Workers’ Comp Judge Balks, Cries Fraud : Benefits: Long Beach jurist rejects claims of 10 laid-off workers, accuses them, their doctors and lawyers of deception.
In a sweeping and controversial action, a Long Beach workers’ compensation judge has thrown out benefit claims filed by a group of 10 laid-off employees and accused the workers, their lawyers and doctors of conspiring to commit insurance fraud.
Workers’ Compensation Judge Frank S. Falero, in a batch of decisions issued this week, dismissed claims from 10 former employees of International Rectifier Corp., a semiconductor manufacturer based in El Segundo.
In language repeated in the various decisions, Falero took the unusually strong step of charging that there “appears unquestionably” to be “a scheme to deceive” International Rectifier and its insurer, Argonaut Insurance Co.
Falero, who could not be reached for comment Friday, wrote in his decisions that evidence showed that the workers, their lawyers and doctors “proved, to this trier of fact, beyond a reasonable doubt the parties’ intent, malice and knowledge to commit the level of misrepresentation known as fraud.”
The judge called the claims “another too frequent example of the rampant fraud and abuse” raising the cost of workers’ compensation insurance and “seriously impairing the rights of legitimately injured workers.”
As a result, Falero instructed International Rectifier and Argonaut to report the cases to the California Insurance Department’s fraud division and seek prosecution by the Los Angeles County district attorney’s office.
Falero’s action comes amid increasingly aggressive efforts by California employers, insurance companies and some workers’ compensation judges to fight perceived abuses in the state’s much-maligned system for helping injured workers.
Those efforts, along with such factors as the sluggish labor market, have contributed to a recent drop-off in workers’ compensation claims.
Officials of International Rectifier and Argonaut said they contested the 10 furloughed workers’ claims because they believed that the cases had the earmarks of a scam: All 10 workers who filed claims did so after being laid off; they all visited the same medical practice for reports to justify their claims, and all but one were represented by the same law firm.
Bob Anderson, a vice president for human resources at International Rectifier, said he was “flabbergasted” by Falero’s rulings.
“The message it sends to the business community is that if you feel you’re being abused, you can fight back and win,” Anderson said.
But a lawyer for Beverly Hills Multispecialty, the medical practice whose doctors’ reports backed the workers’ compensation claims, said Falero’s posture was “offensive to basic notions of fundamental fairness.”
The lawyer, Daniel Lispi, said Falero’s decisions disregarded the fact that each of the workers labored for 10 years or more in physically demanding jobs at International Rectifier and that each worker showed “objective evidence” of psychiatric and physical injuries.
Lispi said Falero “may believe these workers should have continued to work in pain, but he cannot change the law that if a worker wants, he can collect limited benefits to cure pain, if caused by years at work.”
He said the decisions will be appealed to the state’s Workers’ Compensation Appeals Board.
Neither the workers nor their lawyers could be reached for comment.
In siding with arguments raised by International Rectifier and Argonaut, Falero disallowed all of the medical charges--amounting to nearly $158,000--submitted by doctors affiliated with Beverly Hills Multispecialty who evaluated and treated the 10 workers.
In addition, the judge ordered the workers to reimburse International Rectifier and Argonaut Insurance for $62,000 spent by the companies to defend themselves.
Richard A. Robyn, a workers’ compensation judge now serving as a legal adviser to the state Division of Workers’ Compensation, said he isn’t sure whether Falero’s fraud allegations were appropriate for someone in his position.
Robyn noted that the opinions of workers’ compensation judges--who work in a relatively informal administrative law system--have no standing in the federal or state Superior Court systems.
Informed of Falero’s allegations late Friday, Casey L. Young, administrative director of the state’s Division of Workers’ Compensation, said he would review the 10 workers’ cases.
Young said that while it is important for the system’s judges to reject illegitimate claims, “it does strike me as a little strange” for a workers’ compensation judge to allege a fraud conspiracy in an administrative law decision.
Working the Compensation Game
The cost employers bear for workers’ compensation insurance premiums has jumped 207% since 1982. But the number of suspected fraudulent cases is relatively small compared to the number fo cases filed.
Higher Costs
The total amount of insured employers pay for workers’ compensation premiums more than tripled over the last 10 years.
1982: $2.8 billion
1991: $8.6 billion
Cracking Down on Fraud
The number of cases of suspected workers’ compensation fraud reached a high in July last year; 1992 was the first year the state began tracking cases of suspected fraud.
January, 1992: 129
July, 1992: 1,102
March, 1993: 531
