California’s powerful insurance lobby has quietly scuttled an effort to combat fraudulent medical billing that drains hundreds of millions of dollars from the state’s workers’ compensation insurance system.

At issue was a proposal aimed at preventing billing scams backed by a task force of public and private employers, including Los Angeles County and Walt Disney Co. It would have required insurers to send notices to injured workers to check whether they actually received all medical services billed.

But insurers balked, complaining about the high cost of increased paperwork. They persuaded state Sen. Roderick Wright (D-Inglewood) to strip the plan from a bill he introduced in February, Wright’s office confirmed. The proposal’s setback frustrated employers seeking new tools to battle illegal traffic in medical records.

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