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Apr 2, 2016

Billion-dollar scam

Co-produced with PRX Logo

UPDATE, Oct. 15, 2016: This week, Reveal revisits California’s workers’ compensation program and the fraud that reporter Christina Jewett discovered. We follow up on what’s happened since we first published this story. An updated version of the original episode can be heard below.

California’s workers’ compensation program covers 15 million workers across the state. If you get hurt on the job – fall off a ladder, for instance – it’s the system you turn to. Most employers are required to carry workers’ comp insurance, which helps cover medical bills and lost wages for injured employees.

But Reveal reporter Christina Jewett has discovered serious fraud in the system after reviewing thousands of documents. They show that in the last decade, more than 80 people have been accused of cheating California’s workers’ comp medical system out of $1 billion.

Jewett and producer Delaney Hall tell the story using an undercover law enforcement wiretap and the accounts of a worker, employer and investigator.

Host Al Letson then sits down with Jewett to really dig into what it is that makes workers’ comp such an easy target for people who want to take advantage of it.

And finally, we revisit a story about the bogus screws that ended up in spines of surgery patients. You can consider it the prequel to the main investigation …

Dig Deeper

  • Read: Profiteering masquerades as medical care for injured California workers
  • A history of corruption: How California’s health care system for workers forgot about fraud
  • Previously on Reveal: Medical firm profited on pain with knockoff spine surgery hardware

Credits

Support for Reveal is provided by The Reva and David Logan Foundation, the Ford Foundation, the John D. and Catherine T. MacArthur Foundation and Mary and Steven Swig.

Track list:

  • Camerado-Lightning, “True Game (Reveal show theme)” (Cut-Off Man Records)
  • Stars of the Lid, “Requiem for Dying Mothers part 2” from “The Tired Sounds of Stars of the Lid” (Kranky)
  • Ryan Little, “Lost Memories”
  • Blue Dot Session, “The Silver Hatch” from “Rayling”
  • Sheeba Exp, “Ending” from “Walden Sessions” (Spettro Rec)
  • Tycho, “Adrift” from “Dive” (Ghostly International)
  • Alexandre Navarro, “Souvenirs” from “Sketches” (Constellation Tatsu)
  • Ben Benjamin, “VIP LCD” from “The Many Moods of Ben Benjamin Vol. 1” (Ghostly International)
  • 10:32, “Written Not Sent” from “Vanitas EP” (Ghostly International)
  • KILN, “Kopperkosmo” from “meadow:watt” (Ghostly International)
  • Dave Depper, “Swagger 1” from “Compositions 3” (Needle Drop Co.)
  • Dave Depper, “Western” from “Compositions 3” (Needle Drop Co.)
  • Marcos H. Bolanos, “Calm Like a Trap” from “Unchained Melodies Vol. 1"
  • Dlay, “Slinky” from “Elemental” (Ketsa Music)
  • Dave Depper, “Rare Groove” from “Compositions 2” (Needle Drop Co.)
  • Velella Velella, “Sharpie” from “The Bay of Biscay” (Needle Drop Co.)
  • KILN, “Fyrepond” from “Dusker” (Ghostly International)
  • KILN, “Acre” from “meadow:watt” (Ghostly International)
  • Broke For Free, “Miei” from “Petal”
  • Sad Brad Smith, “Help Yourself” from “Up in the Air Soundtrack” (Warner Music)
  • Jim Briggs, “duboutro” (Cut-Off Man Records)

TRANSCRIPT:

Reveal transcripts are produced by a third-party transcription service and may contain errors. Please be aware that the official record for Reveal's radio stories is the audio.

Section 1 of 3          [00:00:00 - 00:14:04] (NOTE: speaker names may be different in each section)
Al Letson: From The Center for Investigative Reporting and PRX, this is Reveal. I'm Al Letson.
Early one afternoon in December of 2010, an undercover operation was about to get underway in Ontario, California, 35 miles east of Los Angeles.
Vladislav: This is Detective Vladislav Mikulich. I am here with our cooperative witness Cyrus Sorat. This is case 09DW015451. I shall be handing the recorder over to him in just one moment so that we can go to our meeting.
Al Letson:

 

[00:01:00]

Vladislav Mikulich works for the state's department of insurance. He's hoping to get incriminating evidence of fraud in California's $24 billion workers' compensation system. Workers' comp is a form of insurance that employers pay for to help workers who get hurt on the job.
Cyrus Sorat is a businessman facing charges related to workers' comp. He's agreed to secretly record a close business associate to try and get leniency in his own case. Cyrus meets a man named Kareem Ahmed in a parking lot of a restaurant. They're clearly old friends. The two men are in the same line of business. They work with doctors, encouraging them to prescribe pain creams to injured workers. Workers' comp insurance firms pick up the bill. Cyrus and Kareem walk into the restaurant together and sit down.
Waitress: Something to drink for you?
Kareem: I just had a big lunch. I will take actually a little bit of water with some lime.
Al Letson: The two men settle in, hashing out business deals and gossiping. They get especially excited talking about a hospital executive, Michael Drobot, who's paying bribes to doctors to do spinal surgeries in his hospital.
Kareem: How the hell is he ... He's going to go around, what, giving them free surgeries? How the ... Is he going to do it? What if they don't even have the surgeries?
[00:02:00]
Al Letson:
 

This executive paid doctors tens of thousands of dollars to do the surgeries on injured workers. He disguised those payments by saying he was paying to rent tiny corners of the doctors' offices. As in two feet by two feet, what Cyrus refers to here as a "two by two."

Kareem: How do they ... How is he going to do it then?
Cyrus: Just renting a corner from the doctors' office, paying them $50,000 for that two by two.
Kareem: Yeah, but that's illegal. That's inducement! He can't do that.
Cyrus: I know.
Al Letson: It's a scam that went on for years, because it's so easy to cheat the state's workers' comp system. Especially compared to the federal Medicare program. That's what Cyrus tells Kareem.
Cyrus: Let me tell you something.
Kareem: Okay. Yeah?
Cyrus: If you do Medicare ...
Kareem: Medicare?
Cyrus: If you do Medicare, the feds hang you.
Al Letson: The feds hang you. They're going to come after you.
Kareem: Oh, I know. That's why I never touched Medicare.
[00:03:00]
Cyrus:
 

But when it's workers' comp, nobody cares. A nybody got a problem with the workers' comp?

Kareem: Never.
Al Letson: They both agree, oversight, accountability ... In those days, it seemed like nobody was going to go after people who were scamming the workers' comp system.
Cyrus: When it comes to workers' comp ...
Kareem: Yeah, nobody cares. Nobody cares about it.
Al Letson: It turns out that there are people who care about fraud in the system, including state and federal prosecutors. The feds convicted Cyrus and the hospital executive they're talking about. Kareem is still fighting charges in state court.
 

[00:04:00]

We reviewed thousands of documents. They showed that in the last decade, more than 80 people had been accused of cheating California's workers' comp medical system out of $1 billion. That's "billion," with a "B." The cases cover some pretty incredible allegations. We're talking about a bag of cash, paid to hustle workers into shock-wave therapy sessions. Questionable surgeries described by prosecutors as "aggravated mayhem." The doctors who were paid off to do the spinal surgeries? They drilled hardware into the backs of more than 4,400 injured workers. Reporter Christina Jewett and producer Delaney Hall went to find out how a small group of people are getting rich from workers' comp, and how both injured workers and employers become victims. Christina starts in Southern California with Denise Rivera, a worker who got hurt on the job.
Christina: Ever since she was injured at work four years ago, Denise has been unemployed. She's actually living in the garage attached to her mom's house. Four generations of her family live here, and they like to tease Denise.
Denise:
[00:05:00]
They're like, "It's cold out there!" I says, "I like it. I'm fine. If I get too cold, I'll come in." Or, "It's hot out there." I says, "I'm fine. If it gets too hot, I'll come in." At least I got a rough over my head, and I'm thankful for that.
Christina: For ten years, Denise worked the night shift caring for disabled kids. She would turn the kids when they were sleeping, feed them, and get them ready for the day.
Denise: I mean, no matter what their situation was, not being able to get up out of bed, not being able to go outside and play, whatever, they always had a smile for you. Always.
Christina: One day in 2011, she was giving a boy a shower when she slipped. She fell on her knees on the hard tile floor.
Denise: It was very painful. I mean, I just laid there. It hurt so bad.
Christina: Denise reported the injury and her employer sent her to a doctor covered by their workers' comp insurance. He recommended knee surgery, but her employer's insurance company said no. Then she saw an ad on TV for California Injury Lawyer. She called their 1-800 number. That very evening, three people showed up at her house. They had her sign a pile of documents and left a business card.
[00:06:00]
Denise:
 

There's no pictures on it or anything, anybody's picture.

Christina: Nobody's name?
Denise: No. Nobody's name. Nobody's name at all.
Christina: Do you remember thinking that might be kind of odd at the time?
Denise: No, I didn't. I guess I shouldn't have went with somebody that was on TV.
Christina: They sent her for treatment to a place called The Riverside Health Clinic.
Denise: It was full. Full, full, full every day to where there was no sitting room.
Christina: Denise went to the clinic for two years.
Denise: Each month I got one of these little things that looks like a lunch menu from a school.
Christina: The sheet listed all sorts of medical treatments. The ones she got included shock-wave therapy, acupuncture, urine tests, hot and cold therapy, MRIs, and nerve tests with suction cups. I'm not even sure about this one.
Denise:

[00:07:00]

I can't describe it. It was like a little jackhammer that they used, they said, to break up inflammation. Honestly, none of them helped. The acupuncture made it worse. It didn't hurt while they were doing it, but afterwards I was in a lot of pain.
Christina: What about the jackhammer thing? Did that help?
Denise: No. No. The shots of cortisone didn't help either. It probably helped me for maybe an hour, and after that, it didn't help.
Christina: Denise said her knee continues to swell and give out at times. She never got surgery. Prosecutors say Denise walked into a money-making scam. They accused the chiropractor of running the California Injury Lawyer office and a chain of clinics illegally, without a license to practice law or medicine. The chiropractor, Peyman Heidary, he's pleaded not guilty. His lawyer says the prosecutors ruined a good man's reputation and have no specific evidence of fraud.
[00:08:00]
Denise:
 

Let me see. I can add this. Let's get the grand total here. See what it all adds up to.

Christina: Denise and I went over the charges for her medical treatments. She'd never seen any of the bills. Patients in workers' comp typically don't get them, but I got them by filing a public records request. I sorted the bills by price, from high to low.
Now, for the first one, it's $27,000.
Denise: Holy cow! That's a lot. I have no idea what that is even for. None whatsoever.
Christina: The next highest bill? $17,000 for pain creams from Kareem Ahmed's companies. We heard him earlier in the undercover recording talking about how no one cares about workers' comp. Denise was not impressed with the product.
Denise: No. I could've went to Walmart and got Bengay for $5. Whatever.
Christina: There's your interpreter.
Denise: No, I didn't have an interpreter. I didn't need an interpreter.
[00:09:00]
Christina:
 

A total of twenty-three doctors, medical companies, and others lined up with bills on Denise's case.

$95,257 worth of-
Denise: Oh, no way. No wonder they don't want to settle with me! No, that's ridiculous. That is ridiculous. No.
Christina: Denise was hoping for a settlement from workers' comp to cover her injuries and lost wages.
Just looking at that, that these folks want $95,000 for your care and you're still sitting here without your-
Denise: Nothing. Nothing. I lived in my mom's garage. I did exactly what these people asked me to do. I did what the attorney asked me to do. Basically, I got screwed.
Christina:

 

[00:10:00]

She eventually got another lawyer and settled the case for $32,500. That settlement? It's about as much as Denise would have made in one year of work. Meanwhile, prosecutors say the chiropractor and others who set up the sham law office and questionable clinics, they walked away with $18 million. It turns out, Denise Rivera's case is one of more than a hundred thousand in California involving a health provider who's been accused or convicted of scamming the system. That's the number we came up with after examining thousands of pages of criminal prosecutions and millions of workers' comp court records. In most of these cases, the workers don't even know that the medication, treatment, or surgery they got was evidence of a possible crime.
Producer Delaney Hall and I went down to San Diego to meet with an investigator who is the first line of defense against these kinds of schemes.
Tina Barton: I'll cross over here.
Christina:

 

[00:11:00]

Tina Barton investigates insurance fraud. By law, workers' comp insurers have to employ a team of special investigators like Tina, who can present fraud cases to criminal prosecutors. Tina drove us all over San Diego County and showed us how operators target and entice workers to go through with expensive and sometimes dangerous medical treatment.
Are we getting close?
Tina Barton: We are very close.
Christina: Our first stop is a chiropractic clinic in San Diego, a couple hours south of where Denise lives.
Tina Barton: Here it is right here, as a matter of fact.
Christina: Tina suspects that this is a clinic that gives workers as much expensive treatment as possible, whether they actually need it or not.
Tina Barton: These are some people walking in the door. It might have just opened.
Christina: The clinic is small and a bit dingy. Tina pulls over across the street and she slouches just a little bit lower in her seat. She served a couple of tours in the military, and then she worked as a police officer for thirteen years. She's been on stakeouts here before.
Tina Barton:

[00:12:00]

One thing to observe is the number of people walking in and out of the door. A lot of times problem clinics are described as "mills." What that means is you'll see a lot of people waiting for long hours. A clinic like this will see eighty to a hundred people a day.
Christina: As part of her investigation, Tina's talked to workers who've been treated here.
Tina Barton: They had no idea why they were showing up, and then they would say, "Okay. Just go in this room and go lay down." There were electrodes being placed on their body or certain things being placed on their body. Or they'd go into this medical device and they had no idea why. That causes people uncertainty and fear.
Christina: Remember the lunch menu of medical services that Denise received? Clinics can make big money on endless rounds of treatment. Prosecutors have accused at least a dozen of other clinics in Southern California of operating this way.
Tina Barton: We're talking about millions of dollars a month going back and forth, flowing around. We're talking about highly organized criminal enterprises. We're talking about doctors who are being driven by greed. This is Hollywood-level stuff.
[00:13:00]
Christina:
 

Our first clue of how workers could end up at a clinic like this one comes at our next stop.

Tina Barton: Do you guys want to walk around?
Christina: Which is a strip mall in southern San Diego County, about four miles from the U.S./Mexico border. Business names are listed in English and Spanish. There's a grocery store piping in music, a laundromat, an auto parts shop. Just a few doors down, we find a business card sitting on the front desk of an insurance office. It lists a 1-800 number and says, "Accidentes," in big letters across the top.
Tina Barton: It says, "Podría recibir hasta 3,900," so, "You can receive up to $3,900." I think, monthly.
Christina:

 

[00:14:00]

Prosecutors point out that advertisements like this, suggesting people could make up to thousands of dollars on a workers' comp claim are often the entry point to a scam. They're part of a sophisticated marketing strategy that includes radio and TV ads. They target Spanish-speaking workers.
Section 1 of 3          [00:00:00 - 00:14:04]
Section 2 of 3          [00:14:00 - 00:28:04] (NOTE: speaker names may be different in each section)
Speaker 1: ... [radio 00:14:00] and TV ads. They target Spanish speaking workers. When someone calls the 1-800 number, Tina says they connect with recruiters who can make $250 for each worker that they funnel to a clinic. Back in the car, Tina tells us that once a worker is on their radar, these recruiters don't quit.
Tina: They're compulsive. They're intrusive. I have people tell me that they'll call every single day to check in with them to see if they have friends or family.
Speaker 1: When workers agree to file a workers' comp claim, recruiters meet up with them and have them sign a ream of legal documents. Then they refer into a network of lawyers and medical clinics. The worker gets passed from treatment to treatment, like Denise, with each person along the way making money. Tina likens it to being sucked into a powerful wave.
Tina:
[00:15:00]
Problem is is once you're on wave the wave's going to take you, and that's what this system is. That wave is just going to take you, and it's going to take you for a ride. At that point, once you're signed up there's nothing you can do.
Speaker 1: The consequences for getting swept up in these scams can be high. Besides getting unnecessary, and sometimes even harmful treatments, workers can lose their jobs. The fallout can ripple beyond individual workers, hurting employers, too. Like when aggressive marketers go in and entice a big group of employees at one company to file workers' comp claims with the promise of big settlements. Christina spent time with one business owner who paid a very high price.
Christina: We first met Suzy [Kim 00:15:43] at the Los Angeles janitorial company started by her parents, Premier Building Maintenance Services. She once had a fashion boutique and worked on Hollywood photo shoots, but seven years ago she got into the family business.
[00:16:00]
Suzy:
 

Why? Obligation. I guess I just wanted to help my dad but I thought it would be temporary.

Speaker 1: At first, her parents ran the front office during the day, and then picked up mops and buckets to clean other offices at night. Eventually, the company cleaned 80 locations and had 350 employees. That age-old American dream, it started to feel within reach.
Suzy: They were very comfortable, finally. They were able to live comfortably, for once.
Speaker 1: Then in the spring of 2010, it hit, a tsunami of workers' comp claims.
Suzy: We got bombarded with these bills, just constant billing. Every month there was more and more claims.
Speaker 1:

 

[00:17:00]

Workers said they got hurt by falling down stairs or slipping on the floor. Suzy knows that people actually do get hurt on the job. In her experience, when that happens workers tend to tell a supervisor about the injury and takes some time off to get rest and medical cares. In these cases, there was no record of an injury while they were working at Premier. A lot of these cases were coming in a year or more after a worker stopped working there. The cases kept flooding in.
Suzy: It was overwhelming. I was overwhelmed so I didn't get to look at a lot of these documents until later. Going through it, that's when I started understanding what was going on.
Speaker 1: It looked to Suzy like the workers were filing in clusters based on the hospital or courthouse where they cleaned. Other waves of claims came from workers who were married or lived together.
Suzy: We were told by other employees that they were getting calls and people were coaching them, handing out business cards to attorneys.
Speaker 1:

[00:18:00]

I dug through public records and found 70 cases filed by Suzy's workers. She says her insurance company was paying out disability settlements to workers in the ballpark of $50,000, and even more.
Think about your car insurance. If you get into a major crash, or three or four, your rates are going to up and up. It was like Suzy's company was running a demolition derby, and insurers wanted no part of it.
Suzy: Trying to shop for insurance every year was very difficult. Most carriers just declined right off the bat. I would get a huge list from the broker say, "Okay, who did you approach?" Decline, decline, decline.
Speaker 1: Suzy suspected the company was the target of fraudulent claims. She went to the LA district attorney's office for help. She called the Department of Insurance. She even testified in a public hearing on workers' comp held by the state in 2012. Suzy wasn't sure how much longer the company could hold on.
 

[00:19:00]

One afternoon last August, we found Suzy in the process of moving out of the building where her family ran Premier Janitorial. The business collapsed, in part, due the expense of all the workers' comp claims its employees filed. Movers were wheeling out desks and chairs. Suzy's only regret is that they didn't quit sooner, before her parents sunk their retirements savings on a failing business.
Suzy: It's been hard. It's been stressful. Just going through all the paperwork again brings back all the memories. It's difficult.
Speaker 1: Prosecutors have gone after several health care providers that treated her workers. A psychologist billed for hundreds of hours of therapy in a single day. A chiropractor is accused of billing body parts that were never injured. These prosecutions, they're coming too late to help Suzy's company.
Behind their offices a man named Juan [Quetana 00:19:49] is looking at the last of the equipment for sale in the company shed. Juan is happy to pick up cheap equipment, dust mops, squeegees, step ladders.
Juan: I just take advantage of the moment.
Speaker 1: Juan launched his janitorial business about a year ago. He knows what happened Suzy's firm but he can't help but hope for better. American dream all over again.
Juan: Yeah. I'm working on it. It's not too far, it's close.
Speaker 1: We figured it must be a little bittersweet for Suzy to be selling her old equipment off to a hopeful new employer. Did you have any advice for him?
Suzy: My advice, I don't know if he wants to hear it. With this work comp problem, I don't see how any business can survive doing this. I wish him well.
Al:
[00:21:00]
That story is from Christina Jewett and Delaney Hall. This note, that clinic we checked out with Tina, the investigator, it turns out that the chiropractor who [inaudible 00:20:58] was indicted. He pled guilty to fraud but hasn't been sentenced yet. How did this system get so out of control, and what can be done to stop these kind of scams? We'll tackle that when we come back. You're listening to Reveal from the Center for Investigative Reporting and PRX.
 

 

[00:22:00]

From the Center for Investigative Reporting and PRX, this is Reveal. I'm Al Letson. Today, we're looking at how people are gaming the workers' comp system in California. In our last story we heard undercover tape of two men chatting it up about how easy it is to scam the system. To hear these two talk, it sounds like the wild west.
Speaker 6: Let me tell you something, [Chris 00:22:04]. If you do Medicare.
Speaker 7: Medicare?
Speaker 6: If you [do 00:22:10] Medicare, the Fed hang you.
Speaker 7: I know, that's why I never touch Medicare.
Speaker 6: Workers' comp, nobody cares.
Al: These guys are talking about how hard it is to scam the federal Medicare system compared to California's workers' comp system. For more on that, reporter Christina Jewitt joins us. Hey, Christina.
Christina: Hey, Al.
Al: What makes workers' comp such an easy target for people who want to take advantage of it?
Christina: First off, there's a lot of really good providers in the system. If you're not, if you're crooked, it's pretty easy to get a foot hold. You hang up a shingle, send a letter to the state and you can start billing right away for your services. In fact, you could just open up a PO box and start billing. Chances are no one's going to come check in on you for quite a while.
Al: How is Medicare different?
[00:23:00]
Christina:
 

First of all, they keep a list of people who they won't even let bill for services, if you've been in trouble for fraud before. Nothing like that in workers' comp. The other thing, you can't just bill from a PO box. Medicare, they'll come and check on you and make sure that you're actually running a legitimate business.

Al: If we wanted to open up a workers' comp clinic, we could just open the next week and start billing?
Christina: You know what, we could try. We could open up a clinic, start treating workers because if insurance companies don't want to pay us there's a side door. It's like a giant loophole. We can take our bills to one of two dozens workers' comp courts around the state and demand our money. It's called filing a lien. The law's not exactly on our side but if we stick around, demand to get paid, we might just get paid to go away.
Al: Let's say we're a little bit ambitious. You can be the brains, I'll be the doctor. How can we make some big money?
Christina: We could offer to treat people injured on the job with this device.
[00:24:00]
Al:
 

What is that? That sounds like a doctor hitting a little hammer on your knee over and over and over again.

Christina: That's the sound of shock wave therapy.
Al: Shock wave therapy, isn't that what they use for depression, like when they give people shock treatments?
Christina: You're thinking about electrotherapy. This is different. This is actually a technology that was developed to bust apart a kidney stone, if you get one of those painful things in your kidney. The FDA actually also approved this for treating two specific conditions. It's plantar fasciitis and tennis elbow.
Al: I don't see how we can get rich doing that. Not a lot of patients that would have those specific problems, are there?
Christina: We can push the envelope a bit. Medical providers are now using this to treat almost any part of the body. If you're a doctor, you can make the case that this is helping people who get hurt on the job. Insurance companies might not agree. They can deny the payment but we can take it up in court. Like I said earlier, we might not get the full amount but with these costing about $2,000 a treatment, we could still make some pretty good money.
Al: This goes on all the time in southern California?
Christina:
[00:25:00]
Yeah, these procedures are happening all the time. We checked to see how many cases are in the courts right now. If you search just for companies with shock wave in their name, there are thousands of cases.
Al: If this is such a big problem, why isn't the state doing anything to solve it?
Christina: You could say they've tried. I talked to Lachlan Taylor. He was a legal advisor to the state. In 2010 he investigated the system. It left him with a pretty bad impression of some of the medical providers who show up to these courts.
Lachlan: In an early stage of our study, I did label the abusive providers thieves and scoundrels. As I got further into I realized there's no point in moralizing about it. They're doing what is economically rewarded by our system. If we've created rules that reward bad behavior, it should be no surprise that we see a lot bad behavior.
Al: If he studied all of this in 2010, why hasn't anything changed, or has it?
Christina:
[00:26:00]
What happened was a state law was passed, and it was based on a lot of his work. It worked at first. The number of liens went way down but now it's right back up to where he initially saw the problem.
Al: What do the folks who currently run the program have to say?
Christina: At first, nothing. I've been asking the state for an interview for three months. I just heard from the director of the state department that runs workers' comp in California, Christine Baker. She said she and the Governor's Office are very concerned about what we've been asking about, about these liens and the medical fraud problem. She said her office just took a close look at the medical providers who are busiest filing these liens.
Christine: We are evaluating, in detail, those that are filing, and we do note that many are indicted. Many of the top ten, twenty are on the indicted list. We know there's a problem.
Christina: With that observation you made that some of the top lien filers have been indicted, certainly, it could take years for a final say on those cases. How do you plan to tackle that?
[00:27:00]
Christine:
 

The legislature will have to explore that, and the governor. It will take some legal discussion, review.

Christina: We're going to have to wait and see if lawmakers do anything about this.
Al: What about the victims, the workers who've been injured?
Christina: There's a couple of things. First, there's a pretty solid recent history of a lot of bribes driving a lot of surgeries the workers probably didn't need. Then there's workers who need a certain kind of help and don't get it. Then, there's this woman, Kim Reeder, I met. She felt like the people treating her had a hidden agenda.
Kim: I was put through a clinic situation. It seems to me like a fraud assembly line. It was just one thing after the other after the other. It's like you're living in the dark as to what's going on.
Christina:

 

[00:28:00]

Kim decided to investigate her case and see what was going on. She found out that the insurance company was billed for transportation and interpreting services that she never got. She thinks that patients should actually get this information in the mail. Normally , the bills just go right to the insurance company.
Kim: I really-
Section 2 of 3          [00:14:00 - 00:28:04]
Section 3 of 3          [00:28:00 - 00:49:46] (NOTE: speaker names may be different in each section)
Christina: Normally, the bills just go right to the insurance company.
Kim: I really want to see our workers' comp patients have the ability to be able to look through their billing. If that happens, all this can go away. I just think California's made up of significantly more honest people than dishonest people.
Christina: Kim's advice is that workers help police this. Making that happen, that would be up to California's lawmakers.
Al: Thank you, Christina.
Christina: No problem, Al.
Al:

 

[00:29:00]

That's Reveal's Christina Jewett. We're going to hear more from Christina in a minute in a story that you have to hear to believe, involving private planes, a bag full of money, and counterfeit screws that get drilled into your back. Ouch. That story, when we come back on Reveal from the Center for Investigative Reporting and PRX.
From the Center for Investigative Reporting and PRX, this is Reveal. I'm Al Letson. In the tradition of the X-Men, Star Wars, and Lord of the Rings, we bring you a prequel. Not actually like some of those movies like Star Wars and Lord of the Rings, those prequels, not so much, but the X-Men, that was good. In the tradition of the X-Men, we bring you a prequel that is so good, you're going to love it.
 

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We first aired this story in November of 2014. It's a story about surgical hardware. Screws. The kind that get driven into the back and neck in a spinal surgery. This investigation led us down the path to the stories you heard earlier. That's because a few years ago, the market for these spinal screws was booming, with surgeons operating on injured workers. Reporters, Christina Jewett and Will Evans bring us the story.
Will: Let's start with an 85-year-old machinist in his mom and pop shop in surburban Riverside County. That's near Los Angeles.
Machinist: I made hammers, a lot of screwdrivers, different kinds of screwdrivers.
Will: For a company that distributes hardware for spinal surgery, one day, someone from the company asked if he could make a more sensitive product.
Machinist: Screws.
Will: Meant to be driven into a person's spine.
Machinist: They gave me a sample. They told me the size to make them, the length and the thread diameter. It looked like a wood screw.
Will: They weren't wood screws. These were carefully engineered to hold a human spine together. The Food and Drug Administration is supposed to keep a close eye on this stuff or anything that goes into the human body.
The companies that make them have to prove they're strong enough and made of the right metal, and that makes them expensive. Each screw can cost up to $300 or so. The guys from the spinal hardware company asked the machinist to make screws just like the government approved once, but for much less.
Machinist: He was trying to get me down to about $39 or something like that. He was trying to get them cheap.
Will: That's where my reporting partner, Christina Jewett, picks up the story.
Christina: Now, let's talk about a woman at the northern end of the same Southern California County, Riverside. Her name is Derika Moses. Until early 2014, she didn't know much about spinal screws. Derika is a former softball star, who's working for Pepsi, setting up displays in grocery stores.
Derika: You get some back pains, twisting everything, lifting a lot.
[00:32:00]
Christina:
 

One day, Derika was lifting a case of 2-liter soda bottles.

Derika: Just heard a pop, pop, pop. I just sat there for a minute. I'm like, "It'll go away," but this time, it didn't go away. I had to sit there 5, 10 minutes before I can even straighten up.
Christina: She says the pain remained debilitating for days, then weeks and months.
Derika: Constant, constant pain.
Christina: She decided her only hope was something called spinal fusion surgery. The surgery uses special hardware to essentially build a bridge along the vertebrae. It's meant to take pressure off nerves in the spine.
She went for it. She found a doctor she trusted, went to the hospital with high hopes that her pain would end. She got 4 screws driven into her back. 6 years later ...
Derika: This comes in the mail.
Christina: A letter from a group of lawyers. Do you want to go ahead and read through it?
Derika:
[00:33:00]
"You may have had fake spinal fixation hardware implanted in your body." Like I said, it was bold and that came across real hard on me. 3 pages of something that I normally would've just thrown in the trash. I had to know if I was part of it. I had to know.
Christina: The lawyers who sent that letter to Derika, they claimed that thousands of people had counterfeit screws lodged in their backs and necks. If a patient has a counterfeit, there could be problems. If the threads aren't just right, the screws might back out of the bone. They might break. If they're not manufactured to FDA standards, they could even be toxic to patients.
Will: For most of the patients, there's no easy way to find out which screws were implanted. They're embedded deep in people's spines, so the patients can't take a good look at them.
We wanted to figure out what was going on. How could this happen in a system that's regulated by the government? Did Derika have fakes in her back? How did they get there?
Christina:
[00:34:00]
Derika was lucky, if you can call it that. These spinal fusion surgeries are not always successful. For a lot of people, the pain doesn't go away. That's what happened to Derika. She had her screws taken out a while before she got that letter. She also convinced her nurse to give her the hardware after it was removed.
Derika: I remember waking up. I looked over to my left and a nurse was there. She said, "I have your hardware right here." She held up a bag. She said, "All this came out of you." She took it and she slid it up under my pillow.
Christina: Of all things, Derika wanted to melt down the pieces and make them into a necklace.
Derika: Just to tell people like, "This is something that used to be in my back." It was a representation of what I had been through. It would've been a great conversation piece.
Christina: When Derika heard about the counterfeit scam, she locked them up in a safe deposit box at a local bank. We went to the bank to see them.
Derika: There's my life in a bag.
Christina:
[00:35:00]
Her life in a bag. Even I could tell, some of the screws were not like the others. What jumps out to me is the logo.
Derika: You're good. You're a lot better than I am because I didn't even notice that until they pointed it out to me. They're not the same size. Look at these.
Christina: I took pictures of the screws and brought them to the company whose name is on the logo.
Derika: This is crazy.
Christina: It's called the U&I Corporation.
Sung: This is not what we designed.
Christina: That's the general manager, Sung Hwang.
Sung: The very left one is U&I, and the other 3 is not U&I.
Christina: The first thing he noticed, the U&I logo on his screws is in italics. On some of these screws, the logo was straight up and down.
Sung: Even on the same screw, the logo size is different.
Christina: We leafed through a stack of photos of Derika's hardware. Number 2, here, does anything jump out to you about that one?
Sung: Right one looks like somebody else. The left one looks like U&I. Look at their thread. We design like this. The right one is not U&I.
[00:36:00]
Christina:
 

In a way, does it seem like they weren't even trying that hard to cover their tracks?

Sung: Actually, I don't think they tried to make the best product.
Derika: Have a seat.
Christina: Thank you. I went back to Riverside to see Derika the next morning. Part 2. I feel like a gumshoe running around.
Derika: The journey continues.
Christina: I told her what the company manager said. He said this one's authentic, doesn't think those other 3 are the real deal.
Derika: Wow. It's fake after all. They didn't even care enough to make it look right.
Will: Derika had some implants from a company cleared by the government and some unauthorized impostors make a stand. We started tracking down people who work for the company that sold Derika's screws to see how they pulled it off.
 

[00:37:00]

The company is called Spinal Solutions. They're a distributor. They hire sales reps to bring their products to the doctors to get them to use their stuff. The sales reps don't have to have any special license.
Sales Rep: I really thought I would've needed a lot more education and what not.
Will: We talked to one sales rep who would only speak to us if we disguised his voice. He was afraid his old bosses would come after him. At first, he told us he was thrilled to have the job.
Sales Rep: Of course, I went home excited. I'm going to be in the medical field. My role impressed my kids. Doctors are awesome. They're highly educated. I'm in a role with an educated class of people.
Will: The guy who ran Spinal Solutions is named Roger Williams. It was clear to the sales rep that Roger was making a ton of money. He had a BMW, a Mercedes Benz, and a yacht called the Spare Change. He and his wife flew around the country in a private jet painted in purple and gold stripes, the colors of their favorite basketball team.
Sales Rep: They would go follow the Lakers around the United States. Sometimes, they would, of course, befriend a Laker and what not, and fly one of them back as well.
[00:38:00]
Will:
 

The rep was pretty successful. He traveled around and actually went into the operating room during surgeries. He was there to answer doctors' questions about Spinal Solutions products, but then he also started to notice some weird things going on with the company's screws.

Sales Rep: The screws that I got out of trays that were going to hospitals were so bad. You couldn't ignore that they were counterfeit. It was so blatantly obvious to even the untrained eye. These screws are different. They have shavings on them still. They're not done. They were going out in trays ready for sterile processing, and then they would go into the O.R., where they would be implanted into the patients.
Will: The problem was Spinal Solutions was selling spinal implants to doctors all over the country, in Nevada and Texas and Wisconsin.
 

[00:39:00]

One of their regular customers was a prominent surgeon in Maryland, Dr. Randy Davis. He did hundreds of surgeries with Spinal Solutions implants. He says he never saw any screws that looked wrong.
Dr. Davis: I think most real spine surgeons would be able to tell if the screw is made by some little old guy in an instrument shop. I don't really believe that story.
Will: There's more to the story about Dr. Randy Davis. It helps explain how Spinal Solutions brought doctors on board. See, the doctors, as the company sold them on the idea that together, they would develop new products to help patients. The doctor had the ideas and Roger Williams, the head of the company, was going to bring them to market.
Dr. Davis: I really believed him because he was such a good salesman. That's the one thing that Roger was great at. When he was selling you in the beginning, you really believed it. You really believe that he was going to do great things.
Will: Spinal Solutions signed up the doctor as a consultant. The company paid him hundreds of thousands of dollars for his ideas.
[00:40:00] Now, Spinal Solutions might seem like some rogue company, but this part is pretty common for this industry. Medical technology companies hire doctors as consultants all the time. Sometimes, these close relationships can cross a line. "You use my expensive hardware, I'll pay you well." Prosecutors have cracked down on some deals calling them kickbacks.
I asked Randy Davis if he thought Spinal Solutions was trying to buy his loyalty.
Dr. Davis: That's something that I always ask myself everyday. That's very important to me that I ask myself to make certain that I ask myself.
Will: I didn't follow that.
Dr. Davis: I ask myself that everyday because I do not want to be in a situation where I am going to make any decisions on patients based on money. I believe I do not do that.
[00:41:00]
Will:
 

Got you. The relationship lasted several years. Eventually, the doctors says he cut ties with the firm because he didn't see the company doing enough with his ideas.

Christina: Let's be clear. No one has proven that Randy Davis used counterfeits or that he took kickbacks.
Will: Right. We don't know if surgeons got a good look at the screws in the operating room. We don't know whether they knew the screws were fake, but we do know Spinal Solutions took very good care of its doctors.
Christina: We went out to a remote Southern California airport to meet a pilot who flew private planes for the company. Robert Garrison told us the company president had varying doctors around and even making deliveries of cash.
Robert: He said, "These doctors are greedy. They're so greedy, you can't believe it. All I do," he says, "I take advantage of their greed."
Christina: The pilot told us Roger asked him to make some unusual deliveries to doctors, bundles of hundred-dollar bills.
[00:42:00]
Robert:
 

He said, "Get a nice box at the airport and put this." It was full of money. I counted it, approximately $20,000 cash.

Will: Another time, Garrison says he made a special delivery to a Southern California doctor. The package was a bottle of wine with a little something more.
Robert: Money on the top of it.
Will: There was money on the top of the wine bottle?
Robert: Yeah. It was a canister with a wine bottle, and it was a bunch of cash around the top of it.
Will: Now, passing doctors bundles of cash like that could be considered a bribe. We tried to find Roger Williams to get his side of the story, emails, letters, phone calls. We contacted several lawyers he's used over the years. No word from Roger. We did get our hands on a recording of a bankruptcy hearing from 2013.
Court Lady : Mr. Williams, please raise your right hand. Do you solemnly swear to tell the truth, the whole truth, and nothing but the truth?
Roger: I do.
Court Lady : Please state your full name.
Roger: Roger Karl Williams.
Court Lady : Okay.
Will:

[00:43:00]

Roger had gone from bringing in $18 million a year in revenue at his peak to crushing debt. Bankruptcy officials tried to figure out where all that money went.
Official: A canceled check or the actual check being deposited.
Roger: You know what, I resent where you're going with this because the thing is all this money was put in the company, and that's the only way we could survive. I don't really appreciate the fact that you are implying that I'm ...
Official: I'm not implying anything, sir. I'm asking you for records.
Roger: Because I really know what's going on here. I'm going to tell you something. I did everything to keep this business alive, everything possible. I don't have a penny to my name. I got $3,000 of my account. You could dig to your heart's content, but you will not find a dime from me.
Christina: There are a couple of problems at work here. For one, we have a system where medical firms can get pretty cozy with the doctors who use their products, things like artificial hips and prescription drugs. When medical companies lavish money on doctors, it can end badly for patients.
Will:

[00:44:00]

We have this system where there's a lot of trust. Patients trust their doctors. Hospitals expect doctors to be ethical. Doctors expect medical hardware sales people to be legit. The FDA doesn't monitor every screw sold to every doctor. The system depends on the honesty of all these parties.
Christina: Obviously, there was a breakdown here. The sales rep we talked to would tell you that he begged the FDA to look into this.
Sales Rep: You need to go sirens blazing and door kicking and stop this like yesterday because everyday that you guys don't do something, some loved one is getting these screws put in their spine. The longer you drive the silence, the more victims there are, the more fraud there is, the more pain and suffering or possible paralysis. You can go on and on.
Will: The FDA did open an investigation, but then they let the company continue selling its products while they traded letters back and forth.
Christina: The FDA also recalled some of Spinal Solutions' implants at one point, but what does that mean if the screws are already buried in your back?
[00:45:00]
Will:
 

Any way you look at it, the FDA certainly seemed to alarm Roger Williams. During that bankruptcy hearing, he said he brought in paid consultants to help him deal with the Feds.

Roger: If I didn't pay them, then I'm looking at criminal charges for stuff. I did what I could to find money to wherever it was, if it was in my backyard or wherever it was to pay whatever I could say.
Official: Right. You're covering yourself. That's why we're making sure that ...
Will: Spinal Solutions isn't selling screws anymore. That elderly machinist who used to make screws for the company, he says he doesn't have any business these days. He said his doctors have been after him for 15 years to stop working. He worries about getting dizzy and falling, but he doesn't worry about his handiwork on those screws he made.
Now, looking back, you would be okay with the ones you made being used in surgeries and ending up in people's backs?
Machinist: Yeah. Sure.
Will: Okay.
Machinist: Why would I be worried?
Christina:
[00:46:00]
Derika Moses finds ways to laugh about what's happened, even though her unsuccessful spinal surgery means she now needs a whole closet of devices to get around. She has a brace, a cane, and a walker.
Derika: The kind you see a lot of older folks wear or use with the wheels. The only difference of mine is they're hardly tennis balls yet.
Christina: She's given up on the plan to make a necklace out of her surgical hardware.
Derika: I don't think it'll ever become a jewelry. I think it's going to become an international exhibit maybe one day, something, a reminder that you can't do this to people.
Christina: She hopes that someday, someone will be held accountable.
Al: That was Reveal reporters, Christina Jewett and Will Evans. That story was produced by Marianne McCune, with production help from Delaney Hall.
As for former Spinal Solutions president, Roger Williams, well, it seems he's already been looking into new ventures. The last time that Dr. Randy Davis heard from Roger, he was pitching a medical technology project in the South Pacific. Here's what he told Will.
[00:47:00]
Dr. Davis:
 

They showed up in the middle of the night, about 10 Samoans.

Will: You're kidding me.
Dr. Davis: No.
Will: Roger showed up-
Dr. Davis: Roger showed up and said, "I got some people from the Samoan government. Would you be willing to talk to them?" It was the most bizarre thing I've ever heard. I didn't hear anything else.
Al: In the year since this story first ran, a California law firm filed a suit accusing doctors across the country of taking kickbacks to use the counterfeit screws. The doctors outside of California got the case against them dismissed, but California doctors are still fighting it. That lawsuit calls for patient monitoring fund that would cover the future medical cost of patients who have fake screws in their spines. Derika's lawsuit is still marching forward, and her doctor is pleading the Fifth, as in staying quiet to avoid incriminating himself in some aspects of the case.
 

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In a minute, we've got a preview of a story we've been working on about the refugee crisis in Europe.
First, we want to tell you about the people who put together our show today. Delaney Hall and Julia B. Chan were our lead producers on today's show. Patricia Flynn was the show's editor. Our radio staff includes Stan Alcorn, Fernanda Camarena, Rachel de Leon, Sheryl Duvall, Deb George, Peter Haden, Melinda [Hasey 00:48:14], Katharine Mieszkowski, Michael Montgomery, David Ritsher, Neena Satija, Michael Schiller, Ike Sriskandarajah, Laura Starecheski, Taki Telonidis, and Amy Walters. Our sound design team is the wonder twins, my man, J. Breezy, Mr. Jim Briggs and Claire "C-Note" Mullen. Our senior editor for today's show was Fernando Diaz. Our editor in chief is Amy Pyle, and Christa Sharfenberg is our head of studio. Susanne Reber is Reveal's executive editor. Our executive producer is Kevin Sullivan. Our theme music is by Camerado-Lightning.
Here's a tease of the story of the refugee crisis in Europe. We follow Abdul.
Abdul: We walked through the mountains.
Al:
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He fled Afghanistan when he was just 15 years old and found refuge in England, but now, the country he considers home wants to send him back. He worries about his safety that happens.
Abdul: I'm scared of Taliban. They're still looking for me.
Al: Be sure to stay tuned to Reveal in the coming weeks for the story of kids crossing borders on their own.
Support for Reveal is provided by the Reva and David Logan Foundation, the Ford Foundation, the John D. and Catherine T. MacArthur Foundation, the John S. And James L. Knight Foundation, and the Ethics and Excellence in Journalism Foundation.
Reveal is a co-production of the Center for Investigative Reporting and PRX. I'm Al Letson. Remember, there is always more to the story.
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