CompWest Helps Shut Down Overbilling Scheme in Extensive Fraud Investigation

inmotion-august-2017Thanks to the diligent work of the CompWest claims department, California law enforcement and parent company AF Group’s Investigative Services Unit (ISU), CompWest will soon receive restitution following an insurance fraud investigation that spanned more than five years and uncovered 114 fraudulent cases.

The scheme
In 2012, the Orange County District Attorney’s Office began an investigation into the fraudulent billing practices of Aspen Medical Resources, a durable medical equipment company that rented machines which functioned as both an ice pack and heating pad to injured workers who filed claims with CompWest and other carriers.

Investigators found that from 2005 through 2013, the medical company rented one machine per patient, but billed for the hot and cold functions of the unit separately—overbilling insurance companies by charging as much as $15,000 to $18,000 per patient for the use of machines valued at less than $500. They also created two other corporate identities designed to confuse carriers billed by their services.

Resolution
Responding to a California Insurance Code §1877.3 Demand Letter issued by the District Attorney’s Office, the ISU, Claims Analytics and CompWest claims teams conducted extensive research into which claims involved Aspen’s rented equipment and provided detailed documentation for investigators.

In 2017, after an extensive five-year investigation, all three principals of Aspen Medical Resources pled guilty to insurance fraud, and were later convicted of defrauding more than $70 million from insurance companies in the overbilling scheme. They agreed to pay CompWest restitution of $164,267.43 immediately, with no collection of any outstanding liens.

Tough on fraud
This is a victory for CompWest and the industry as a whole; insurance fraud is the second largest criminal activity in the United States, according to the Coalition Against Insurance Fraud (CAIF). Insurance fraud costs Americans more than $80 billion per year—$7.2 billion of which is workers’ compensation-related.

Al Gileczek, president of CompWest, credits the strong teamwork at CompWest for the successful outcome of the case. “California represents the largest workers’ compensation market of any state in the country,” he said. “Unfortunately this creates even greater challenges when fighting insurance fraud. The hard work from ISU and the CompWest claims team is indicative of the company’s daily passion, discipline and commitment to managing costs in a tough environment.”

CompWest is committed to aggressively investigating workers’ compensation fraud, because we know its devastating impact on our customers’ experience modifiers and premium.

If you suspect fraudulent activity, call our toll-free anonymous tip line: 1-800-994-FRAUD (3728).