"Fraud" is defined as "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage."
The California Fraud Assessment Commission yesterday took the first steps toward creating a subcommittee charged with examining the factors that are driving the increase in Schedule II prescriptions.
Participants in the meeting, according to the WorkCompCentral news report this morning, had a healthy debate as to whether the increase in opioid abuse in the state rose to the level of fraud.
Certainly most everyone in the industry understands that there is a problem. The California Workers' Compensation Institute (CWCI) released a study last year concluding that 3% of the approximately 100,000 licensed doctors in California are responsible for 54.9% of Schedule II prescriptions.
Between 2002 and 2010, the percentage of Schedule II prescriptions for injured workers increased 383.3%. Schedule II prescriptions accounted for 1.2% of all workers' comp prescriptions and 4.3% of prescription costs in 2002. By 2010, they accounted for 5.8% of prescriptions and 19.6% of prescription payments according to CWCI.
Commissioner Don Marshall focused on injured workers engaging in deceit to gain access to drugs, but thought that perhaps that was more the purview of the U.S. Drug Enforcement Agency.
In my opinion Gary Fagan, a supervising deputy district attorney in San Bernardino County, took a standard approach to the issue on behalf of his fellow district attorneys. He said if the assessment commission starts to focus on prescription drugs, it will limit the ability of district attorneys throughout the state to focus on employer, claimant and provider fraud.
Compared to the complex world of the underground economy, focusing on employer, claimant and provider fraud is easy money for the district attorneys, and frankly as anyone in the industry knows, even then a case has to be handed to the district attorneys office on a silver platter with all of the investigation and evidence in place before they begin their "investigation".
Over-prescribing of opioid and narcotics "is not fraud and not what this grant is for," Fagan told the Commission.
Fagan and Marshall miss the point.
Drugs are BIG BUSINESS. The overall pharmaceutical industry sales is $300 BILLION dollars a year. Heck, drug companies spend over $14 billion per year just in marketing expenses, which is down 15% from five years ago!
And that's the legitimate side of the drug business. You can bet that the underground drug economy has numbers that are equally impressive since the street value of a narcotic are often 10 to 20 times that of its retail price.
Over-prescription of opioids and narcotics is not the fraud issue. The fraud issue is much, much bigger than that - it is organized crime.
Focusing on injured workers getting too many prescriptions is like focusing on pot smokers - a minuscule component of the overall drug economy.
The fact of a meteoric rise in Schedule II prescriptions in such a short period of time and the fact that just 3,000 doctors in California are responsible for over half of all Schedule II prescriptions points to a very refined business strategy - a strategy that is perpetrated for profit and to take unfair advantage of the workers' compensation system through deceit and trickery.
Commissioner Jiles Smith has the issue correctly defined. Smith said he thinks the commission is missing a "golden opportunity" if it does not attempt to drill down into the issue of opioid prescriptions. He said at the very least, it would be beneficial to put providers on notice that the commission and district attorneys are taking an interest in prescribing patterns.
"If our job is to fix problems and protect injured workers, we should say we're watching at this point," he said. "Half the battle is shining light on it."
The other half of the battle is following the money. That in itself takes a large amount of money, and a commitment by California's district attorney's offices to tackle organized crime in a concerted effort with other state and Federal agencies.
In my opinion the Fraud Commission should be a part of the solution rather than turn a blind eye, and should direct a portion of the fraud grants to be used in conjunction with other law enforcement resources to follow the money - it is a sure bet that small scale workers' compensation fraud is the gateway to a larger, and more easily prosecuted fraud - the one that takes down nearly every criminal enterprise: tax fraud.
There is no question in my mind that the evidence compellingly points to large scale criminal activity. Follow the money, find the fraud. Simple to define, more difficult to execute.workers compensation, work comp, injured worker