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Workers’ Compensation Daily News for August 3rd, 2021

  • Feds Pursue Kaiser Permanente For Fraudulent Claims
    on August 3, 2021 at 8:18 AM

    The United States has intervened in six complaints pending in Northern California federal court, alleging that members of the Kaiser Permanente consortium violated the False Claims Act by submitting inaccurate diagnosis codes for its Medicare Advantage Plan enrollees in order to receive higher reimbursements.

    The Kaiser Permanente consortium members (collectively Kaiser) are Kaiser Foundation Health Plan Inc., Kaiser Foundation Health Plan of Colorado, The Permanente Medical Group Inc., Southern California Permanente Medical Group Inc. and Colorado Permanente Medical Group P.C. Kaiser is headquartered in Oakland, California.

    Under Medicare Advantage, also known as the Medicare Part C program, Medicare beneficiaries have the option of enrolling in managed care insurance plans called Medicare Advantage Plans (MA Plans). MA Plans are paid a per-person amount to provide Medicare-covered benefits to beneficiaries who enroll in one of their plans.

    The Centers for Medicare and Medicaid Services (CMS), which oversees the Medicare program, adjusts the payments to MA Plans based on demographic information and the diagnoses of each plan beneficiary. The adjustments are commonly referred to as "risk scores." In general, a beneficiary with more severe diagnoses will have a higher risk score, and CMS will make a larger risk-adjusted payment to the MA Plan for that beneficiary.

    Medicare requires that, for outpatient medical encounters, MA Plans submit diagnoses to CMS only for conditions that required or affected patient care, treatment or management during an in-person encounter in the service year.

    In order to increase its Medicare reimbursements, Kaiser allegedly pressured its physicians to create addenda to medical records after the patient encounter, often months or over a year later, to add risk-adjusting diagnoses that patients did not actually have and/or were not actually considered or addressed during the encounter, in violation of Medicare requirements.

    The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery.

    The False Claims Act also permits the government to intervene in such lawsuits, as it has done, in part, in these cases. The cases are consolidated in the Northern District of California and captioned United States ex rel. Osinek v. Kaiser Permanente, 3:13-cv-03891 (N.D. Cal.); United States ex rel. Taylor v. Kaiser Permanente, et al., 3:21-cv-03894 (N.D. Cal.); United States ex rel. Arefi, et al. v. Kaiser Foundation Health Plan, Inc., et al., 3:16-cv-01558 (N.D. Cal.); United States ex rel. Stein, et al. v. Kaiser Foundation Health Plan, Inc., et al., 3:16-cv-05337 (N.D. Cal.); United States ex rel. Bryant v. Kaiser Permanente, et al., 3:18-cv-01347 (N.D. Cal.); and United States ex rel. Bicocca v. Permanente Med. Group, Inc., et al., No. 3:21-cv-03124 (N.D. Cal.).

    This matter was investigated by the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Offices for the Northern District of California and the District of Colorado, with assistance from HHS-OIG.

    The claims in which the United States has intervened are allegations only, and there has been no determination of liability.

  • WCIRB Updates Advisory Plan Tables
    on August 3, 2021 at 8:18 AM

    The Workers’ Compensation Insurance Rating Bureau of California has published the September 1, 2021 update to the loss elimination ratios that were used in computation of classification relativities in the recently approved September 1, 2021 Regulatory Filing.

    This annual update reflects the most current claim severity and benefit on-leveling factors. Additionally, the WCIRB has updated other tables included in the advisory California Retrospective Rating Plan, California Large Risk Deductible Plan and California Small Deductible Plan.

    View the updated tables for the most current version of the advisory plans at the following links:

    - - California Retrospective Rating Plan.
    - - California Large Risk Deductible Plan.
    - - California Small Deductible Plan.

    In a Retrospective Rating Plan the insurance company typically issues a policy with both a minimum and maximum premium for the policy along with a rating formula. The actual, or final, premium is determined at the end of the policy period by the using the formula based on the rating factors and the actual losses. In essence, the plan is loss sensitive and the employer is participating in the cost of actual losses as well as the potential savings for lower than expected losses.

    A Deductible Plan sets the amount of each loss that the employer must pay for each claim. Typically, the insurer pays the full amount of the loss and then bills the employer for the deductible amount.

    Advisory plans are developed by the WCIRB for the convenience of its members. These plans were submitted to the Insurance Commissioner for informational purposes, but do not bear the official approval of the California Department of Insurance and are not a regulation. An insurer must make an independent assessment regarding its use of these plans based upon its particular facts and circumstances.

  • COVID Cases Surge in Vaccinated SF Hospital Staff
    on August 2, 2021 at 10:57 AM

    Hundreds of staffers at two major hospitals in San Francisco have tested positive for coronavirus in July, with most of them being breakthrough cases of the highly infectious Delta variant, The New York Times reported Saturday evening.

    By the CDC's definition, a breakthrough infection is a COVID case that occurs in someone who is fully vaccinated, meaning 14 or more days after completing the recommended doses of an authorized vaccine. Some say the word "breakthrough" is a euphemism for a vaccine failure.

    The University of California, San Francisco Medical Center told media outlets that 183 of its 35,000 staffers tested positive. Of those infected, 84% were fully vaccinated, and just two vaccinated staff members required hospitalization for their symptoms.

    At Zuckerberg San Francisco General Hospital, at least 50 members out of the total 7,500 hospital staff were infected, with 75-80% of them vaccinated. None of those staffers required hospitalization.

    UCSF's chief medical officer, Dr. Lukejohn Day, told The Times the numbers from his hospital showed just how important and effective vaccinations are.

    "What we're seeing is very much what the data from the vaccines showed us: You can still get COVID, potentially. But if you do get it, it's not severe at all," Day said.

    Day also told ABC7 News that at least 99% of the cases at UCSF were traced back to community spread, but that hospital officials are still investigating and conducting contact tracing.

    He added that most of the cases presented mild to moderate symptoms, and some were completely asymptomatic. He said the cases were spread among doctors, nurses, and ancillary staff.

    "We sort of are seeing that across the board," he said. "We have so far not detected any patient-to-staff or staff-to-patient transmission right now."

    The highly infectious Delta variant has been deemed more transmissible than the viruses that cause the common cold, Ebola, and smallpox, and is equally as contagious as chickenpox, the US Centers for Disease Control and Prevention said in internal documents.

    The Delta variant has also been known to spread among vaccinated people in breakthrough cases, prompting the recommendation, if not requirement,that even fully vaccinated people wear masks indoors in areas with high transmission rates.

  • California Employer and 32 Others Receive NSC Safety Award
    on August 2, 2021 at 9:45 AM

    The National Safety Council is America’s leading nonprofit safety advocate - and has been for over 100 years.

    As a mission-based organization, it works to eliminate the leading causes of preventable death and injury, focusing its efforts on the workplace.

    It hopes to create a culture of safety to not only keep people safer at work, but also beyond the workplace so they can live their fullest lives.

    The National Safety Council just announced 33 organizations will receive Industry Leader Awards in 2021 for excellent safety performance within their industries.

    The Industry Leader Awards are one component of the NSC Occupational Awards Program, which recognizes outstanding safety achievements of NSC members and represents the top 5% of member companies that qualified for the NSC 2021 Occupational Excellence Achievement Award (based on 2020 calendar year data).

    Winners are selected based on the North American Industry Classification System (NAICS) code, lowest total incidence rate and employee work hours.

    One of the 33 award recipients is a California employer, California Resources Corporation. CRC is an oil and natural gas exploration and production company committed to environmentally sustainable and responsible development.

    CRC explores for, produces, gathers, processes and markets crude oil, natural gas and natural gas liquids. it has a large portfolio of lower-risk conventional opportunities in each of California’s four major oil and gas basins: San Joaquin, Los Angeles, Ventura and Sacramento., LA Basin Operations, Long Beach, California.

    The director of membership at the National Safety Council said that "It is truly an honor to recognize these 33 organizations for their commitment to advancing safety."

    She added that "In an unprecedented year, these winners went above and beyond to exemplify what it means to protect employees from death and injury at work."

    A sincere thank you and congratulations to each of these organizations, and CRC in our state, on prioritizing safety and saving lives.

  • DWC Sets Hearing for Copy Service Fee Schedule Updates
    on July 30, 2021 at 10:02 AM

    The Division of Workers’ Compensation has issued a Notice of Public Hearing to amend the Copy Service Price Schedule. The Zoom public hearing is scheduled for Monday, August 30, 2021 at 10 a.m.

    The proposed updates to the regulations include:

    - - An increase of the flat rate for copy services from $180 to $225 for records up to 500 pages, and includes all associated services such as pagination, witness fees for delivery of records, and subpoena preparation.
    - - Several provisions to address improper payments, such as a preclusion for medical providers to improperly charge for inspection of records, maximum witness fees from third party release of information services, and an increase for bills not paid within 30 days of billing.
    - - A procedure to object to services provided within 30 days of a request by an injured worker to an employer, claims administrator or workers’ compensation insurer for copies of records in the employer’s possession that are relevant to the claim. It is not uncommon for an employee’s attorney to subpoena records even though they have been subpoenaed by defendant. The 30-day waiting period is triggered when the copy service advises the claims administrator of an intent to copy records from a specific location for a specific dispute. The parties would then have an opportunity to object within the waiting period. Once an objection is raised, the parties must meet and confer to resolve the objection.
    - - DWC will also charge and collect retrieval costs for records requested under the Public Records Act.

    The proposed amendments to the Copy Service Price Schedule are exempt from the rulemaking provisions of the Administrative Procedure Act. DWC is required to have a 30-day public comment period, hold a public hearing, respond to all the comments received during the public comment period, and publish the order adopting the regulations online. Members of the public may review and comment on the proposal until August 30, 2021.

    Members of the public may attend the public meeting:

    Access Information
    - - Join from PC, Mac, Linux, iOS or Android: https://dir-ca-gov.zoom.us/j/83062005767
    - - Or Telephone:
    - - Dial: USA 216 706 7005
    - - USA 8664345269 (US Toll Free)
    - - Conference code: 956474

    Find local AT&T Numbers:

  • Mandatory Drug Monitoring Databases Reduced Opioid Use
    on July 30, 2021 at 10:02 AM

    A new study from the Workers Compensation Research Institute examines the effects of must-access prescription drug monitoring programs (PDMPs) and recent regulations limiting the duration of initial opioid prescriptions on various outcomes for workers with work-related injuries.

    "The policies examined were part of an extensive effort by stakeholders at local, state, and national levels to address potential excessive opioid prescribing and opioid abuse," said John Ruser, president and CEO of WCRI. "Must-access PDMPs reduced the amount of opioids prescribed to workers without changing the likelihood that workers had any opioid prescriptions."

    The study, Effects of Opioid-Related Policies on Opioid Utilization, Nature of Medical Care, and Duration of Disability, explores how policies limiting access to opioid prescriptions contributed to changes in opioid utilization and how they altered other medical care related to the management of pain. The study estimates the effects of state-level opioid policies by comparing outcomes in states that adopted the policies relative to states that did not, while accounting for other factors that could have influenced changes in opioid utilization and the other outcomes studied.

    In California, the prescription drug monitoring program is called Controlled Substance Utilization Review and Evaluation System (CURES). CURES is a database of Schedule II, Schedule III, Schedule IV and Schedule V controlled substance prescriptions dispensed in California. Section 11165.4 of the Health and Safety Code, sets forth the requirements for mandatory consultation of CURES.

    The following are among the study’s findings:

    - - Must-access PDMPs reduced the amount of opioids prescribed by 12 percent in the first year.
    - - Regulations limiting duration of initial opioid prescriptions resulted in a 19 percent decrease in the amount of opioids among claims with opioids.
    - - For most injuries, there was little evidence that workers increased the use of other types of care due to must-access PDMPs. However, for neurologic spine pain cases, the policies resulted in an increase in the number of non-opioid pain medications and an increase in whether workers had interventional pain management services.
    - - Must-access PDMPs and limits on initial prescriptions had little impact on the duration of temporary disability benefits captured within 12 months after an injury.

    The analysis includes information for workers injured between October 1, 2009, and March 31, 2018, in 33 states: Alabama, Arizona, Arkansas, California, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nevada, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and Wisconsin. These states represent 85 percent of benefits paid in 2017.

    The authors of this study are David Neumark and Bogdan Savych. To learn more about this study or to download a copy, visit https://www.wcrinet.org/reports/effects-of-opioid-related-policies-on-opioid-utilization-nature-of-medical-care-and-duration-of-disability.

  • No Jury Trial In Superior Court Comp Coverage Dispute
    on July 29, 2021 at 10:12 AM

    In June 2016, Kirk Hollingsworth was involved in a fatal accident while working for defendant Heavy Transport, Inc. (HT).

    Hollingsworth’s wife and son, plaintiffs Leanne and Mark Hollingsworth, filed a wrongful death complaint in superior court against HT and Bragg Investment Company, Inc.

    Plaintiffs alleged that HT lacked the required workers’ compensation insurance at the time of the incident, and therefore plaintiffs were entitled to sue Bragg/HT under Labor Code section 3706, which states, "If any employer fails to secure the payment of compensation, any injured employee or his dependents may bring an action at law against such employer for damages . . . ."

    Bragg/HT then filed an application for adjudication of claim with the Workers’ Compensation Appeals Board. Only one of these tribunals could have exclusive jurisdiction over plaintiffs’ claims, and in a previous court of appeal opinion, Hollingsworth v. Superior Court (2019) 37 Cal.App.5th 927 (Hollingsworth I), the court held that the superior court, which had exercised jurisdiction first, should resolve the questions that would determine which tribunal had exclusive jurisdiction over plaintiffs’ claims.

    Following remand, plaintiffs asserted they were entitled to a jury trial on the factual issues that would determine jurisdiction. The superior court denied plaintiffs’ request and held a hearing in which it received evidence and heard testimony regarding HT’s insurance status. The superior court determined that HT was insured by a workers’ compensation policy at the time of Hollingsworth’s death, and therefore the WCAB had exclusive jurisdiction over the matter. Plaintiffs appealed. The court of appeal affirmed the trial court in the published case of Hollingsworth v. Heavy Transport, Inc.

    Plaintiffs assert on appeal, that they were entitled to a jury trial on the fact issues that would determine jurisdiction. The appellate court disagreed.

    Although a jury may determine questions relevant to workers’ compensation exclusivity when the issue is raised as an affirmative defense to common law claims, jurisdiction under Labor Code section 3706 is an issue of law for the court to decide.

    Citing numerous decisions, the court said that it is the general rule that "[i]n a civil case . . . personal and subject matter jurisdiction ordinarily are issues for the court, not the jury."

    Because plaintiffs asserted jurisdiction under Labor Code section 3706, it was appropriate for the court, not a jury, to determine the questions relevant to jurisdiction. Plaintiffs did not have a right to a jury trial on these facts.

  • Pfizer Legal Battle Over Anti Kickback Law Heats Up
    on July 29, 2021 at 10:12 AM

    Three years ago, pharma giant Pfizer paid $24 million to settle federal allegations that it was paying kickbacks and inflating sales by reimbursing Medicare patients for out-of-pocket medication costs.

    By making prohibitively expensive medicine essentially free for patients, the company induced them to use Pfizer drugs even as the price of one of those medicines, covered by Medicare and Medicaid, soared 44% to $225,000 a year, the Justice Department alleged.

    Now, Kaiser Health News reports that Pfizer is suing the federal authorities to legalize essentially the same practice it was accused of three years ago - a fighting response to a federal crackdown that has resulted in a dozen drug companies being accused of similar practices.

    A Pfizer win could cost taxpayers billions of dollars and erase an important control on pharma marketing after decades of regulatory erosion and soaring drug prices, say health policy analysts. A federal judge's ruling is expected any day.

    "If this is legal for Pfizer, Pfizer will not be the only pharmaceutical company to use this, and there will effectively be a gold rush," government lawyer Jacob Lillywhite said in oral arguments last month.

    Pfizer's legal argument "is aggressive," said Chris Robertson, a professor of health law at Boston University. "But I think they've got such a political tailwind behind them" because of pocketbook pain over prescription medicine - even though it's caused by pharma manufacturers. Pfizer's message, "'We’re just trying to help people afford their drugs,' is pretty attractive," he said.

    That's not all that's working in Pfizer's favor. Courts and regulations have been moving pharma's way since the Food and Drug Administration allowed limited TV drug ads in the 1980s. Other companies of all kinds also have gained free speech rights allowing aggressive marketing and political influence that would have been unthinkable decades ago, legal scholars say.

    Among other court arguments, Pfizer initially claimed that current regulation violates its speech protections under the First Amendment, essentially saying it should be allowed to communicate freely with third-party charities to direct patient assistance.

    "It's infuriating to realize that, as outlandish as they seem, these types of claims are finding a good deal of traction before many courts," said Michelle Mello, a professor of law and medicine at Stanford University. "Drug companies are surely aware that the judicial trend has been toward more expansive recognition of commercial speech rights."

    Pfizer's lawsuit, in the Southern District of New York, seeks a judge's permission to directly reimburse patient expenses for two of its heart-failure drugs each costing $225,000 a year. An outside administrator would use Pfizer contributions to cover Medicare copays, deductibles and coinsurance for those drugs, which otherwise would cost patients about $13,000 a year.

    Letting pharma companies put money directly into patients' pockets to pay for their own expensive medicines "does induce people to get a specific product" instead of shopping for a cheaper or more effective alternative, said Stacie Dusetzina, an associate professor of health policy at Vanderbilt University. "It's kind of the definition of a kickback."

    Government rule-makers have warned against such payments since the launch of Medicare's Part D drug benefit in 2006. Drug companies routinely help privately insured patients with cost sharing through coupons and other means, but private carriers can negotiate the overall price.

    Because Congress gave Medicare no control over prescription drug prices, having patients share at least part of the cost is the only economic force guarding against unlimited price hikes and industry profits at taxpayer expense.

    At the same time, however, regulators have allowed the industry to help patients with copays by routing money through outside charities - but only as long as the charities are "bona fide, independent" organizations that don't match drugmaker money with specific drugs.

    Several charities have blatantly violated that rule in recent years by colluding with pharma companies to subsidize particular drugs, the Justice Department has alleged. A dozen companies have paid more than $1 billion to settle allegations of kickback violations.

  • WCIRB Report Shows First Combined Ratio Over 100% Since 2012
    on July 28, 2021 at 9:26 AM

    The WCIRB just published its 2021 State of the System report. Highlights of the report show the recent changes in premium revenue, claims, and costs.

    The sharp and sudden employment drops in 2020 significantly impacted workers’ compensation exposure, the number of claim filings and claims activity. Premium levels dropped sharply in 2020 due to continued insurer rate decreases and the pandemic-related economic slowdown. Premiums are forecast to increase modestly in 2021 with economic recovery and the impact of insurer rate decreases moderating.

    The insurance market remains stable and non-concentrated. Insurer charged rates continue to decrease and are now at a 50-year low. Average indemnity claim costs are rising, while average medical claim costs remain relatively flat. The impact of the pandemic on average claim costs in the long-term remains uncertain.

    Average insurer rates charged for the first quarter of 2021 are only 2% below the rates charged in 2020, possibly signaling a sign of moderating insurer rate decreases and potential future hardening of the insurance market. Total written premium is forecast to increase modestly in 2021 with the economic recovery and moderation of the impact of declining premium rates, but would still be well below the level from 2014 to 2019.

    California had the highest rates in the country until 2018, when rate declines moved it from the top spot. It is now the fourth highest, behind New Jersey, New York, and Vermont.

    Almost 150,000 COVID-19 claims have been filed in the California workers’ compensation system. The impact of the filing of so many COVID-19 claims in 2020 on claim frequency was in part offset by a reduction in the number of non-COVID-19 claims filed. Over one-half of the almost 150,000 COVID-19 claims filed in the California workers’ comp system as of June 1, 2021 were within the insured system.

    Over time, the ratio of COVID-19 claims relative to statewide infections declined as the COVID- 19 workers’ compensation presumption created by Senate Bill (SB) No. 1159 was more restrictive than the Governor’s Executive Order issued in spring 2020.

    The winter surge resulted in over 2 million infections statewide and the largest volume of COVID-19 workers’ compensation claims filed during the pandemic. COVID-19 claims as a percent of all indemnity claims peaked in December 2020 during the winter surge of infections. As vaccines rolled out in spring 2021, the proportion of COVID-19 claims has been very modest. A much higher than projected share of COVID-19 claims has been filed by younger workers. Younger individuals are more likely to have mild COVID-19 symptoms.

    Currently projected costs of COVID-19 claims in the insured system for accident years 2020 and 2021 are over $1 billion in total.

    Preliminary estimates suggest the CT claim share of indemnity claims for accident years 2020 and 2021 are significantly below the 2018 and 2019 levels. The vast majority of increases in CT claims since 2012 came from the Los Angeles Basin and San Diego areas.

    Following the implementation of reforms related to lien filings of SB 863 (in 2013) and SB 1160 and Assembly Bill (AB) 1244 (in 2017), the number of lien filings dropped significantly. The number of liens filed in 2020 is over 70% below the pre- SB 1160 and AB 1244 level.

    Combined ratios in California have historically been volatile. Recent industry ratios have been fairly stable, with seven consecutive years of combined ratios below 100% from 2012 to 2019. Combined ratios since 2016 have been increasing primarily due to lower premium levels driven by lower insurer rates and higher expense ratios. The combined ratio for 2020 is the first above 100% since 2012. Excluding the impact of COVID-19 claims, the 2020 combined ratio would be 96%.

  • Grocery Chain Cited for $115K in COVID Sick Pay Violations
    on July 28, 2021 at 9:26 AM

    The Labor Commissioner’s Office cited three El Super grocery stores in Southern California for failing to provide or delaying supplemental paid sick leave (SPSL) or other benefits to 95 workers impacted by COVID-19. Some of the workers were forced to work while sick, others were told to apply for unemployment while quarantining or in isolation, while others waited months to be paid.

    The citations were issued to Bodega Latina Corporation, a Delaware corporation doing business as El Super with 52 stores in California. The following locations in Los Angeles and San Bernardino counties were cited:

    - - 1100 W Slauson Avenue, Los Angeles 90044
    - - 10721 Atlantic Avenue, Lynwood 90262
    - - 14590 Bear Valley Road # 28, Victorville 92395

    The 2021 SPSL, which went into effect on March 29 and is retroactive to January 1, 2021, requires that California workers are provided up to two weeks of supplemental paid sick leave if they are affected by COVID-19. Among the key updates in the legislation, leave time also applies to attending a COVID-19 vaccine appointment and recovering from symptoms related to the vaccine.

    The law is in effect until September 30, 2021. Small businesses employing 25 or fewer workers are exempt from the law but may offer supplemental paid sick leave and receive a federal tax credit, if eligible.

    The Labor Commissioner’s Office opened an investigation on September 9, 2020 after receiving complaints from workers and a referral from the United Food and Commercial Workers International Union representing grocery store workers.

    The investigators determined the employer did not consistently inform workers of their rights to SPSL if impacted by COVID-19. In some instances, sick workers were told to come to work until they received their test results even when they had COVID-19 symptoms. To cover isolation time, workers were in some cases told to apply for unemployment or disability. Moreover, many were denied time off to isolate, even though members of their household had tested positive. Some workers were never paid for their time off due to COVID-19.

    The citations include $114,741.67 in wages, damages and interest for failing to provide leave under 2020 COVID-19 SPSL for food sector workers (Labor Code § 248), and $14,894.66 in wages, damages and interest for failing to provide leave under 2021 COVID-19 SPSL for employers with 26 or more employees (Labor Code § 248.2). In addition, $318,200 was assessed in penalties for nonpayment or late payment of SPSL (Labor Code § 246(n)).

    Anyone who currently works or has worked at El Super who believes their employer refused to provide paid sick leave or COVID-19 supplemental paid sick leave as required by law is encouraged to call the Labor Commissioner’s Office confidential Paid Sick Leave Hotline at (855-526-7775) and leave their contact information. All workers can also call the Labor Commissioner’s Office to ask questions or get more information on how to file a wage claim for paid sick leave at 833-LCO-INFO (833-526-4636).

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