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Paul W. Luscher is an associate attorney with the Sacramento office. Having decided on a legal career early on, Mr. Luscher, while earning his Bachelor of Arts degree at California State University, Sacramento, interned with the Sacramento County District Attorney's office. Subsequently, while attending McGeorge School of Law, he worked for the U.S. Attorney's office in Sacramento. After graduating from McGeorge, he engaged in general practice and was a legal writer for Matthew Bender. For the past quarter century, however, Mr. Luscher has specialized in the practice of California workers' compensation law, engaged mainly in defense work. In the course of his practice, he has appeared before all the Workers' Compensation Appeals Boards in Northern and Central California. He is not only familiar with general workers' compensation law, but has also dealt with issues of Serious and Willful misconduct actions, Labor Code Section 132a claims, penalty issues, lien claims, asbestos litigation, contribution, and subrogation issues.


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Workers' Compensation Daily News for Sep 20, 2017

Orthopedic QME Fraudulent Concealment Case Dismissed
Wed, 20 Sep 2017 04:28:20 - Pacific Time
A California federal judge dismissed a fraud claim in a medical malpractice suit accusing a QME orthopedic surgeon of botching a man’s knee replacement surgery and fraudulently concealing an infection, saying there is no evidence that the doctor knew about the infection.

Before commencement of a jury trial, Law360 reports that U.S. Magistrate Judge Jacqueline Scott Corley granted partial summary judgment in favor of QME Dr. David Jupina and his practice group, Tri Valley Orthopedics & Sports Medicine Group Inc., in a suit brought by William Denis McCann accusing the health care providers of botching his total knee replacement surgery which purportedly resulted in a bacterial infection that ultimately required corrective surgery and replacement of the artificial joint.

The judge said McCann’s fraudulent concealment claim fails since the patient didn’t prove that Jupina knew that McCann had a deep tissue infection, only that he had a superficial infection that was treated with antibiotics.

"Based on the record before the court, no reasonable trier of fact could find that Dr. Jupina knew plaintiff had a deep tissue infection," Judge Corley wrote in a six-page order. "No test result told Dr. Jupina that plaintiff had a deep tissue infection; - No expert has opined that based on what Dr. Jupina observed he had to know that plaintiff had an infection despite not having any test results."

A fraudulent concealment claim requires that the doctor has a duty to disclose certain facts, and the judge said the claim fails without evidence the doctor had knowledge of those facts.

"A duty cannot arise when the fact is not actually known to the defendant," she said.

Judge Corley said the fact that Jupina referred McCann to another doctor for a second opinion and informed the patient he didn’t know what was wrong with his knee undermines McCann’s argument that the doctor knew he had a deep tissue infection and wanted to hide that fact from the patient.

The suit was filed in June 2016 and seeks more than $500,000 in damages. A jury trial is set for November on the remaining claims, according to court records. The case is William Denis McCann v. David Jupina et al., case number 3:16-cv-03244, in the U.S. District Court for the Northern District of California.

Dr. Jupina joined the Tri-Valley Orthopedic group in 1998. He is currently team physician for local Foothill High School athletes, and Orthopedic Surgery Consultant to the Federal Correctional Institution in Dublin, CA. He performs surgery at ValleyCare Hospital, San Ramon Regional Medical Center, Hacienda Surgery Center and Pleasanton Surgery Center.

The DWC lists him as a QME with offices in ten locations in Northern California Read More...

Feds Wrap up Drug Cases Against Fountain Valley Clinic
Wed, 20 Sep 2017 04:27:59 - Pacific Time
A federal jury has convicted a physician assistant who worked at a Fountain Valley medical clinic on federal drug trafficking charges for writing prescriptions for dangerous and addictive narcotics without a medical purpose.

Kaitlyn Phuong Nguyen, 32, of San Jose, California, was found guilty yesterday of 10 counts related to the illegal distribution of oxycodone, methadone and alprazolam. The trial jury heard evidence that four “patients” died of drug overdoses after obtaining prescriptions from Nguyen.

On the eve of Nguyen’s trial last week, the doctor who oversaw the clinic was sentenced to 70 months in prison after pleading guilty to two counts of illegal distribution of a controlled substance by a practitioner.

When he pleaded guilty earlier this year, Dr. Victor Boon Huat Siew admitted illegally prescribing oxycodone, methadone and alprazolam from his clinic from the beginning of 2009 through early 2015.

Siew, 66, of Laguna Beach, was sentenced by United States District Judge James V. Selna, who presided over Nguyen’s trial.

According to court documents and evidence presented during Nguyen’s trial, Siew and Nguyen issued prescriptions without a medical purpose in exchange for cash and insurance payments. "Many of the patients.... had ‘red flags’ in their patient files, indicating that they were abusing their pain medication and should not have been given prescriptions," according to a brief filed in relation to Nguyen’s trial.

Nguyen, who worked at the clinic in 2012, performed only cursory examinations on most "patients" prior to prescribing them narcotics. "Despite having a license to write prescriptions herself, defendant [Nguyen] usually used a prescription pad pre-signed by Siew (which was not a lawful practice) to prescribe addictive substances such as oxycodone, methadone and alprazolam," according to the trial brief.

The most common drugs prescribed by Siew and his employees were oxycodone (best known under the brand name OxyContin), methadone (a synthetic opioid often used as a treatment for addiction to opioids such as heroin), and alprazolam (sold primarily under the brand name Xanax).

The jury found Nguyen guilty of conspiring to distribute controlled substances and nine counts of distribution of controlled substances. As a result of yesterday’s convictions, Nguyen will face a statutory maximum penalty of 140 years in federal prison when she is sentenced by Judge Selna on January 22.

A third defendant in the case - physician assistant Thanh Nha T. Pham, 31, of Fountain Valley, pleaded guilty to conspiracy to distribute controlled substances and is scheduled to be sentenced by Judge Selna on January 29.

This case is the result of an investigation by the Drug Enforcement Administration, the Fountain Valley Police Department and the California Department of Justice. The case is being prosecuted by Assistant United States Attorneys Ann Luotto Wolf and Rosalind Wang of the Santa Ana Branch Office. Read More...

Lien Claimants Say Judge Levy was "Seriously Misleading"
Tue, 19 Sep 2017 04:08:43 - Pacific Time
Declarations and brief continue to be filed in federal court for and against imposing a preliminary injunction halting the implementation of newly adopted SB 1160. This new law provides for a stay on lien claims filed by indicted medical providers until after their case has been resolved.

Dr. Eduardo Anguizola who is facing multiple counts of insurance fraud filed by Orange County prosecutors is the lead plaintiff who claims Labor Code 4615 violates the procedural component of the due process clause because it immediately stays all liens without notice or a hearing.

The defendants responded that Section 4615 affords sufficient process because Plaintiffs still have the same rights afforded to them by the workers' compensation scheme generally. The Defense filed a 117 page Declaration of Workers' Compensation Chief Judge Paige Levy that articulated how lien claimants subject to 4615 have rights to due process under the new law, and indeed attached several illustrative cases on the stay law that have been decided by either Removal or Reconsideration by the WCAB.

Essentially she pointed out several panel decisions that have held that any lien claimant who asserts they do not fall subject to the stay have the right to have their argument heard and decided upon filing a DOR on the issue. Any WCJ that had refused to do so was overturned. Judge Levy pointed out the statutory and regulatory provisions that allowed lien claimants to challenge the application of the "automatic stay" to their individual cases.

The plaintiffs were given time to rebut Judge Levy, and filed a brief and many declarations accordingly. They claim these documents "address the seriously misleading declaration of Judge Levy."

They argue "Now, faced with the State-submitted declaration of Paige S. Levy, the Chief Judge of the California Division of Workers’ Compensation, the Court gave the Plaintiffs a fair chance to reveal what is occurring in the California workers’ compensation courts and to address the seriously misleading declaration of Judge Levy."

They say "Judge Levy offers only anecdotal references to a handful of cases to support the State’s claim that workers’ compensation judges are providing due process to claimants affected by Section 4615. Judge Levy’s declaration is wholly refuted by the detailed declarations submitted concurrently with this brief and is contravened by the DIR and WCAB’s own publications, guidelines, procedures, manuals, recent public admissions, website, and press releases."

They further argue that "the regulations providing procedures like Petitions for Reconsideration and Petitions for Removal are inapplicable because they arise only after a Court has issued an order. However, Section 4615 stays are imposed not by judicial orders but by clerical actions performed in a backroom and distributed to WCAB judges, typically by "flagging" the liens on the EAMS system, resulting in their dismissal by operation of law, a situation in which the workers’ compensation court does not hear the matter at all."

Plaintiffs attach numerous declarations by lien claimants who portray the situation for lien claimants quite differently from Judge Levy. One of them was from Attorney Marty Renetzky who started and ran Medical Collection Company for 6 years and 6 medical clinics for Dr. Floyd Cord from 1981 through 1983. He also started and ran Vista Bay Medical Group until 1991, started and ran Golden State Auto Appraisal Company for 7 years, and currently runs Crestview Medical Collections.

He says "American Allied Diagnostics Medical Group, Inc., has taken all steps to appropriately document and pursue its liens. This includes filing liens, paying activation fees and appearing at all relevant hearings." Yet he says its liens ended up on the stayed liens list although they have not been charged with any crime. They were never given official notice of this, and he says they have no procedure to contest this status.

He does not say that any petition for reconsideration or removal has been filed or rejected, so he does not specifically show how Judge Levy was wrong or how the procedure outlined in her declaration does not work for this lien claimant.

Another court hearing is set for September 28, 2017 at 8:30 am. Judge Wu may make is ruling on a preliminary injunction at this next hearing. Read More...

San Diego Deputy Sheriff Charged in Fraud Case
Tue, 19 Sep 2017 04:08:32 - Pacific Time
Prosecutors say a local San Diego sheriff’s deputy, who claimed he had suffered a back injury but may have been seen working out with heavy weights as a gym, has been charged with committing workers compensation insurance fraud resulting in $57,000 in losses.

According to the story in the San Diego Union Tribune, Matthew Tobolsky, 40, faces 14 counts including insurance fraud, filing a false claim, attempted perjury and failing to disclose information that affects a payment. The charges carry a potential sentence of up to 15 years in custody, which would most likely be served in county jail.

Tobolsky has not yet had an opportunity to enter a plea in the case. He is scheduled to be arraigned in San Diego Superior Court Wednesday afternoon.

According to the District Attorney’s Office, Tobolsky claimed in January that he had injured his back from lifting two five-gallon water bottles. But an investigation, initiated by the Sheriff’s Department, indicated Tobolsky had misrepresented his physical condition and what he could or could not do.

Authorities said Tobolsky told medical professionals that he was suffering from debilitating pain and was unable to do light duty on the job. But the investigation revealed he was able to work out with weights at a gym.

Of the $57,000 in losses, $46,000 was paid directly to the defendant, prosecutors said.

The Sheriff’s Department investigated the case will help from the state Department of Insurance and the District Attorney’s Office’s Insurance Fraud Division. Read More...

Illegally Uninsured L.A. Garment Manufacturers Cited
Mon, 18 Sep 2017 04:43:25 - Pacific Time
The California Labor Commissioner’s Office cited 14 garment manufacturers and contractors $372,135 for labor law and garment registration violations, following inspections of 18 garment manufacturers last month in the Los Angeles area. The businesses cited employ 170 workers in the Los Angeles garment district.

The penalties included $275,835 in fines and stop orders for seven employers operating without workers’ compensation insurance coverage. Fourteen businesses were cited $34,300 for garment regulation violations, including failure to register as a garment manufacturer, display the garment registration or maintain required records. Investigators also confiscated 5,725 illegally manufactured garments with an estimated street value of $103,000 from six of the businesses.

"Garment manufacturers who thwart the law threaten workers’ rights and undermine honest employers in the industry, making it difficult for legitimate businesses to succeed,” said Labor Commissioner Julie A. Su. “These illegal entities should take note: We will shine a light on the underground economy and those who contract with unregistered contractors will also be held accountable."

The Labor Commissioner’s office is also pursuing wage theft investigations on those employers who failed to pay proper wages under the California Labor Code.

The Garment Manufacturing Act of 1980 requires that all industry employers register with the Labor Commissioner and demonstrate adequate character, competency and responsibility, including workers’ compensation insurance coverage. Garment manufacturers who contract with unregistered entities are automatically deemed joint employers of the workers in the contract facility. Clothing confiscated from illegal operations cannot be sold, and will be donated to a non-profit agency that will provide the items to homeless and domestic violence shelters in the Los Angeles area.

The Labor Commissioner also administers a special wage claim adjudication process for garment workers pursuant to California’s AB 633, passed in 1999. This law provides not only an expedited process for garment workers to file wage claims but also provides a wage guarantee where garment manufacturers are responsible for wage theft at their contractors’ facilities.

The Labor Commissioner’s Office, officially known as the Division of Labor Standards Enforcement, is a division of the Department of Industrial Relations (DIR). Among its wide-ranging enforcement responsibilities, the Labor Commissioner’s Office inspects workplaces for wage and hour violations, adjudicates wage claims, investigates retaliation complaints and educates the public on labor laws.

In 2014, Commissioner Su launched the Wage Theft is a Crime multilingual public awareness campaign. The campaign defines wage theft and informs workers of their rights and the resources available to them to recover unpaid wages or report other labor law violations. Employees with work-related questions or complaints may contact DIR’s Call Center in English or Spanish at 844-LABOR-DIR (844-522-6734). Read More...

FDA to Enforce New Compounded Drug Law
Mon, 18 Sep 2017 04:43:15 - Pacific Time
The head of the U.S. Food and Drug Administration said on the agency is working on a new policy that would encourage more compounding pharmacies to register under a law enacted in the wake of a deadly 2012 meningitis outbreak linked to one such company.

FDA Commissioner Scott Gottlieb made the comments in an interview with Reuters as federal prosecutors in Boston prepare for the second criminal trial over contaminated steroids manufactured by the now-defunct New England Compounding Center (NECC).

That meningitis outbreak sickened 778 patients nationwide, including 76 who died, after receiving contaminated steroids, prosecutors said.

After the outbreak, Congress in 2013 passed the Drug Quality and Security Act, which aimed to bring more compounding pharmacies, which make custom medications, under the authority of the FDA rather than state pharmacy boards.

The law created a category of "outsourcing facilities" that could register with the FDA, allowing them to sell products in bulk to hospitals and physician practices without prescriptions for individual patients.

In exchange, those compounders would have to follow federal manufacturing standards and subject themselves to routine inspections. Today, around 70 firms have registered as outsourcing facilities.

According to the American Pharmacists Association, there are about 7,500 pharmacies that specialize in compounding services.

Under the 2013 law, compounders that did not register with the FDA would remain under state oversight, and according to the agency, could only compound drugs based on prescriptions for specific patients.

Gottlieb said that in order to encourage more compounders to register, the FDA would release draft guidance in the next two months reflecting its intention to adjust its enforcement priorities based on the size of registered compounders and the riskiness of their products.

"We’re looking at ways we can provide more of a gradation in our regulatory architecture so we don’t have a one-size-fits-all approach," Gottlieb said.

Pharmacists have long mixed tailored medications for patients based on individual prescriptions. By 2013, the practice had mushroomed, with some pharmacies selling thousands of doses of regularly used mixtures for physicians to keep for future use.

Gottlieb’s comments came ahead of next week’s trial in Boston of Glenn Chin, a former supervisory pharmacist at NECC who is accused of second-degree murder and fraud. He has pleaded not guilty.

NECC’s co-founder, Barry Cadden, was sentenced in June to nine years in prison after he was convicted on racketeering and fraud charges. Prosecutors said he directed the production of drugs in unsanitary and dangerous ways to boost profits.

The FDA has been criticized by groups like the American Pharmacists Association, which has said the federal agency has been overstepping its authority to regulate state-licensed pharmacies.

That criticism has focused on the FDA’s position that the 2013 law requires prescriptions for specific patients, restricting pharmacies from distributing drugs to stock doctors’ offices for their uses, even if allowed under state law.

Gottlieb said he stood by the FDA’s interpretation of the law and that he expected no slowdown in terms of its enforcement.

But he said the new guidance would help address concerns from smaller pharmacies that want to do just that but have resisted registering as outsourcing facilities because of the expense of regulatory compliance.

The draft guidance, he said, would allow smaller firms creating low-risk drugs to be subject to less onerous requirements than larger outsourcing facilities.

Doing so, he said, would help ensure more pharmacies are in compliance with manufacturing standards, potentially creating more access to compounded medications.


First State Adopts Generic Drug Price-Gouging Law
Fri, 15 Sep 2017 09:15:12 - Pacific Time
As U.S. consumer outrage grows over prescription drug prices, state authorities and patient advocates in Maryland are preparing to enforce the nation’s first law designed to punish drugmaker price-gouging.

The state Attorney General’s office said it will field complaints and investigate "unconscionable increases" in essential generic medicines when the closely watched law takes effect Oct. 1.

Drugmakers fear the Maryland law will embolden other states and are seeking a court injunction. Both sides made their arguments on Thursday before a U.S. District Court judge in Baltimore, who could decide on an injunction in the coming days.

According to the Report in Reuters Health, anticipating the law will survive the legal challenge, the Attorney General’s office said it is working with health economists at Johns Hopkins University to identify price spikes, which are not made public by drugmakers. Patient advocacy groups are urging consumers to report increased costs for their medicines. Maryland Citizens’ Health Initiative will add an option to report price gouging to its website.

Pharmaceutical companies have so far dodged stricter federal oversight despite growing outrage over price hikes. Valeant Pharmaceuticals International Inc raised the price of heart medications Isuprel by about 720 percent and Nitropress by 310 percent, after acquiring them in 2015. Mylan NV raised the price of its life-saving EpiPen six-fold between 2008 and 2016.

But states, struggling to cover rising healthcare costs, are taking up the fight. At least 176 bills on pharmaceutical pricing and payment have been introduced this year in 36 states, according to the National Conference of State Legislatures.

Maryland’s law is the most aggressive legislation to be passed so far, and allows the state to levy fines and order a reversal of price increases.

The Association for Accessible Medicines, a generic industry trade group that filed the lawsuit, argues that the law is unconstitutional because it does not define price-gouging and amounts to intervention by an individual state in interstate commerce.

"The issue of drug pricing is a national issue ... not something that should be handled piecemeal in 50 different ways," said Jeff Francer, general counsel for the trade group which represents companies like Teva Pharmaceutical Industries Ltd and Novartis AG’s Sandoz unit.

Maryland Attorney General Brian Frosh said that states have a well-defined role to play in policing "unconscionable" business activity against consumers, especially when they have no other recourse. He cited consumer contracts for telephone service, which are non-negotiable.

Several states have passed laws requiring drugmakers to disclose price increases, but the Maryland law is one of a few drawing the most attention from the drug industry.

Nevada has been sued by two industry trade groups after passing in June a law requiring diabetes drugmakers to justify price increases above a certain amount.

Ohio voters next year will decide on a ballot measure requiring drugmakers to offer state groups the same discounts given to the federal Department of Veterans Affairs. A similar measure failed in California last year, but the state’s legislature this week approved a drug pricing bill requiring drugmakers to justify price increases over 16 percent in a two-year period. It now goes to the state’s governor for a final decision. Read More...

CWCI Study Says IMR Process Tapering Off
Fri, 15 Sep 2017 09:15:06 - Pacific Time
A new study on the California workers’ compensation independent medical review (IMR) process established by state lawmakers to resolve medical disputes finds that in the first half of this year, more than 91% of all utilization review (UR) physicians’ modifications or denials of treatment that were reviewed by an IMR physician were upheld, and after increasing steadily since 2013, IMR volume appears to be leveling off.

California law requires workers’ comp claims administrators to have a Utilization Review (UR) program to assure that care provided to injured workers is backed by clinical evidence outlined in medical guidelines adopted by the state. Most treatment requests are approved by UR, but in 2012 state lawmakers adopted IMR to give injured workers a chance to get an independent medical opinion on treatment requests that UR physicians deny or modify.

Use of IMR has grown sharply since 2013, but in its new study, the California Workers’ Compensation Institute (CWCI) tallied 86,066 IMR decision letters issued in the first half of this year in response to applications submitted to the state after a UR physician modified or denied a medical service request. At that rate, the volume of IMR letters in 2017 will decline 2.2% from the 2016 level, while the number of individual treatment requests decided in those letters will be down 0.6 percent - the first time IMR volume has not increased since the process took effect in 2013.

CWCI’s analysis of the 2017 IMR decisions found that after reviewing the patient’s records and other information provided to support the request, IMR physicians upheld the UR doctor’s modification or denial of the service 91.3% of the time, which was virtually identical to the 91.2% uphold rate in 2016.

As in prior years, pharmaceutical requests accounted for almost half of the 2017 IMR decisions, led by opioids, which represented 28.8% of all 2017 prescription drug IMRs, even though IMR doctors have consistently upheld the UR decision in 90% of the opioid requests.

Requests for physical therapy; injections, durable medical equipment; and MRIs, CTs and PET scans together comprised another 29% of the 2017 IMRs, but no other medical service category accounted for more than 4% of the disputed requests. Among the various service categories, uphold rates in 2017 ranged from 80.4% for evaluation/management services (primarily consultations) to 94.6% for chiropractic manipulation.

The Institute study also confirmed that a relatively small number of physicians continue to account for most of the disputed medical services that go through IMR. A breakdown of IMR volume among high-volume physicians showed that the top 10% of physicians who were named in IMR decision letters issued between July 2016 and June 2017 (1,114 doctors) accounted for 85% of the disputed service requests during that period, while the top 1% (111 providers) accounted for 45% of the disputed services.

Additional details and graphics from the study are available in a CWCI Spotlight Report, "Independent Medical Review Decisions: January 2014 Through June 2017." Read More...

Ridesharding Transforms Comp Medical Transportation
Thu, 14 Sep 2017 09:36:51 - Pacific Time
Digital devices and mobile applications are breathing new life into traditional workers’ compensation services. According to the report in the Claims Journal - this was a key takeaway from the session, "Ridesharing Technology: Transforming Transportation in Workers’ Compensation," presented at the 2017 California Workers’ Compensation & Risk Conference in Dana Point, California.

"Until recently, the workers’ compensation industry relied on an antiquated approach to coordinating transportation, which required a lot of manual oversight," said Joseph McCullough, senior vice president of product at One Call Care Management. "Not surprisingly, this model resulted in a significant number of missed medical appointments, which can delay and even derail an injured worker’s progress toward recovery with significant and costly consequences."

Within the past few years, ridesharing has become widely accepted with rapid adoption in healthcare and workers’ compensation. "Integrating ridesharing with a secure digital platform and proper credentialing has been the key to making this model safe and appropriate for the workers’ compensation market. With these critical components in place, One Call has experienced a 50 percent increase in daily ridesharing trips over the last seven months," noted McCullough.

Digitization of non-emergency medical transportation, as well as other additional services, is a radical shift for the industry. As a forward-thinking player in this space, One Call has leveraged technology and formed strategic partnerships to meet the evolving needs of payers and injured workers. Today, transportation network companies (TNCs), like Lyft, use ridesharing to provide full digital capabilities, complete transparency into ride coordination and an overall streamlined process.

"Going from passive to active ride management is a transformative experience for everyone involved, and the industry will reap significant benefits including a reduction in failed and late pick-ups, as well as minimizing the need to reschedule medical appointments and transportation. Clinical, claims and return-to-work outcomes improve as patients attend appointments with greater consistency and reliability," said McCullough.

As with any industry disruption, there have been fears over exposure and liability. Some initially considered ridesharing to be risky because of a misconception, largely perpetuated by traditional vendors like taxi companies, that the industry was not being properly regulated. In truth, 48 states have passed TNC-related regulations for driver and vehicle safety, licensing, background checks and liability insurance and these regulations are often stricter and more onerous than those regulating traditional taxi companies.

"This demonstrates that safety standards and regulations do exist," said McCullough. "Beyond these requirements, patient experience is also enhanced. Injured workers have improved visibility into the details of their rides, and they can rate their satisfaction with drivers and their ride experience."

Clients also want deeper and broader insights into their ancillary services. "We strive to provide prescriptive as well as actionable intelligence," added McCullough. "We’ve made strategic investments in our technology platform and tools, which have advanced our analytic capabilities. We’re well positioned to do more with data - in a secure environment. Our clients can draw powerful conclusions from various data points, especially as they begin to develop and integrate their own mobile apps."

Using this same type of modern digital platform, it’s possible to streamline the delivery of other accompanying services, such as web-based video translation services. "Similar to transportation, interpretation and language services are vital to communicating and facilitating the treatment plan with injured workers. Our goal is to eliminate any barriers so they receive the care they need to recover and return to work," concluded McCullough. Read More...

CopperPoint Mutual Buys Pacific Comp
Thu, 14 Sep 2017 09:36:46 - Pacific Time
Arizona’s provider of workers’ compensation insurance since 1925, announced a definitive agreement to acquire Pacific Compensation Insurance Company (PacificComp), a California-based workers’ compensation carrier, from Alleghany Insurance Holdings LLC, a wholly-owned subsidiary of Alleghany Corporation (NYSE: Y), for $150 million in cash. The combined book of underwriting business for the two companies will represent approximately $400 million in premium and a combined asset base of nearly $4.1 billion, with $1.5 billion in policyholder surplus.

CopperPoint was founded in 1925 and is headquartered at CopperPoint Tower in Phoenix and has a presence statewide. Today it provides workers’ compensation insurance to more than 12,000 businesses, as well as offers other business insurance products, including property and casualty coverage.  It holds $1.35 billion in surplus and more than $3.4 billion in assets with no debt.  The family of CopperPoint Insurance Companies and its subsidiaries are rated A- Excellent XII by A.M. Best.

CopperPoint was privatized and converted to a mutual insurance company in 2013 with a vision of geographic expansion and product diversification. In 2016, Marc Schmittlein, a 30-year veteran of The Travelers, was brought on by the board of directors as CopperPoint CEO to help the company take the next step in its journey to become a regional mutual commercial lines company.

Pacific Compensation Insurance Company provides workers’ compensation insurance coverage exclusively through independent insurance brokers for California companies. The company was formerly known as Employers Direct Insurance Company and changed its name to Pacific Compensation Insurance Company in April 2010. The company was incorporated in 2002 and is based in Westlake Village, California with an additional address in Agoura Hills, California. Pacific Compensation Insurance Company operates as a subsidiary of Alleghany Insurance Holdings LLC.

The acquisition of PacificComp represents a significant milestone in CopperPoint’s geographic expansion and diversification initiatives. PacificComp brings a proven track record, strong underwriting discipline and focused approach to serving businesses in the California market. The two companies share complementary strengths, including expertise in workers’ compensation and a commitment to providing the highest quality customer experience through select independent agents.

"We are creating a family of insurance companies built on strong business relationships and best-in-class service," said Marc Schmittlein, President & CEO of CopperPoint. "PacificComp brings experienced professionals with deep California market expertise and a solid book of business that will undoubtedly provide us with a sound platform for growth."

"In joining CopperPoint, we have found an ideal strategic and cultural fit for our employees, broker partners and policyholders that will allow us to continue our service to the market without interruption and provide us with the ability to expand the products and services we offer," said Jan Frank, CEO of PacificComp. "Our companies share a strategic vision for the continued expansion of the business and an approach to the marketplace that makes me and the PacificComp management team excited to become part of the CopperPoint family of companies."

Schmittlein added, "A key tenet of our value proposition comes from our proximity to customers, their business, their markets and their communities. Acquiring PacificComp builds on that core strength and is a natural fit for our policyholders growing West, particularly into California."

Upon closing, PacificComp will continue to operate under its current name as part of the broader CopperPoint family of companies. Terms of the agreement include the purchase of adverse development reinsurance cover on PacificComp’s pre-acquisition claims. The transaction is expected to close at the end of the year subject to customary closing conditions and regulatory review and approvals.

Past Week News Archive

CDI Approves WCIRB Regulatory Filing: Wed, 13 Sep 2017 05:45:38 - Pacific Time: Read More...

DWC Makes Adjustments to OMFS: Wed, 13 Sep 2017 05:45:31 - Pacific Time: Read More...

Another High Court to Rule on Comp Marijuana: Tue, 12 Sep 2017 07:58:53 - Pacific Time: Read More...

Generic Drugmakers to Exploit "Tribal Immunity": Tue, 12 Sep 2017 07:58:48 - Pacific Time: Read More...

New MSA Workers’ Compensation Review Contractor (WCRC): Mon, 11 Sep 2017 08:15:46 - Pacific Time: Read More...

Geographic Dimensions of California Opioid Abuse: Mon, 11 Sep 2017 08:15:40 - Pacific Time: Read More...

Another State Sues Opioid Drugmakers: Fri, 8 Sep 2017 08:08:35 - Pacific Time: Read More...

DWC Adds Modifications to Drug Formulary: Fri, 8 Sep 2017 08:08:26 - Pacific Time: Read More...

New, Deadly, and Untreatable Hospital Acquired Infections: Thu, 7 Sep 2017 08:23:14 - Pacific Time: Read More...

WCIRB Now Recommends 2% Rate Reduction for 2018: Thu, 7 Sep 2017 08:23:08 - Pacific Time: Read More...