Workers’ Comp Clinic Sues Insurers Over Late Payments

One of Southern California’s largest operators of clinics for injured workers has sued several insurance companies, charging that delays in paying claims has nearly ruined its business.

In a suit filed in Los Angeles Superior Court late Friday, Irvine-based Tricare Inc., which operates Veritas Medical Group Inc. among other clinics, said insurers have raised numerous objections to medical evaluations and delayed payments for up to 400 days.

The delays have destroyed Veritas and three sister companies and have nearly ruined Tricare, according to a lawsuit which seeks $115 million in damages.

Tricare has closed 75% of its operations because of the slow payments, said chief executive Larry G. Gerdes. “We were a $47-million company, but we had to restate our revenue (last year) to $12 million.”

The complaints of Tricare are part of widespread criticism among doctors that insurance companies are balking at paying for evaluations of injured workers.

Earlier this year, Primedex Corp., pulled out of the business, in part because of payment delays. And CBL Medical Inc. in Los Angeles, the Southland’s only remaining publicly held company in the field, said Monday that payments from insurers are running up to 500 days behind.

John McDermott, a Los Angeles-based lawyer for Tricare accused the industry of using its complaints about workers compensation fraud to tarnish all providers of health care and evaluations for injured workers.

Insurers say any delays are caused by appeals to the state agency that hears insurers’ objections to the bills. Resolution of appeals can take up to a year, said Gail Radzevich, a spokeswoman for defendant Industrial Indemnity Co. in San Francisco.

“I would expect that all insurers are reviewing bills with extreme care and caution because of the high incidence of fraud by workers, doctors and attorneys,” said Ron Christensen, a spokesman for another defendant, the State Compensation Insurance Fund.