I don't watch TV very often, but the other day I was too sick with flu to read, write, talk, or do anything else, so I was spacing out in front of TV. I don't remember anything from my viewing except an ad that caught my eyes -- an ad that threatens jail for "welfare frauds." The ad listed a number of requirements that TANF recipients must observe (e.g., send a notice of the address change within 10 days, etc.). The failure to comply with the requirements means jail, the authoritarian male voice of the ad intoned, while the screen presented a picture of the bars of a jail cell! The ad ended on this note: "Welfare fraud is a crime -- don't even try it."
"Failures to comply" with regulations mean different things for workers & capitalists.
***** Public Fraud Unit Favors Those Who Privately Fund It
D.A.'s workers' comp section is paid for with money from employers that is doled out by insurers. Prosecutors tend to ignore both but go after workers. Courts see no problem.
from series re increased use of private dollars to finance public justice
Ted Rohrlich & Evelyn Larrubia L.A.Times 8/6/2000 pA1
The Los Angeles County district attorney's office has for nearly a decade operated with a built-in potential for a conflict of interest stemming from its acceptance of private money to pay for public prosecutions of workers' compensation insurance fraud. When defense lawyers challenged this use of private funds, which was authorized by the state Legislature, prosecutors said not to worry: Their judgments were independent. Appellate courts agreed with prosecutors that there was no actual conflict of interest. However, a review of prosecutors' performance shows that their decisions, on whom to investigate and on whom to prosecute, have consistently favored those who provide them with money. The money originates with the state's employers and is handed out by employers and insurers. It is supposed to combat workers' compensation fraud in all its forms -- whether committed by employers, insurance companies or workers.
But the district attorney's office has downplayed employer fraud and repeatedly ignored evidence of possible crimes by insurance companies. At the same time, it has cracked down hard -- and sometimes unjustly -- on the workers whom insurance companies and employers accuse of lying about on-the-job injuries. A case in point is that of Indravadan Jayaswal. The district attorney's office had the middle-aged clerk handcuffed at work and taken to jail after he filed a workers' compensation claim for his aching back, arm and neck. Jayaswal was experiencing classic symptoms, one of his doctors said, of a "clerical workers' sickness" caused by the repetitive stress of spending all workday, every workday, typing on a computer. He was, therefore, his doctor said, entitled to workers' compensation benefits. But Jayaswal had not at first claimed that his ailments were work-related. He said he was afraid he would be fired if he claimed to have been injured on the job. So, when pressed, he said he told his doctors initially that he had experienced pain lifting his garage door. An insurance adjuster seized on the garage door statement as evidence that Jayaswal was lying when he later attributed his injuries to work.
Without asking him to explain, prosecutors charged him with the felony of lying to collect benefits. Compare that to the way prosecutors handled what they regarded as lies under oath by some of their benefactors. District attorney officials said they collected evidence that seven insurance company executives had perjured themselves in reports to state regulators. The executives overstated the extent to which their companies were financing their own legally required efforts to ferret out fraud. The district attorney's office was almost wholly dependent on these efforts as the source of its workers' compensation fraud cases.
Although the head of the D.A.'s anti-fraud effort routinely prosecuted workers for lying under oath, he said it did not occur to him to apply the same standard to the insurance executives. He did not see them as his targets. Nor did his office. The extent to which prosecutors had abandoned even the possibility of going after insurers was made clear in a 1998 job advertisement for the workers' compensation anti-fraud unit. "The suspects we investigate," said the ad, issued by Chief Deputy Dist. Atty. Robert P. Heflin, "include workers, employers, doctors and lawyers." The ad did not even mention the possibility that insurance companies could be charged with crimes. The unit's priorities are evident at a glance:
In 8 years, it has spent $38 million in private funds. It has prosecuted more than 250, mostly low-paid workers, fewer than 20 lawyers, doctors or other medical personnel and about two dozen employers, all of them small or medium-sized. It has prosecuted exactly zero insurance companies....
...The district attorney's office has never prosecuted an insurance company for defrauding injured workers by not paying them benefits. It's not that the unpaid benefits involve insignificant sums, said Casey Young, the former head of the state Division of Workers' Compensation. Year after year, insurers on average shortchange one of six injured workers by $900 apiece, according to random audits performed by the division. Young told a legislative panel in 1998 that this rate of shortchanging translates statewide to $84 million per year. "This is not money that's disputed, I want to underline," he said. It's money that insurers acknowledged that they owed but were caught keeping for themselves.
Young's estimate did not include additional sums that insurers saved by not notifying workers when they were eligible for vocational rehabilitation benefits, as required by law. The same audits showed that, year after year, insurers failed to inform nearly half of all injured workers who had been out of work for 90 days that they were eligible for job retraining. Cora Lee, who is in charge of the audits for Southern California, once testified in a deposition that up to 80% of the files checked at some insurance companies have showed money owed. "We've had some really nasty companies," she said.
Officials in the Los Angeles County district attorney's office, including Feldman and the current head of the workers' compensation fraud unit, Deputy Dist. Atty. Philip Wynn, acknowledged that a criminal investigation might be appropriate to determine whether these patterns of shortchanging workers were intentional. But these same officials and their supervisor, Director of Special Operations Allen Field, said they had never launched one because they had never heard of the audits, which were mandated by the Legislature in 1989 and have been the subject of legislative hearings, news releases and trade press reports. Summaries of the 150 audits conducted to date are available on the Internet at http://www.dir.ca.gov/dwc/audit.html.
Not everyone in the office was in the dark. Kristie Hutchinson, then and now the unit's special assistant, said she knew about the state auditors, though not about the audit results. David Guthman, who headed the unit for one year in 1997, said he learned about the audits when the Division of Workers' Compensation approached him for help during one particular audit, of the Fremont Compensation Insurance Group of Glendale. Fremont marketed itself as a company that could save employers money by rooting out worker and doctor fraud. It advertised on more than 600 billboards around the state that showed cheating workers behind bars. Its slogan was "Fraud Doesn't Work Here." It was wrong about that.
Auditors alleged that Fremont employees, spread among all three of its California claims-adjusting locations, Glendale, Fresno and San Francisco, backdated about 10,000 documents between 1990 and 1996. Auditors alleged that the backdating, which sometimes saved Fremont late-payment fees to workers and doctors, was sufficiently widespread as to constitute a general business practice. To settle an administrative case that could have cost it its license, Fremont agreed to pay $525,000 without admitting wrongdoing and promised to spend an additional $200,000 to train employees to play by the rules. It also agreed to change its computer system to make backdating impossible. Fremont said settling the case was cheaper than fighting it.
Fremont reported six of its employees to prosecutors. Two from its Fresno office were convicted of fraud-related charges. Four from its San Francisco office were never charged. Jacqueline Schauer, the lawyer for the auditors, ridiculed the extent of Fremont's housecleaning, saying that apparently more than 150 Fremont employees in the San Francisco office alone were involved. Fremont did not refer any of its Glendale headquarters employees to the Los Angeles County district attorney's office.
While investigating the backdating allegations in Glendale, however, auditors had approached the district attorney's office for help. The auditors said through a spokesman that they wanted the district attorney's office to grant immunity to some Glendale employees so they could question them. But they said the district attorney's office declined. Deputy Dist. Atty. Adalbert Botello, the supervisor who was the primary person dealing with the auditors, said he thought they merely wanted legal advice on immunity procedures, which he gave. He said he did not see their inquiry as a reason to assign his unit's investigators to probe for possible criminal acts by Fremont or its employees.
The district attorney's office has prosecuted few employers, explaining that cases of employer fraud are rarely called to its attention. Yet fraud committed by employers is probably more costly than that committed by workers, according to assessments by prosecutors in Los Angeles and elsewhere. Some employers save money by lying to their insurers about the nature of work their employees perform. Insurance premiums for dangerous jobs such as roofing can run one-third of payroll or more. If a roofing contractor falsely claims that his work force is clerical, identical coverage runs only about 1% of payroll.
But the district attorney's office says that, with a few exceptions, insurers don't want the reputation of nailing their own customers. Deputy Dist. Atty. Barry Gale -- the only one of the unit's 16 prosecutors who handles employer fraud -- said he has been frustrated because he has been unable to get insurance companies or others to refer him cases. Only eight of the state's approximately 300 workers' compensation insurers have done so, he said. Gale said he tried to open an investigation into employers who illegally operate without insurance. Taxpayers pay more than $20 million a year in benefits to injured workers whose employers don't have insurance.
But the state Insurance Department blocked him with a legal opinion. Its conclusion: Private industry pays his salary to prosecute insurance fraud, and people who do not have insurance, by definition, cannot commit that crime. Some of the state's large employers qualify to insure themselves. They have the same responsibility to handle claims fairly as insurance companies, and the same auditors who check insurance companies also review their practices and sometimes find them wanting.
Ralphs Grocery Co. of Los Angeles set a new record in 1998 for "amount in penalties in one audit." The total: $217,530. Ralphs had shortchanged about half of 154 injured workers whose claim files were checked -- by a total of $106,000. Auditors also found that Ralphs failed to investigate some claims and denied benefits in others without saying why. Ralphs did not respond to an invitation to comment. District attorney officials never looked into these allegations to determine whether the short-changing was intentional. They said they learned of the Ralphs audit for the first time while being interviewed for this article.
Workers are the defendants in four out of five of the cases handled by the district attorney's special unit. This mirrors statewide and national trends. Cases against workers are easy. The overwhelming majority of workers who are charged plead guilty, are placed on probation and are ordered to pay restitution. Prosecuting them is known in the trade as picking the "low-hanging fruit."...
...District attorney's officials assert that the insurance industry is not their boss, nor even their partner. The insurance industry merely directs their attention to possible cases, they say, and the district attorney's office alone determines whether these cases are worthy of prosecutions. "No deputy who has ever worked in this program heard us ever, ever say we were doing anything to serve the insurance companies," said Feldman, the former head of the unit. Insurance companies don't pay the bills, the district attorney's office points out. They merely have a say in how the funds are handed out. The district attorney's office says it is insulated from influence by individual employers since all employers are obligated to pay a surcharge on their insurance premiums, whether they like it or not.
Trial and appellate courts have reviewed these funding arrangements and have agreed with the district attorney's office that no conflict of interest exists. District attorney's officials added that they would gladly look into allegations that insurers were ripping off workers if someone would just bring them the evidence. The officials said they have repeatedly asked, in vain, that lawyers who represent injured workers seeking benefits bring them cases of suspected criminal wrongdoing by insurers or employers. Prosecutors said their appeals for cooperation have been made at functions put by on by these workers' lawyers, who are known as applicants' attorneys.
There are three applicants' attorney groups in Los Angeles County. A member of one said he had a client who contacted the district attorney's office and found officials receptive to looking into a complaint about possible insurer fraud. No action has been taken in that case. But presidents of the other two applicants' attorneys associations said they were dumbfounded by the district attorney's office assertion that it had tried to get them to refer cases. "I must live on a different planet," said Larry Stern, president of the Southern California Applicant Attorneys Assn. "Applicant attorneys have given up writing to the D.A.'s office, because they don't respond....It's a waste of 33 cents."
[The full article is available at <http://www.northocgreens.org/corpwlf2.html>.] *****
Yoshie