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TriCare Files $115-Million Workers' Comp Suit : Health: The Irvine-based operator of clinics for injured employees says its business has been damaged because insurers delay paying claims. Carriers say the lag is caused by slow pace of state appeals process.

September 21, 1993|JAMES S. GRANELLI | TIMES STAFF WRITER

IRVINE — One of Southern California's largest operators of clinics for injured workers has weighed in as one of the biggest critics of slow-paying insurers that cover workers' compensation claims.

TriCare Inc., which filed a lawsuit in Los Angeles County Superior Court late Friday, said Monday that 75% of its operations have been destroyed because insurers have taken as long as 400 days to pay claims.

The company, based in Irvine, closed four subsidiaries in April because of the long delays, according to the suit. TriCare names nine carriers as defendants and seeks $115 million in damages.

"We were a $47-million company, but we had to restate our revenue (last year) to $12 million," Larry G. Gerdes, the company's chief executive, said Monday.

TriCare's complaints are part of growing and widespread criticism among doctors that insurance companies are balking at paying for evaluations of injured workers.

Earlier this year, Primedex Corp. in Culver City pulled out of the business, in part because of payment delays. And CBL Medical Inc. in Los Angeles, the Southland's only remaining publicly held company in the field, said Monday that payments from insurers are running as much as 500 days behind and that the company is near the end of its line.

John McDermott, a Los Angeles-based lawyer for TriCare, accused the industry of using its long-running and well-publicized complaints about fraudulent medical and legal practices--some of which he admits exist--to tarnish all providers of health care and evaluations for injured workers.

"There's no excuse for not paying them fully and in a timely manner," he said.

Insurers say that any delays are caused by appeals to the state agency that hears objections carriers make about bills submitted to them. Appeals can take as long as a year to be resolved, said Gail Radzevich, a spokeswoman for Industrial Indemnity Co. in San Francisco, one of the defendants.

Spokesman Ron Christensen of the State Compensation Insurance Fund, another defendant in the TriCare suit, said, "I would expect that all insurers are reviewing bills with extreme care and caution because of the high incidence of fraud by workers, doctors and attorneys."

Radzevich and Christensen, both speaking in general because their companies have not been served with the lawsuits yet, said the delays also are simply built into the system.

While Primedex has been under investigation by the FBI and the Los Angeles County district attorney's office, TriCare and CBL are cleanly run companies with no major complaints against them and no investigations of their operations, said TriCare lawyer McDermott and Robert Mishkin, CBL's president.

"The insurance industry took the fraud issue, which is real, and exploited it as a means for not paying anybody, and that has turned out to be very profitable for them," Mishkin said. "Claims are dropping, premiums are rising and meantime they're not paying anybody."

McDermott said TriCare and other providers worn down by the process are often settling claims for less than cost, even though the bill was for no more than the state's revised fee schedule.

"How can you justify a 400-day delay on a $1,000 claim and then pay only $850?" McDermott asked. "How can a company like Veritas be bad when insurers think enough of it to use it for defense purposes?"

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