Los Angeles Times, Sunday, August 6, 2000

Public Fraud Unit Favors Those Who Privately Fund It
D.A.'s workers' comp section is paid for with money from employers that is doled out by insurers. Prosecutors tend to ignore both but go after workers. Courts see no problem.


     The Los Angeles County district attorney's office has for nearly a decade operated with a built-in potential for a conflict of interest stemming from its acceptance of private money to pay for public prosecutions of workers' compensation insurance fraud.
     When defense lawyers challenged this use of private funds, which was authorized by the state Legislature, prosecutors said not to worry: Their judgments were independent. Appellate courts agreed with prosecutors that there was no actual conflict of interest.
     However, a review of prosecutors' performance shows that their decisions--on whom to investigate and on whom to prosecute--have consistently favored those who provide them with money.
     The money originates with the state's employers and is handed out by employers and insurers. It is supposed to combat workers' compensation fraud in all its forms--whether committed by employers, insurance companies or workers.
     But the district attorney's office has downplayed employer fraud and repeatedly ignored evidence of possible crimes by insurance companies. At the same time, it has cracked down hard--and sometimes unjustly--on the workers whom insurance companies and employers accuse of lying about on-the-job injuries.
     A case in point is that of Indravadan Jayaswal.
     The district attorney's office had the middle-aged clerk handcuffed at work and taken to jail after he filed a workers' compensation claim for his aching back, arm and neck.
     Jayaswal was experiencing classic symptoms, one of his doctors said, of a "clerical workers' sickness" caused by the repetitive stress of spending all workday, every workday, typing on a computer. He was, therefore, his doctor said, entitled to workers' compensation benefits.
     But Jayaswal had not at first claimed that his ailments were work-related.
     He said he was afraid he would be fired if he claimed to have been injured on the job. So, when pressed, he said he told his doctors initially that he had experienced pain lifting his garage door.
     An insurance adjuster seized on the garage door statement as evidence that Jayaswal was lying when he later attributed his injuries to work.
     Without asking him to explain, prosecutors charged him with the felony of lying to collect benefits.
     Compare that to the way prosecutors handled what they regarded as lies under oath by some of their benefactors.
     District attorney officials said they collected evidence that seven insurance company executives had perjured themselves in reports to state regulators.
     The executives overstated the extent to which their companies were financing their own legally required efforts to ferret out fraud. The district attorney's office was almost wholly dependent on these efforts as the source of its workers' compensation fraud cases.
     Although the head of the D.A.'s anti-fraud effort routinely prosecuted workers for lying under oath, he said it did not occur to him to apply the same standard to the insurance executives.
     He did not see them as his targets. Nor did his office.
     The extent to which prosecutors had abandoned even the possibility of going after insurers was made clear in a 1998 job advertisement for the workers' compensation anti-fraud unit. "The suspects we investigate," said the ad, issued by Chief Deputy Dist. Atty. Robert P. Heflin, "include workers, employers, doctors and lawyers."
     The ad did not even mention the possibility that insurance companies could be charged with crimes.
     The unit's priorities are evident at a glance:
     In eight years, it has spent $38 million in private funds.
     It has prosecuted more than 250, mostly low-paid workers, fewer than 20 lawyers, doctors or other medical personnel and about two dozen employers, all of them small or medium-sized.
     It has prosecuted exactly zero insurance companies.

     Good Intentions
     The idea behind using private funds to fight workers' compensation insurance fraud was to put unscrupulous doctors and lawyers behind bars.
     These doctors and lawyers bilked a system designed to speed benefits to injured workers. Workers could pick any doctors they wanted. Employers, through their insurance carriers, were stuck paying the bills.
     Doctors were making a mint because of unique California laws that gave them special incentives to inflate their bills and required insurers and employers to pay for initial evaluations whether workers turned out to be injured or not. Doctors in California collected five to six times what they did in other states for these evaluations.
     That wasn't enough for some doctors and lawyers, who paid re cruiters to troll unemployment insurance lines, telling laid-off workers that they would be better off if they claimed that they had been injured on the job.
     Insurance companies rarely challenged these fraudulent claims, electing instead to pay them and pass the costs along to their employer-customers.
     These activities caused a genuine fraud crisis in Southern California in the late 1980s and early 1990s, resulting in steadily increasing insurance premiums for businesses already struggling in a recession.
     Employers organized and got the attention of state legislators by screaming that they couldn't afford to pay these higher premiums and threatening to leave California if something wasn't done.
     Then-state Sen. Robert Presley (D-Riverside) took the lead in writing legislation aimed at putting the unscrupulous doctors and lawyers out of business and behind bars.
     Workers were never the target, said James Morris, an aide to Presley. "Everyone realized that the workers in this context were kind of the sheep in this whole thing," he said.
     Presley's legislation, which passed in 1991, was unusual in that it required employers, rather than taxpayers in general, to pay for investigations and prosecutions through a surcharge collected on their insurance premiums.
     There were two reasons Presley took the private money approach. The state was in the red and Presley said any general fund appropriation would not pass. County prosecutors were unwilling to use tax money already assigned to them. They had higher priorities: violent crimes.
     Morris, the Presley aide, recalled speaking to several county prosecutors, including representatives of the Los Angeles County district attorney's office who told him: "Unless we see any money, we're not going to be prosecuting this type of case."
     Employers are now assessed a statewide total of $30 million a year. In the Legislature's scheme, the money is divided between the state Department of Insurance for investigations and the various county district attorney's offices. Prosecutors apply for the money annually to the insurance commissioner, who doles it out with the consent of the state's Fraud Assessment Commission, which consists of two insurers, two self-insured employers and one otherwise insured employer. The Los Angeles County district attorney's office has historically gotten the lion's share of the funds.
     The private dollars paid for a slew of prosecutions, proving, said Stanley Zax, chief executive of Zenith Insurance Co., that district attorneys are like anybody else: "When they are incentivized to go after something, they go after it."

     Medical Mills
     In the early days of the program, Los Angeles County Dist. Atty. Gil Garcetti announced that he was going to focus on the doctors and lawyers involved in the medical mills. "Our goal has to be to put some of these people in prison," he said in 1993.
     But the medical mill prosecutions turned out to be quite difficult. (Garcetti, locked in a reelection battle with one of his deputies, declined to discuss such cases or any aspect of the workers' compensation anti-fraud fight for this story.)
     The district attorney's office won only one of its big mill cases, against a psychiatrist named Mark Kaplan, whose frauds were also documented by television news people operating undercover.
     The office lost the other three such cases it pressed to conclusion. Part of this was because prosecutors ineffectively presented evidence, jurors and defense lawyers said. Part was because jurors had trouble distinguishing between fraudulent actions and actions that were lawful--just greedy.
     The operators of a large chain of clinics who were accused of systematically overcharging insurers and performing unnecessary tests offered lawful greed as their defense.
     "They charged the absolute maximum that was available under the law," said defense lawyer Michael Chaney. "Charging too much isn't fraud. It's just excessive." Jurors agreed.
     The second in command of the district attorney's workers' compensation unit also agreed. Deputy Dist. Atty. Richard Rosenthal advocated abandoning his own prosecution of another large string of clinics called Primedex. He concluded that its alleged insurance company victims were not really victims; they were more like accomplices in that they had willingly paid Primedex's bills and passed the costs along to employers.
     "It is obvious that Primedex exploited the workers' compensation system," Rosenthal wrote to his superiors in a confidential memo. "It is obvious that Primedex ordered medically unnecessary procedures. But it is also obvious that the insurance companies and [state workers' compensation judges] allowed the acts to occur."
     They all participated in what amounted to "a giant quasi-legal Ponzi scheme with citizens of this state on the losing end," he said. Rosenthal declined to comment for this story.
     Although he repeatedly recommended giving up on Primedex, his superiors would not allow it. The district attorney's office had spent millions in private funds on the mammoth prosecution and had repeatedly promised the Fraud Assessment Commission that arrests were imminent.
     Five years after Rosenthal recommended dumping the case, former Primedex executives are still awaiting trial. The prosecutor who inherited the case, Deputy Dist. Atty. Robert Foltz, thinks it is going to be a tough sell.
     "The amount of provable fraud in the case is really in question," he said in an interview, "because basically the law allowed what they were doing."
     Primedex itself went out of business long ago, as did many of the clinics specializing in workers' compensation cases. They folded, in some cases, because they were spooked when the district attorney's office obtained search warrants to seize their files and, in other cases, because the Legislature clamped down on the billing excesses that had made the clinics so profitable. The Legislature imposed a schedule that limited fees for the first time in 1993.
     The medical mill prosecutions saved insurance companies millions of dollars. Primedex alone claimed that it was owed $159 million for medical services when it shut down. Under ordinary circumstances, the company's internal memos say, it could have expected to collect $135 million. Once the district attorney's office alleged fraud, however, insurance companies were able to settle for less than $10 million.

     See No Evil
     While prosecutors aligned themselves with insurers in going after doctors, they elected not to investigate complaints by doctors that dozens of insurers committed fraud against them.
     The doctors charged in civil lawsuits that insurers illegally conspired to tar them as fraud mill operators and drive them out of business without bothering to assemble any evidence that they were in fact committing fraud.
     As proof of a conspiracy, the doctors cited an account by a former executive for Golden Eagle Insurance who said insurers decided to engage in a little vigilantism to control costs.
     In a letter to lawyers for some of the doctors, the executive, Hy Bates, said he attended a secret meeting in 1991 with representatives from three dozen other insurers active in the Los Angeles area.
     "The gist of the strategy," he said, "was to target the [medical] facilities with the highest dollar volumes . . . and then utilize any technical or legal argument available to them to deny or delay payment."
     Deputy Dist. Atty. Edward Feldman, who headed the workers' compensation fraud unit from its inception in 1992 until the end of 1996, said he was skeptical about the lawsuits because he suspected that some of the doctors were crooks. He said he had never heard about the secret meeting Bates described.
     The district attorney's office also did not investigate the finding of a civil jury in Los Angeles Superior Court, which concluded that the state's largest workers' compensation insurer defrauded an employer of hundreds of thousands of dollars.
     The insurer, the quasi-public State Compensation Insurance Fund, tricked its prospective customers, jurors concluded. Its sales force told employers that their premiums would be based on a realistic assessment of what claims by injured workers would cost, jurors found, but instead the premiums were based on the highest possible cost.
     Court of Appeal justices upheld the jury verdict of civil fraud and ordered the insurer to pay a $5-million punitive damage award, asserting: "There was substantial evidence that senior management personnel at SCIF . . . intentionally misled prospective insureds."
     For the district attorney's office, prosecuting the State Compensation Insurance Fund would have meant biting the hand that fed it--in more ways than one. The fund's president is a permanent member of the Fraud Assessment Commission, which decides how big a chunk of the anti-fraud funds the Los Angeles County district attorney's office gets each year. The fund, prosecutors say, is also the most cooperative insurance company in providing information that leads to cases.
     Feldman said that had nothing to do with the decision not to go ahead with a criminal probe. He said that the fund's misconduct was called to his attention but that he had higher priorities, particularly since his efforts would be duplicative: A civil jury had already punished the insurer. That, Feldman suggested, seemed punishment enough.

     Hear No Evil
     The district attorney's office has never prosecuted an insurance company for defrauding injured workers by not paying them benefits.
     It's not that the unpaid benefits involve insignificant sums, said Casey Young, the former head of the state Division of Workers' Compensation.
     Year after year, insurers on average shortchange one of six injured workers by $900 apiece, according to random audits performed by the division.
     Young told a legislative panel in 1998 that this rate of shortchanging translates statewide to $84 million per year. "This is not money that's disputed, I want to underline," he said. It's money that insurers acknowledged that they owed but were caught keeping for themselves.
     Young's estimate did not include additional sums that insurers saved by not notifying workers when they were eligible for vocational rehabilitation benefits, as required by law.
     The same audits showed that, year after year, insurers failed to inform nearly half of all injured workers who had been out of work for 90 days that they were eligible for job retraining.
     Cora Lee, who is in charge of the audits for Southern California, once testified in a deposition that up to 80% of the files checked at some insurance companies have showed money owed. "We've had some really nasty companies," she said.
     Officials in the Los Angeles County district attorney's office, including Feldman and the current head of the workers' compensation fraud unit, Deputy Dist. Atty. Philip Wynn, acknowledged that a criminal investigation might be appropriate to determine whether these patterns of shortchanging workers were intentional.
     But these same officials and their supervisor, Director of Special Operations Allen Field, said they had never launched one because they had never heard of the audits, which were mandated by the Legislature in 1989 and have been the subject of legislative hearings, news releases and trade press reports. Summaries of the 150 audits conducted to date are available on the Internet at http://www.dir.ca.gov/dwc/audit.html.
     Not everyone in the office was in the dark. Kristie Hutchinson, then and now the unit's special assistant, said she knew about the state auditors, though not about the audit results. David Guthman, who headed the unit for one year in 1997, said he learned about the audits when the Division of Workers' Compensation approached him for help during one particular audit, of the Fremont Compensation Insurance Group of Glendale. Fremont marketed itself as a company that could save employers money by rooting out worker and doctor fraud. It advertised on more than 600 billboards around the state that showed cheating workers behind bars. Its slogan was "Fraud Doesn't Work Here."
     It was wrong about that.
     Auditors alleged that Fremont employees, spread among all three of its California claims-adjusting locations--Glendale, Fresno and San Francisco--backdated about 10,000 documents between 1990 and 1996. Auditors alleged that the backdating, which sometimes saved Fremont late-payment fees to workers and doctors, was sufficiently widespread as to constitute a general business practice.
     To settle an administrative case that could have cost it its license, Fremont agreed to pay $525,000 without admitting wrongdoing and promised to spend an additional $200,000 to train employees to play by the rules. It also agreed to change its computer system to make backdating impossible. Fremont said settling the case was cheaper than fighting it.
     Fremont reported six of its employees to prosecutors. Two from its Fresno office were convicted of fraud-related charges. Four from its San Francisco office were never charged. Jacqueline Schauer, the lawyer for the auditors, ridiculed the extent of Fremont's housecleaning, saying that apparently more than 150 Fremont employees in the San Francisco office alone were involved. Fremont did not refer any of its Glendale headquarters employees to the Los Angeles County district attorney's office.
     While investigating the backdating allegations in Glendale, however, auditors had approached the district attorney's office for help. The auditors said through a spokesman that they wanted the district attorney's office to grant immunity to some Glendale employees so they could question them. But they said the district attorney's office declined.
     Deputy Dist. Atty. Adalbert Botello, the supervisor who was the primary person dealing with the auditors, said he thought they merely wanted legal advice on immunity procedures, which he gave. He said he did not see their inquiry as a reason to assign his unit's investigators to probe for possible criminal acts by Fremont or its employees.

     Employer Fraud
     The district attorney's office has prosecuted few employers, explaining that cases of employer fraud are rarely called to its attention.
     Yet fraud committed by employers is probably more costly than that committed by workers, according to assessments by prosecutors in Los Angeles and elsewhere.
     Some employers save money by lying to their insurers about the nature of work their employees perform. Insurance premiums for dangerous jobs such as roofing can run one-third of payroll or more. If a roofing contractor falsely claims that his work force is clerical, identical coverage runs only about 1% of payroll.
     But the district attorney's office says that, with a few exceptions, insurers don't want the reputation of nailing their own customers.
     Deputy Dist. Atty. Barry Gale--the only one of the unit's 16 prosecutors who handles employer fraud--said he has been frustrated because he has been unable to get insurance companies or others to refer him cases. Only eight of the state's approximately 300 workers' compensation insurers have done so, he said.
     Gale said he tried to open an investigation into employers who illegally operate without insurance. Taxpayers pay more than $20 million a year in benefits to injured workers whose employers don't have insurance.
     But the state Insurance Department blocked him with a legal opinion. Its conclusion: Private industry pays his salary to prosecute insurance fraud, and people who do not have insurance, by definition, cannot commit that crime.
     Some of the state's large employers qualify to insure themselves. They have the same responsibility to handle claims fairly as insurance companies, and the same auditors who check insurance companies also review their practices and sometimes find them wanting.
     Ralphs Grocery Co. of Los Angeles set a new record in 1998 for "amount in penalties in one audit." The total: $217,530. Ralphs had shortchanged about half of 154 injured workers whose claim files were checked--by a total of $106,000. Auditors also found that Ralphs failed to investigate some claims and denied benefits in others without saying why. Ralphs did not respond to an invitation to comment.
     District attorney officials never looked into these allegations to determine whether the short-changing was intentional. They said they learned of the Ralphs audit for the first time while being interviewed for this article.

     'Low-Hanging Fruit'
     Workers are the defendants in four out of five of the cases handled by the district attorney's special unit. This mirrors statewide and national trends.
     Cases against workers are easy. The overwhelming majority of workers who are charged plead guilty, are placed on probation and are ordered to pay restitution. Prosecuting them is known in the trade as picking the "low-hanging fruit."
     In its most recent grant application, the Los Angeles County district attorney's office said the workers it goes after commit outrageous fraud: "supposedly bed-ridden claimants [who are] playing tackle football."
     It produced records of two cases it said were typical. One involved a $5-an-hour temporary laborer who hurt his heel but exaggerated his injury and was caught on videotape rehearsing a limp with a cane in a doctor's parking lot. The other involved a bartender who said he hurt his back on the job; he was collecting disability while secretly working as a bartender elsewhere.
     Those records did not provide a full picture.
     The district attorney's office also picks off people such as:
     * George Solis
     At age 56, Solis was run over by a hit-and-run driver as he crossed a street carrying a crate of jalapeno peppers for the family restaurant he managed.
     He suffered brain damage, said he couldn't work and was paid $126 per week in workers' compensation benefits.
     But after several years, the Fremont insurance firm, which was looking at paying a potentially much larger settlement for permanent disability, decided to see for itself just how well Solis' brain worked. The insurer hired a private detective who videotaped Solis playing flag football, race-walking and driving a car. Solis had told an insurance company doctor that he could not live independently and could not drive. The doctor looked at the videotape and said it proved that Solis was a malingerer.
     The district attorney's office had Solis arrested. Agents carted him off during an early morning raid on his Huntington Park house as his 80-year-old mother screamed: "You can't take my son. My son is no thief!"
     Deputy Dist. Atty. Eleanor Daniels did not dispute that Solis had been injured. She told Los Angeles Municipal Judge Elva Soper that he was arrested for exaggerating: "The impairment is not as extensive as 100% disabled."
     Soper made her own observations and took an unusual step early in the case. She appointed a specialist on the mental effects of brain injuries to examine Solis for the defense at public expense.
     Dr. Robert Brook looked at the secretly recorded videotapes and concluded that they proved Solis was gravely disabled.
     An average adult takes far less than a minute to tie his shoelaces, he said. A videotape showed that Solis took three minutes.
     Another tape showed that when Solis was playing flag football, he seemed to be playing by himself, Brook said. Neither his teammates nor his opponents paid him any mind.
     Still another tape showed that in a race-walk, he couldn't master the fundamental stride, the doctor said. He was disqualified.
     "It was a rather sad vignette," Dr. Brook testified.
     He said the only kind of work Solis could do would involve "simple, concrete, repetitive activities under constant supervision."
     Over the D.A.'s objections, Soper dismissed the case. She also dismissed a companion case against Solis' brother Austin, who had been accused of fraud for allegedly lying to doctors about his brother's limitations.
     * Edgar Huaz
     Huaz, a 35-year-old father of four from Guatemala, was working the graveyard shift as a chicken deboner at a food plant in Vernon when an industrial-size soap dispenser fell on his head in the men's room while he was washing up, he said.
     Huaz wound up in a hospital complaining of headaches. Within a month, a neurosurgeon, Dr. Harley Deere, operated to relieve pressure from a bruise on his brain.
     But the food plant's insurer, Fremont again, fought Huaz's claim about the work injury. It uncovered evidence that Huaz had been in a fistfight with a co-worker off the job site shortly before he had had brain surgery.
     Fremont inferred that the fight--not the incident with the soap dispenser--was the real cause of the injury and that therefore the insurer and Huaz's employer should be let off the hook.
     The D.A.'s office agreed and charged Huaz with insurance fraud.
     But its case fell apart when Dr. Deere testified that it would have been a physical impossibility for the fight to cause the injury he saw when he opened Huaz's head.
     The district attorney's office dismissed the case.
     * Indravadan Jayaswal
     Jayaswal, a data entry clerk for Blue Cross, had first visited a doctor for what he said was work-related neck, back and shoulder pain in 1991.
     He said in an interview that he did not file a claim at that time because a co-worker warned him that people who filed such claims were fired.
     His pain remained manageable until early 1995, he said, when production quotas were increased and he had to spend more time at the computer. He visited his own doctor, who referred him to two specialists. He told the specialists, according to their notes, that he had experienced a pulling sensation lifting a garage door. He did not mention that he thought his pains were work-related, although one of the doctors told him he should take a break from working. This doctor and Jayaswal signed a state disability form, checking off a box that said explicitly that the ailment was not work-related.
     When Jayaswal returned to work with restrictions on using a computer, records show, a supervisor referred him to Blue Cross' health and safety department. He then filled out a workers' compensation claim, stating that his pains were work-related.
     A claims examiner for Blue Cross' workers' compensation insurance carrier, a Kemper company, became suspicious.
     When an insurance company-hired doctor told the claims examiner that she was on to something, Kemper referred the case for investigation and prosecution to the state Department of Insurance and to the district attorney's office.
     In doing so, Kemper officials said Jayaswal was known to file false claims--an assertion they later admitted they could not support, according to court records. They also suggested that he fraudulently filed for workers' compensation benefits to pay for his medical care because he had no group health insurance. In fact, he had used his group health plan to pay for his treatments.
     The Department of Insurance investigation into whether Jayaswal's injuries were related to his job was woefully incomplete.
     "What is his job?" the case investigator was asked at a preliminary hearing.
     "I really don't know," he said.
     He told a judge, however, that he had spoken to the specialists who had treated Jayaswal initially and that both had told him that Jayaswal's ailments could have been caused by his job.
     At Jayaswal's trial one of the same doctors went further. He testified that, not only could Jayaswal's problems have been work-related, they probably were.
     The prosecutor said this did not matter. Deputy Dist. Atty. Robert Wallace argued that fraud hinges on a state of mind. He contended in court that whether Jayaswal was entitled to benefits or not was irrelevant. If he merely tried to collect benefits while believing that he was not entitled to them, that would be enough for a conviction.
     Superior Court Judge Michael Tynan did not need to hear any more. He acquitted Jayaswal before the defense put on any witnesses.
     Jayaswal sued the insurance company for malicious prosecution and settled with Kemper for an undisclosed sum.
     But he could not get his old job back. He said he could not even get a job in the same industry.
     "They destroyed all my life," said Jayaswal, now 61. "I was just interested in why I had pain. I had a good job. My company was paying a lot of overtime. . . . Why should I go to workers' compensation? I wasn't going to get [much money]. I only wanted the pain to go away."

     System Defended
     District attorney's officials assert that the insurance industry is not their boss, nor even their partner. The insurance industry merely directs their attention to possible cases, they say, and the district attorney's office alone determines whether these cases are worthy of prosecutions.
     "No deputy who has ever worked in this program heard us ever, ever say we were doing anything to serve the insurance companies," said Feldman, the former head of the unit.
     Insurance companies don't pay the bills, the district attorney's office points out. They merely have a say in how the funds are handed out. The district attorney's office says it is insulated from influence by individual employers since all employers are obligated to pay a surcharge on their insurance premiums--whether they like it or not.
     Trial and appellate courts have reviewed these funding arrangements and have agreed with the district attorney's office that no conflict of interest exists.
     District attorney's officials added that they would gladly look into allegations that insurers were ripping off workers if someone would just bring them the evidence.
     The officials said they have repeatedly asked, in vain, that lawyers who represent injured workers seeking benefits bring them cases of suspected criminal wrongdoing by insurers or employers. Prosecutors said their appeals for cooperation have been made at functions put by on by these workers' lawyers, who are known as applicants' attorneys.
     There are three applicants' attorney groups in Los Angeles County. A member of one said he had a client who contacted the district attorney's office and found officials receptive to looking into a complaint about possible insurer fraud. No action has been taken in that case.
     But presidents of the other two applicants' attorneys associations said they were dumbfounded by the district attorney's office assertion that it had tried to get them to refer cases.
     "I must live on a different planet," said Larry Stern, president of the Southern California Applicant Attorneys Assn. "Applicant attorneys have given up writing to the D.A.'s office, because they don't respond. . . . It's a waste of 33 cents."

     Conflict of Interest
     The actual conflict of interest between the district attorney's office as public prosecutor and the office as an institution dependent on private industry can be seen in the way it passed prosecuting some of the insurance companies that fed it with cases.
     Few insurance companies bothered to meet their legal responsibility to refer suspicious claims.
     In fact, only one in 10 insurers sent over any, said Feldman. And the industry's lack of cooperation made "a mockery of fraud enforcement" and took "the heart out of the system."
     As Feldman struggled to keep the district attorney's workers' compensation unit going with "two hands . . . tied behind our back," his special assistant called to his attention evidence that executives of some of the precious few firms that were cooperating had committed perjury.
     The special assistant, Hutchinson, said the executives had made "material misrepresentations" under oath, overstating the extent of their anti-fraud efforts in reports to state regulators.
     Feldman acknowledged that filing perjury charges against them would have been possible--even that it would have had "nice symmetry" given his unit's custom of charging alleged worker cheats with perjury. But he said that arresting the executives never crossed his mind.
     Pressed to explain, he said that even if it had occurred to him to prosecute, it would have been counterproductive.
     The insurance carriers involved were among the few that were bringing any cases to the unit.
     If he had filed charges, Feldman said, they would have stopped.
     And if that happened, he added: "We'd have to close down our shop."