- Massive Increases in Payroll Taxes Needed to Fix "Broken" UI Systemon December 3, 2024 at 2:06 PM
The California Legislative Analyst’s Office released a report Monday detailing the urgent need to fix the state’s "broken" unemployment insurance system, which currently faces significant financial challenges incurred during the pandemic, including an outstanding $20 billion loan from the federal government.
According to the Executive Summary the "State’s Unemployment Insurance (UI) Financing System Is Broken. The state’s UI program is supposed to be self-sufficient-that is, the system should collect enough funds to pay for benefits over time. This means, in some years, the system will collect more than necessary so that, during most economic downturns, there is enough money to pay for rising benefit costs. That system is broken: tax collections routinely fall short of covering benefit costs. (The state’s fiscal problems are unrelated to the widespread fraud that affected temporary federal UI programs during the pandemic.) Both our office and the administration expect these annual shortfalls to continue for the foreseeable future. Under our projections, deficits would average around $2 billion per year for the next five years. This outlook is unprecedented: although the state has, in the past, failed to build robust reserves during periods of economic growth, it has never before run persistent deficits during one of these periods."
The state’s UI tax system requires a full redesign so that contributions: (1) cover benefit costs in most years and (2) build up a reserve that can be drawn down during recessions. The Report recommend four main areas of change:
- - We recommend the Legislature increase the taxable wage base from $7,000 to $46,800, tying the taxable wage base to the amount of UI benefits a worker can actually receive ($450 per week). Taxing this level of earnings means no taxes would be paid on wages that are not covered by UI. This taxable wage base level would place California among the ten states with taxable wages bases above $40,000 and all other Western states. While necessary, this step alone would not be sufficient to address the state’s solvency problems.
- - Following federal guidelines, we recommend the state adopt a simple, robust UI tax structure comprised of a standard tax rate and a reserve-building tax rate. The standard tax rate would cover typical UI benefit costs. The reserve-building rate would help the state build up a robust reserve that can be drawn down during recessions. Under current conditions, the standard tax rate would be 1.4 percent and the reserve-building rate would be 0.5 percent, for a total of 1.9 percent UI tax rate applied to our proposed $46,800 taxable wage base.
- - We recommend the Legislature transition to a new experience rating system that bases employers’ tax rates on increases or decreases in their employment, rather than an exact accounting of their former workers’ UI costs (as the current system operates). This approach would continue to reflect, indirectly, employers’ costs to the UI system because business that reduce employment tend to have higher UI usage. Thus, this alternative approach maintains the policy goals of experience rating but does not suffer from the main downsides of the current system.
- - The outstanding federal loan complicates the state’s efforts to fix its broken UI financing system: as long as the federal loan remains outstanding, even an improved tax system would probably not be able to build reserves ahead of the next recession. To address this, and in acknowledgment of the unique nature of the pandemic that caused the significant UI loan, we outline a shared approach to refinancing the federal loan. This would involve two equal parts: (1) a revenue bond paid back by employers and (2) new borrowing from the Pooled Money Investment Account paid back by the General Fund.
The Executive Summary concludes by saying "The scope and magnitude of our recommendations reflect the deep problems in the existing UI system. These include: (1) the staggeringly large and growing loan from the federal government and (2) the fact that the system is currently running a deficit even during an economic expansion. These are significant problems in isolation, let alone in combination. The significant changes proposed in this report are an honest reflection of these problems. However, whether or not the Legislature takes action, employers will soon pay more in UI taxes than they do today due to escalating charges under federal law. Making changes now will allow the Legislature to make strategic choices about how to repay the federal loan, while also replacing the UI financing system with one that is simpler, balanced, and flexible."
- DWC Announces Transition to CourtCall Video Platform for Hearingson December 3, 2024 at 2:06 PM
The Division of Workers’ Compensation (DWC) announced it will be moving from the telephone conference lines used for status conferences, mandatory settlement conferences (MSCs), priority conferences, and lien conferences to the CourtCall video platform. All hearings currently heard via the conference lines will transition to the CourtCall video platform on March 1, 2025.
CourtCall developed the Remote Appearance Platform, creating an organized and voluntary way for attorneys to appear for routine matters in Civil, Family, Criminal, Probate, Bankruptcy, Workers' Compensation and other cases from their offices, homes or other convenient locations. Designed with reliable and user-friendly technologies, Courts and remote participants experience seamless communication during cases, while benefiting from significant time and cost savings.
According to its website, CourtCall says it benefits judges and court staff in the following ways"
- - Reduces the cost of litigation
- - Less crowded courtrooms and increased security
- - More efficient case flow
- - Increases public access
- - Connects all relevant parties, regardless of their locations
- - "Privacy" and "Open Court" services available
- - More efficient courtroom logistics; eliminates work for busy Court Staff
Today, CourtCall says it remains the industry leader in providing supported Remote Legal Collaboration services throughout the United States, Canada and Worldwide. They maintain an updated list of the Courts they serve across the Nation.
Each judge will have a link to their virtual courtroom on the CourtCall video platform. In the coming months, these links will be posted on DWC’s website and included on hearing notices. Every courtroom will also have a call-in number if needed by the parties. Training videos will be available on the DWC website.
DWC believes that this technological upgrade will provide greater functionality for hearings and allow parties more flexibility during the conference process. There will be no charge to the parties for this service.
All trials, lien trials, and expedited hearings will continue to be set in person.
DWC will provide regular updates regarding the conversion timeline via its Newslines.
- DIR Publishes Fiscal Year 2024/2025 Policy Assessment Noticeon December 2, 2024 at 4:24 PM
Labor Code Sections 62.5 and 62.6 authorize the Department of Industrial Relations to assess employers for the costs of the administration of the workers' compensation, health and safety and labor standards enforcement programs. These assessments provide a stable funding source to the support operations of the courts, to ensure safe and healthy working conditions on the job, to ensure the enforcement of labor standards and requirements for workers' compensation coverage.
Labor Code Sections 62.5 and 62.6 require allocation of the six assessment types between insured and self- insured employers in proportion to payroll for the most recent year available. Enclosed with a letter is an invoice for the share of the following total assessments, and a document showing the methodology used to compute the assessment amounts and the resulting determination of the respective assessment/surcharge factors. The factors are applied to the premium amount are allocated across the following six categories:
- - Workers' Compensation Administration Revolving Fund Assessment (WCARF) - - $ 698,761,939
- - Subsequent Injuries Benefits Trust Fund Assessment (SIBTF) - - $ 848,000,000
- - Uninsured Employers Benefits Trust Fund Assessment (UEBTF) - - $ 53,088,800
- - Occupational Safety and Health Fund Assessment (OSHF) - - $ 189,509,130
- - Labor Enforcement and Compliance Fund Assessment (LECF) - - $ 181,983,628
- - Workers' Compensation Fraud Account Assessment (FRAUD) - - $ 90,435,332
All workers' compensation insurance policies issued with an inception date during the calendar year 2025 must be assessed to recover amounts advanced on behalf of policyholders. Assessable Premium is the premium the insured is charged after all rating adjustments (experience rating, schedule rating, premium discounts, expense constants, etc.) except for adjustments resulting from the application of deductible plans, retrospective rating or the return of policyholder dividends.
The assessment factors to be applied to the estimated annual assessable premium for 2025 policies are shown in the table on the notice. These are the same factors that were used to calculate the assessment.
The total assessment is calculated based on the direct workers' compensation premiums reported to the Department of Insurance for Calendar Year 2023 by carriers. The first installment is due on or before January 1, 2025, with the balance due on or before April 1, 2025.
- USC Keck Hospital Succeeds an Leads Nation at Nurse Manager Retentionon December 2, 2024 at 4:24 PM
Laudio and the American Organization for Nursing Leadership (AONL) announced the release of their second joint report, Trends and Innovations in Nurse Manager Retention. The report provides new data on nurse manager retention trends, along with the downstream impacts of manager turnover, and couples it with actionable insights directly from managers on high-priority improvements to promote satisfaction, retention, and growth.
The authors found the highest exit rates in the first few years of a nurse management role. In the first four years, between 10% and 12% of nurse managers step down and return to front-line work. In the first three, up to 12% leave the organization.
Building on the spring report, Quantifying Nurse Manager Impact, the new report provides fresh insights from the Laudio Insights dataset - spanning over 200,000 frontline team members - and AONL-led interviews with nurse managers. The analysis shows that nurse manager turnover is highest during the first four years of leadership, revealing a critical window for leader support and investment. Furthermore, nurse manager transitions have a quantifiable impact on RN retention - they were associated with a two to four percentage point average rise in RN turnover in the year that followed.
"Nurse managers are vital in maintaining the stability of frontline teams and ensuring optimal patient care," said Robyn Begley, CEO of AONL and chief nursing officer, SVP of workforce at the American Hospital Association. "This report underscores the importance of prioritizing nurse manager well-being and engagement in health systems’ workforce strategies. It also provides practical guidance to implement meaningful changes to support these crucial leaders."
The report also highlights top areas for health system executives to prioritize based on nurse manager interviews.The national average exit rate for nurse managers is 8.8%, according to the report. At hospitals in California, Ohio and Louisiana, leaders shared with Becker's Hospital Reviewhow they have achieved turnover rates as low as 3%.
In California Keck Hospital of USC, which has an annual nurse manager turnover rate of 3%, has "mastered" the skill of engaging these leaders and ensuring job satisfaction, according to Chief Nursing Officer Ceonne Houston-Raasikh, DNP, RN.
The Los Angeles-based hospital hosts quarterly listening sessions for its 13 nurse managers to share their challenges and frustrations. Additionally, anonymous pulse surveys examine engagement levels.
One issue that Keck Hospital of USC recently addressed was the timeline for performance evaluations. They were originally due Dec. 31, but after managers expressed the "crunch time" coupled with scheduled end-of-year time off, leaders postponed the deadline to Jan. 31.
When Dr. Houston-Raasikh joined Keck, several nurse managers were fairly new to their roles. They were also relatively new to healthcare, as many had fewer than three years of experience.
Nurses a few years into their career have less lived experience with conflict than those with 10-plus years into leadership, and thus need more support when navigating tense situations, Deana Sievert, DNP, RN, chief nursing officer of Columbus-based UH/Ross Heart Hospita said.
- Fresno Pharmacist to Serve 7 Years for Trafficking 450,000 Opiate Pillson November 26, 2024 at 2:04 PM
U.S. Attorney Phillip A. Talbert announced that Ifeanyi Vincent Ntukogu, 49, of Fresno, was sentenced to seven years and three months in prison for illegally distributing oxycodone and hydrocodone.
Ntukogu was a pharmacist in Madera who dispensed more than 450,000 oxycodone and hydrocodone pills based on fraudulent prescriptions, all in exchange for cash.
"As a licensed pharmacist, Mr. Ntukogu was trusted to dispense medications safely, supporting positive health outcomes. He intentionally exploited his trusted role, dispensing hundreds of thousands of fraudulently prescribed oxycodone and hydrocodone pills, knowing his greed-fueled actions would put opioids in the hands of drug dealers and could cause grave harm to the public. Working closely with our state and federal law enforcement partners, we dismantled this operation and held those who chose profit over public safety accountable," said Special Agent in Charge Sid Patel, who leads the FBI Sacramento field office.
"Ntukogo thought he could outsmart the system by rejecting red flag prescriptions all while conducting drug deals on the side for cash. His illicit scheme led to the distribution of nearly half a million highly addictive opioids in Tennessee, Texas and beyond; fueling the fire of prescription drug misuse and endangering American lives," said DEA Special Agent in Charge Bob P. Beris. "This lengthy sentence underscores the serious consequences for medical practitioners who place profits above people. DEA will continue to work with our counterparts to investigate, arrest and prosecute individuals who abuse their positions and threaten public safety."
According to court records, from December 2014 through November 2018, Ntukogu dispensed more than 450,000 oxycodone and hydrocodone pills based on fraudulent prescriptions delivered to him by his co-conspirators and co-defendants in the case, Kelo White and Donald Pierre. The prescriptions were from more than 10 different physicians whose signatures were forged.
Ntukogu reviewed each prescription and rejected the ones that he believed regulators may deem suspicious. For example, he rejected prescriptions that were supposedly written by certain doctors or that were written for individuals who were having prescriptions filled at other pharmacies because he believed those prescriptions may raise red flags.
Ntukogu dispensed the pills through his New Life Pharmacy in Madera. Upon doing so, he required cash payments from White and Pierre and increased the price that he charged over time. White and Pierre then illegally sold the pills in Tennessee, Texas, and elsewhere.
Ntukogu received hundreds of thousands of dollars for his participation in the scheme. His sentence was also enhanced because he used his special skills as a pharmacist to help commit the crime.
This case was the product of an investigation by the Federal Bureau of Investigation, the Drug Enforcement Administration, and the California Department of Health Care Services. Assistant U.S. Attorneys Antonio Pataca and Joseph Barton prosecuted the case.
The case was investigated under the DOJ’s Organized Crime Drug Enforcement Task Force (OCDETF). OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. For more information about OCDETF, please visit Justice.gov/OCDETF.
This case was also part of the DOJ’s Operation Synthetic Opioid Surge (SOS), which is a program designed to reduce the supply of deadly synthetic opioids in high impact areas as well as identifying wholesale distribution networks and international and domestic suppliers.
White is scheduled to be sentenced on Feb. 24, 2025. He faces a statutory maximum penalty of 20 years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Pierre, the remaining defendant in the case, was previously convicted and sentenced to nine years and four months in prison.
"This defendant displayed a blatant disregard for public safety and the law," U.S. Attorney Talbert said. "It took the effort of agents, investigators, undercover officers, and medical professionals to bring an end to this illicit prescription-writing racket. The U.S. Attorney’s Office will continue our pursuit of those who fuel the opioid epidemic for their own personal benefit."
- US Framing West Faces 31 Wage Theft Criminal Chargeson November 26, 2024 at 2:04 PM
The California Attorney General announced the filing of 31 criminal charges and two enhancements against US Framing West and two employees,Thomas Gregory English and Amelia Frazier Krebs, for multiple violations of state labor laws. The announcement follows their surrender and arraignment in Los Angeles Superior Court earlier this month.
Between 2018 and 2022, US Framing West provided framing construction for multiple projects across California allegedly using crews of unlicensed subcontractors. While working these projects, US Framing West allegedly committed grand theft, payroll tax evasion, prevailing wage theft, and filed false documents with the State.
In the complaint, the Attorney General alleges that US Framing West failed to pay more than $2.5 million in state payroll taxes during this period and underpaid its workers by approximately $40,000 at a public works project in Cathedral City.
US Framing West is a construction company that specializes in framing contracting. DOJ’s investigation revealed that US Framing West had secured a number of high-paying framing jobs on large construction projects in California and then subcontracted out the physical labor to unlicensed subcontractors.
Starting in 2018 and through to 2022, US Framing West is alleged to have hired numerous unlicensed contractors for projects throughout the State and failed to file and submit taxes to the California Employment Development Department (EDD) for these employees.
DOJ’s investigation into US Framing West began after the Northern California Carpenters Regional Council alerted DOJ to potential wage theft violations occurring at an Oakland construction project. DOJ, with support from the California Department of Insurance, California Department of Industrial Relations (DIR), and EDD, subsequently conducted a joint investigation into US Framing West for allegations relating to violations of state labor laws and tax evasion on construction projects spanning Alameda, Los Angeles, Contra Costa, Orange, Riverside, San Diego, San Francisco, and Santa Clara counties.
Additionally, DOJ alleges that US Framing West engaged in prevailing wage theft and filing false documents with DIR in connection with a public works project in Cathedral City. Public works projects - projects that use more than $1,000 of public funds - require all workers on the project to be paid the "prevailing wage."
- Jury Awards Injured Walmart Truck Driver $34M For Subrosa Based Dischargeon November 25, 2024 at 4:25 PM
Jesus "Jesse" Fonseca worked at Walmart's Apple Valley distribution center in San Bernardino County for 14 years, During that time he claimed he competently executed all tasks and was commended for his hard work and dedication. His yearly performance reviews were always satisfactory and he received quarterly bonuses throughout the entirety of his employment. In addition, he received numerous awards, including model safety trucks, safety jackets, certificates and annual safety belt buckles. Also, he was a leader in his department, and was involved in a hiring committee, a safety committee, and a set run committee. Additionally, he rained drivers and was a mentor for approximately 12 drivers.
Fonseca was injured on the job when his semi-truck was rear-ended on June 19, 2017. He filed a workers' compensation claim and his work restrictions varied from time to time, but for the most part they included no pushing, pulling and lifting over 5-10 pounds and no commercial driving. Fonseca claimed his doctors said that he should not be driving the 18-wheeler for 10-14 hours per day as was typical for his employment with Walmart. He also claimed that Walmart failed to accommodate each and every request for accommodations he made.
On January 31, 2018, Fonseca said he received a call from Walmart who said it .was informed that there was a report of fraud and questioned him for approximately 20 to 30 minutes. Walmart told him that they were informed that he was driving a vehicle and his restrictions provided that he could not drive. He informed Walmart that his restriction not to drive was as to commercial vehicles for commercial purposes, and did not understand those restrictions to include personal driving, especially because he drove to his doctor’s appointments and was not informed that he could not drive himself to his appointments. So he maintained that he did not do anything wrong.
On February 3, 2018, he claimed Walmart denied his last request for modified duty before he was terminated from employment.
His workers’ compensation claim continued without incident and he claims he did not receive any further information or communications from Walmart as to the alleged fraud until March 27, 2018, when Tisha Snyder allegedly called him and accused him of fraud and told him that his employment was going to be terminated because of gross misconduct and integrity. Snyder allegedly called him in the presence of a third party, his supervisor, Lou Lacroix.
The next day March 28, Fonseca allegedly attempted to discuss his termination with Walmart’s VP of transportation, Jeff Hammonds. However, Mr. Hammonds initially said he would get back to him by end of day, then he refused to speak with him since he was represented by workers’ compensation counsel. On March 29, 2018, while Fonseca was on lave for his work-related injuries, Walmart terminated his employment with the stated reason of gross misconduct and integrity.
His attorney claimed Walmart's third-party workers' compensation administrators investigated Fonseca, and videotaped him driving an RV, and determined no further action was warranted. Fonseca alleges that on November 18, 2018, he applied for two jobs and alleges he was allegedly "forced" to disclose he was fired for "gross misconduct and integrity" and as a result he was "not considered for either job."
On July 7, 2019 he filed a First Amended Complaint in the United States District Court, Central District of California (case 5:19-cv-00821-JGB-KK which was later transferred to state court) and he alleged 11 causes of action, for Disability Discrimination, Failure to Accommodate, Failure to Engage in an Interactive Process, Retaliation under FEHA, Failure to Prevent Discrimination, Interference under CFRA, Retaliation under CFRA, Hostile Work Environment, Wrongful Termination in Violation of Public Policy; Intentional Infliction of Emotional Distress and Defamation.
The case ultimately proceed to a two phase trial in the San Bernardino Superior Court (CIVDS1909501). On November 19, 2024 the jury issued its Special Verdict for Defamation Per Quod (a legal term that describes a defamatory statement that requires additional evidence to prove its harmful effect on a plaintiff's reputation). The Special Verdict found past economic losses of $522,323, future economic loss of $677,926, past non-economic loss of $3.5 million, Future non-economic loss of $5 million, (which totals $9.7M in actual damages) and additionally a phase II award of $25 million in punitive damages.
Lead attorney David M. deRubertis s reportedly said the evidence in the trial "showed that Walmart's defamation of Jesse was part of a broader scheme to use false accusations to force injured truckers back to work prematurely or, if not, terminate them so that Walmart can cut down workers' compensation costs,"
In a statement to Newsweek,Walmart spokesperson Kelly Hellbusch said, "This outrageous verdict simply does not reflect the straightforward and uncontested facts of this case. Accordingly, we will pursue all available remedies."
The deRubertis Law Firm APC and Eldessouky Law APC represent Fonseca. Constangy Brooks Smith & Prophete LLP represents Wal-Mart.
- So Cal Prosecutors Fight New Street Drug 3 Times Stronger Than Fentanylon November 25, 2024 at 4:25 PM
A Santa Clarita man has been arraigned on an indictment alleging he distributed protonitazene - a novel synthetic opioid that is up to three times more powerful than fentanyl (which itself is 50 times stronger than heroin) - resulting in a victim’s fatal overdose this spring. The coroner’s office has identified the young man as Bryce Jacquet (DOB November 10, 2001).
Out of over 160,000 death records made public by the county’s medical examiner since 1999, this appears to be the very first to explicitly mention protonitazene as a cause of death.
Benjamin Anthony Collins, 21, is charged with one count of distribution of protonitazene resulting in death. This is believed to be the nation’s first death-resulting criminal case involving this narcotic.
Protonitazene is a benzimidazole derivative with potent opioid effects which has been sold over the internet as a designer drug since 2019, and has been identified in various European countries, as well as Canada, the US and Australia. It has been linked to numerous cases of drug overdose, and is a Schedule I drug in the US.
It was developed by a Swiss pharmaceutical company in the 1950s as an alternative to morphine, but was never adopted due to severe side effects.
Collins was arrested on November 18, and pleaded not guilty to the charge at his arraignment. A trial date of January 14, 2025, was scheduled. A federal magistrate judge ordered Collins jailed without bond.
According to the indictment, during the early morning hours of April 19, 2024, Collins knowingly and intentionally distributed protonitazene, which resulted in the death of 22 year old Bryce Jacquet. In recent years, protonitazene has been sold over the internet.
Collins allegedly sold the 22-year-old victim pills containing protonitazene and arranged to sell the victim a bulk supply of these pills in the future. The victim, a resident of Stevenson Ranch, consumed the pills soon afterward in the front seat of his car and quickly died. His mother later found him dead in the front seat parked outside her home and called 911.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
If convicted, Collins would face a mandatory minimum sentence of 20 years in federal prison and a statutory maximum sentence of life imprisonment.
The Drug Enforcement Administration and Los Angeles County Sherriff’s Department are investigating this matter.
Assistant United States Attorney Lisa J. Lindhorst of the General Crimes Section is prosecuting this case.
- SoCal School District Joins 200 Self-Funded Employers Suing Drugmakerson November 21, 2024 at 12:56 PM
The Oceanside Unified School District filed a lawsuit in U.S. District Court for the District of New Jersey against pharmaceutical and pharmacy benefit companies. The lawsuit alleges that three pharmaceutical manufacturers - Eli Lily, Novo Nordisk, and Sanofi - and three pharmacy benefit managers - Express Scripts, CVS Caremark, and Optum RX - colluded to inflate the price of insulin paid by the district's self-funded health plan.
The lawsuit describes a scheme in which pharmacy benefit managers (PBMs) secure billions of dollars in rebates from pharmaceutical manufacturers in exchange for including their insulin products on the PBMs' list of approved drugs, known as formularies. Manufacturers then artificially raise their prices to pay for those rebates, shadowing each other in lockstep rather than competing to offer lower consumer prices.
The lawsuit points out that insulin is a century-old medication, and while its production costs have decreased with little need for new investments in innovation, research, or development, its price has surged by more than 1000 percent since 2003. This dramatic increase is attributed to a pricing strategy involving pharmaceutical manufacturers and pharmacy benefit managers.
One of the attorneys representing the School District said in a press release that "like many organizations with self-funded health plans, the Oceanside Unified School District should not be forced to pay inflated and unreasonable insulin prices created by a scheme between big pharma and benefits managers to engage in unfair and deceptive trade practices.
This lawsuit aims to address these practices under state unfair business laws and federal Racketeer Influenced and Corrupt Organization (RICO) laws."
According to the story published by NBCSandiego.com, Oceanside Unified School District is one of more than 200 school districts joining in the lawsuits nationwide. The attorney representing it says they’re anticipating more districts from San Diego County to come forward.
However, some employers with self-insured pharmacy benefits plans may become targets of litigation themselves. A study published by The American Journal of Managed Care last July conducted a national survey of 110 employer drug benefit decision makers for organizations with self-insured pharmacy benefits.
The study found that nearly two-thirds of employers reported having rebate agreements with a rebate guarantee for specialty drugs.The person or entity most influential to rebate strategy decisions was often a benefits consultant (37.3%), a human resources/benefits leader (29.1%), or a benefits broker (21.8%). Employers with rebate guarantees ascribed a higher level of importance to guarantees when selecting a PBM than employers receiving rebates without a guarantee and those who do not receive rebates.
The study concluded by saying "As the public discourse on PBMs and drug rebates continues, it is important to recognize the role employer benefits consultants may play in perpetuating employer reliance on guaranteed rebate arrangements."
Responding to this study, the Mahoney Group warned "the reliance on drug rebate guarantees poses an elevated fiduciary risk for employers, especially in light of the Consolidated Appropriations Act (CAA) of 2021, which imposes tighter fiduciary duties on sponsors of group health plans."
Large, self-insured employers are also beginning to face lawsuits from their workers over claims of mismanaging health and pharmaceutical benefits and violating their fiduciary duties under the Employee Retirement Income Security Act. Employees at Johnson & Johnson earlier this year filed a federal class-action lawsuit against their New Jersey-based employer alleging that over the years they have paid millions of dollars more for drugs than they should have. Wells Fargo was also sued by employees in a July class action for allegedly paying inflated prices to its contracted pharmacy benefits manager, Express Scripts.
In a statement to NBC 7, Eli Lily said, in part: "These allegations are baseless. It is the school district and other health plans - not Lilly - who negotiate the terms of their rebate arrangements, including whether to pass those rebates on to people who take insulin."
CVS Caremark also responded, saying, in part, "Pharmaceutical companies alone are responsible for the prices they set in the marketplace for the products they manufacture ... we intend to vigorously defend against this baseless suit."
- Pharmaceutical Company and Its CEO Pay $47M to Resolve Kickback Caseon November 21, 2024 at 12:55 PM
Pharmaceutical company QOL Medical, LLC (QOL) and its CEO, Frederick E. Cooper, have agreed to pay $47 million to resolve allegations that they caused the submission of false claims to federal health care programs, in violation of the False Claims Act, by offering kickbacks, in the form of free Carbon-13 breath testing services, to induce claims for QOL’s drug Sucraid.
Sucraid is an FDA-approved therapy for the rare genetic condition, Congenital Sucrase-Isomaltase Deficiency (CSID). CSID patients have difficulty digesting sucrose (table sugar) and suffer from chronic gastrointestinal symptoms such as diarrhea, abdominal pain, bloating and gas.
As part of the settlement, QOL and Mr. Cooper admitted and accepted responsibility for certain facts providing the basis of the settlement. Beginning in 2018, QOL, with Mr. Cooper’s approval, distributed free Carbon-13 breath test kits to health care providers and asked providers to give the kits to patients with common gastrointestinal symptoms. QOL claimed that the test could "rule in or rule out" CSID. In fact, the test does not specifically diagnose CSID. Conditions other than CSID can cause a patient to test "positive" for low sucrase activity on a Carbon-13 breath test. Approximately 30% of the Carbon-13 breath tests from QOL were positive for low sucrase activity.
QOL paid a laboratory to analyze the breath tests, report the results to health care providers, and provide the results to QOL. The results QOL received from the laboratory did not contain patient names, but did contain the name of the health care provider who ordered the test, along with the patient’s age, gender, symptoms and test result. Between 2018 and 2022, QOL disseminated this information to its sales force with instructions to make sales calls for Sucraid to health care providers whose patients had positive Carbon-13 breath test results. QOL tracked whether sales representatives converted "positive" Carbon-13 breath tests into Sucraid prescriptions. As QOL’s CEO, Mr. Cooper was aware of and approved the implementation and continuation of this marketing program.
Some QOL sales representatives also made claims regarding the Carbon-13 test’s ability to definitively diagnose CSID that were not supported by published scientific literature. For example, in slides at a 2019 national sales training, which Mr. Cooper reviewed, QOL suggested that sales representatives tell health care providers, "If you have a positive breath test, the patient will not improve unless you treat with Sucraid."
The allegations resolved by the settlement agreement were, in part, originally bought in a case filed under the qui tam or whistleblower provisions of the False Claims Act by former QOL Medical employees. The case is captioned United States ex rel. John Doe 1, et al. v. QOL Medical, LLC, et al., No. 1:20-cv-11243 (D. Mass.).
Of the total $47 million recovery, approximately $43.6 million constitutes the federal portion of the recovery and approximately $3.4 million constitutes a recovery for State Medicaid programs. The whistleblowers will receive approximately $8 million as their share of the recovery.
This matter was handled by Assistant U.S. Attorneys Brian LaMacchia and Lindsey Ross for the District of Massachusetts and Trial Attorneys Emily Bussigel and Paige Ammons of the Justice Department’s Civil Division. The case was investigated by HHS-OIG, FBI, DCIS and the Office of Inspector General for the Department of Veterans Affairs.
- Massive Increases in Payroll Taxes Needed to Fix "Broken" UI Systemon December 3, 2024 at 2:06 PM
The California Legislative Analyst’s Office released a report Monday detailing the urgent need to fix the state’s "broken" unemployment insurance system, which currently faces significant financial challenges incurred during the pandemic, including an outstanding $20 billion loan from the federal government.
According to the Executive Summary the "State’s Unemployment Insurance (UI) Financing System Is Broken. The state’s UI program is supposed to be self-sufficient-that is, the system should collect enough funds to pay for benefits over time. This means, in some years, the system will collect more than necessary so that, during most economic downturns, there is enough money to pay for rising benefit costs. That system is broken: tax collections routinely fall short of covering benefit costs. (The state’s fiscal problems are unrelated to the widespread fraud that affected temporary federal UI programs during the pandemic.) Both our office and the administration expect these annual shortfalls to continue for the foreseeable future. Under our projections, deficits would average around $2 billion per year for the next five years. This outlook is unprecedented: although the state has, in the past, failed to build robust reserves during periods of economic growth, it has never before run persistent deficits during one of these periods."
The state’s UI tax system requires a full redesign so that contributions: (1) cover benefit costs in most years and (2) build up a reserve that can be drawn down during recessions. The Report recommend four main areas of change:
- - We recommend the Legislature increase the taxable wage base from $7,000 to $46,800, tying the taxable wage base to the amount of UI benefits a worker can actually receive ($450 per week). Taxing this level of earnings means no taxes would be paid on wages that are not covered by UI. This taxable wage base level would place California among the ten states with taxable wages bases above $40,000 and all other Western states. While necessary, this step alone would not be sufficient to address the state’s solvency problems.
- - Following federal guidelines, we recommend the state adopt a simple, robust UI tax structure comprised of a standard tax rate and a reserve-building tax rate. The standard tax rate would cover typical UI benefit costs. The reserve-building rate would help the state build up a robust reserve that can be drawn down during recessions. Under current conditions, the standard tax rate would be 1.4 percent and the reserve-building rate would be 0.5 percent, for a total of 1.9 percent UI tax rate applied to our proposed $46,800 taxable wage base.
- - We recommend the Legislature transition to a new experience rating system that bases employers’ tax rates on increases or decreases in their employment, rather than an exact accounting of their former workers’ UI costs (as the current system operates). This approach would continue to reflect, indirectly, employers’ costs to the UI system because business that reduce employment tend to have higher UI usage. Thus, this alternative approach maintains the policy goals of experience rating but does not suffer from the main downsides of the current system.
- - The outstanding federal loan complicates the state’s efforts to fix its broken UI financing system: as long as the federal loan remains outstanding, even an improved tax system would probably not be able to build reserves ahead of the next recession. To address this, and in acknowledgment of the unique nature of the pandemic that caused the significant UI loan, we outline a shared approach to refinancing the federal loan. This would involve two equal parts: (1) a revenue bond paid back by employers and (2) new borrowing from the Pooled Money Investment Account paid back by the General Fund.
The Executive Summary concludes by saying "The scope and magnitude of our recommendations reflect the deep problems in the existing UI system. These include: (1) the staggeringly large and growing loan from the federal government and (2) the fact that the system is currently running a deficit even during an economic expansion. These are significant problems in isolation, let alone in combination. The significant changes proposed in this report are an honest reflection of these problems. However, whether or not the Legislature takes action, employers will soon pay more in UI taxes than they do today due to escalating charges under federal law. Making changes now will allow the Legislature to make strategic choices about how to repay the federal loan, while also replacing the UI financing system with one that is simpler, balanced, and flexible." - DWC Announces Transition to CourtCall Video Platform for Hearingson December 3, 2024 at 2:06 PM
The Division of Workers’ Compensation (DWC) announced it will be moving from the telephone conference lines used for status conferences, mandatory settlement conferences (MSCs), priority conferences, and lien conferences to the CourtCall video platform. All hearings currently heard via the conference lines will transition to the CourtCall video platform on March 1, 2025.
CourtCall developed the Remote Appearance Platform, creating an organized and voluntary way for attorneys to appear for routine matters in Civil, Family, Criminal, Probate, Bankruptcy, Workers' Compensation and other cases from their offices, homes or other convenient locations. Designed with reliable and user-friendly technologies, Courts and remote participants experience seamless communication during cases, while benefiting from significant time and cost savings.
According to its website, CourtCall says it benefits judges and court staff in the following ways"
- - Reduces the cost of litigation
- - Less crowded courtrooms and increased security
- - More efficient case flow
- - Increases public access
- - Connects all relevant parties, regardless of their locations
- - "Privacy" and "Open Court" services available
- - More efficient courtroom logistics; eliminates work for busy Court Staff
Today, CourtCall says it remains the industry leader in providing supported Remote Legal Collaboration services throughout the United States, Canada and Worldwide. They maintain an updated list of the Courts they serve across the Nation.
Each judge will have a link to their virtual courtroom on the CourtCall video platform. In the coming months, these links will be posted on DWC’s website and included on hearing notices. Every courtroom will also have a call-in number if needed by the parties. Training videos will be available on the DWC website.
DWC believes that this technological upgrade will provide greater functionality for hearings and allow parties more flexibility during the conference process. There will be no charge to the parties for this service.
All trials, lien trials, and expedited hearings will continue to be set in person.
DWC will provide regular updates regarding the conversion timeline via its Newslines. - DIR Publishes Fiscal Year 2024/2025 Policy Assessment Noticeon December 2, 2024 at 4:24 PM
Labor Code Sections 62.5 and 62.6 authorize the Department of Industrial Relations to assess employers for the costs of the administration of the workers' compensation, health and safety and labor standards enforcement programs. These assessments provide a stable funding source to the support operations of the courts, to ensure safe and healthy working conditions on the job, to ensure the enforcement of labor standards and requirements for workers' compensation coverage.
Labor Code Sections 62.5 and 62.6 require allocation of the six assessment types between insured and self- insured employers in proportion to payroll for the most recent year available. Enclosed with a letter is an invoice for the share of the following total assessments, and a document showing the methodology used to compute the assessment amounts and the resulting determination of the respective assessment/surcharge factors. The factors are applied to the premium amount are allocated across the following six categories:
- - Workers' Compensation Administration Revolving Fund Assessment (WCARF) - - $ 698,761,939
- - Subsequent Injuries Benefits Trust Fund Assessment (SIBTF) - - $ 848,000,000
- - Uninsured Employers Benefits Trust Fund Assessment (UEBTF) - - $ 53,088,800
- - Occupational Safety and Health Fund Assessment (OSHF) - - $ 189,509,130
- - Labor Enforcement and Compliance Fund Assessment (LECF) - - $ 181,983,628
- - Workers' Compensation Fraud Account Assessment (FRAUD) - - $ 90,435,332
All workers' compensation insurance policies issued with an inception date during the calendar year 2025 must be assessed to recover amounts advanced on behalf of policyholders. Assessable Premium is the premium the insured is charged after all rating adjustments (experience rating, schedule rating, premium discounts, expense constants, etc.) except for adjustments resulting from the application of deductible plans, retrospective rating or the return of policyholder dividends.
The assessment factors to be applied to the estimated annual assessable premium for 2025 policies are shown in the table on the notice. These are the same factors that were used to calculate the assessment.
The total assessment is calculated based on the direct workers' compensation premiums reported to the Department of Insurance for Calendar Year 2023 by carriers. The first installment is due on or before January 1, 2025, with the balance due on or before April 1, 2025. - USC Keck Hospital Succeeds an Leads Nation at Nurse Manager Retentionon December 2, 2024 at 4:24 PM
Laudio and the American Organization for Nursing Leadership (AONL) announced the release of their second joint report, Trends and Innovations in Nurse Manager Retention. The report provides new data on nurse manager retention trends, along with the downstream impacts of manager turnover, and couples it with actionable insights directly from managers on high-priority improvements to promote satisfaction, retention, and growth.
The authors found the highest exit rates in the first few years of a nurse management role. In the first four years, between 10% and 12% of nurse managers step down and return to front-line work. In the first three, up to 12% leave the organization.
Building on the spring report, Quantifying Nurse Manager Impact, the new report provides fresh insights from the Laudio Insights dataset - spanning over 200,000 frontline team members - and AONL-led interviews with nurse managers. The analysis shows that nurse manager turnover is highest during the first four years of leadership, revealing a critical window for leader support and investment. Furthermore, nurse manager transitions have a quantifiable impact on RN retention - they were associated with a two to four percentage point average rise in RN turnover in the year that followed.
"Nurse managers are vital in maintaining the stability of frontline teams and ensuring optimal patient care," said Robyn Begley, CEO of AONL and chief nursing officer, SVP of workforce at the American Hospital Association. "This report underscores the importance of prioritizing nurse manager well-being and engagement in health systems’ workforce strategies. It also provides practical guidance to implement meaningful changes to support these crucial leaders."
The report also highlights top areas for health system executives to prioritize based on nurse manager interviews.The national average exit rate for nurse managers is 8.8%, according to the report. At hospitals in California, Ohio and Louisiana, leaders shared with Becker's Hospital Reviewhow they have achieved turnover rates as low as 3%.
In California Keck Hospital of USC, which has an annual nurse manager turnover rate of 3%, has "mastered" the skill of engaging these leaders and ensuring job satisfaction, according to Chief Nursing Officer Ceonne Houston-Raasikh, DNP, RN.
The Los Angeles-based hospital hosts quarterly listening sessions for its 13 nurse managers to share their challenges and frustrations. Additionally, anonymous pulse surveys examine engagement levels.
One issue that Keck Hospital of USC recently addressed was the timeline for performance evaluations. They were originally due Dec. 31, but after managers expressed the "crunch time" coupled with scheduled end-of-year time off, leaders postponed the deadline to Jan. 31.
When Dr. Houston-Raasikh joined Keck, several nurse managers were fairly new to their roles. They were also relatively new to healthcare, as many had fewer than three years of experience.
Nurses a few years into their career have less lived experience with conflict than those with 10-plus years into leadership, and thus need more support when navigating tense situations, Deana Sievert, DNP, RN, chief nursing officer of Columbus-based UH/Ross Heart Hospita said. - Fresno Pharmacist to Serve 7 Years for Trafficking 450,000 Opiate Pillson November 26, 2024 at 2:04 PM
U.S. Attorney Phillip A. Talbert announced that Ifeanyi Vincent Ntukogu, 49, of Fresno, was sentenced to seven years and three months in prison for illegally distributing oxycodone and hydrocodone.
Ntukogu was a pharmacist in Madera who dispensed more than 450,000 oxycodone and hydrocodone pills based on fraudulent prescriptions, all in exchange for cash.
"As a licensed pharmacist, Mr. Ntukogu was trusted to dispense medications safely, supporting positive health outcomes. He intentionally exploited his trusted role, dispensing hundreds of thousands of fraudulently prescribed oxycodone and hydrocodone pills, knowing his greed-fueled actions would put opioids in the hands of drug dealers and could cause grave harm to the public. Working closely with our state and federal law enforcement partners, we dismantled this operation and held those who chose profit over public safety accountable," said Special Agent in Charge Sid Patel, who leads the FBI Sacramento field office.
"Ntukogo thought he could outsmart the system by rejecting red flag prescriptions all while conducting drug deals on the side for cash. His illicit scheme led to the distribution of nearly half a million highly addictive opioids in Tennessee, Texas and beyond; fueling the fire of prescription drug misuse and endangering American lives," said DEA Special Agent in Charge Bob P. Beris. "This lengthy sentence underscores the serious consequences for medical practitioners who place profits above people. DEA will continue to work with our counterparts to investigate, arrest and prosecute individuals who abuse their positions and threaten public safety."
According to court records, from December 2014 through November 2018, Ntukogu dispensed more than 450,000 oxycodone and hydrocodone pills based on fraudulent prescriptions delivered to him by his co-conspirators and co-defendants in the case, Kelo White and Donald Pierre. The prescriptions were from more than 10 different physicians whose signatures were forged.
Ntukogu reviewed each prescription and rejected the ones that he believed regulators may deem suspicious. For example, he rejected prescriptions that were supposedly written by certain doctors or that were written for individuals who were having prescriptions filled at other pharmacies because he believed those prescriptions may raise red flags.
Ntukogu dispensed the pills through his New Life Pharmacy in Madera. Upon doing so, he required cash payments from White and Pierre and increased the price that he charged over time. White and Pierre then illegally sold the pills in Tennessee, Texas, and elsewhere.
Ntukogu received hundreds of thousands of dollars for his participation in the scheme. His sentence was also enhanced because he used his special skills as a pharmacist to help commit the crime.
This case was the product of an investigation by the Federal Bureau of Investigation, the Drug Enforcement Administration, and the California Department of Health Care Services. Assistant U.S. Attorneys Antonio Pataca and Joseph Barton prosecuted the case.
The case was investigated under the DOJ’s Organized Crime Drug Enforcement Task Force (OCDETF). OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. For more information about OCDETF, please visit Justice.gov/OCDETF.
This case was also part of the DOJ’s Operation Synthetic Opioid Surge (SOS), which is a program designed to reduce the supply of deadly synthetic opioids in high impact areas as well as identifying wholesale distribution networks and international and domestic suppliers.
White is scheduled to be sentenced on Feb. 24, 2025. He faces a statutory maximum penalty of 20 years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Pierre, the remaining defendant in the case, was previously convicted and sentenced to nine years and four months in prison.
"This defendant displayed a blatant disregard for public safety and the law," U.S. Attorney Talbert said. "It took the effort of agents, investigators, undercover officers, and medical professionals to bring an end to this illicit prescription-writing racket. The U.S. Attorney’s Office will continue our pursuit of those who fuel the opioid epidemic for their own personal benefit." - US Framing West Faces 31 Wage Theft Criminal Chargeson November 26, 2024 at 2:04 PM
The California Attorney General announced the filing of 31 criminal charges and two enhancements against US Framing West and two employees,Thomas Gregory English and Amelia Frazier Krebs, for multiple violations of state labor laws. The announcement follows their surrender and arraignment in Los Angeles Superior Court earlier this month.
Between 2018 and 2022, US Framing West provided framing construction for multiple projects across California allegedly using crews of unlicensed subcontractors. While working these projects, US Framing West allegedly committed grand theft, payroll tax evasion, prevailing wage theft, and filed false documents with the State.
In the complaint, the Attorney General alleges that US Framing West failed to pay more than $2.5 million in state payroll taxes during this period and underpaid its workers by approximately $40,000 at a public works project in Cathedral City.
US Framing West is a construction company that specializes in framing contracting. DOJ’s investigation revealed that US Framing West had secured a number of high-paying framing jobs on large construction projects in California and then subcontracted out the physical labor to unlicensed subcontractors.
Starting in 2018 and through to 2022, US Framing West is alleged to have hired numerous unlicensed contractors for projects throughout the State and failed to file and submit taxes to the California Employment Development Department (EDD) for these employees.
DOJ’s investigation into US Framing West began after the Northern California Carpenters Regional Council alerted DOJ to potential wage theft violations occurring at an Oakland construction project. DOJ, with support from the California Department of Insurance, California Department of Industrial Relations (DIR), and EDD, subsequently conducted a joint investigation into US Framing West for allegations relating to violations of state labor laws and tax evasion on construction projects spanning Alameda, Los Angeles, Contra Costa, Orange, Riverside, San Diego, San Francisco, and Santa Clara counties.
Additionally, DOJ alleges that US Framing West engaged in prevailing wage theft and filing false documents with DIR in connection with a public works project in Cathedral City. Public works projects - projects that use more than $1,000 of public funds - require all workers on the project to be paid the "prevailing wage." - Jury Awards Injured Walmart Truck Driver $34M For Subrosa Based Dischargeon November 25, 2024 at 4:25 PM
Jesus "Jesse" Fonseca worked at Walmart's Apple Valley distribution center in San Bernardino County for 14 years, During that time he claimed he competently executed all tasks and was commended for his hard work and dedication. His yearly performance reviews were always satisfactory and he received quarterly bonuses throughout the entirety of his employment. In addition, he received numerous awards, including model safety trucks, safety jackets, certificates and annual safety belt buckles. Also, he was a leader in his department, and was involved in a hiring committee, a safety committee, and a set run committee. Additionally, he rained drivers and was a mentor for approximately 12 drivers.
Fonseca was injured on the job when his semi-truck was rear-ended on June 19, 2017. He filed a workers' compensation claim and his work restrictions varied from time to time, but for the most part they included no pushing, pulling and lifting over 5-10 pounds and no commercial driving. Fonseca claimed his doctors said that he should not be driving the 18-wheeler for 10-14 hours per day as was typical for his employment with Walmart. He also claimed that Walmart failed to accommodate each and every request for accommodations he made.
On January 31, 2018, Fonseca said he received a call from Walmart who said it .was informed that there was a report of fraud and questioned him for approximately 20 to 30 minutes. Walmart told him that they were informed that he was driving a vehicle and his restrictions provided that he could not drive. He informed Walmart that his restriction not to drive was as to commercial vehicles for commercial purposes, and did not understand those restrictions to include personal driving, especially because he drove to his doctor’s appointments and was not informed that he could not drive himself to his appointments. So he maintained that he did not do anything wrong.
On February 3, 2018, he claimed Walmart denied his last request for modified duty before he was terminated from employment.
His workers’ compensation claim continued without incident and he claims he did not receive any further information or communications from Walmart as to the alleged fraud until March 27, 2018, when Tisha Snyder allegedly called him and accused him of fraud and told him that his employment was going to be terminated because of gross misconduct and integrity. Snyder allegedly called him in the presence of a third party, his supervisor, Lou Lacroix.
The next day March 28, Fonseca allegedly attempted to discuss his termination with Walmart’s VP of transportation, Jeff Hammonds. However, Mr. Hammonds initially said he would get back to him by end of day, then he refused to speak with him since he was represented by workers’ compensation counsel. On March 29, 2018, while Fonseca was on lave for his work-related injuries, Walmart terminated his employment with the stated reason of gross misconduct and integrity.
His attorney claimed Walmart's third-party workers' compensation administrators investigated Fonseca, and videotaped him driving an RV, and determined no further action was warranted. Fonseca alleges that on November 18, 2018, he applied for two jobs and alleges he was allegedly "forced" to disclose he was fired for "gross misconduct and integrity" and as a result he was "not considered for either job."
On July 7, 2019 he filed a First Amended Complaint in the United States District Court, Central District of California (case 5:19-cv-00821-JGB-KK which was later transferred to state court) and he alleged 11 causes of action, for Disability Discrimination, Failure to Accommodate, Failure to Engage in an Interactive Process, Retaliation under FEHA, Failure to Prevent Discrimination, Interference under CFRA, Retaliation under CFRA, Hostile Work Environment, Wrongful Termination in Violation of Public Policy; Intentional Infliction of Emotional Distress and Defamation.
The case ultimately proceed to a two phase trial in the San Bernardino Superior Court (CIVDS1909501). On November 19, 2024 the jury issued its Special Verdict for Defamation Per Quod (a legal term that describes a defamatory statement that requires additional evidence to prove its harmful effect on a plaintiff's reputation). The Special Verdict found past economic losses of $522,323, future economic loss of $677,926, past non-economic loss of $3.5 million, Future non-economic loss of $5 million, (which totals $9.7M in actual damages) and additionally a phase II award of $25 million in punitive damages.
Lead attorney David M. deRubertis s reportedly said the evidence in the trial "showed that Walmart's defamation of Jesse was part of a broader scheme to use false accusations to force injured truckers back to work prematurely or, if not, terminate them so that Walmart can cut down workers' compensation costs,"
In a statement to Newsweek,Walmart spokesperson Kelly Hellbusch said, "This outrageous verdict simply does not reflect the straightforward and uncontested facts of this case. Accordingly, we will pursue all available remedies."
The deRubertis Law Firm APC and Eldessouky Law APC represent Fonseca. Constangy Brooks Smith & Prophete LLP represents Wal-Mart. - So Cal Prosecutors Fight New Street Drug 3 Times Stronger Than Fentanylon November 25, 2024 at 4:25 PM
A Santa Clarita man has been arraigned on an indictment alleging he distributed protonitazene - a novel synthetic opioid that is up to three times more powerful than fentanyl (which itself is 50 times stronger than heroin) - resulting in a victim’s fatal overdose this spring. The coroner’s office has identified the young man as Bryce Jacquet (DOB November 10, 2001).
Out of over 160,000 death records made public by the county’s medical examiner since 1999, this appears to be the very first to explicitly mention protonitazene as a cause of death.
Benjamin Anthony Collins, 21, is charged with one count of distribution of protonitazene resulting in death. This is believed to be the nation’s first death-resulting criminal case involving this narcotic.
Protonitazene is a benzimidazole derivative with potent opioid effects which has been sold over the internet as a designer drug since 2019, and has been identified in various European countries, as well as Canada, the US and Australia. It has been linked to numerous cases of drug overdose, and is a Schedule I drug in the US.
It was developed by a Swiss pharmaceutical company in the 1950s as an alternative to morphine, but was never adopted due to severe side effects.
Collins was arrested on November 18, and pleaded not guilty to the charge at his arraignment. A trial date of January 14, 2025, was scheduled. A federal magistrate judge ordered Collins jailed without bond.
According to the indictment, during the early morning hours of April 19, 2024, Collins knowingly and intentionally distributed protonitazene, which resulted in the death of 22 year old Bryce Jacquet. In recent years, protonitazene has been sold over the internet.
Collins allegedly sold the 22-year-old victim pills containing protonitazene and arranged to sell the victim a bulk supply of these pills in the future. The victim, a resident of Stevenson Ranch, consumed the pills soon afterward in the front seat of his car and quickly died. His mother later found him dead in the front seat parked outside her home and called 911.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
If convicted, Collins would face a mandatory minimum sentence of 20 years in federal prison and a statutory maximum sentence of life imprisonment.
The Drug Enforcement Administration and Los Angeles County Sherriff’s Department are investigating this matter.
Assistant United States Attorney Lisa J. Lindhorst of the General Crimes Section is prosecuting this case. - SoCal School District Joins 200 Self-Funded Employers Suing Drugmakerson November 21, 2024 at 12:56 PM
The Oceanside Unified School District filed a lawsuit in U.S. District Court for the District of New Jersey against pharmaceutical and pharmacy benefit companies. The lawsuit alleges that three pharmaceutical manufacturers - Eli Lily, Novo Nordisk, and Sanofi - and three pharmacy benefit managers - Express Scripts, CVS Caremark, and Optum RX - colluded to inflate the price of insulin paid by the district's self-funded health plan.
The lawsuit describes a scheme in which pharmacy benefit managers (PBMs) secure billions of dollars in rebates from pharmaceutical manufacturers in exchange for including their insulin products on the PBMs' list of approved drugs, known as formularies. Manufacturers then artificially raise their prices to pay for those rebates, shadowing each other in lockstep rather than competing to offer lower consumer prices.
The lawsuit points out that insulin is a century-old medication, and while its production costs have decreased with little need for new investments in innovation, research, or development, its price has surged by more than 1000 percent since 2003. This dramatic increase is attributed to a pricing strategy involving pharmaceutical manufacturers and pharmacy benefit managers.
One of the attorneys representing the School District said in a press release that "like many organizations with self-funded health plans, the Oceanside Unified School District should not be forced to pay inflated and unreasonable insulin prices created by a scheme between big pharma and benefits managers to engage in unfair and deceptive trade practices.
This lawsuit aims to address these practices under state unfair business laws and federal Racketeer Influenced and Corrupt Organization (RICO) laws."
According to the story published by NBCSandiego.com, Oceanside Unified School District is one of more than 200 school districts joining in the lawsuits nationwide. The attorney representing it says they’re anticipating more districts from San Diego County to come forward.
However, some employers with self-insured pharmacy benefits plans may become targets of litigation themselves. A study published by The American Journal of Managed Care last July conducted a national survey of 110 employer drug benefit decision makers for organizations with self-insured pharmacy benefits.
The study found that nearly two-thirds of employers reported having rebate agreements with a rebate guarantee for specialty drugs.The person or entity most influential to rebate strategy decisions was often a benefits consultant (37.3%), a human resources/benefits leader (29.1%), or a benefits broker (21.8%). Employers with rebate guarantees ascribed a higher level of importance to guarantees when selecting a PBM than employers receiving rebates without a guarantee and those who do not receive rebates.
The study concluded by saying "As the public discourse on PBMs and drug rebates continues, it is important to recognize the role employer benefits consultants may play in perpetuating employer reliance on guaranteed rebate arrangements."
Responding to this study, the Mahoney Group warned "the reliance on drug rebate guarantees poses an elevated fiduciary risk for employers, especially in light of the Consolidated Appropriations Act (CAA) of 2021, which imposes tighter fiduciary duties on sponsors of group health plans."
Large, self-insured employers are also beginning to face lawsuits from their workers over claims of mismanaging health and pharmaceutical benefits and violating their fiduciary duties under the Employee Retirement Income Security Act. Employees at Johnson & Johnson earlier this year filed a federal class-action lawsuit against their New Jersey-based employer alleging that over the years they have paid millions of dollars more for drugs than they should have. Wells Fargo was also sued by employees in a July class action for allegedly paying inflated prices to its contracted pharmacy benefits manager, Express Scripts.
In a statement to NBC 7, Eli Lily said, in part: "These allegations are baseless. It is the school district and other health plans - not Lilly - who negotiate the terms of their rebate arrangements, including whether to pass those rebates on to people who take insulin."
CVS Caremark also responded, saying, in part, "Pharmaceutical companies alone are responsible for the prices they set in the marketplace for the products they manufacture ... we intend to vigorously defend against this baseless suit." - Pharmaceutical Company and Its CEO Pay $47M to Resolve Kickback Caseon November 21, 2024 at 12:55 PM
Pharmaceutical company QOL Medical, LLC (QOL) and its CEO, Frederick E. Cooper, have agreed to pay $47 million to resolve allegations that they caused the submission of false claims to federal health care programs, in violation of the False Claims Act, by offering kickbacks, in the form of free Carbon-13 breath testing services, to induce claims for QOL’s drug Sucraid.
Sucraid is an FDA-approved therapy for the rare genetic condition, Congenital Sucrase-Isomaltase Deficiency (CSID). CSID patients have difficulty digesting sucrose (table sugar) and suffer from chronic gastrointestinal symptoms such as diarrhea, abdominal pain, bloating and gas.
As part of the settlement, QOL and Mr. Cooper admitted and accepted responsibility for certain facts providing the basis of the settlement. Beginning in 2018, QOL, with Mr. Cooper’s approval, distributed free Carbon-13 breath test kits to health care providers and asked providers to give the kits to patients with common gastrointestinal symptoms. QOL claimed that the test could "rule in or rule out" CSID. In fact, the test does not specifically diagnose CSID. Conditions other than CSID can cause a patient to test "positive" for low sucrase activity on a Carbon-13 breath test. Approximately 30% of the Carbon-13 breath tests from QOL were positive for low sucrase activity.
QOL paid a laboratory to analyze the breath tests, report the results to health care providers, and provide the results to QOL. The results QOL received from the laboratory did not contain patient names, but did contain the name of the health care provider who ordered the test, along with the patient’s age, gender, symptoms and test result. Between 2018 and 2022, QOL disseminated this information to its sales force with instructions to make sales calls for Sucraid to health care providers whose patients had positive Carbon-13 breath test results. QOL tracked whether sales representatives converted "positive" Carbon-13 breath tests into Sucraid prescriptions. As QOL’s CEO, Mr. Cooper was aware of and approved the implementation and continuation of this marketing program.
Some QOL sales representatives also made claims regarding the Carbon-13 test’s ability to definitively diagnose CSID that were not supported by published scientific literature. For example, in slides at a 2019 national sales training, which Mr. Cooper reviewed, QOL suggested that sales representatives tell health care providers, "If you have a positive breath test, the patient will not improve unless you treat with Sucraid."
The allegations resolved by the settlement agreement were, in part, originally bought in a case filed under the qui tam or whistleblower provisions of the False Claims Act by former QOL Medical employees. The case is captioned United States ex rel. John Doe 1, et al. v. QOL Medical, LLC, et al., No. 1:20-cv-11243 (D. Mass.).
Of the total $47 million recovery, approximately $43.6 million constitutes the federal portion of the recovery and approximately $3.4 million constitutes a recovery for State Medicaid programs. The whistleblowers will receive approximately $8 million as their share of the recovery.
This matter was handled by Assistant U.S. Attorneys Brian LaMacchia and Lindsey Ross for the District of Massachusetts and Trial Attorneys Emily Bussigel and Paige Ammons of the Justice Department’s Civil Division. The case was investigated by HHS-OIG, FBI, DCIS and the Office of Inspector General for the Department of Veterans Affairs.