State may form L.A. office to chase workers' comp ripoffs.

Attorney General may step in if D.A. disbands unit

State Attorney General Dan Lungren will "consider" opening up a unit in Los Angeles County to prosecute workers' compensation fraud if the L.A. County District Attorney's office disbands its workers' comp fraud division, Lungren's chief assistant told the Business Journal last week.

L.A. District Attorney Gil Garcetti recently announced that he may be forced to disband his office's workers' comp fraud unit unless the county Board of Supervisors lifts a hiring freeze on prosecutors.

Lungren met last week with a representative of the California Chamber of Commerce and members of the Fraud Assessment Fund committee, a group set up by state law to disburse $25 million to prosecutors across the state who are battling workers' comp fraud, said George Williamson, Lungren's chief assistant.

The group discussed the possibility of the attorney general's office prosecuting workers' comp fraud in Los Angeles, he said.

Although Lungren "is very concerned" about Garcetti's recent announcement, he wants to approach the possibility of setting up a state prosecutors office devoted to workers' comp fraud "very cautiously," Williamson said.

Part of the workers' comp reform package passed last year, SB 1812, assesses employers a fee to fight workers' comp fraud which is paid as part of their comp premium. Statewide, employers have been assessed $25 million and the state Fraud Assessment Fund committee, which oversees the funds, has allocated $5.2 million of that to the L.A. County district attorney's office.

But on March 1, Garcetti started moving prosecutors out of the workers' comp fraud unit to prosecute street crime. Garcetti has stated that he may disband the unit entirely after July 1, unless the county Board of Supervisors lifts a hiring freeze.

Last week the board did not act on Garcetti's request to allow him to hire for units which receive outside funding, like the workers' comp unit. Instead, the board instituted a "hard freeze," which would allow Garcetti and other county department heads to hire only if they are within budget.

Garcetti's office is currently about $3.5 billion over budget for the 1993-1994 fiscal year, said Judy Hammond, Los Angeles County spokeswoman.

"It is not the role of the attorney general to go in and usurp Mr. Garcetti's prosecuting responsibilities," Williamson said. "He's considering it (setting up a fraud unit), but a lot of contingencies have to be resolved."

Among those is whether the attorney general's office would have to have a "multi-year" funding commitment to set up the office, Williamson said. "I can't go out and hire a bunch of fraud lawyers and then Mr. Garcetti decides to start up his unit again. That would put us in a bad position."

Also, the current law that funds workers' comp would have to be changed since it does not provide that the attorney general can receive the funds to prosecute workers' comp fraud.

Chuck Dalldorf, aide to Sen. Pat Johnston, D-Stockton, said that Johnston, Sen. Steve Peace, D-Chula Vista, and Assemblywoman Juanita McDonald, D-Carson, "would be willing to draft legislation which would allow the state attorney general's office to handle the workers' compensation enforcement."

Those three lawmakers last week sent a letter to the supervisors urging county Chief Administrative Officer Sally Reed to allow Garcetti to hire staff for the workers' comp unit.

"We believe that ... they (fraud unit prosecutors) were the single most important factor in closing down medical-legal mills in Los Angeles. Workers' comp claims have dropped by nearly one-third in the last three months," the letter stated.

Ed Feldman, deputy district attorney who heads the fraud unit, has brought workers' comp fraud felony charges against about 100 individuals, including doctors and a lawyer, over the last year. He said that if the attorney general has to start a unit from scratch, it could be months or years until workers' comp fraud is prosecuted.

If that happens, "I think the crooks are going to breathe a sigh of relief," Feldman said.

Williamson agreed it would take a long time for the attorney general's office to set up a workers' comp unit. Just finding staff for the office would take six to eight months he said.

Julianne Broyles, a lobbyist with the California Chamber of Commerce who met with Lungren last week, said employers, whose workers' comp insurance premiums provide the money for the fund to prosecute fraud, are outraged about the situation.

"Here the state passed the mandate (to prosecute workers' comp fraud) and we have the funding," she said, "and now it is being held hostage in budget negotiations between the board of supervisors and the district attorney."