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Workers’ Compensation Daily News for September 26th, 2021

  • Comp Drug Costs Decreased by 38% in Ten Years
    on September 24, 2021 at 9:24 AM

    CompPharma offers retrospective and real-time pharmacy benefit management (PBM) audits along with a range of consulting services to workers’ compensation payers.

    The company just published its 17th Annual Survey of Prescription Drug Management in Workers’ Compensation.

    The survey results indicate that workers’ compensation prescription drug costs have decreased by approximately $1.8 billion or 38% over the last decade. Several drivers contributed to this decline:

    - - Massive decrease in opioid utilization and impact on co-prescribing;
    - - Significant reduction in California’s pharmacy fee schedule;
    - - A very competitive PBM market; and
    - - Consolidated PBM industry providing greater buying power.

    The structural decline in drug costs we have seen for the last nine years continued in 2020 as workers’ compensation pharmacy costs decreased 12.3% across all 28 payers surveyed. This follows 2018’s 10.1% and 2017’s 9.8% decline.

    While the double-digit drop is quite significant, it is important to note that there was wide variation among the respondents with changes ranging from a decrease of 27.9% to a 10% increase. There was more variation this year than in any recent survey, likely due to the broad range of respondents, e.g., public entities, state funds, and payers of last resort and their exposure to COVID-19. Four respondents reported declines greater than 20%.

    Fully half of all respondents attributed the drop in spend to fewer claims and/or the impact of COVID. Another key contributor was the continuation of significant year-over-year reductions in opioid spend.

    Here are the five top takeaways from this year’s survey:

    1. Total workers’ comp drug spend was approximately $3 billion in 2020.
    2. Opioid spend in 2020 dropped to 17% of total drug spend across all respondents.
    3. There was a significant decrease in opioid utilization in 2020.
    4. There is no consensus regarding the most problematic issues in workers’ comp, rather an abiding concern that the industry is still challenged by physician dispensing, mail-order pharmacies, and over-prescribing physicians.
    5. Respondents expect a lot out of their PBMs, including a more proactive approach, more useful and actionable data, and more transparency on pricing. Some - but by no means all - respondents acknowledge their own staff must do a much better job to support their PBMs’ clinical management efforts.

  • DWC Withdraws Setting of TTD Rates for 2022
    on September 24, 2021 at 9:24 AM

    The Division of Workers’ Compensation announced on September 15th, that the 2022 minimum and maximum temporary total disability (TTD) rates will not change.

    They said in that announcement that the minimum TTD will remain $203.44 and the maximum TTD rate will remain $1,356.31 per week.

    However, that announcement was premature.

    This week the DWC announced that the September 15, 2021 newsline that established the 2022 minimum and maximum temporary total disability (TTD) rates has been withdrawn.

    The decision to withdraw the September 15 newsline is based on finding that the State Average Weekly Wage (SAWW) data posted by the U.S. Department of Labor (DOL), data which under Labor Code Section 4453(a)(10) is used to determine annual TTD rates in California, was preliminary and incomplete.

    The TTD rates in the September 15 newsline should not be used or relied upon in determining indemnity benefits for the upcoming year.

    DWC will issue a new newsline with the correct 2022 TTD rates when the correct data is posted and confirmed by DOL.

  • Drugmakers Pay $453M to Resolve Pay-For-Delay Price Fixing
    on September 23, 2021 at 9:30 AM

    Courthouse News reports that a federal judge on Wednesday tentatively approved more than $450 million in settlements with three pharmaceutical giants accused of conspiring to jack up the price of an essential diabetes drug.

    In a consolidated class action filed in federal court in Northern California, drug wholesalers claim Bausch Health Companies, Lupin Pharmaceuticals, Assertio Therapeutics and their affiliated companies struck anticompetitive deals that caused the price of brand-name diabetes drug Glumetza to spike nearly 800% from $5.72 to more than $51 per tablet in 2015.

    A jury trial was set to start in early October, but before that could happen motions for settlements with all three pharma giants were filed over the last eight days.

    Bausch will pay $300 million. Lupin will pay $150 million, and Assertio will pay $3.85 million. The Assertio settlement is significantly smaller due to the firm’s tenuous financial condition and pending opioid litigation that could push the company into bankruptcy.

    On Wednesday, Senior U.S. District Judge William Alsup said he will tentatively approve the deals after lawyers address his concerns regarding class notice and timing.

    According to the consolidated lawsuit, Assertio Therapeutics, formerly known as Depomed Inc., conspired with Lupin to delay lower-cost generic versions of Glumetza from entering the market. As part of a 2012 settlement in a patent suit, Lupin agreed to delay introducing its generic version of Glumetza until February 2016. In exchange, Assertio and Santarus, which had exclusive rights to make and sell Glumetza in the U.S. at that time, agreed to postpone launching their own generic until six months after Lupin entered the market. This gave Lupin a guaranteed six-month period to exclusively sell its generic version.

    The drug wholesalers say that deal was worth at least $56 million to Lupin, but it actually became much more valuable in 2016 when the price of Glumetza increased nearly nine times over, allowing Lupin to charge $44 per tablet instead of the $4 it would have otherwise charged.

    The wholesalers, referred to as "direct purchasers" in the litigation, say this "pay-for-delay deal" amounted to $280 million in value for Lupin and billions of dollars in extra sales for Bausch, which inherited exclusive rights to make and sell Glumetza through a web of corporate acquisitions and name changes. The plaintiffs say this scheme also caused them to pay $2.8 billion in overcharges since 2012.

    Also on Wednesday, Alsup questioned why Assertio’s $3.85 million settlement is “dramatically lower” than two other deals with Bausch and Lupin that amount to $450 million combined.

    Class counsel Steve Shadowen of Hilliard Shadowen explained that Assertio’s financial condition is in dire straits. The company had negative $24.8 million in working capital as of July, and its $23 million in accounts receivable, or expected income from prior sales, was offset by $22.5 million in liability for rebates and discounts, Shadowen said. The company is also a defendant in some 250 pending opioid cases which could push it into bankruptcy, he added.

    Shadowen said $3.85 million is "at the high end" of what Assertio can pay.

    "We were bitterly disappointed especially given Assertio’s role in creating the agreement that allowed Bausch and Lupin to take from consumers the amount of money that they took," Shadowen said. "That’s a bitter pill to swallow to let Assertio go with this amount of money, but we have to look at the hard cold financial reality."

    Class attorneys will ask for fees amounting to 25% of the total settlements, or $114.7 million, which will be deducted from the combined settlement fund.

  • WCRI Study Claims Early Manual Therapy Lowers Med Costs
    on September 23, 2021 at 9:29 AM

    Workers with low back pain (LBP) who received manual therapy (MT) early within two weeks of their physical therapy care (PT) had lower medical costs and fewer days away from work than those who received it later, according to a new study from the Workers Compensation Research Institute (WCRI). MT is hands-on therapy that improves range of motion and reduces pain.

    "This is a unique study that addresses an unfamiliar but important health care issue in workers’ compensation," said John Ruser, president and CEO of WCRI. "Although the findings only provide evidence of association between the use and early use of MT and outcomes, it helps fill information gaps in medical and health care policy research regarding this therapy."

    The study, Outcomes Associated with Manual Therapy for Workers with Non-Chronic Low Back Pain, focuses on LBP claims in 28 states. It compares costs and outcomes between claims with early and late MT and between claims with and without MT. The following are among the study’s findings:

    - - Among workers with LBP who received MT, early MT (within 2 weeks of PT care) was associated with lower costs and shorter temporary disability (TD) duration as compared with late MT (after 2 weeks of PT care). Early MT was also associated with a lower likelihood of receiving magnetic resonance imaging (MRI), pain management injections, and opioids, as compared with late MT.
    - - Among workers with LBP, those who received MT had higher costs and slightly longer TD durations than those who did not receive MT but received other PT services. These differences may partly reflect dissimilarities in injury severity or underlying health conditions that cannot be measured in the data. Also, longer periods of observation (more than 18 months) may be important to consider when addressing the cost effectiveness of MT treatment.
    - - Large interstate variations in the utilization of MT services were seen across the 28 study states, which could be explained, to some extent, by differences in state policies influencing provider practices and billing.

    The findings are based on statistical analysis that controls for various factors affecting treatment choice and outcomes. Data used for the analysis capture medical services and benefit payments at 18 months postinjury for workers with LBP who did not have surgery but received MT and other medical services provided by non-chiropractic providers.

    The 28 study states are Arkansas, California, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and Wisconsin.

  • Modified Work Not Required After Discovery of Undocumented Status
    on September 22, 2021 at 10:28 AM

    Paola Flores was as a driver for Westside Accurate Courier Services when she was injured in a motor vehicle accident on August 23, 2018. Temporary disability was paid by the employer from February 9, 2019 through February 26, 2019.

    After the accident she returned to work. The employer told her they had plans to promote her but they needed to verify some information about her before they could give her the promotion.

    In the process of promoting Flores, the employer discovered that she was not eligible to work. When this was discovered she was given two choices. One was to resign, and the other one was to be fired because she could not work in the United States. She chose to resign.

    Subsequent medical reports state that she could only do modified work compatible with the work restrictions identified. Thus, the case proceeded to trial on the issue of continuing temporary disability. She contended that since she can only do modified duty and modified duty is not available, she was therefore entitled to temporary disability benefits.

    A Finding and Order issued denying her further TD benefits. A Petition for Reconsideration was denied in the panel decision of Flores v Westside Accurate Courier Services (ADJ11673008),

    Labor Code section 1171.5 states in part "All protections, rights, and remedies available under state law, except any reinstatement remedy prohibited by federal law, are available to all individuals regardless of immigration status who have applied for employment, or who are or who have been employed, in this state."

    However, the California Supreme Court held in Salas v. Sierra Chemical Co., (2014) 59 Cal.4th 407, 425 [79 Cal.Comp.Cases 782]. that the statute is "is not preempted by federal immigration law except to the extent it authorizes an award of lost pay damages for any period after the employer's discovery of an employee's ineligibility to work in the United States."

    Although the Court’s decision in Salas pertained to FEHA, the ruling clearly applies to the provisions of the Labor Code regarding workers’ compensation injury claims.

    The circumstances in this matter are analogous to those where the WCAB has held that an injured employee who is terminated from his or her employment for good cause is not entitled to temporary disability benefits. (Butterball Turkey Co. v. Workers' Comp. Appeals Bd. (Esquivel) (1999) 65 Cal.Comp.Cases 61 (writ den.); Peralta v. Party Concepts (2016) 2016 Cal.Wrk.Comp. P.D. LEXIS 100 (Appeals Board panel decision).)

    "Here, whether applicant resigned or was "constructively discharged," defendant cannot legally employ applicant and in turn cannot be liable for benefits incurred after it learned that applicant could not be employed. Applicant's inability to work is not the result of defendant’s conduct; it is because applicant cannot legally be employed. Thus defendant is not liable for, and applicant is not entitled to, temporary disability indemnity benefits for any period of disability caused by her injury, after July 25, 2019."

  • Understaffed Psychiatric Hospital Resolves Suit for $2.85M
    on September 22, 2021 at 10:28 AM

    The owners of Sonoma County’s only psychiatric hospital, Aurora Santa Rosa Hospital, have agreed to pay $2.85 million to settle a lawsuit that alleges a number of state labor code violations, including significant understaffing that led to unsafe working conditions for nurses and other staff.

    In 2018, the former director of nursing Teresa Brooke filed a lawsuit - Brooke v. Aurora Behavioral Healthcare-Santa Rosa, LLC et al. - alleging that understaffing and related issues caused pervasive Cal-OSHA violations at a Santa Rosa behavioral healthcare hospital operated by Signature Healthcare Services, LLC, one of the largest privately-held behavioral health hospital conglomerates in the U.S.

    Using PAGA, the plaintiff sought to recover Labor Code penalties on behalf of the State of California for unlawful working conditions experienced by nurses and other hospital staff.

    On August 25, the Superior Court of California approved a settlement including a Gross Settlement Fund of $2,850,000 - with $2,046,750 being paid to the State of California and $682,250 being paid to hospital staff, based on formulas mandated by the PAGA statute.

    The court-approved settlement also includes various additional programmatic measures agreed to by the parties, including notice to employees that they will not face repercussions for speaking up regarding unsafe or unlawful practices.

    The settlement further provides for the parties to jointly retain an outside expert to evaluate the hospital’s policies, practices, and procedures and make recommendations for any changes it may deem needed to improve working conditions for front-line staff who care for acute patients.

    "This is the first of its kind, a significant PAGA settlement centering on occupational health and safety in a hospital," said Xinying Valerian, one of Plaintiff’s lead attorneys and principal of Valerian Law. "The settlement is heavily focused on the employee population who have been most impacted - nurses and mental health workers, and we have not seen any other case of this kind. There’s still work to be done, but we’ve accomplished something through a civil penalties PAGA case that has not happened before."

    "In approving the settlement, the Court recognized that the settlement provides genuine and meaningful relief that will benefit the Santa Rosa hospital employees as well as the public," according to Andrew Melzer, co-lead counsel and partner at Sanford Heisler Sharp LLP. "This case reinforces that we can and should be pursuing Labor Code and whistleblower actions aimed at deterring violations and improving conditions for hospital workers."

    Qiaojing Ella Zheng, a partner at Sanford Heisler Sharp’s San Francisco Office, added, "the resolution of this matter not only presents the employees in the Santa Rosa facility with an outstanding result, but also sets an example of how psychiatric hospitals all over the state should protect the health and safety of these frontline healthcare workers."

    Valerian and Melzer said staffing ratios of registered nurses to patients at the the hospital, at times 19 patients to one registered nurse and another licensed staff member, created unsafe working environment for nurses and other staff.

    According to the law firms, other employment rights cases remain pending against Signature Healthcare.

    Further information about the PAGA settlement will be made available to the 1,000 or so employees later in September.

  • Contractors Charged with $5 Million Premium Fraud Scheme
    on September 21, 2021 at 9:48 AM

    The Alameda County District Attorney’s Office, along with the California Department of Insurance, announce that charges have been filed against multiple suspects in an organized insurance and workers’ compensation fraud scheme that defrauded insurance carriers over $5 million in estimated losses.

    Former owners of Signature Painting and Construction Inc, Eric Andrew Oller and Brian Christopher Mitchell, were each charged with one felony count of conspiracy to commit a crime, six counts each of felony insurance fraud and two counts of workers’ compensation fraud. SPC is based in Walnut Creek, but operates throughout the Bay Area.

    Defendant Yama Sekander, owner of A-1 World Class Painting, was also charged with one count of felony workers’ compensation fraud.

    Oller is also the owner of Valhalla Consulting, which along with A-1, was used as a shell company by Mitchell to pay employees at SPC.

    From 2017 to 2018, SPC allegedly paid its employees using VC’s bank account, with the intent to illegally reduce its workers’ compensation insurance premium. SPC misrepresented information or didn’t include information about its company structure and payroll costs to its insurance carriers in order to illegally reduce its insurance premiums.

    "If a business creates an environment where they falsely pay a lower insurance premium, that company has an unfair competitive advantage over one that is law-abiding," said District Attorney Nancy E. O’Malley.

    It is alleged that Mitchell was illegally misclassifying employees and underreporting payroll costs to reduce workers’ compensation insurance premiums. The riskier the job, the higher premium an employer must pay for workers’ compensation. For example, a clerical worker costs less to insure than a worker engaged in a riskier job. It is alleged that Mitchell misclassified several of these employees to lower premium costs.

    Mitchell and Oller are also accused of entering into agreements to move employees from one company to another, to save money on workers compensation insurance. Mitchell is accused of using Sekander’s company, A-1, to obtain a workers’ compensation insurance policy for his company, SPC.

    The allegations also include that some employees at SPC were paid "under the table" so that the company could avoid paying or reporting the proper taxes. The defendants also allegedly instructed some injured employees to report working for one company, while in reality, they worked for another.

    Insurance carrier SCIF suffered a loss of approximately $3.1 million in premium payments while AmTrust loss was approximately $1.9 million as a result of this fraud scheme.

    The investigation into the defendants began in 2019 after the State Compensation Insurance Fund submitted a fraud referral to the California Department of Insurance. The fraud began in 2015.

    Charges were filed in late August and all three defendants were arraigned the morning of September 20. Their next court date will be November 18 at the East County Hall of Justice in Dublin.

  • Global Fraud Prevention Market Growing 25% Annually
    on September 21, 2021 at 9:48 AM

    According to the new report by Global and Markets, Global Insurance Fraud Detection Market Report and Forecast 2021-2026, the global insurance fraud detection market attained a value of approximately $2.7 billion in 2020. Aided by rising adoption of fraud detection services in small and medium enterprises, the market is projected to grow at a Compound Annual Growth Rate of 25.6% between 2021-2026 further to reach $10.75 billion by 2026.

    Insurance fraud detection refers to services and systems which are deployed to track and analyse data to identify irregularities and provide real-time monitoring for fraud prevention. Different types of frauds can include identity theft, billing and payment frauds, cyber-attacks, and false claims. Fraud detection solutions like fraud analytics, authentication, and governance, risk, and compliance are employed for effective management of fraudulent activities. Fraud detection systems are crucial to safeguard the interests of both, insurer and insured across various sectors including the healthcare, automobile, and infrastructural.

    The market growth of insurance fraud detection can be attributed to integration of technological advancements in detection services including Artificial Intelligence (AI), Machine Learning (ML) and Internet of Things (IoT).

    The healthcare sector witnessed an invigorated rise in the number of suspicious claims globally, and hence insurance companies are making robust investments in fraud detection services, which is augmenting the market growth.

    With the outburst of coronavirus pandemic, and the subsequent digitisation of operations, rising cases of cyber-attacks and identity thefts are propelling the market growth of fraud detection services. With rising prevalence of e-commerce retail channels and mobile banking applications increasing adoption of authentication solutions like biometric solutions, and face and voice recognition systems are fuelling the growth of the industry. In addition, the healthcare sector witnessed an invigorated rise in the number of suspicious claims globally, and hence insurance companies are making robust investments in fraud detection services, which is augmenting the market growth.

    Furthermore, with availability of cost-friendly, effective, and advanced fraud detection services, small and medium enterprises are increasingly deploying fraud analytics in their working systems to protect the business from potential risks of frauds, hence, adding to market growth.

    The market report analyses the market based on technologies, organization, deployment, applications, and major regions. The report looks into the market shares, plant turnarounds, capacities, investments, and mergers and acquisitions, among other major developments of the key players in the industry.

  • 138 Defendants Charged in $1.4 B Healthcare Fraud Busts
    on September 20, 2021 at 2:21 PM

    A strategically coordinated, six-week nationwide federal law enforcement action has resulted in criminal charges against 138 defendants, including 42 doctors, nurses, and other licensed medical professionals, in 31 federal districts across the United States for their alleged participation in various health care fraud schemes that resulted in approximately $1.4 billion in alleged losses.

    The enforcement action includes criminal charges against four defendants in the Southern District of California, involving more than $129 million in intended losses.

    Nationwide, this action includes more than $1.1 billion in fraud committed using telemedicine, more than $29 million in COVID-19 health care fraud, more than $133 million connected to substance abuse treatment facilities, or "sober homes," and more than $160 million connected to other health care fraud and illegal opioid distribution schemes across the country

    Telemedicine Fraud Cases - The largest amount of alleged fraud loss charged in connection with the announced  - over $1.1 billion in allegedly false and fraudulent claims submitted by more than 50 criminal defendants in 11 judicial districts nationwide - relates to schemes involving telemedicine: the use of telecommunications technology to provide health care services remotely.

    COVID-19 Fraud Cases - Nine defendants are alleged to have engaged in various health care fraud schemes designed to exploit the COVID-19 pandemic, which resulted in the submission of over $29 million in false billings.

    In the Southern District of California, Roselia Kubeck and Rosario Gonzalez pleaded guilty to having approached residents of senior complexes in El Centro and Calexico, California, who were Medicare beneficiaries, and offering COVID-19 screening tests for the residents. The defendants knew at the time that the tests would not actually test for COVID-19 but would be a general respiratory pathogens screening panel that tested for the presence of several kinds of respiratory pathogens. They also took urine samples from the Medicare beneficiaries without explaining that the urine samples were not necessary to conduct a COVID-19 test. The defendants then completed requisition forms for tests on the nasal swabs and urine samples, and inaccurately indicated on the forms that the beneficiaries needed the respiratory tests because they were suffering from acute respiratory infections and needed urine tests because the beneficiaries were long-term users of opiates or had urinary tract infections. The laboratories that performed the tests subsequently submitted inaccurate and medically unnecessary claims to Medicare based on the inaccurate diagnoses that the defendants put on the requisition forms.

    Sober Homes Cases - The sober homes cases are announced on the one-year anniversary of the first ever national sober homes initiative in 2020, which included charges against more than a dozen criminal defendants in connection with more than $845 million of allegedly false and fraudulent claims for tests and treatments for vulnerable patients seeking treatment for drug and/or alcohol addiction. The over $133 million in false and fraudulent claims that are additionally alleged in cases just  announced reflect the continued effort by the National Rapid Response Strike Force and the Health Care Fraud Unit’s Los Angeles Strike Force, with the participation of the U.S. Attorney’s Offices for the Central District of California and the Southern District of Florida, to prosecute those who participated in illegal kickback and bribery schemes involving the referral of patients to substance abuse treatment facilities; those patients could be subjected to medically unnecessary drug testing - often billing thousands of dollars for a single test - and therapy sessions that frequently were not provided, and which resulted in millions of dollars of false and fraudulent claims being submitted to private insurers.

    Cases Involving the Illegal Prescription and/or Distribution of Opioids and Cases Involving Traditional Health Care Fraud Schemes

    In the Southern District of California, Ronald Charles Green Jr. and Melinda Elizabeth Green were charged with conspiring to defraud TRICARE and Medicare out of more than $129 million. In connection with a compounding pharmacy fraud, the defendants allegedly engaged in a scheme involving the submission of false and fraudulent claims to TRICARE for expensive and medically unnecessary pain creams, scar creams and multi-vitamins, which were billed through compound pharmacies. Thereafter, the defendants allegedly launched multiple durable medical equipment companies, and carried out a scheme to defraud Medicare through the submission of false and fraudulent claims for expensive durable medical equipment which were induced through a system of illegal kickbacks. Out of the $129 million in claims, Medicare paid the defendants’ companies more than $69 million.

    Prior to the charges announced as part of the nationwide enforcement action and since its inception in March 2007, the Health Care Fraud Strike Force, which maintains 15 strike forces operating in 24 districts, has charged more than 4,600 defendants who have collectively billed the Medicare program for approximately $23 billion.

  • NCCI Analysis Shows WC Costs More than Group Health
    on September 20, 2021 at 2:21 PM

    In February 2020, NCCI published the article "Comparing the Quantity and Prices of Physician Services Between Workers Compensation and Group Health." A newly published article extends that work by also looking at a mix of services.

    A model of component cost differentials of physician services between WC and GH for 12 common WC injuries showed that:

    - - WC costs more than GH to treat comparable injuries, after controlling for claim characteristics such as age and gender
    - - Utilization differences account for about 78% of the overall cost differential for WC
    - - Chronic pain-related injuries, such as bursitis and back disorders, have larger differentials amongst the 12 injuries studied

    It also found that:

    - - Unit price differentials vary principally by state, with most states having higher unit prices for WC than for GH
    - - Utilization differentials vary principally by type of injury, with all 12 injuries showing higher WC utilization
    - - A WC physician fee schedule in a state is often associated with prices that are competitive with, or even below, GH prices

    There are distinct patterns of medical services by service category. Comparing WC to GH:

    - - Evaluation, management, and physical medicine costs are higher for WC due to greater utilization
    - - For WC, the greatest proportional component difference is in the utilization of physical medicine
    - - For chronic cases, radiology and surgery cost more for WC due to both higher unit prices and greater utilization

    A greater volume of services is the primary driver of higher treatment costs for WC over GH for primary care (office visits and physical therapy). For specialty care (radiology and surgery), greater volume combines with a more expensive mix of procedures to drive WC treatment costs higher, especially on more complex injuries. For all age groups, quantity dominates mix in driving WC costs higher than GH and are greatest after age 40. For males and females and for all four physician service categories, the cost differential model has WC costs higher than GH; however, differences are greater for males than for females. More referral - based services, on average, to treat an injury drive greater differences for males.

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