SACRAMENTO – Assemblymember Cathleen Galgiani (D-17) announced today that Governor Schwarzenegger has signed her bill that attacks Medi-Cal fraud and identity theft.  Assembly Bill (AB) 381 was sponsored by the California Hospital Association, and received bipartisan support throughout the State Legislature. 

AB 381 is aimed at reducing fraudulent Medi-Cal claims, and eliminating identity theft and the black market for stolen social security card numbers.  Hospitals use social security numbers because most Medi-Cal patients who are seen on an emergency basis do not carry their identification cards.  However, this opens the door for fraudulent medical providers to obtain reimbursement by submitting stolen social security numbers along with phony medical records.  AB 381 requires the Department of Health Care Services to establish a computerized system to provide hospitals and physicians with the Medi-Cal numbers of patients they are treating, so the State can prohibit the use of social security numbers which leads to identity theft and Medi-Cal fraud. 

“We can always cancel our stolen Visa card and get another one, but we can’t cancel our Social Security cards.  That is why this problem is so prevalent,” stated Galgiani.

Just recently the Attorney General’s Office conducted a year long Medi-Cal Fraud sting that resulted in the arrests of three individuals who bilked the State out of $1.4 million dollars.  The three were involved in a complicated scheme whereby patients were recruited from the “Union Rescue Mission” in downtown Los Angeles, and supposedly treated at the “Workplace Industrial Management Clinic”.  The three were convicted of fraudulent reporting of medical services that were never provided, and selling the names and social security numbers of Medi-Cal patients to others for the purpose of creating phony medical records, and collecting on fraudulent reimbursement claims.

“This is a case where greed caught up with these thieves after they tried to collect funding for treatment to thirty-five individuals who were already deceased,” Galgiani said. 

The three were also convicted of stealing the identities and Medi-Cal billing numbers of legitimate physicians, and submitting fraudulent claims under their names. 

“These crooks became so arrogant that they even tried to collect reimbursement funding for services supposedly provided by a physician who was in Sri Lanka caring for victims of the Tsunami,” said Galgiani.

It is estimated that nearly 10% of California’s Medi-Cal dollars are stolen through Medi-Cal fraud which involves billing for work not done or not required.  The Governor has just cut $331 million from the program in the current budget, yet Medi-Cal fraud accounts for approximately $2.8 billion in losses to the State on an annual basis. This translates to about $2.8 billion in wasted money that could otherwise be spent on legitimate health care needs.

Assemblymember Galgiani states that “Medi-Cal fraud not only rips off taxpayers, it puts the public health at risk when unnecessary medical treatments are performed out of greed.  AB 381 will allow our Medi-Cal system to work efficiently while still guarding against fraud.”