Committee Passes Over Request for Workers’ Comp System Audit
May 26, 2016
The Joint Legislative Audit Committee (JLAC), headed by Assembly Member Freddie Rodriguez and Senator Richard Roth, met this week to discuss audit requests from various legislators.
Any legislator can submit a request for an audit to JLAC. When an audit request letter is submitted to the JLAC office, the Chair reviews the request, acknowledges its receipt, and forwards it to the California State Auditor (CSA). The CSA prepares an analysis of the audit request, which includes a brief objective background, the audit scope and objectives, and the estimated cost to conduct the proposed audit. Before finalizing the analysis, the CSA staff will confirm the scope and objectives of the audit request with legislative staff in the requester’s office. After the JLAC approves an audit request, the CSA generally takes at least six months to complete the audit work. Under certain circumstances, an audit can be completed in a shorter timeframe when the JLAC requires this of the CSA. Legislative staff can work with the JLAC staff when circumstances warrant a shorter timeframe.
The May 25 JLAC hearing included notice of an audit request from the Assembly Insurance Committee Chair, Assembly Member Tom Daly. The request was for an audit of the system of preventing, detecting, and prosecuting fraud in the system, and, in his letter to JLAC, noted that ample evidence exists that the workers’ compensation system is experiencing major fraud and waste in connection with providing care and related services to injured workers. Mr. Daly noted that the Legislature needs to get a better understanding of how the existing anti-fraud system performs by discovering how the California Department of Insurance, Division of Workers’ Compensation, Fraud Assessment Commission, local prosecutors, insurers, and self-insured entities work independently and collectively to reduce fraud – whether within unnecessary medical treatment, billing or self-referrals. The audit request includes the ask that the audit provide a summary of discovered fraud by category – insurer, employer, medical provider and attorney.
CSAC supports Assembly Member Daly’s request for the audit, as California’s counties experience some of the highest costs in the state’s workers’ compensation system and any reduction of fraud within in the system could lead to major savings for counties as employers. Such savings would allow counties to utilize their strapped budgets for services such as public safety and human services.
The workers’ compensation system audit request was not taken up by JLAC on Thursday and, instead, presumably moved to its next hearing in August.