First Comp Insurance, CNA Insurance, Comp West Insurance, Employers Insurance, Farmers Insurance, State Farm Insurance, Fireman’s Fund, Tristar (City of Los Angeles), Gallagher Basset, Republic Indemnity, Sentry, and Travelers Insurance.

If a claim was not paid, the defendants are accused of filing a lien at the Workers Compensation Appeals Board and aggressively collecting on these fraudulent claims. McCracken was employed as the collection manager for Aspen and is accused of negotiating the liens at the Workers Compensation Appeals Board with the carriers;  McCracken is accused of receiving a commission on all of his collections. The defendants are accused of being informed by various insurance carriers that Aspen was billing for the units incorrectly,but continued to bill the same way and aggressively defended their fraudulent claims, making it more cost-effective for the insurance carriers to pay the fraudulent claims than fight them.

Campau, Mirallegro and Khorshad are accused of billing under other company names, National DME and Abrexis Orthocare LLC. They are accused of using different addresses and different Employment Tax Identification Numbers for each of these companies in order to mislead the insurance carriers and give the appearance that these companies were different companies and not Aspen. The defendants are accused of collecting over $12 million from insurance carriers under these business names.

Insurance companies contacted the Orange County District Attorney’s Office (OCDA) and the Department of Insurance, who jointly investigated this case. OCDA seized all assets of the companies, which are now under receivership. Deputy District Attorney Shaddi Kamiabipour of the Insurance Fraud Unit is prosecuting this case.

The WCIRB launched Classification Search – an online tool to help users search for and find the right standard classification based on keywords or industry groups. The tool includes other useful features including the pure premium rate history for each classification, classification phraseologies sorted numerically or alphabetically, and classification listings by industry group or other classification attributes. Classification Search is available in the Learning Center section of the WCIRB’s website (www.wcirb.com) and is accessible by both desktop and mobile browsers.

Classification Search allows users to do a full text search across all standard classifications or by industry group. Users may enter keywords to see a list of all classification phraseologies that contain the keyword or that are commonly associated with the keyword. Advanced search features allow users to combine or exclude keywords or use wildcard search characters.

“Questions about classifications – and which classifications apply to a business – are the number one reason that people call our customer service department,” according to Eric Riley, the WCIRB’s Chief Customer Officer. “This tool is the latest addition to the online resources we’ve created to give insurers, agents and brokers, and employers easy and effective access to the information they need.”

Walter Martinez, 60, of Alta Loma, Calif. pled guilty to 43 felony counts of using cappers – recruiters paid from victims’ insurance settlement – to get clients for his practice. Martinez evidently embellished his scheme with at least three cappers. “The use of cappers is a problem because these individuals usually approach accident victims acting as an attorney with no training and give legal advice to people when they are vulnerable after a collision,” California Insurance Commissioner Dave Jones said in a statement.

The Department of Insurance Auto Insurance Fraud Task Force received information and documentation that indicated Martinez was using cappers. In this case, bank records showed that more than $250,000 in checks were written to the alleged cappers between 2009 and 2012.

Martinez was sentenced to one year in jail, followed by three years felony probation and a $91,000 fine. Two of the cappers sentenced were: Israel Gonzales, 34, of Rancho Cucamonga, who plead guilty to eight counts 750(a) IC; an Michael Melcher, 58, of Covina, who plead guilty to two counts 750(a) IC.

State Bar records reflect that Martinez was suspended for one year, stayed, actually suspended for five months, and was ordered to make restitution, take the MPRE and comply with rule 9.20 of the California Rules of Court. The order took effect Feb. 23, 2012. Martinez stipulated in the State Bar case to 10 acts of misconduct in six matters. The State Bar information claims that for almost four years, he operated a branch law office in Westminster that was run by two non-lawyers who engaged in conduct that constituted the practice of law. Although he was not aware of their misconduct, he was grossly negligent in not knowing that they were engaged in activities that constituted legal practice. He stipulated that by failing to supervise his employees, he allowed them to engage in the unlawful practice of law. Among other things, the non-lawyers signed up clients, negotiated and settled their claims, paid some settlement funds, accepted settlement funds for other clients but never distributed the money, and did not pay medical bills.

The Orange County district attorney conducted an undercover investigation of Martinez’ law offices, creating paperwork to make it look as if they had been in an auto accident. Martinez’ employee conducted intake and signed up the investigators as clients without any attorney oversight. The employee negotiated and settled the investigators’ claims, received settlement checks from an insurance company and gave the two 50 percent of the proceeds. Several months later, the superior court assumed jurisdiction of Martinez’ practice, which was shut down after the State Bar seized his files and froze his bank accounts.

SB 626 which was introduced last year by state Senator Jim Beall would have rolled back some of the key workers’ compensation reforms contained in SB 863.

The California Chamber of Commerce characterized SB 626 as “A California Chamber of Commerce-opposed “job killer” bill that severely undercuts the workers’ compensation reform deal agreed to by labor unions and employers in 2012 and would result in dramatic cost increases to California employers.” The Chamber goes on to state that “SB 626 distorts the entire balance of the deal and would decimate provisions anticipated to deliver hundreds of millions of dollars of costs savings, which were promised to be redirected to injured workers in the form of higher benefits. Already, important cost-saving reforms under SB 863 have been placed in doubt as a result of litigation from system vendors. Additionally, full regulatory implementation has not been completed, creating uncertainty over whether the savings will materialize. Meanwhile, California employers continue to see their workers’ compensation costs increase, due to higher medical treatment costs and an increase in the rate of claims filed.”

Specifically, the bill would eliminate a cornerstone cost-saving provision contained in SB 863 – independent medical review (IMR). Under SB 626, IMR decisions would be fully appealable to the WCAB taking medical necessity decisions away from physicians and putting them back in the hands of judges. It would also result in treatment delays for injured workers. The projected savings associated with IMR are estimated at around $400 million. It would repeal a provision in SB 863 that eliminates impairment ratings for psychiatric add-ons in some, but not all, cases. Numerous data-driven analyses demonstrated applicant attorneys had abused this add-on to artificially inflate permanent disability ratings. It would repeal a provision in SB 863 that prohibits a chiropractor from being a primary treating physician once the maximum number of chiropractic treatments has been received. It also unnecessarily limits utilization review and Independent Medical Review by requiring that the reviewing physician hold the same license as the physician requesting treatment. Current law requires reviewers to be competent to evaluate the specific clinical issues involved in the medical treatment and utilize relevant, evidence-based medical treatment guidelines, which are not state-specific.

A Senate Labor and Industrial Relations Committee hearing on SB 626 was set for January 15, 2014. This hearing would have been the first step in obtaining passage this legislative year. However, Senator Beall removed the bill from the Committee agenda fearing that it would not obtain enough votes to successfully win Committee approval. Thus, at this point, it would seem the SB 626 may have suffered an early death in 2014.

ABC News reports that federal prosecutors filed a record number of health care fraud cases last fiscal year, perhaps reflecting the greater emphasis the government has placed on combating the crime costing taxpayers billions of dollars per year. According to Justice Department statistics obtained through a Freedom of Information Act request by a Syracuse University-based nonprofit group that tracks federal spending, staffing and enforcement activities, prosecutors pursued 377 new federal health care fraud cases in the fiscal year that ended in October. That was 3 percent more than the previous year and 7.7 percent more than five years ago.

Southern Illinois led the nation on a per-capita basis in such cases filed, with the government pursuing 10.1 prosecutions per 1 million people, which was more than eight times the national average.

The latest numbers, while not necessarily showing that the white-collar crime is on the rise, may reflect a greater emphasis by authorities, predominantly the FBI and the Department of Health and Human Services, to root out the wrongdoing, said Susan Long, who is an associated professor of managerial statistics at the school and the co-director of the nonprofit, the Transactional Records Access Clearinghouse. “Clearly the numbers suggest this is an area the (Obama) administration is not ignoring,” Long said Wednesday.

An illustration of the anti-fraud push came last May, when 89 people in eight cities – including 14 doctors and nurses – were charged for their alleged roles in separate Medicare scams that collectively billed the taxpayer-funded program for roughly $223 million in bogus charges. Because such fraud is believed to cost the Medicare program between $60 billion and $90 billion each year, Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius partnered in 2009 to increase enforcement by allocating more money and staff and creating strike forces in fraud hot spots around the country.

Medicare fraud has morphed into complex schemes over the years, moving from medical equipment and HIV infusion fraud to ambulance scams as crooks try to stay a step ahead of authorities. The scammers have also grown more sophisticated using recruiters who are paid kickbacks for finding patients, while doctors, nurses and company owners coordinate to appear to deliver medical services that they are not.

For decades, Medicare has operated under a pay-and-chase system, paying providers first and investigating suspicious claims later. Federal authorities are using new technology designed to flag suspicious claims before they are paid, but the system still is relatively new.

While “frankly surprised” by his office’s distinction as the per-capita leader in health-care fraud prosecutions, southern Illinois U.S. Attorney Stephen Wigginton said every U.S. attorney enjoys discretion in prioritizing which crime issues to combat, taking into account regional demographics and Holder’s desires. But Wigginton said he placed special emphasis on going after health-care defrauders since he began overseeing his district more than three years ago. Since then, Wigginton’s office has increased such investigations each year. Last year, more than 30 people were indicted for allegedly scamming a Medicaid program meant to allow individuals to stay in their homes instead of entering a nursing home. “I think we’re very focused and strategic,” said Wigginton, whose office also has taken a lead nationally in cracking down on fraudulent time-share marketing and the St. Louis region’s increasing struggles with heroin use.