Waste, Fraud, & Mismanagement

Medi-Cal Paid $17.6 Million in Fraudulent Charges to Nonprofit

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The state’s Medi-Cal system paid $17.6 million to a Long Beach nonprofit that fraudulently obtained the money by submitting phony claims for drug and alcohol abuse treatment, The Associated Press reported May 9.

Three people were convicted May 9 in the scheme.

“They were the latest among 19 people convicted of federal charges involving a Long Beach-based nonprofit called Atlantic Recovery Services, later called Atlantic Health Services,” the AP reported. “The organization provided treatment for substance abuse to students at local high school and middle schools, a U.S. Department of Justice statement said. For four years ending in 2013, the organization enrolled students in its program even if they had only used drugs or alcohol once, then falsified documents to show they had a ‘medically diagnosed substance use disorder,’ according to the statement. Employees also submitted fraudulent documents and forged students’ signatures to falsely show they had attended counseling sessions, then billed the state’s Medi-Cal drug program for reimbursement, prosecutors said.”

Phony claims totaling approximately $18.5 million were submitted, and the Medi-Cal program paid approximately $17.6 million, prosecutors said.

Atlantic’s former president pleaded guilty to federal charges and was sentenced in September to seven years in prison. The former billing supervisor was convicted of one count of health care fraud and acquitted of 10 other counts. Two other employees were convicted of a total of seven counts. Those who were convicted are scheduled to be sentenced in July, with each facing up to 10 years in prison for each count.

San Diego Wasting Millions by Not Preventing Worker Injuries, Audit Finds. The city of San Diego doesn’t do enough to prevent on-the-job injuries in city agencies, doesn’t adequately track waste and fraud, and likely is wasting millions of dollars a year because of poor management of workplace safety programs, according to a report issued this month by the San Diego City Auditor’s Office.

“The completeness of safety programs varies across City departments, which likely contributes to higher employee injury rates and costs,” the auditor wrote. “The City’s workers’ compensation claims rate is above average among other large cities in California. From FY2017 to FY2021, the City had an average of 14.7 workers’ compensation claims per 100 [full-time employees], which is 17 percent higher than the average among California cities with workforces over 3,000.”

The city incurred $40.7 million in direct workers’ compensation costs in fiscal year 2021, which is close to 1.2 times the costs incurred in fiscal year 2017, the audit found. For every $1 incurred for direct cost, indirect costs can be as much as $4.50, the audit noted.

“The true cost to the City for work-related injuries may range from $151 million to $224 million per year,” the auditor stated. “The high end of the estimated cost is more than the entire budgets of the Parks & Recreation Department and Library Department combined …. Therefore, even a small percentage reduction in the number of work-related injuries can have a significant impact in terms of cost savings.”