Agent News

CompWest Quarterly

Third Quarter 2017

CompWest Helps Shut Down Overbilling Scheme in Extensive Fraud Investigation

Thanks 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, Aspen Medical Resources 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.

In 2017, after an extensive five-year investigation by the ISU, Claims Analytics and CompWest claims teams, 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.

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). Learn more about our fraud prevention and detection efforts online.

CompWest Utilization Review Organization Receives URAC Accreditation

CompWest’s Utilization Review Organization (URO) recently received URAC accreditation, a key accomplishment for the CompWest Claims department. The URO became the first insurance company URO in the state of California to receive this distinction, and did so well ahead of the July 2018 deadline.

CompWest’s URO plays a critical role in the exceptional customer service provided to policyholders in California. Since its establishment in 2010, the URO has assisted in the delivery of medically necessary and timely treatment options to injured workers, and saved the company nearly $2 million per year in outside URO vendor fees.

In September of 2016, an amendment was made to a California statute, requiring all organizations that conduct utilization review for workers’ compensation to receive an accreditation of their services by July 1, 2018. Non-compliant organizations will no longer be allowed to exist in California.

To ensure the continuation of the URO, the Corporate Claims team quickly began the accreditation process with URAC, which was named by the State of California as the initial designated accreditation organization. Ten months later, URAC determined that CompWest’s URO met all state requirements to obtain accreditation.

“The accreditation from URAC enables the CompWest URO to continue to provide superior service to the injured worker by approving the medical treatment they require in a fast and responsible process,” said Rob Shatsnider, vice president of Claims for CompWest. “Without this accreditation, the CompWest URO could no longer perform this vital service.”

AF Group’s A.M. Best Rating Reaffirmed, Outlook Now “Positive”

CompWest is excited to announce that A.M. Best has recognized the ongoing financial strength and stability of AF Group, of which CompWest is a member, by reaffirming its financial strength rating as “A-” (Excellent) and upgrading its “stable” outlook to “positive.”

In recognizing AF Group’s enhanced financial position, A.M. Best cited “improving operating performance driven by profitable underwriting results and demonstrated expertise within the workers’ compensation marketplace. Furthermore, the ratings acknowledge the group’s utilization of sophisticated predictive analytic modeling tools and medical cost containment practices and initiatives.”

“This announcement is a reflection on the outstanding partnerships we have established with our agents, who share our vision of providing unparalleled service to the customers we collectively serve,” said Lisa Corless, president of AF Group.

AF Group’s strong financial position is supported by:

  • Anticipated outperformance of the industry for the sixth consecutive year in 2017 with a forecasted combined ratio significantly better than the expected industry result of 100%.
  • Claim and medical management strategies producing claim costs that are 17% better than the industry on average.
  • Ranking as the 11th largest workers’ compensation insurance company in the United States on a net premium basis, with a diversified portfolio of insureds.