When people think of fraud in the workers comp system, they often focus on claimants: workers who fake injuries, who malinger out of work after a legitimate injury, or who collect benefits for an injury that occurred away from work. It’s a problem, for sure, but this is not where the real action lies. If you’re looking for fraud, focus on the pros: attorneys and doctors. And if you want to see how fraud works on a truly epic scale, follow the action in California (which happens to be the most expensive state for comp in the country, in no small part due to rampant fraud).
Sean O’Keefe was a successful San Diego attorney. He ran a legitimate law practice until he became, in his own words, “stupid and greedy.” He began paying a recruiter to send him referrals, to the point where two thirds of his clients – and his billings – were coming from the recruiter; the latter was literally pulling people off the streets. In exchange for the referrals, O’Keefe agreed to send these workers to specified medical providers, who offered an array of totally unnecessary services: MRIs, sleep studies, counseling, medications and screenings.
To cite just one example, O’Keefe’s clients accessed the services of New Age Pharmaceuticals, a Beverly Hills company that packaged $20 worth of ordinary medications into compounds that could generate a $5,000 payment from the workers’ compensation system.
O’Keefe, once a respected attorney, has lost his license to practice law. He is cooperating with federal and state officials in uncovering the mechanics of this complex and appalling enterprise. To be sure, the phony claimants earned a few bucks for serving as guinea pigs in the system, but the real money went into the pockets of attorneys like O’Keefe and the many doctors who billed for unneeded services. If justice serves, they will all pay a steep price for their greed and their stupidity.
Senior Workers Compensation Consultant