The Entire CA Workers Comp System is Run by Fraud Syndicates- Prosecutor Finally Speaks Out

She spent 17 years prosecuting the most complex insurance fraud cases in California — and she saved the most explosive admission for last. In this episode of Fraudcraft, recently retired Kern County Deputy District Attorney Kate Zimmermann drops a bombshell: California's workers' compensation system doesn't just have a fraud problem. According to Kate, large fraud syndicates are running the system itself.
From her very first case — a veritable buffet of corporate practice of medicine violations, applicant fraud, tax fraud, and illegal clinic ownership — to uncovering money funneled overseas to entities flagged by Interpol for potential terrorism ties, Kate's career reads like a crime thriller. Except it's all real. And it's happening to California workers right now. Kate also reveals one of the most chilling fraud tactics she prosecuted: patient files color-coded with red, yellow, and green stickers — not to track treatment, but to track how easy each insurance carrier was to rob. Clinics hired employees whose only job was to call carriers and find out reimbursement rates. The drugs you left the office with had nothing to do with your injury. They were chosen based on what your insurance company would pay.
This is the episode the insurance industry, legislators, injured workers, and prosecutors need to watch. If you've ever wondered why fraud in the workers' comp system never seems to get better — Kate explains exactly why, and what it's going to take to change it.
🎙️ Fraudcraft | The podcast exposing the billion-dollar underground economy of commercial insurance fraud.
Disclaimer: The views of the guests are their own & may not necessarily reflect the views of Fraudcraft the podcast. However in order to incite change & understand problems, we need to present all of the sides of the system connected to fraud.
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Transcript

SPEAKER_00 0:00

Hey everyone, this is Tina, your host on Fraudcraft, the podcast where subject matter experts take you on a ride inside the billion-dollar underground economy created by fraud signiquets. This is where we talk all things fraud schemes and fraud tech in the commercial insurance industry. In this episode, we get into it with one of California's top deputy district attorneys from Kern County, recently retired prosecutor Kate Zimmerman. Her very first case had every organized criminal fraud scheme type imaginable. And she's acquired years of very complex fraud scheme knowledge. Her insights are invaluable and must be shared. California businesses and consumers? Listen to her insight. Take as a cautionary tale so that you don't lose more of your money to fraudsters. Thank you for being a listener and subscribing to my podcast. It's free. We appreciate your support. I need you to hit like on the videos and comment. Let me know what you think about what Kate says. Pose any questions that you might have for her, as she'll be a regular guest. She has so much to share. Thank you for watching, and let's see you on the next video. Doing this before your vacation, I really appreciate that. I might not know my own name when I get back. Hi, everybody. This is Tina, your host on Fraudcraft. I have a very dear friend on right now. She's a recently retired prosecutor. We'll go into her background, but I'm so excited. I'm like a kid being led out to go play and recess with this woman because that's how much fun we we've had together in our other hoodlums, and we all know who they are. Kate fascinates me because she has the most amazing brain in the world. She has an alien brain and a human body. And I always tell people, this is Kate. She can be working on a 10,000-piece puzzle, talking to you about the most complex fraud and taking phone calls and doing text all at the same time. Like you literally can do 50,000 things at once. I've never seen anybody like you. The world would be a better place if there were more of you. Oh, that's sweet. And I just, I just adore you. And I'm I'm so excited that you're on. You've made a big sacrifice to come on right now because you've got a whole lot of stuff going on. You'd recently retired. You just retired days ago. Yeah. You haven't caught a breath. You're about to be a world traveler, but you came on to Fraudcraft.

SPEAKER_02 2:17

Thank you. Why is that? I had to know me too, Tina. I mean, we've just we've had so much fun over the years doing this. So whatever I can do. And you know, I I I absolutely have been eating up your episodes.

SPEAKER_00 2:29

That's why that's one of the huge reasons why I started this podcast is because the world needs to know the amazing people in the space, like you, like Shoddy, like Don, like more who are going to be coming on. We have amazing, amazing people in our industry.

SPEAKER_02 2:42

And I I'm honored that you would put me in there with the two of them because I just think the world of them and the stuff that you, you know, you talk about my brain, the stuff you used to bring in the door for me to look at. I I would just, wow.

SPEAKER_00 2:54

We've had some sessions, the cases that you have worked on, and you've been such a great contributor with your presentations, your, your, your public speaking, how you've been sharing what's in that brain. And that's why I want you on this podcast as well, because I want more people to see what's what's going on inside.

SPEAKER_02 3:11

And I I very much look at this as an opportunity to give back. You know, I know Shoddy's mentioned it. I know you've mentioned it. There is no manual. And when I started prosecuting fraud back in, oh God, spring of 2007, I mean, there really wasn't a how-to or a manual. So if if I've succeeded at anything, it's only because I failed repeatedly until I figured out the way to get through it. And so if if I can help other people in this space find a way to attack these fraud syndicates and keep the work going that people like Shoddy, people like Erica Mulher, people like Michael Ciriotti.

SPEAKER_01 3:50

Yes.

SPEAKER_02 3:51

There's there's just been a number of people who've really stepped into that gap and and tried to say, this is wrong, we're going to do something about it. You know, whatever I I might be able to offer to somebody, either what is it, everybody's life has a purpose, some is to serve as a warning to others. If I can serve as a warning to somebody else of how not to do, don't go down this road, pick a different one, then that I've done my job.

SPEAKER_00 4:13

I love that because I want this to be the podcast where the newbies come in and go, here's the here's a manual, here's the here's a guide that you and I didn't have and the other great ones in our industry. One of my friends, Rich, the other day mentioned the term tribal knowledge.

SPEAKER_02 4:27

Yeah. Yeah. No, there's a lot of tribal knowledge and there's a lot of institutional knowledge. And that's the part that I worry is going to be lost. You know, I look at Don retiring, Shoddy retiring, me retiring, and you realize that there's nothing new under the sun. These are the same people in many instances in the same locations, doing the same fraud or same type of fraud. And I remember one of your capping schemes that you had hopped on to early on. And it came in and people were talking to me about it. And I said, Oh my God, this is just this. And I, it was like crickets around the table because within, you know, 10 years, people had no idea that there had been other people doing the exact same thing, just under a different title. And as soon as you say, okay, are they located here? Oh yeah, how'd you how did you know that? Like you're like this genius. And it's like, no, it's just they're the same. We never got the information completely clear. They just the bacteria started growing again. So it's time to time to dump a little more chlorine in the swimming pool and see if we can take care of the problem.

SPEAKER_00 5:29

I want everybody to know who you were before you came into this space because it's actually really fascinating.

SPEAKER_02 5:34

Oh, let's see. Uh I came into this space primarily because I started at the DA's office in 2002. I was a late to law school person because I went to the military before I went to college. Uh, started as an MP um in the National Guard at age 17 before I finished high school, and decided to go active duty. And I know you were military, so you might appreciate this. Our drill sergeants used to threaten you with things if you didn't behave while you were in training. And so the threat for us was you're gonna go to Fort Hood. And the joke was that, you know, there you have battalions fighting battalions, and then when the MPs show up, they'll all turn on the MPs. So that was the place you didn't want to go. So I went to do my active contract and they said you're gonna go to Fort Hood. And I was like, no, I'm not. So they offered me military intelligence and I said, okay, I can do that. So I went to the Defense Language Institute, went to Goodfellow Air Force Base, had taken Korean, had taken Eastern, you know, Asia, North Korea, Chinese military tactics, and Desert Storm kind of got in the way. And after they sat up shaking up the jar with where everybody was gonna go, I wound up in Augsburg, Germany. So I spent my three years there. I came back, I went to college, went to law school, and I didn't know I was gonna be a prosecutor, honestly. I had really thought I was gonna do something corporate or tax, because my brain kind of is a little rule-based. And my first year professor for Krim uh said, Hey, you've got kind of a knack for this. Why don't you come work for me? And so I was his research assistant for the rest of law school, and he kept working at me. You should be a prosecutor, you should be a prosecutor. And uh, if you know anything about the legal environment, uh circa 2001, 2002, it was a really tight market. Enron had gone down, the big three accounting had gone down, jobs were evaporating. I had a couple of them that just went poof. And uh I managed to talk my way into an interview with Kern County, who was interviewing down at Pepperdine on campus. And uh, they brought me up and they offered me a job and I said, employment's good. And so I packed up the family. We moved to Bakersfield and we've been here since. And uh, about five years into my career, I was starting to think, what do I really want to do? And it had kind of started a little before that. I had been asking, hey, can I go to white collar? Can I go to white collar? Because I was an intelligence analyst when I was in the military in Germany and I like the puzzle and I wanted the puzzle. And I knew I didn't want to do dead bodies, I didn't want to do sex cases, let's go do fraud. And so I actually had asked to go twice previous. And they finally came back to me and said, sure, we'll give it to you. And I thought they were doing a favor for me or giving me a gift, and I didn't realize what I was putting myself up for because I remember my first day walking in, going down the hallway, and people were popping their heads out of offices and laughing. Does she know? Does she know? Does she know? And I'm like, does she know what? How bad could it be? It was bad. So the first case that I had on my desk ended up being a lay ownership of a medical clinic by a woman who worked with her family. And I would call it a veritable buffet of fraud, because it had applicant fraud, it had premium fraud, it had tax fraud, it had all of the medical-based frauds, it had corporate practice of medicine. I mean, if you could come up with a way to take the system, these people were doing it. And oh, by the way, it's pending prelim like in two weeks. And what am I gonna do? And so from that point on, it was kind of off to the races. And, you know, the case had run three prior prosecutors out of the office. And I remember coming home and looking at my husband and saying, well, there are two options. We can either start looking for where are we gonna go next, or I gotta figure out how to do this. And I was so incredibly blessed to have some of the people who came into my orbit and came alongside and kind of said, Well, what about this and what about that? And I suppose I should segue a little. I didn't have a huge program. When I started, it was a single prosecutor. We had an investigator, we had an investigative assistant. We were still doing things on legal tablets with pens. When I started at the DA's office, we were still doing closing arguments using rolls of butcher paper on easels with magic markers that you scribbled as you were talking to the jury.

SPEAKER_00 9:44

But you had you had fraud assessment money, right?

SPEAKER_02 9:47

Well, we did, but there really wasn't enough to put together these huge programs. Yeah, I remember going to one of the fraud assessment meetings, and I remember um I I love Don, and Don is one of my favorite people, but there were days I was just like, really? So I want to say it was Orange County was talking about how they had uh investigators going to the courthouse steps to the auctions where people were uh bidding on things or it's sealed bids being open and trying to match up payrolls. And they're like, that's a wonderful idea. And I'm like, yeah, you give me eight investigators, I would have time to do that stuff too. You know, we're just trying to stay on top of the paperwork for the grant and oh, by the way, occasionally prosecute something while we're doing it. But uh, I remember the late great Dre Cherugino. He was a detective with the Department of Insurance, absolutely love Ray. And uh one day he's sitting there and he says, Well, hell, she can't do any of this. And I went, tell me more, because I learned quickly, I didn't have the depth in the unit that would allow me to do forensic accounting. I didn't have the ability to sit there and say, how much of this is fraud and how much is legit and what's taken. And so I very quickly glomed on to what theories of liability would allow me to completely avoid everything the bad guys were doing. Because then it was simply if we couldn't do it at all, then there was a complete loss. And it made the numbers for taking really, really nice to just be able to put that on and through. And I know that didn't work for everybody, but it worked for us. But that case, I got, you know, they talk about something that's better to be lucky than good. I got lucky and my defense attorney wanted to kick it out a little bit. And uh while it was pending prelim, I then said, I don't like how they've got this charged. I went behind it, went to the grand jury, got an indictment on the back side of it. In fact, I did that on a couple of my cases and were able to push it through. And when it was all said and done, sent the primary actor to prison for six years and took a bunch of money. Still just it kind of marvel at how did I do that? It's that military idea of you can't fail.

SPEAKER_00 11:53

Yeah.

SPEAKER_02 11:53

You know, if if the commander says do something, you look at what assets you have and you figure out how to do it. And a lot of this is just being willing to work harder than the average bear, saying, I'm not gonna get beaten and if I'm gonna go down, I'm gonna go down fighting. And it's just it's broken my way more often than not. Though I still marvel and say, how did this even come together the way it did? But uh yeah, so that was my first foray into workers' comp fraud.

SPEAKER_00 12:21

Oh my gosh, I did not know that. You had the most complicated case you could ever prosecute as your first case.

SPEAKER_02 12:28

Yeah, well, from that point on, I mean the rest of it. She she was notorious here locally. She had been an alpha scalp for a chiropractor at one point. And if you know anything about those, those corporate practice mills, typically it's a chiropractor that we see who comes in and sets it up and has the doctor whose license they're using. She had been the office girl in one of those and then realized, well, why do I need to have a chiropractor involved at all when I can just do all of it? And went to one of those ballroom seminars down by LAX and you know, did the love connection as I like to call it, where they find somebody who wants to buy a license and somebody who wants to sell the use of their license and set it up as a corporation and off they went. No. Do I get the guy who's on the evening news running with the baby doll on high heels while collecting comp? No, I don't get anything like that. I get how to set up a corporation and build, you know, the comp system, EDD.

SPEAKER_00 13:21

I was amazed when I asked attorneys when you were in law school, what did they teach you in terms of anything like this? Corporate practice of medicine and capping and kickbacks. You know, every single attorney tells me that that's lacking in law school.

SPEAKER_02 13:36

It is, but you know, I'm not convinced that that's wrong. And I I've taken a very different approach to how I view these cases. And it's served me well. It may or may not work for somebody else. But the thing you have to remember is in California, the workers' comp system is purely a creature of statute. So we talk about that more? Sure. It's rule-based. As I like to tell people, no one's entitled to anything in the system unless and until they demonstrate that they meet the statutory definitions. And so I think one of the one of the ways we unnecessarily complicate the investigation and prosecution is we get caught up in the bright lights, in the, you know, like the moth in a room full of light type of stuff. Oh, they're doing this, they're doing this, they're doing this. At the end of the day, they're lying, cheating, and stealing. And so if you start with, here are rules, whether you want to think of it as like hoops they have to jump through or a limbo bar they got to get under, the rules tell you what's necessary to access the system. If you say everything that can be done is an attempt to exploit the trust that necessarily has to be present to make the system function by changing what words mean or in some way, I mean, it's just they're just flat line. Right. And and but you wouldn't know that if you don't start with the statutes. And so one of the things that I learned after 15 years, didn't take me quite that long, but at the end of 15 years, I could feel comfortable saying, everywhere you look, the bad guys trying to inject dysfunction and chaos into what is otherwise an incredibly orderly rule-based system. The reason why it's confusing is we seem to forget that there's no such thing as a free lunch. And so investigators and prosecutors alike want to jump to the end and say, look at their doing bad stuff. I know they're doing bad things. And look at this. Instead of investing the time up front to truly look at what the rules are and then say, what was necessary for this person to demonstrate they were entitled, what did they tell us to tell us they were entitled and where is that a lie? But you think about that there were two primary statutes that I was dealing with. You had 4,600 on the treatment side of the labor code, and you had 4620 on the med legal. Well, if they give you the definitions of when you are entitled to a benefit, it you start just constructing essentially definitional baskets. You know, when you say that it's an employee, well, we know the employee is the primary driver of everything in the system. So what is an employee? Is there actually a real person involved? You know, and and so you take that apart and then you take a part, you know, reasonably calculated. That gets rid of all of the MIL stuff, the PAT treatments. If you say it's medical, well, what is medicine? And so then you can go over onto the regulatory side and say, are they in compliance with the business and professions code? But if you start at the end and say, well, a lay person can't own a clinic, you're gonna end up walking around in a circle forever and a day. Right. I call it the materiality black hole. Anybody who's done investigations has probably taken a case in and somebody says, Well, how is this material? Well, it matters because the statutes tell you it matters. If the system says you have to meet certain criteria to collect out of the system, anything you say in an attempt to demonstrate that you've met those definitions is the representation. As soon as you come up with that you knew that wasn't the truth, congratulations, winner, winner, chicken dinner. Like I said, it's I'm a slow learner. It took a while to get to that point. But once you look at it from that perspective and you say, I have to do the heavy lifting to some degree, I have to understand what are my authorizing statutes, and then start playing with what are the definitions, it's very quick to see where your fraud syndicates have said, this is the word I'm going to exploit, whether it be I don't actually have an employee, whether it's it's not medical care, reasonably calculated to cure or relieve the effect of the industrial injury. And then from there, you you just distill it down, distill it down. And yes, you're charging something out of the labor code or the penal code, but you can't do it in a vacuum. You have to understand the system that you're attempting to regulate to then point to the dysfunction to say, here's that material misrepresentation that applies to the penal code.

SPEAKER_01 18:01

Right.

SPEAKER_02 18:02

I know I just threw a whole bunch at you right there, didn't I?

SPEAKER_00 18:04

I love that you did that because we're talking to the Kate today. Yeah.

SPEAKER_02 18:10

About the Kate several years ago when Kate would have never known that several years, you know, when I first started, there was no way I knew that. It was more, oh my God, look at all these things they're doing. Oh my God, they're committing fraud. Okay, but how are they committing the fraud? And if you say that everything that they're doing is set up simply to make it look like the representations are truthful to meet those statutory definitions, it suddenly becomes very, very, I won't say easy, but easier to pick out what are going to be your quality theories of liability, what are going to be the things that you're able to prove beyond a reasonable doubt. Because at the end of the day, if you think about prosecutors, we really are translators. I know you've been talking a lot about interpreters lately, but to some degree, that's what a prosecutor is is you're you're taking people who speak one language and you're breaking it down into a language that your jury can understand what's being said. And your job is to put on the evidence in a way that makes sure that the people in the jury box are hearing what the people who have the knowledge know. And if you can't do that, you're gonna have a really hard time. So, you know, one of the questions I used to get was, well, you know, do juries get it? Not only do they get it, they lap it up like candy. I mean, they're they're they're shocked and horrified to truly realize how much fraud is in the system. They're chocked, they're they're they're horrified to see what this does to the people that get caught in the system. The injured workers are the equivalent of a tin can on the side of a road. If I can collect the can for a CRV, well, I can pick up a worker and I can make a heck of a lot more. I mean, it's that same mindset that that's what they're worth to the people that are supposedly caring for them. And juries see that and they're they're appalled and aghast, as they should be. Yeah. You know, the the abuse of trust being done by physicians, by the people who, in theory, have sworn oaths to care for people. And and and you look at what they're willing to do, up to and including unnecessary surgeries. I know there's been a lot in the news about the implants. You know, those those people have ticking time bombs in their spine in the state of California now. Because the people who, in theory, were saying, hi, come to us. Your employer hates you, they don't want to give you anything, the carrier hates you, they don't want to give you anything. Come to us, we'll give you what you need. And you find out that these things were designed to fail to begin with.

SPEAKER_01 20:34

Absolutely.

SPEAKER_02 20:35

It's gross on a level that you truly, I can't think of a more evil crime, if that makes sense. Yeah. I mean, you'd have to go down the idea of the serial killers, you know, somebody who's methodical and is truly, I'm, I'm intending to do this and do harm regularly. That's the level of deliberation that we have out of these, out of these criminal syndicate actors. This isn't accidental. This isn't just a, oh, oops, I made a mistake. I mean, these are truly people who have complete disregard for the health and safety of the people entrusted to them and along the way are simply lining their own pockets for whatever purpose they're they're they're ultimately aiming for.

SPEAKER_00 21:14

See, this is what I love about you because what you're saying right now and and how you're getting the message out there a decade or so ago when I started investigating fraud syndicates, when I got into the complexity of it all, the these major organized fraud schemes, organized crime rings in California Workers' Comp, a lot of people, it was so hard to get the message across and get people to care. Well, so what, you know, there are solicitors going out there and getting clients for attorneys. I mean, even judges during some of the cases in Orange County. I even sat there when a judge said, Well, what's the big deal? This isn't this is an attorney who's just issuing business referrals to a copy service to an interpreter who cares about the pay to play. And I'm sitting there going, What none of these people understand is the fact. The fact that the injured worker is being sent down this river of these nastiest fraudsters, slimy medical doctors. They are truly slimy people in these organized crime ranks. You wouldn't send your mom or your grandmother or your grandfather to their clinics. And all they want to do is profit off of someone's head. So if they put, you know, uh illegal vinyl hardware in someone's back, they'll do it.

SPEAKER_02 22:26

If they get them addricted to pills, they don't care.

SPEAKER_00 22:29

Addricted to the pills. When I talk about copy service fraud, everyone gives me glazed looks. They're like, What? I don't care. Well, really. So would you like when the copy service gets your personal data and they send it over to India or Pakistan or the Philippines? Share your the most private personal data about you, all the places where you've treated, all the places where you've you've received medication, all the doctors, all your very protected medical history, they send it overseas and they sell that data off behind your back and you don't realize it. Now do you care about copy service fraud?

SPEAKER_02 23:02

You know, stuff like that. Well, and and when you think about it in terms of in a world where privacy is hard to come by, and you and you have people who are inserting just crazy stuff in, you know, what happens later on when you have a legitimate injury, you know, a subsequent injury, and the file looks like you, you know, were all but on your death bed. How do you then argue that no, no, no, I have somebody who's responsible for my injury now because the paperwork looks like you were injured all along and you never were.

SPEAKER_01 23:35

Yeah.

SPEAKER_02 23:38

It cannot be overstated the damage done by these organized syndicates. It um it's funny.

SPEAKER_00 23:46

We haven't even touched it in our conversation right now is how much we're we really haven't.

SPEAKER_02 23:49

But I I gotta tell you, one of the most surprising moments I had, and it it shouldn't have shocked me, but you know, I'm a little naive, I guess. You know, again, you're thinking workers comp fraud to some degree is the guy with the baby doll who's getting a paycheck every two weeks from the system. When I started getting the reports out of the government, because you know, you know what SARs and CTRs are. Those are the things that the bankings are banks are required to file if somebody does monetary transactions above a certain threshold or they're engaged in something like layering where you're trying to avoid the rules by doing different deposits. Right. And so those rules all wind up into a series of reports. And I started getting reports on some of the bad guys that we were looking at, and the feds had flagged these people and they had interpoll in their file because the money was being built out of the California workers' comp system and funneled into entities overseas and were being looked at for potential terrorism ties. And, you know, there is such a long road between the guy who's running with the baby doll on the news and tells us, Doctor, I can't run, all the way through to who's paying for terrorism in overseas countries, but they're connected. And if you can't make that connection together, you're really missing the significance of it. And again, that comes down to how are we messaging it and what are we telling people about this? Because it's not just a, well, who cares? You're just paying for a referral. Well, first off, you're precluded from participation in the system as soon as you issue the payment. So the correct messaging is this isn't a marketing tool. This is an outright violation of the essential components that would make you eligible to be paid.

SPEAKER_01 25:36

Right.

SPEAKER_02 25:37

Then what are you doing with this money? And so you've got the harm that goes that route. The other challenge for people who investigate and prosecute frauds, and I know that you saw this, Tina, along the way, is the crooks in the system have the ability to buy enormous credibility. So I remember I had, it was actually a premium fraud case, which is where somebody lies to have their premiums reduced inside workers' comp. Essentially, as an employer, how can I pay less than my share into the system so that when my person gets injured, it's not my problem. I'll let somebody else have have fit filled. And the guy walked in and looked at the judge with his attorney, and they're like, Well, he's a good guy, and he built a playground for his church's Sunday school. And, you know, I got 15 character witnesses. And I looked at the judge, I said, You can buy a lot of credibility with stolen money. You know, what is it worth to you if you didn't have to work for the money to begin with? Of course you're the good guy. Of course they can come to you and get the playground. You didn't have to work for it. And so you're you're fighting on one end the artificial prop-up of the good guy. On the other end, you've got all the way through to funding international terrorism out of a system that people in general look at and go, how did we even get here?

SPEAKER_00 26:52

Yeah, I I when you mention this, there's so many things I'd like to say that we can't say on this podcast. But I mean, I can't tell you how many cases I've had that have been uh shoved under the rug because of donation monies.

SPEAKER_02 27:08

If I had had a nickel for every time we would do a search warrant and find photos of our bad guys with, you know, the handshake or the arm wrapped around the political type. Because they do, they they get their hooks in and you know, the politicians they they look at it and go, Oh, this is a good guy. I remember there was a fairly notorious guy in the radiology world here in California. Yeah. Who managed to come up with a CCW out of a Kern County community through the police department and got himself named as a reserve officer, doesn't live in Kern, has no connections to Kern. That city has had some issues over the years and has definitely had um some notoriety. But yeah, he was able to essentially donate enough money into somebody's city council campaign down there that they named him a reserve officer and handed him a CCW and a badge out of our community. And I know you know who I'm talking about.

SPEAKER_00 28:02

Yeah, I know exactly what you're talking about. It's you know, the thing that has been frustrating over the years is that we've all had to be very careful about what we say because the frautzers have so much money. Yeah. Here's my question for you. Putting you on the spot, I like to talk about this. Kate, is there organized crime operating in California War Comp?

SPEAKER_02 28:23

If there wasn't organized crime, I'm not convinced we'd have a comp system. I don't know how to be more blunt than that. I mean, our entire system, if you look at it, is run on a day-to-day basis by large fraud syndicates. I mean, there's just no other way of looking at it.

SPEAKER_00 28:42

And there it is, everybody. I believe our very good friend Tom Frays called it institutionalized fraud.

SPEAKER_02 28:49

Yeah. Yeah. Um, and he also coined the phrase about it being the thin veneer of technical compliance on everything.

SPEAKER_00 28:58

It's very interesting.

SPEAKER_02 28:59

Yeah, it really is. You know, and I say that uh only half jokingly because I remember going in to a person at the county many, many, many years ago. And the county had switched for our health administration to an organization that I said, oh my God, these people are on my desk. They're, they're they're committing fraud. I had already been down to Orange County and had met with a U.S. attorney, the FBI, IRS, and postal over some of the activities going on by this guy in a different organ, you know, he the uh dovetailed organizations. And I said, Um, do you know that we just signed on with somebody who I'm looking at right now and this is organized crime? And I remember them looking at me and saying, Kate, this is a large company. Clearly you've got this wrong. And sure enough, years later, the feds actually prosecuted the guy who was the head of it. And interesting talking point, he ended up serving his time at a federal facility here in Kern County. Because, you know, one of our primary industries is prisons. So it's kind of nice that they all get to come home. I I didn't get to put in there, but I got to smile as I drove down the road and wave at the prison. So yeah, no, it was. But but there really is this sense that it can't be fraud because it's large. It can't be fraud because it's traded on a stock exchange, it can't be fraud because, because, because. But when you truly dig down, there are days I had a feeling that it was easier to come up with names of who wasn't engaged in fraud rather than who was. Right. And that's and that's sad to say. I mean, I I get that the carriers definitely want to ensure that they're keeping their stockholders happy. And I'm glad to see that they're giving benefits and they're not cutting it that direction. But, you know, ask Don about it sometime and ask him if he and I had a conversation about an organization in California that I said, how is what they're doing any different than this fraud? And I named the fraud that we were working on at the time. And why are we prosecuting this guy? And at the same time, your company has a contract with these guys to do the same thing. And he had to kind of smile and agree about it because it's just it's that prevalent. It is. There's such a tolerance for it. I when you were talking to Don Marshall and you were talking about the fraud referrals. I mean, I was laughing at home because I remember thinking if you go to the Department of Insurance and you can pull up the list and they'll give you the list of all the carriers in the state who are authorized to provide workers' comp insurance. Ask Shoddy how many companies she would get referrals out of. Ask Michael how many companies he would get fraud referrals out of. If I got them out of a dozen, I'd be shocked. You know, here you have you have hundreds of people licensed. They all have the same obligation. And you look at how many of them are actually involved in attempting to do something about the fraud problem. Right. The problem from the beginning. There's just there's a built-in tolerance level where people just say it's part of the price of doing business. And as long as you have that kind of a mindset, you're not gonna make a true dent in the problem.

SPEAKER_01 32:12

Absolutely.

SPEAKER_02 32:12

Everybody has to do their part. I know that obviously the criminal prosecution is incredibly powerful. There are days you feel like it's not as powerful as you wish. Sometimes it feels like the the people involved in the investigation spend more time doing time than the people that you ultimately even convict at the back end of it. But, you know, I understand you guys were talking about business decisions. And I I never complained about a a carrier paying a bill. I know that there were prosecutors because I would talk to them at various things and they, oh my God, you're you're prosecuting, they paid the bill. How is that? I said, that has nothing to do with it. They have a legal compulsion to handle the claim in a particular way, but that doesn't mean that they have to then either pick being out of compliance and having additional exposure or nothing happens. But at the same time, if they're not going to do their diligence, if they're not going to look at it and say, hey, this just doesn't even make sense, I'm not going to respond when a prosecutor says, hey, I think you've got information that will make a case, to some degree, you're part of the problem.

SPEAKER_00 33:16

Right. One of our mutual friends who we adore um testified one time when he was asked on on the stand, why is your company paying into this fraud? And he said, on the stand, it's a it's a business decision. And I read that and it took me aback. And we talk about we've talked about this for years about insurance carriers saying business decision, that sort of thing. I think it's more I think what they're actually saying is we give up. We give up fighting this because I'm wondering what your thoughts are on this. Is that is the WCAB so broken that it's it's almost impossible now for insurance carriers to fight the fraud at the WCAB?

SPEAKER_02 33:57

I I never spent any time at the WCAB. I'll be completely candid. So everything I heard about it was anecdotal, either from people who spent time there, or I have a very, very dear person who's near to my heart, and I know who you know who I'm talking about. Where you go to for everything I ever needed to know about the system and never thought to ask because he would help me. You absolutely have to. You absolutely have to buy Jim. But I would hear stories about that carriers would go to the WCAB and literally have the goods in their hands showing that what the bill said happened hadn't happened. And you would have judges who would say, I'm not here to deal with fraud. That's a different venue. Let's deal with the bill.

SPEAKER_00 34:40

Yeah.

SPEAKER_02 34:41

And that's sad to me because, like I said, I look at it as a you're not entitled to anything in the system unless and until you prove you're entitled. So the notion that you would throw the procedure end of it, as it were, completely out the window at the WCAB and let's move quickly to how cheaply can we get this settled, give throw something at them and make them go away, is a real problem. And it was a huge boon to investigators and prosecutors when we were able to see the law change. And, you know, there was a time when I started and Shoddy started, we literally were having our victim carriers were funding the people who were fighting us in court at the same time that we were working on the prosecution.

SPEAKER_01 35:23

Yeah.

SPEAKER_02 35:24

And and the ability to get that tap turned off, it may be the most significant piece of legislation and prosecution. And I don't think most people even realized what that was or how that came about. Right. For a fraud fight, that was that was huge to not have people essentially paying for their criminal defense attorney by sending a bill today while we're fighting them over yesterday's bill.

SPEAKER_00 35:46

Getting back on to the cate of yesterday when you first walked in and that was your first time.

SPEAKER_02 35:52

I walked in and thought, oh my word, what am I doing?

SPEAKER_00 35:54

Yeah, I, you know, you missed a few things in talking to us about this because how the heck did you prosecute that case with it being your first case and you had no prior experience in commercial insurance fraud? You didn't learn it in law school. So how did you survive that?

SPEAKER_02 36:11

A lot of it was just picking up the books and reading them. I'm back to there's no such thing as a free lunch someday. You just have to sit down and read it. And like I said, I got very, very fortunate that I had attorneys who didn't really want to go forward. So they kicked continuances out and my courts didn't really want to hear it. So they were happy to give people, you know, eight and nine-month continuances. And so um, yeah.

SPEAKER_00 36:32

That's what I wanted. Um, I think the general public doesn't understand how hard people like us work in this industry. When I figured out what capping was or the hint of capping, and I had to learn it, I I couldn't go anywhere. I I couldn't pick up any books. If you if you Google capping and kickbacks and running capping steering online, you get just a mess of of stuff from and you don't really, you don't really get the the laws um that are associated with it that are that are material to what you're trying to do with the case. And so I had I spend every day for like a year studying.

SPEAKER_02 37:06

In general, the white collar unit at the Kern County DA's office, a lot of people didn't realize because we frequently were housed outside of the main office. You know, five o'clock, that was just the start of the third shift. You know, just like how you go for lunch at noon, we go get our dinners at five and come back and work another four, five, six hours. Right. That's part of why I was really excited to offer what I can to people on this. A, I don't want them to have to work those kinds of hours and and then look back and say, oh my God, where did my life go? But I also want to make sure that what Shoddy and Michael and Erica and I on the prosecution side, and Jenna on the investigation side, that it has something that lives beyond us, if that makes any sense. Because otherwise, what was it worth?

SPEAKER_01 37:52

Right.

SPEAKER_02 37:53

You know, yeah, we sent some people to prison, we got some money back, and that was great, but does it have a lasting value? You know, Shoddy and I, God, I can't even think how many years ago it would have been. It was shortly after I met her, and at some point you'll have to hear the story of how Shoddy and Kate met. That was an interesting one.

SPEAKER_01 38:08

But I'd like to hear that.

SPEAKER_02 38:10

We're sitting up at uh what was then the NYCVA conference, now the AFA conference, and we've kind of lamenting that there weren't resources. And she and I made the joke about, well, you know what? If she and I do nothing else, we're both going to get an appellate case that tells somebody what not to do. And so, you know, she came out of hers with Petronella, which on the premium side, really talking about how you calculate the restitution out. And I got mine Pierce. That was the phone call in January of 08 that evolved into a case that took until September of 19 before the appeal was done and it was affirmed, that gave us some additional leverage on statute of limitations and what's a fraud scheme and and where does it live and die and making sure you're hitting things. So, you know, I I look at it from that perspective that she and I did leave something behind, as it were, but I really want to wherever possible. If somebody thinks I've got something I can offer them as far as how to look at it or or, you know, turn it on its side and look at it again and find a way through it, then that's a good thing to do. You gotta pay it forward. I I had some incredible mentors. You know, I kind of mentioned I got the call from Jim, Dawn, when you came on board and educated me on some of the copy stuff. We're back to prosecutors. We to some degree get the glory for it when we win. All we do is we're translators. Yes. You know, we're not doing it ourselves. We're having a lot of people who work very, very hard to help us look good. Right. That being said, if we screw up, it usually is our fault. It's a good way to have spent a lot of years. And I'd like to see it continue with the next generation coming in. And if if they can start a little sooner with understanding how it all works because of what you're doing and the platform you're giving Shoddy and myself and Don, then that's a fabulous, fabulous thing. That that's a good legacy that I think all of us can be proud of.

SPEAKER_01 40:04

Absolutely.

SPEAKER_02 40:05

If we do something with it and if we're able to help the people that come behind us. Nobody wants to hear just old war stories about back in the day. Guess what I did? It it's more of a what can you get from this and what can you do to make it a better place out there.

SPEAKER_00 40:19

I mean, no one has those traffic cone stories like you do, Kate.

SPEAKER_02 40:23

Jeez. That wasn't fraud. That wasn't fraud. I had to.

unknown 40:28

Yeah.

SPEAKER_02 40:30

Yeah. Yeah. I I remember I said I didn't want to do sex cases. The one case I had to do.

SPEAKER_00 40:36

Yeah. God, we do have to talk about that same day, but anyway, okay, I'll I'll move on. Um that's another reason for this podcast is to create a legacy for us all, right? We we have done amazing work in this space, and there's a there's a lot more uh people who I'd like to get on who have done some some great work, but I think this is how we help help the next generation. They come and watch this, you know, come see how how Kate made it work. You know, what would you say to the new prosecutor, the prosecutor going from violent crimes into insurance fraud or or traffic into insurance fraud?

SPEAKER_02 41:10

You are in for an amazing ride. You know, embrace it. Uh it's sad when I hear that people use the insurance fraud units in some places as punishment. You know, it's the place you put the person that you don't want to have to deal with or you don't want to have to see. Um, oh, it's not that big of a deal. I I have to say, I we don't think I would be as thrilled with the career that I had if I had stayed more mainstream is bluntly um between being in uh Kern County where a lot of people just go, what's going on there? So I was able to fly under the radar to some degree. How do cows commit fraud? Like, yeah, basically, how do cows commit fraud? And then um because it was insurance fraud, I didn't have a lot of the politics, you know, because nobody was watching this isn't a high-profile homicide. You know, when I first took it up at my then elected Ed Jaggles, his idea was, you know, you you take care of people who victimize others. And you know what? If you don't get them, you'll get them next time. Go give it a try. And so I had a lot of latitude to to try things and say, hey, does this work? And okay, well, if it didn't quite work, how do we adjust and go from there? So, you know, for somebody who's coming into it, there is the work to be done. If you invest the time, if you invest the effort, it can be an incredibly rewarding career. And it's just plain fun on some of it. I mean, this the stuff that you will see, you'll you'll have a hard time going to the doctor the rest of your life, I'll tell you that. You're gonna be questioning when they're sending me out to do this. But uh no, I mean, it it really presents an opportunity because there isn't a manual. So many, there's only so many ways you can get dope out of a pocket legally. You know, everybody gets that dead bodies are bad. You really get to craft, you really get to home, you you're gonna be running motions that most people don't run because a lot of the people who defend the bad guys have civil backgrounds. Right. Running quasi-civil motions in the middle of criminal court, and you've got to explain to somebody why that ain't so. You really, really get to make it your own. And it's a shame if somebody squanders that opportunity.

SPEAKER_01 43:17

Absolutely.

SPEAKER_02 43:17

And and I have to believe that there are the next generation and the generation behind that and one behind that, they're all gonna bring their own spin to it. You know, they can pick up the stuff that that has been done. And it it I I've often said that practicing law is as much an art as it is a science. You know, there's lots of roads to get to Rome. Just because we did it this way doesn't mean you have to do it this way. If we screwed up, you might want to avoid the screw up, but you don't have to do it the same way we did it. You have the opportunity to make a difference and and to truly make a difference in a way that that most people wouldn't visualize. It's a kind of a quiet corner, but yeah, there's something eminently satisfying in it to be able to look at it and say, I did. This.

SPEAKER_00 44:02

Yes.

SPEAKER_02 44:03

It's a good feeling.

SPEAKER_00 44:05

That's the beauty part of it, right? And then there's the dark side. And I'd like to get in the dark side too. Okay. What's this is which dark side are we gonna talk about? There's such I know there's so many dark sides to the work that we do, and it gets it does get really dark. And I've had I've had heinous moments when I was chasing bad guys. Um, you know, and I'm I'm former law enforcement of Vice Narcotics, right? And I I've dealt with uh, I mean, you name it. And when I started chasing bad guys and fraud significates and organized crime in California work comp, it was like that all over again. Shaudi talks about how some of her criminal investigators, she would lay out the suspects of her insurance fraud case and then be like, oh, I know them. Well, how do you know them? Well, you know, I work gangs, and that's that's why I came into insurance fraud from law enforcement. I saw all my bad guys who were running drugs, bodies, guns, you name it, jump ship and go into insurance fraud. Why wouldn't you?

SPEAKER_02 44:59

I mean, I mean, I know that drugs, by and large, are pretty legal in California now compared to when I started, but you know, back in the day, it sounds so old, back in the day, you know, a little itty bitty rock would send you away for a long, long time and you wouldn't make much money. You have the workers' comp system, which is an open checkbook. You know, there there aren't policy limits like you're gonna have on some of the other commercial lines. So as long as you can get people to buy in that this is somehow affiliated with treatment and then ultimately dispute resolution, which is your copy game that you you love so much. I do love it, you can steal millions and millions and millions of dollars. And the odds of getting caught are small. If you get caught, having somebody able to streamline it to get it into court in time before statute runs, being willing to stick with it until it comes out the other end of the chute, and then what's the judge gonna do at the back end anyway? The dollar to risk ratio is so favorable to people who are the bad guys. It doesn't take a rocket scientist to say, do I want to go back to prison every so many years because I decided to hold up a quickie mart? And oh, by the way, when the police do show up before I get gone, I have a chance of getting shot. Or would I prefer to wear suits and go to conferences and shake hands and rub elbows with other people who make a lot of money?

SPEAKER_00 46:22

Yes.

SPEAKER_02 46:22

And and know that at the end of the day I'm probably safe.

SPEAKER_00 46:25

Yes. What I'd like to talk to you about is the victimology and criminology of it, the psychology of everyone involved in this. I like talking about what makes the trait of the victim, the injured worker, and also what do the bad guys look like and feel like and uh act like, you know, when you're when you're sitting there one-on-one with with these broadsters, the bad doctors and attorneys, the copy services, the the bad interpreters. What's your impression? Because I talk about this, um, my experience with them. Shadi has talked about how they're very charming. Of course, I have a different perspective because I'm not the prosecutor sitting in the room when they have handcuffs on them and they're relating with the prosecutor versus, you know, a street investigator, right? Can you can you talk to us about your experience with the fraudsters, the bad doctors, attorneys, medical legal professionals?

SPEAKER_02 47:17

Yeah, they are the smartest person in every room. So you have to start with that. They they have figured out how to use the system. They're not even necessarily concerned about explaining it to you because A, they're the smartest person in the room, and B, they they have the ability to charm. I mean, by definition, these are people who talk people out of money. So they're not unsophisticated. I don't know how many of them honestly believe in their own mind that what they're doing is somehow justifiable or legal versus the ones that don't. Because I didn't care enough to delve that deeply. I know there were at least a couple of them who, you know, what's the old adage? Why what do you call the person who graduates bottom of the medical class doctor? So, you know, they've got a they've got a pulse and a and a medical card and not much else going for them. And so they get sucked into something that pays them far more than what their skills would ever allow them to do. Are they still fraudsters? Yeah. Are they masterminds of crime? Not at all. The ones who are the real hearts of some of these syndicates, they they project that they believe their own stuff they're shoveling. And whether it's because they truly do or it's because they know that they have to do that because it sells it, if they show uncertainty or they show doubt, uh somebody else is going to pick it up on the other end. But they will absolutely tell you, tell the jury, tell the judges that you guys just don't understand this. I I've got it, I've got it dialed in a way that nobody else ever thought about doing it and make it happen.

SPEAKER_00 48:48

How do they what do they say when you show them the the code? They're not going to be able to do that. Well, they'll try.

SPEAKER_02 48:53

My favorite is a phrase, and I used to tell people who would bring cases into me and they would use the can word, and I'd say, I don't want to hear, I can't. See, we're back to it's playing with definitions. And so, well, a doctor can do that. Well, yeah, a doctor can. The issue is you in this instance. And so they want to talk about things on a 30,000-foot view. They want to talk about things in an abstract. How can this be fraud? A doctor can do this. Well, yes, they can in some instances, but not in this instance. And the issue is in this instance, could you? And so you really kind of have to yank people back down to reality. I think my favorite one was I had a guy and he decided to take the stand in his own defense. And it was the stupidest thing he ever could have done. So, you know, his attorney gets up and, you know, he, of course, then has to talk about how smart he is and how much he knows, and he was doctor of the year for his community and this, that, and the other thing. And, you know, by the time it was done, he regretted ever having done it because then he couldn't walk away from the things that we were able to definitively show he was doing. Well, I didn't understand. Well, how did you not understand that? You you testified here. But, you know, they're they're very willing to hop into what they perceive to be the driver's seat and take you along for the ride if you're willing to go. You have to know why what you've alleged is correct. You have to know why what they've said about it isn't correct. And you have to have that level of confidence. And we're back to some degree, if you start with a mushy idea, oh, look at all this crazy stuff these people are doing, you're never gonna be in the position to have the fluency to have the argument with the person who this is their livelihood. They protect it viciously. They're not going to walk in and go, oh, you're right. I was committing fraud. I'm sorry. They're gonna come in and try and tell you why you silly, silly investigator, you silly prosecutor, you don't know anything, talk to me. I'm the expert and I'll tell you how this all actually works. We're back to you have to have done your homework. I can't stress that enough. The the importance of the homework in dealing with them. But yeah, they're they're very brazen, they're very willing to here, take a look at what I have got. How is this a problem? And then, you know, add in the added fun of inevitably they've always got six lawyers that they were working with along the way. And so they'll try and, you know, throw the lawyers under the bus. And now they told me it was legal. You know, you can have fun with that. The psychology behind these fraudsters, I mean, they're no different than the snake oil sales, but with the traveling road shows who were willing to sell you, you know, a cure-all for a nickel. It's the same person. They just have found a different avenue.

SPEAKER_01 51:36

Right.

SPEAKER_02 51:37

As far as your victims, they're an interesting bunch. We certainly, with the big capping schemes, would see very concerted pushes. So when people think about Kern County, I don't know how much people know or don't know. We are a heavily agriculture community. In fact, I was laughing. I went home to my mom's house in Minnesota and picked up something off the kitchen counter and realized it had been grown in Kern County. And I'm like, oh they're right down the road. So I mean, we we we feed the country. We do oil, we do some cattle, not much. We do a lot of prisons. But when you do ag, you have definite seasons for growing. And so the joke between Shadi and I were she had the bad guys living in her backyard.

SPEAKER_01 52:18

Yes.

SPEAKER_02 52:19

I had them working in mine. So they would hop on the I-5 and head north. And I've got the five and the 99 come together in Kern County. And so I have two really good arteries for actors who don't want to live in Kern County but want to come create mischief here. And so you'd hit the end of the growing season, and on one of the capping schemes, they had 17 out of 19 people in a packing shed all file for workers' comp injuries the last day before the layoffs hit. So you've got those victims, as it were, victims of the system, who are clearly trying to work the system to their benefit. You've got the ones who are legitimately injured. And then I think that they ultimately buy into what they're being told about their injuries. Those were the ones that were the saddest. These are people who had an injury, they could have been treated, they could have been rehabilitated and probably sent back to work. And by the time they have been put through 38 specialists and this procedure and that procedure, if it didn't hurt them further, so they can't work, they psychologically have come up with that they can't work.

SPEAKER_01 53:25

Right.

SPEAKER_02 53:26

They're sad. I think the hardest one I dealt with was a guy who was a prison guard and he had gotten hurt. And I remember him coming in to see me and he brought a laundry basket full of bottles of medication with him. Because every time he went to the doctor's office, they handed him a package of predesignated meds. And he told them, I'm not taking them. Well, no, no, you have to take these with you. Well, they had to take them with them because they were billing for it. And all he wanted was to have the surgery on his knee and he could go back to work. Well, he's a year and a half in. And I asked him, I said, Well, why are you still going back? And he says, Well, because every time I would go in, they would tell me that they had submitted the paperwork, but the carrier wanted more information. And in his mind, if he decided to go somewhere else, he'd have to start all over again with another doctor, getting them to the point where they would say, I need to go have surgery. And so he recognizes, you know, he's a year and a half down the road. He's not working, he's a fixable person, but he's but he feels trapped because he can't get out of the mill because of the time that's already been invested. And he's hopeful that this month will be the month that they finally get their act together. And I remember somewhere along the way, he came to learn that they had never asked for the surgery. So he's thinking that this is all the carrier who's sitting there and not doing it and requesting. And it turned out that he they had never had the request for authorization even sent. And it was, it was just, it was devastating for him. That that's not how he wanted to live. That's not what he wanted in life. But when you think about any product, the idea of loyalty, they joke about the best way to know what somebody will buy is like what their mom bought because you were raised on it, type of thing. Yeah, these these fraud guys, they they live on the loyalty between convincing the victims that the carriers are just out to work them over and give them nothing and we're your best friends, to you're gonna hurt your case if you do something other than continue to come back, and here's what we need you to do, to people who've been strung out on drugs that they never needed because it was easier to throw a bottle of opioids at them. And of course, it was the one that the book said had the highest reimbursement value for the physician handing them out. It just Unreal. It just and so it goes, and it just continues to churn.

SPEAKER_00 55:39

If you had all of California's employees in front of you, and you could impart some words of wisdom to them to help them not get prayed into these fraud significates before getting prayed into it, or while they're involved in these fraud schemes or going to the bad doctors, they have a bad attorney. What would you like to say to them?

SPEAKER_02 56:00

You may not know everything about the system, but all of us have an innate sense in our gut when something isn't right. And if it doesn't feel right, there's a reason you think that. So obviously there's a tension between the people who are providing the benefits to you and what you need. But to some degree, you have to own your own treatment. You need to ask questions. You need to say, why am I doing this? If something feels like you're not being heard, then you need to say, I'm not being heard and go find that other opinion. That would be primary. Secondarily, is good doctors don't need to advertise. I hate to say it and it's gonna people are gonna be mad at me. I don't think good lawyers really need to advertise. They certainly don't need to leave uh calling cards under your windshield blade at the In N Out Burger. They're not, they're not stapling signs to telephone polls. If you, if you are looking for a lawyer, your local bar association has referrals. It doesn't guarantee that you're gonna get somebody good, but it ups the odds compared to 1-800 whatever on the telephone pole. You know, we're back to there are no such thing as a free lunch. You know, if somebody's promising you the sun, the moon, and the stars, that's probably not gonna come out the way you're thinking it does. Workers Comp is designed to assist an injured worker in getting back as much of their life as they can and compensating them for what they can't. It's not a lotto ticket. And anybody who's promising you here's a lotto ticket, they're lying to you. They're flat lying to you. And why would they do that? What do they want from you out of it? They're not doing it out of the goodness of their heart. So are you willing to risk your physical health, your mental well-being, the potential criminal charges that can flow from it for somebody who, what loyalty do you have to them anyway?

SPEAKER_01 58:02

Right.

SPEAKER_02 58:03

Be smart, be a wise consumer, ask questions. And and and if you see something that doesn't look right, then it probably isn't right.

SPEAKER_00 58:11

Absolutely. What would you say if you had California businesses in front of you? What what are some things that you have seen uh in your years of of prosecuting commercial insurance fraud?

SPEAKER_02 58:23

First off, educated employees are a good thing.

SPEAKER_00 58:26

I know that they're that thank you.

SPEAKER_02 58:30

You know, my God I know that well, I know that there are posters that the law says you have to put up to tell people what their rights are. It's not a bad thing for them to know it. Because we're back to they're gonna be your canary in the coal mine. They're the person who's going to say. I mean, at the end of the day, you're not with them when they go in to see the provider, whoever it is that's alleging to provide the service. So if they don't know what their rights are, if they don't know how to contact somebody because they have questions, how are you expecting them to do that?

SPEAKER_00 59:00

For one, Google will drive them to a fraudster attorney. You know, what do I do? Exactly. Guaranteed.

SPEAKER_02 59:08

Other thing is, I think when you have an employer-employee relationship that from the outset is built on mutual respect, I think that that serves as a prophylactic. Again, is it going to solve everybody who wants to go commit fraud? No. But I guarantee you, if your employees are already believing that you're just out to do what you can and you don't care about your employees, they're susceptible to the people who come and whisper in their ear that I'm your best friend and your employee, your employer is just out to get you. So we're back to educate your employees, have the materials available in places they can see. Make sure they actually know you care. And it helps if you really do care. You know, it's incredible when you have strong return to work programs. And I'm not talking about the I'm I'm spying on you and I'm gonna force you back, but you know, checking in on people. You know, how you doing? Oh, wait a minute, you're being told that you can't get the referral pushed through. Well, do you think the employer can call the carrier and say, hey, did you guys get an RFA on this? What's going on with it? I'm ready to bring Bob back to work. You know, people act like everybody's got the cooties and they can't talk to each other. And there are certainly some concerns as far as, you know, represented or unrepresented, but you still have the ability within any of those lanes to show you care, to offer information, that that can be helpful. And obviously, if you are an employer and you have a carrier who's not working with you to help manage your comp program, then that's something I would strongly advise people to be looking at. You know, I know you and Don were talking about it's too bad that stuff's not more easily published with who sends out these fraud referrals. But I feel bad for employers who are paying into carriers who have never sent an FD1 in their life. They have the same risk pool as everybody else. It's not that they do it better to never have somebody come into contact with fraud. It just means they're not doing anything about it. Absolutely. So why are you just funneling money over to somebody who takes the opinion of, well, it's okay, I'll just, I'll just up the premium the next go around for the next three years on this person and just keep paying it. They're they're really, yeah. I know Don had mentioned the idea of, well, you know, it makes people look bad. Okay, good. If you have a carrier who's not doing their part in this, they should look bad. They should be named, they should be shamed. And the people who are doing it right necessarily should have that competitive advantage. Because you're not shopping just for what's the lowest here or there. I mean, well, in an in comp, it should be pretty static anyway. You know, the pure premium rate's gonna be the pure premium rate. How they make the sausage in the back room as far as what they're actually gonna charge is a different story. Right. But you might as well get what you're paying for. So when I was watching you and Don talk, and uh you were discussing the idea that carriers are studied by the the bad guys and and what happens, I will absolutely 100% sign off on that. Yeah. Um, actually had a case that uh was successfully prosecuted where each of the file folders that were the alleged patient files, and I say alleged patient files because that would suggest it was actually medical care being given, had a dot like you get at the at the office depot with the different colors, and the stickers were red, yellow, and green. And when we got to the insider who told us what those were, uh they indicated how easy it was to get bills through the particular carriers. And they had people whose job they had been hired by the group to do nothing but call carriers and say, What are you paying for this? And based on what the carriers were paying, that then signaled, in this case, it was drugs that were being office dispensed, what a package of drug that patient was going to leave with, without regard to what the injury was, without regard to what needed to happen for their cure or relief of their industrial injury, but it was based solely on is this insurance company going to reimburse for these items at the maximum rate? And you then got your package based on you were agreeing, but they'd pay all of it, give them everything. Yellow, they got a slightly different package, red, those were the ones that were the toughest, and they either would get just a couple or they would get nothing, depending on at the point what were what were the values. They study you, you know, they study the carriers, they look for ways through the system. We could see where they send, you know, basically tracer bills through to see will this fly or what questions will they get asked, and then we'll amend the documentation on the backside to make it look justified. You know, yeah. What type of entity was that? That one was a it was a corporate practice fraud that you had somebody with a license who put something on it together and sold it off to chiropractors on autopilot is basically a paper mill. And and the sad the sad part about those are, you know, I can go to a a cocktail party and I can talk to a doctor. Just because I talk to a doctor doesn't mean they're treating me. These mills have figured out that if they put somebody with a white coat in a room with somebody who arguably is a patient, the only people who know what's actually happening are the people in there. And most of the time the patient doesn't know. And in comp they really don't know because the bills never go to the patient. They never see what's being billed. So the only person who gets something is a carrier from somebody who is a doctor, they're say they're doing medicine, but are they actually doing medicine? No more so than what they would have done at the cocktail party. The notion that they would go to that length. I mean, think of the investment in time and energy to have somebody making those phone calls, but clearly it was profitable enough for them to do that, to do that level of tracking simply to get around whatever protections there may be, or to figure out how to maximize what's going to go out the door and know who to target and know who to rob blind.

SPEAKER_00 1:05:05

What a great guest. What great information that was just imparted. I love doing this podcast. We have great people. This is this is why I created this podcast is to highlight the great subject matter experts that we have in this space. This podcast is for you, for the consumer, for the special investigator in the insurance industry, for the criminal investigator and the prosecutor in law enforcement trying to figure out the weird language and what to do with insurance fraud crimes. It's complicated. I want to thank you so much for watching us, for supporting us. I can tell you this we need your support. If you don't mind subscribing, it's free. By subscribing, you'll see all the new videos. I have a lot of subject matter experts coming on. We have really great stuff happening. This podcast is growing like crazy. I love it. And we're getting the word out there, and we're helping people, and that's what's really important. So please support us by subscribing, by hitting like on the videos, by watching the videos in their entirety. The algorithms don't like it if you don't. I'm learning that. Also, what's really important is that this is to build a community, right? So I want to know what you're thinking. When you're watching the video, what questions that you have, what thoughts are prompted by the content? If I can't answer your question, as you can see, uh, we have a lot of subject matter experts at hand. Stay on for the next video because I have another great guest for you. And most importantly, remember that it's cool to be kind. Money's earned from this podcast. Go to really great charities related to animals who don't have living homes right now. So we'll see you on the next video.