Dan Walters: Fraud infects disability system
Calmatters Commentary

Dan Walters: Fraud infects disability system

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Kenneth and Mandy Henderson have given a new dimension to marital togetherness.

Two years ago, a disability claim filed by Mandy Henderson, a lieutenant in the Santa Clara County sheriff’s office, came under suspicion.

She claimed to be in constant pain from injuries suffered on the job and had to spend most of her days lying on a couch. However, a surveillance video showed her walking and engaging in bodybuilding exercises in Las Vegas, where she was living while still on the sheriff’s payroll several hundred miles away.

Lt. Henderson was charged with defrauding the workers’ compensation system that pays medical bills and provides income to those with work-related injuries and illnesses and resigned. She was required to make restitution and placed on probation.

The video, however, also showed her husband, Kenneth, working on making his body more muscular and that interested the City of Santa Clara because he had left the city police department on a disability-related retirement in 2016, claiming that he had been injured in 2015 while picking up a stack of five traffic control cones.

This month, Kenneth Henderson was also charged with workers’ compensation fraud. Prosecutor Vonda Tracey said that when officials showed the workout video to the doctors who had validated his disability, it completely undercut his claim.

“He was described by one of the doctors as presenting like someone who had a stroke,” Tracey said. “He claimed he couldn’t drive and was in constant pain, and he could only do work around the house and water the plants.”

Having both halves of a married law enforcement couple prosecuted for the same crime of cheating on workers’ compensation is obviously unusual. But there’s another odd aspect — it happened in Northern California.

Fraud in California’s $20 billion a year system of supporting disabled workers is rampant, but the vast majority of it occurs in Southern California. Shady lawyers use what are called “cappers” to scour the streets for potential clients, asking them whether they are feeling any pain that might be connected to past employment.

The resulting claims often describe “cumulative trauma” that cannot be tied to any one event. Equally shady doctors sign off on the claims.

Two recent reports by the Workers’ Compensation Insurance Rating Bureau frame the prevalence of fraud in Southern California.

One, on doctors who have been charged with fraud, reveals that “Indicted providers in the Los Angeles Basin accounted for about half of … indicted providers but received more than 90 percent of the medical payments made to indicted providers.”

The second report reveals that “the share of cumulative trauma claims as a percent of all claims is much higher in the Los Angeles Basin than in other parts of the state, and that gap has generally widened over time.”

The Legislature periodically strengthens anti-fraud laws. Three years ago, the Department of Industrial Relations, using a new law, suspended seven Southern California doctors from participating in workers’ comp.

One, Philip Sobol, an orthopedic surgeon in Los Angeles, had been convicted of federal insurance fraud charges for getting kickbacks from lawyers. He had filed nearly 6,000 active compensation claims for an estimated value of more than $42.7 million.

Obviously, there’s big money in defrauding the system and it’s a factor in California’s employers paying the nation’s second-highest costs for workers’ compensation insurance, according to a biennial survey by Oregon’s Department of Consumer and Business Services, the widely accepted authority.

It also indirectly cheats those with legitimate work-related disabilities.

CALmatters is a public interest journalism venture committed to explaining how California's state Capitol works and why it matters.

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