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Workers' Compensation Daily News for May 21, 2018

Three Running for California Insurance Commissioner
Fri, 18 May 2018 07:43:06 - Pacific Time
The June 5 primary election features Democrats Dr. Asif Mahmood and Sen. Ricardo Lara against former commissioner Steve Poizner for the position of the head of the California Department of Insurance.

Early primary voting starts Monday and the top two finishers will advance to November's general election.

The position is one that gets little attention, but has a broad impact on Californians. The insurance commissioner runs an office with 1,400 employees and a budget of $250 million. The Department of Insurance enforces insurance laws, licenses and regulates companies, and investigates fraud.

Poizner, 61, a wealthy Silicon Valley entrepreneur, actually held the job previously. He served one term as a Republican and then spent $25 million of his fortune in an unsuccessful run for governor in 2010. He hopes voters remember his four years as commissioner and are willing to vote for an independent for an office that he said should be free of politics.

His priorities for the office are to: ensure homeowners are adequately insured against devastating wildfires and other natural disasters, crack down on health insurance fraud and help companies develop better insurance policies against cybercrime.

"If I can get a robust cyber insurance market rolling in California, then it will not only help protect businesses in terms of a huge financial liability, but insurance companies will also help enforce better cyber hygiene in order to clean up the security of their computer networks," he said. "That's a really big deal."

Mahmood, 57, who grew up in rural Pakistan, is a political neophyte who initially was running for lieutenant governor and then decided insurance commissioner was a better fit with his medical experience.

Although the commissioner has much less sway over health insurance, which is largely regulated by other departments, Mahmood is making health care his top priority. He wants to preserve the Affordable Care Act, supports government-run health care for everyone, better mental health care and better disaster preparation.

Lara, 43, who has unsuccessfully pushed for state-run health insurance for Californians, is positioning himself as a counterweight to President Donald Trump and his campaign website said he will put consumers ahead of "corporations, the billionaire class, the pharmaceutical or the insurance companies."

Lara won the Democratic Party endorsement and has support from many unions and prominent party lawmakers.

By the third week in April, Mahmood was leading in campaign donations. He had raised over $1 million during the year and had about $900,000 remaining. Poizner had pulled in just under $500,000 and had about $400,000 left. Lara, who got $625,000 since Jan. 1, had just over $175,000. Read More...

FDA Approves First Non-Opioid - for Opioid Withdrawal
Fri, 18 May 2018 07:42:59 - Pacific Time
The U.S. Food and Drug Administration approved Lucemyra for the mitigation of withdrawal symptoms to facilitate abrupt discontinuation of opioids in adults.

While Lucemyra may lessen the severity of withdrawal symptoms, it may not completely prevent them and is only approved for treatment for up to 14 days. Lucemyra is not a treatment for opioid use disorder (OUD), but can be used as part of a broader, long-term treatment plan for managing OUD.

Opioid withdrawal includes symptoms - such as anxiety, agitation, sleep problems, muscle aches, runny nose, sweating, nausea, vomiting, diarrhea and drug craving - that occur after stopping or reducing the use of opioids in anyone with physical dependence on opioids.

In patients using opioid analgesics appropriately as prescribed, opioid withdrawal is typically managed by slow taper of the medication, which is intended to avoid or lessen the effects of withdrawal while allowing the body to adapt to not having the opioid.

In patients with OUD, withdrawal is typically managed by substitution of another opioid medicine, followed by gradual reduction or transition to maintenance therapy with FDA-approved medication-assisted treatment drugs such as methadone, buprenorphine or naltrexone; or by various medications aimed at specific symptoms, such as over-the-counter remedies for upset stomach or aches and pains.

"Today’s approval represents the first FDA-approved non-opioid treatment for the management of opioid withdrawal symptoms and provides a new option that allows providers to work with patients to select the treatment best suited to an individual’s needs," said Sharon Hertz, M.D., director of the Division of Anesthesia, Analgesia and Addiction Products in the FDA’s Center for Drug Evaluation and Research.

The safety and efficacy of Lucemyra was supported by two randomized, double-blind, placebo-controlled clinical trials of 866 adults meeting Diagnostic and Statistical Manual-IV criteria for opioid dependence who were physically dependent on opioids and undergoing abrupt opioid discontinuation.

The FDA is requiring 15 postmarketing studies, including both animal and human studies. Additional animal safety studies will be required to support longer-term use (such as during a gradual opioid taper in pain patients discontinuing opioid analgesics) and use in children.

The FDA granted this application Priority Review and Fast Track designations, and an independent FDA advisory committee supported the approval of Lucemyra at a meeting held March.
Read More...

Fraud Claim May Close Sonoma West Medical Center
Thu, 17 May 2018 05:46:10 - Pacific Time
The Palm Drive Health Care District is seeking bids for the purchase of its Sebastopol hospital, a move brought on by ongoing financial struggles and debt, district officials said Tuesday afternoon.

A request for proposals, which was released Tuesday, seeks a buyer who will operate Sonoma West Medical Center as an acute care hospital or "other health care" facility, said Alanna Brogan, executive director of the district.

Brogan said the need to sell the hospital became clear after the hospital’s lucrative but controversial lab services were suspended. Those services were called off earlier this year after insurance giant Anthem Blue Cross accused the hospital and health care district of participating in a business fraud scheme with a Florida-based medical laboratory company.

Anthem said the scheme resulted in more than $13.5 million in improper payments to the medical center. Hospital and district officials deny the allegation.

According to hospital financial data released Tuesday, the hospital took in $1.5 million in revenue in April with operating expenses of $2.3 million, an operating loss of $800,000.

Officials said district and hospital staff have taken a number of steps to improve operations and revenue collections at the hospital, but old debt continues to cripple the hospital. "We’ve done a lot to improve revenue, we just need to know what our options are going forward," Brogan said.

Closure of Sonoma West Medical Center would leave West County without a full-service hospital and emergency room services.

Dennis Colthurst, president of the district board, said he had hoped the district would not be forced to sell the hospital under the current circumstances. The financial difficulties facing Sonoma West Medical, formerly called Palm Drive Hospital, are not uncommon for rural hospitals across the country. Many of them struggle to compete against larger health care providers such as Kaiser Permanente and Sutter Health.

Colthurst said he wanted the facility to remain as a full-service hospital with an emergency room and insisted it would succeed with the right health care provider at the helm. He said district voters have repeatedly made that clear.

"At the end of the day, the West County needs a hospital with an emergency room with full services for the community," he said. "To me, having the emergency room is vital."

But district board member Jim Horn, a strong critic of the hospital’s current management organization, Sonoma West Medical Center, Inc., said he thought it was unlikely a large health care organization would be willing to operate the facility as a hospital.

He said district and hospital supporters have had informal talks with health care providers in the area for the last year to no avail. He said that when the Petaluma Avenue hospital first closed in April 2014, district board members sought to get someone to operate it as an urgent care center with radiology services, but received no response.

Horn said the district may ultimately be forced to issue another request for proposals allowing the buyer to operate the hospital as something other than a medical facility. Read More...

Worldwide Facilities adds Workers' Compensation Products
Thu, 17 May 2018 05:46:04 - Pacific Time
National wholesale insurance brokerage and managing general agent Worldwide Facilities has created a new workers’ compensation division.

Worldwide Facilities is a national insurance wholesale broker and managing general agent established in 1970, Its team of insurance specialists has access to virtually every specialty domestic and international insurance market.

But, Davis Moore, CEO of Worldwide Facilities, noted that while his firm has a diverse range of products, it did not have brokers specializing in workers’ compensation until now. "This is a $53-billion segment of the industry, and we sensed a need to expand our capabilities in this area," he said.

The company has branch offices in major metropolitan areas - including Los Angeles, San Francisco, San Diego, Irvine, South Bay, Phoenix, Orlando, Tampa, Atlanta, Savannah, Chicago, Austin, New York, Dallas, Houston, Hartford, Nashville, Salt Lake City, Boston, Palm Springs, Morehead City, and Seattle.

The team has seven workers’ compensation specialists led by Senior Vice President Todd Pollock in the firm’s office near Boston, an office it opened in February when Pollock joined the firm.

Pollock is a 23-year veteran in the insurance industry with a specialization in the workers’ compensation field. He started his career at EBI Companies. In 2001, Pollock joined the PMC Insurance Group as a workers’ compensation broker. Prior to joining Worldwide Facilities, Pollock was with Keating, where he served as president and managing partner of workers’ compensation.

The new workers’ compensation division offers more than a dozen markets available for nationwide risk placement.

"Our markets will accommodate any size risk, both new and difficult to place. This new division strives to provide a package of expertise, market knowledge and the highest quality service," said Pollock.

The minimum premiums start at $1,000, and there is no maximum. Loss-sensitive options may be available for larger insureds. Most classes are accepted, including higher-hazard exposures such as healthcare, transportation, and construction. Read More...

California Bill To Ban Patient Brokering and Reduce Fraud
Wed, 16 May 2018 09:19:51 - Pacific Time
Proposed legislation that would tighten regulation of California’s addiction recovery industry is a few steps closer to becoming law.

Senate Bill 1228, introduced by California Senator Ricardo Lara, unanimously passed the Senate Healthcare Committee last month .This bill proposes to establish the Substance Use Disorder Patient Protection Act.

This bill makes findings and declarations about the opioid epidemic and its toll on overdoses in the state, the growing need for treatment services and the surge in patient brokering and trafficking because of the need for services; and the state’s interest in increasing the availability of quality recovery services to encourage patients’ recovery and stability.

The bill would ban patient brokering and require "licensed recovery programs to refer patients only to certified facilities that meet high standards of patient care and protect patients from physical, sexual or financial abuse," according to a statement by Senator Lara.

Patient brokering is the practice of recruiting people in need of treatment for substance use disorder in exchange for kickbacks. This predatory practice - which may involve prowling recovery meetings, homeless camps, and drug courts- is, at its worst, associated with patient deaths and insurance fraud.

Senator Lara says that desperation is fueling a surge in patient brokering or patient trafficking, where patients are referred to recovery services that do not meet their needs and put them at risk of relapse.

Numerous news articles have shown the dreadful cost of brokering to patients and their families. Patients have been recruited with the offer of cash payments or drugs. Patients with acute medical needs have even died after being referred to facilities that did not meet their needs. Insurance fraud and overbilling for medical services can result from patient brokering.

After clients’ insurance coverage is exhausted, facility operators have allegedly been dumping them in the streets. The issue is largely attributed to facilities that do not require state licensure or oversight, including sober living homes.

A recent CDI investigation highlights the growing concern surrounding sober living homes. In November 2016, the CDI issued a press release about an investigation that resulted in the arrest of the operators of some Southern California sober living homes, Community Recovery of Los Angeles (CRLA).

Florida, New York, and more have banned patient brokering.

SB 1228 goes before the Senate Appropriation Committee on May 22. Read More...

Managing Post-Operative Pain Without Opioids
Wed, 16 May 2018 09:19:41 - Pacific Time
Same-day orthopedic surgery allows patients to recover in the comfort of their own homes rather than in a hospital bed, and provides multiple benefits to patients for improved recovery. And the drive to perform total joint replacement procedures on an outpatient basis continues to increase.

Russell Presley Swann, MD, of Indianapolis-based Methodist Sports Medicine, shared his thoughts on postoperative pain management after outpatient orthopedic procedures with MD Magazine.

A potential challenge clinicians and claim administrators  must take into account when considering outpatient total joint procedures with their patients is effective management of post-operative pain. More than 73 million surgical procedures are performed in the US each year, and up to 75% of patients may experience pain after surgery. Inadequate pain management remains common and can result in a number of negative clinical outcomes, including deep vein thrombosis, pulmonary embolism, coronary ischemia, myocardial infarction, pneumonia, poor wound healing, insomnia, and demoralization.3

Until recently, post-operative pain was primarily treated with opioids - and according to the CDC, the increase in opioid prescribing is a contributing factor to the increase of prescription overdoses. Opioid-based pain medications may produce significant adverse effects, with both clinical and financial consequences. Even a 1-day opioid prescription may pose a 6% risk of long-term opioid use, and as many as 1 in 5 patients become a routine opioid user after 10 days of narcotic analgesia.

New techniques and approaches like continuous peripheral nerve blocks (CPNBs) are playing a significant role in making post-operative pain more manageable and providing patients with superior acute postoperative pain relief while decreasing the amount of opioid-related adverse effects. CPNBs have been successfully introduced in the ambulatory setting to provide on-going analgesia at home, as well as in the hospital setting. CPNBs can also help patients ambulate faster and improve their range of motion more quickly.

Through careful planning and leveraging effective pain management techniques such as CPNBs, same-day joint procedures are a realistic option for many patients. However, as with everything in healthcare, open communication with both patients and their caregivers is critical.

This is not only the case for decisions around the procedure itself but the recovery process as well. Many patients may still be unaware that there are alternatives to opioids for post-surgical pain relief and may be hesitant to undergo a procedure as a result.

By ensuring patients and their caregivers are educated regarding their options for both care delivery and pain management, we are providing a needed opportunity to improve the overall patient experience while increasing satisfaction and speeding post-surgical recovery.
Read More...

California and DOJ Join LA Whilstleblower Case Against Insys
Tue, 15 May 2018 09:46:26 - Pacific Time
The U.S. Department of Justice and five U.S. states, including California, have stepped into a previously secret lawsuit against Insys Therapeutics, Inc., revealing for the first time the central role played by whistleblower Maria Guzman in the government’s years-long pursuit of Insys for illegally marketing a dangerous opioid spray named SUBSYS.

The resulting probe has led to a series of convictions, guilty pleas, and indictments of doctors and former Insys executives - including the company’s billionaire founder, John Kapoor, who was indicted in 2017 on federal racketeering charges. The drugmaker is accused of trying to generate more profit by paying kickbacks to doctors to prescribe powerful opioid medications.

The government’s involvement was disclosed in a filing made public on Monday when the case filed in 2013 was unsealed. The move adds firepower to the civil litigation as Insys tries to resolve a federal probe into its marketing of Subsys, a spray form of fentanyl. Six U.S. states - California, Colorado, Indiana, New York, North Carolina and Virginia - also joined whistleblower litigation against Insys, according to the filing in U.S. District Court in Los Angeles.

Ms. Guzman alleged a nationwide scheme by Insys to defraud Medicare and Medicaid by inducing doctors, via kickbacks that ranged from cash to favors to sex, to prescribe large doses of the drug SUBSYS for federally insured patients who never should have received the drug, a form of fentanyl that’s designed to be sprayed beneath the tongue of people who suffer from extreme pain due to cancer.

Using a mantra of "pain is pain," Insys illegally pushed the prescription of SUBSYS for lesser "off-label" conditions such as back pain and migraines, according to the complaint. Ms. Guzman was fired in 2013 after objecting to the potentially deadly scheme.

In federal court filings unsealed on May 11, the U.S. government and five U.S. states said they would take over litigation of the major part of Ms. Guzman’s action, specifically including her claims against Insys for kickbacks.

The original complaint was filed in Los Angeles federal court in 2013. The 139 page Second Amended Complaint in the case provides an account of Ms. Guzman’s experience at Insys. In addition to outlining a fraudulent scheme against taxpayers, it also alleges that Insys was a discriminatory workplace for women.

Indeed, much of the Second Amended Complaint can serve as a training manual for designing illegal kickback schemes. The first third of the document describes in detail how it was done under these topical categories.

- The INSYS Business Model and Kickbacks to Doctors (Page 12)
- Kickbacks and Speaker Programs (Page 14)
- Strip Clubs, Shooting Ranges, Meals, and Referrals (Page 17)
- Hiring a Doctor's Significant Other Family Member, or Friend (Page 22)
- Burlakoff Offered Physicians Lucrative Business Deals and Partnerships (Page 24)
- Instructions for Avoiding Anti-Kickback Standards (Page 24)

With regard to the topic of avoiding anti-kickback standards, the Complaint claims that during the April 2013 INSYS conference in Arizona, management and specialty sales professionals shared methods with one another on how to avoid anti-kickback standards. At the conclusion of the meeting on of the presenters said "I don't want to know what you do," but stated they should do what they need to do, but "It's not on me."
Read More...

Silicon Valley Orthopedist Sent to Prison
Tue, 15 May 2018 09:46:21 - Pacific Time
Saratoga Orthopedic Surgeon Gregory Belcher M.D. was sentenced to 12 months and a day in prison for making a false statement related to a health care benefits program. Belcher was a 1988 graduate of Tufts University School of Medicine.

The sentence was handed down by the Honorable Lucy H. Koh, U.S. District Judge, following an eight-week trial in which Belcher and his wife, Dr. Vilasini Ganesh, were convicted.

On December 15, 2017, Belcher, 56, and his wife, Ganesh, 47, both of Saratoga, Calif., were convicted of crimes related to health care fraud charges.

The evidence at trial demonstrated Belcher submitted a false claim in connection with a billing matter related to the physical therapy practice he conducted from the offices of the Campbell Medical Group in Saratoga, Calif.

Evidence also demonstrated Ganesh, Belcher’s wife and office partner, submitted false and fraudulent claims to several health care benefit programs for services that she knew were not properly payable. For example, Ganesh included claims for days when a patient had not been seen by the provider. She also submitted claims for patients who had been seen by another physician provider who no longer was affiliated with her practice.

On July 13, 2017, a federal grand jury indicted the defendants, charging them with one count of conspiracy to commit health care fraud, in violation of 18 U.S.C. § 1349; one count of conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h); multiple counts health care fraud, in violation of 18 U.S.C. § 1347 and 2; and making a false statement relating to health care matters, in violation of 18 U.S.C. § 1035.

The jury convicted Belcher of one count of health care fraud and convicted Ganesh of five counts of health care fraud and five counts of making false statements. The jury acquitted the defendants of the remaining counts.

In addition to the prison term, Judge Koh sentenced Belcher to a 3-year term of supervised release. Belcher will begin serving the sentence June 6, 2018.

He’ll begin serving his sentence in June. The Medical Board of California fled an Accusation on April 17 seeking to revoke his medical license. No hearing has yet been set on this Accusation. Read More...

President of Fresno Health Care Plan Pleads Guilty
Mon, 14 May 2018 08:40:00 - Pacific Time
The President of a health care company based In Fresno and Visalia pleaded guilty to illegal use of client funds

According to an announcement by U.S. Attorney McGregor W. Scottj, Mark Merrill Reynolds, 62, of Fresno, pleaded guilty to unlawfully converting to his own use client funds held by his company, Ben-E-Lect.

According to court documents, Reynolds was the president and sole shareholder of Ben-E-Lect and Ben-E-Lect of Visalia. These companies operated in Fresno and Tulare Counties.

Ben-E-Lect’s clients were small to medium sized businesses that purchased high-deductible, fully insured group medical plans from independent insurance carriers, and then self-insured beneficiaries for amounts up to the amount of the high deductible.

The company was first incorporated in 1987, and was purchased by Reynolds in 1996.

Ben-E-Lect processed the claims using funds that its clients paid into an account known as the Ben-E-Lect Employer Elect account. Ben-E-Lect was required to hold these funds in a fiduciary capacity and to withdraw clients’ funds only for specific purposes, none of which included Ben-E-Lect’s own operational expenses or Reynold’s personal gain.

According to the plea agreement, Reynolds converted funds from the Employer Elect account to his own use by withdrawing funds from the account and then using these funds for business operational expenses of Ben-E-Lect, and to pay his own personal expenses.

Reynolds faces a maximum statutory penalty of 5 years in prison and a $250,000 fine. He is scheduled to be sentenced by U.S. District Judge Lawrence J. O’Neill on August 20, 2018, at 10:45 a.m.

On May 9, Employer Driven Insurance Services, Inc. (E.D.I.S.), a provider of third party administration that focuses on helping employers of all sizes improve benefits and lower cost, announced that it reached an agreement to acquire the block of business and assets of Ben-E-Lect.

This case is the product of an investigation by the Federal Bureau of Investigation and the California Department of Insurance. Assistant U.S. Attorneys Mark J. McKeon and Henry Z. Carbajal III are prosecuting the case. Read More...

HHS "American Patients First" Plans to Lower Drug Prices
Mon, 14 May 2018 08:39:51 - Pacific Time
President Trump again blasted drugmakers and healthcare "middlemen" for making prescription medicines unaffordable for Americans. He made the remarks at the White House Rose Garden in a speech to introduce what he called "the most sweeping action in history" to lower drug prices.The Department of Health and Human Services released what it called a blueprint titled "American Patients First" with details of its plan.

It said near-term actions would include giving commercial plans that administer Medicare Part D prescription drug benefits for seniors more power to negotiate prices with drugmakers. Federal health plans would also test ways to pay for drugs based on their effectiveness.

HHS’s blueprint encompasses two phases: 1) actions the President may direct HHS to take immediately and 2) actions HHS is actively considering, on which feedback is being solicited.

A few weeks ago, the U.S. Food and Drug Administration announced it would evaluate requiring drugmakers to include the list prices they set on medicines in their advertising. Drugmakers argue that list prices do not reflect actual cost after discounts and rebates.

Some of the administration’s longer-term priorities include restricting use of rebates, creating incentives for drugmakers to lower list prices, and investigating tools to address foreign government practices that it said could be harming innovation and driving up U.S. prices.

Health and Human Services Secretary Alex Azar, a former pharmaceutical company executive, said many of the actions the government was considering would not require approval by Congress and could take place through executive action within months. He said it would take years to restructure the U.S. drug system.

Trump also blasted the pharmaceutical and insurance industries for spending hundreds of millions of dollars on lobbying to "protect the status quo." His remarks follow a renewed focus on the influence of the drugmaker lobby, which spends the most of any lobbying group in Washington.

Trump said his administration would take aim at the "middlemen" in the drug industry who became "very, very rich," an apparent reference to health insurers and pharmacy benefit managers (PBMs). He also said the pharmaceutical industry is making an "absolute fortune" at the expense of American taxpayers.

"Everyone involved in the broken system - the drugmakers, insurance companies, distributors, pharmacy benefit managers, and many others - contribute to the problem," Trump said.

Trump also placed blame on foreign governments, saying they "extort unreasonably low prices" from U.S. drugmakers, forcing companies to charge more in this country. "America will not be cheated any longer, and especially will not be cheated by foreign countries," he said, adding that he has instructed the U.S. Trade Representative to make the issue a top priority with trading partners. Read More...

Past Week News Archive


Former Zenefits CEO Surrenders Insurance License: Fri, 11 May 2018 07:02:59 - Pacific Time: Read More...


Security Company Owner Arrested for $3.2M Fraud: Fri, 11 May 2018 07:02:54 - Pacific Time: Read More...


U.S. Attorneys Sue California Stem Cell Treatment Center: Thu, 10 May 2018 09:18:59 - Pacific Time: Read More...


Feds Provide Example of Fleshing Out Kickbacks: Thu, 10 May 2018 09:18:54 - Pacific Time: Read More...


Michael E. Barri D.C. Sentenced to One Year in Prison: Wed, 9 May 2018 08:23:48 - Pacific Time: Read More...


30 California Counties Join Opiate Litigation: Wed, 9 May 2018 08:23:42 - Pacific Time: Read More...


Walmart and Sam's Club Impose Opioid Prescription Fill Limits: Tue, 8 May 2018 10:54:24 - Pacific Time: Read More...


California Settles with Valeant Pharmaceuticals for $1.875M: Tue, 8 May 2018 10:54:17 - Pacific Time: Read More...


DWC to Amend Med-Legal Fee Schedule: Mon, 7 May 2018 10:09:34 - Pacific Time: Read More...


Commercial Lines Premiums Increase - Except for Comp: Mon, 7 May 2018 10:09:28 - Pacific Time: Read More...