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July 15, 2019 News Podcast

Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: Judge Blocks HHS Drug Price TV Ads Disclosure Rule, Drugmaker Pays $1.4 B to Resolve Fraud Claims, $6M Fraud Verdict Against “Sham” Attorneys Affirmed, LAPD Officer Pleads No-Contest to Comp Fraud, Feds Withdraw Proposed Drug Rebate Rule, Congress Pressures FDA for Cannabis Regs, Cal/OSHA – $68K in Fines for Confined Space Violations, Psychiatric Diagnosis are “Scientifically Meaningless”, Sedgwick to Acquire York Risk Services.

July 8, 2019 News Podcast

Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: Court Ends Disgruntled Claimant’s 13 Years of Litigation, West Hollywood Doctor Faces Fraud Charges, Senior Care Facility Cited for $708K Wage Theft, Uninsured Security Company Owners Convicted, “Mini” MRI Under Development, 48% of Doctors Considering Career Change, Nurses Suffer Chronic Sleep Disorders, United Insurance Named as Applied Underwriters Buyer.

Congress Pressures FDA for Cannabis Regs

Congress is cranking up the pressure on the Food and Drug Administration (FDA) to draft rules to regulate cannabis-based products.  Lawmakers legalized the use of hemp-based cannabidiol (CBD) products late last year in the farm bill, sending the agency scrambling to figure out new rules around regulating a unique product that is both a drug and a dietary supplement.

But Congress is signaling that it is growing impatient as the FDA looks for a solution and may not wait on the sidelines for much longer.

“In Congress, some are itchy [for action],” said Jonathan Miller, general counsel for the industry advocacy group U.S. Hemp Roundtable.  Miller said some lawmakers have been privately circulating potential legislation, but he doesn’t expect any formal push from Congress until at least later this fall. “If their patience ends [and FDA doesn’t act], there will be an effort for legislation,” Miller said.

The FDA held a public hearing at the end of May, and experts and industry representatives said it was a good start but did not advance the ball much in terms of giving clarity from a federal level. People who attended the meeting said they left without any new sense of the agency’s timing on creating new regulations.

During the 10-hour hearing, acting FDA Commissioner Ned Sharpless made no promises about timing, but FDA officials were clear that they wanted more data from the public. Sharpless said the agency was essentially operating in uncharted waters.

In particular, FDA wants more information about dosing levels, including how much CBD is safe to consume, and any long-term exposure risks. The agency is also focused on the effects CBD has on children, elderly and pregnant women.

Public comments concerning FDA’s role are due July 16, after the agency extended the deadline for an additional two weeks.

CBD is derived from the marijuana plant but doesn’t give users a high. Ever since the farm bill passed, CBD products have been appearing online and on the shelves of convenience stores, coffee shops and nutrition stores in select states.

In the meantime, lawmakers from both parties are trying to nudge FDA to act. A provision in the House appropriations package that passed last month sets aside funding for FDA to study and set specific levels of CBD to put in food and drinks.

Senate Majority Leader Mitch McConnell (R-Ky.) met with Sharpless last week, and urged the agency to speed up the timing on CBD regulation. “Congress’s intent was clear with the passage of the Farm Bill that these products should be legal, and our farmers, producers and manufacturers need clarity as well as a workable pathway forward regarding the agency’s enforcement,” McConnell said in a statement. “Like my constituents, I am anxious to know the FDA’s plans to ensure public access to safe CBD products,” he added.

Sen. Ron Wyden (R-Ore.) did not meet with Sharpless personally, but last week sent a letter to the agency urging FDA to set an interim policy by Aug. 1 that would allow products containing hemp-derived CBD to be manufactured and sold as food and dietary supplements. Wyden said it was “fully unacceptable” for FDA to suggest it may take up to five years to issue rules. “The regulatory confusion and uncertainty surrounding CBD cannot continue for that length of time,” Wyden wrote.

Executive Order Triggers Pharmaceutical Stock Price Tumble

The stocks for pharmaceutical companies dropped in price on July 5 after President Donald Trump said his administration is working on an executive order which would require drug companies to price their medicines based on the lowest amount paid for the same drug by another nation.

SPDR S&P Pharmaceuticals, an exchange-traded fund tracking the stocks of major pharmaceutical companies, was down 1.5 percent at 1:10 p.m. on July 5. The index began declining immediately after Trump told reporters on the White House lawn about preparations for the executive order.

“We’re going to be announcing something very shortly, a favored nations clause. As you know, for years and years other nations paid less for drugs than we do. Sometimes by 60-70 percent. We’re working on it right now, we’re working on a favored nations clause, where we pay whatever the lowest nation’s price is. Why should other nations—like Canada—but why should other nations pay much less than us. They’ve taken advantage of the system for a long time, pharma,” Trump said.

“But we’re working on right now a favored nations clause, so that whatever the lowest nation is anywhere in the world, or company, but the lowest nation or company, then what happens is, we will pay that amount. And that’s being worked on right now. We’re gonna do it in the form of an executive order,” the president added.

In October last year, Trump announced a new rule that would bring the prices Medicare pays closer to what other countries pay and save taxpayers an estimated $17.5 billion over the next five years. The president unveiled the rule after the Department of Health and Human Services released a report on drug prices under Medicare Part B, which estimated the United States is paying on average almost two times what other countries are paying.

Trump has taken a number of other steps to lower drug prices. In January, the administration proposed a rule to cut out the middlemen and require drug companies to pay rebates directly to consumers. Every year, an estimated $150 billion is passed around the rebate system to middlemen like pharmacy benefit managers with consumers left entirely in the dark.

Another administration rule will require drug companies to list the prices for their medicine in television advertisements. Earlier this month, the president issued an executive order which, once implemented, would require hospitals to display prices for services upfront.

“When prices are transparent and competition is encouraged, consumers win. We believe that can prove true in health care as it has in every other area of the American economy,” Alex Azar, the secretary of Health and Human Services, wrote in an op-ed in February.

West Hollywood Doctor Faces Fraud Charges

A doctor who operates a medical clinic in West Hollywood where he specializes in treating HIV patients has been taken into custody pursuant to federal charges that allege he engaged in a long-running scheme to defraud health insurance companies in connection with the brand-name human growth hormone Serostim.

James T. Lee, 71, of West Hollywood, was taken into custody on Tuesday afternoon after being escorted from Austria by federal law enforcement agents.

After a federal grand jury returned a 10-count indictment on June 6, Lee was arrested in Vienna at the request of the United States. Lee subsequently waived extradition and agreed to return to the United States.

The indictment against Lee charges him with one count of conspiracy to commit health care fraud, six counts of health care fraud, one count of making false statements relating to health care matters, and two counts of witness tampering.

Lee allegedly engaged in a scheme to divert Serostim – an injectable human growth hormone that is FDA-approved for HIV-positive patients – from legitimate HIV patients to other people who purchased the drug for its purported anti-aging properties. The Food and Drug Administration has approved Serostim for use only by HIV patients with wasting or cachexia who are also receiving antiretroviral therapy.

According to the indictment, from at least May 2011 until February 2019, Lee wrote prescriptions for Serostim to HIV patients, who obtained the drugs and used their Medicare Part D benefits to pay for the drugs. Lee then then illegally purchased the Sersotim back from patients, so that he could re-sell the Serostim. Lee allegedly re-sold the Serostim for a significant profit to other patients who were not HIV-positive, and who used the human growth hormone to build muscle and for other cosmetic purposes.

The indictment alleges a second part of the scheme in which Lee allegedly submitted claims to health insurance companies for Serostim injections, claims that were fraudulent because Lee did not actually provide the Serostim injections to the patients at his office. According to the indictment, many of the patients did not receive the full amount of Serostim that Lee billed to the insurance companies, or they received Serostim that Lee had purchased from other patients.

Lee allegedly twice engaged in witness tampering during meetings with a patient that were recorded without Lee’s knowledge. During those meetings, Lee encouraged the patient to provide false information to federal agents who were investigating the case. Lee coached the patient to lie about the Serostim scheme, including by falsely stating that kickback payments from Lee were merely overpayments from the insurance companies, according to the indictment.

During the course of the conspiracy, Lee and his co-conspirators submitted at least $14.2 million in claims to the insurance companies for Serostim injections, which resulted in payments of approximately $5.9 million, according to the indictment. The scheme allegedly defrauded Health Net, which is a private health benefit plan, and the Government Employees Hospital Association, which is a health benefit plan that provides health insurance coverage to certain former United States government employees.

Senior Care Facility Cited for $708K Wage Theft

The California Labor Commissioner’s Office has cited a Daly City senior care facility for multiple wage theft violations affecting 48 workers. The workers are owed more than $639,000 for underpaid minimum wage, overtime and contract wages as well as other penalties.

The Labor Commissioner’s Office opened an investigation at Amore Retirement Living last June after receiving a complaint that the employer did not have workers’ compensation insurance. Investigators found that the 53-bed facility lacked coverage for the previous five years, and uncovered many other labor law violations.

Investigators at the Labor Commissioner’s Office learned that Amore Retirement Living over a 28-month period ending in October 2017 did not provide overtime or meal periods for their employees who worked an average of 58 hours a week. An audit of payroll and time records also showed that 29 employees worked split shifts without being paid the one-hour premium required in order to provide around-the-clock care to the residents.

The citations against Amore Retirement Living, which total $708,521 including civil penalties, name both the care home’s licensee Krysella Trismeo Corporation and its chief executive officer, Sheryll Miranda-Sunga, as jointly liable for the wage theft.

The investigation determined that the employer owes workers $623,871 in unpaid minimum wages and overtime, liquidated damages, meal period and wage statement violations, split shift premiums and waiting time penalties, with an additional $7,766 for contract wages due for 40 of the workers. The citations also include $84,650 in civil penalties due to the state for minimum wage, overtime, split shift premium, meal period and itemized wage statement violations. Krysella Trismeo Corporation was cited $469,103 on June 20, 2018 for failure to obtain and maintain workers’ compensation insurance coverage.

When workers are paid less than minimum wage, they are entitled to liquidated damages that equal the amount of underpaid wages plus interest. Waiting time penalties are imposed when the employer intentionally fails to pay all wages due to the employee at the time of separation. This penalty is calculated by taking the employee’s daily rate of pay and multiplying it by the number of days the employee was not paid, up to a maximum of 30 days.

Court Ends Disgruntled Claimant’s 13 Years of Litigation

Less than six months after Massoud Kaabinejadian was hired as a senior vice president and credit administrator for Rabobank, his employment was terminated.

Following the termination, on September 20, 2006, he filed a workers’ compensation claim, contending that he suffered severe emotional distress because Rabobank discriminated and retaliated against him based on his national origin.

After approximately five years of litigating that claim, the Workers Compensation Appeals Board (WCAB) ultimately ruled against Kaabinejadian. The WCAB concluded that he did not meet the threshold of compensability for a psychiatric claim under Labor Code section 3208.3, subdivision (d).

Kaabinejadian then filed a petition for reconsideration of the WCAB’s ruling and a writ to the Court of Appeal, which were both denied.

Following the exhaustion of his appeals on the workers’ compensation claim, again representing himself, Kaabinejadian filed a civil complaint in San Bernardino Superior Court against Rabobank and its employee, Cheryl Walker, on December 1, 2011. He alleged a violation of FEHA statutes, and related causes of action.

On April 30, 2012, the court sustained Rabobank’s demurrer “without leave to amend,” dismissed the First Amended Ccomplaint, and denied Kaabinejadian’s motions to compel discovery as moot.

Following the dismissal of his San Bernardino County wrongful termination suit, Kaabinejadian filed a complaint in the instant case on June 4, 2012, in Sacramento County Superior Court against both Rabobank and its defense attorney McGensy, for abuse of process and Intentional infliction of emotional distress.

Defendants filed a special anti-SLAPP motion to strike plaintiff’s complaint. The trial court agreed with defendants, dismissed the case, and awarded defendants attorney fees. The dismissal was affirmed in the unpublished case of Kaabinejadian v McGensy.

“To combat lawsuits designed to chill the exercise of free speech and petition rights (typically known as strategic lawsuits against public participation, or SLAPPs), the Legislature has authorized a special motion to strike claims that are based on a defendant’s engagement in such protected activity.”

Uninsured Security Company Owners Convicted

The Monterey County District Attorney reported that Angel Musones, a 51-year-old resident of Salinas, and Navid Homami, a 45-year-old resident of Monterey, pled no contest to operating their private security guard business – Mile High Security – without having workers’ compensation insurance.

Judge Thomas Wills sentenced both men to 3 years’ court probation and ordered them to each pay $10,000 in criminal penalties.

The District Attorney’’ Workers’ Compensation Fraud Unit opened an investigation of Mile High Security in December 2018.

It was determined that Mile High Security, LLC, started doing business in September 2018. The company advertised and operated itself as a private patrol operator without having a valid license to do so.

Interviews with Homami and Musones confirmed that they did had as many as 8 employed security guards but did not have workers’ compensation insurance  – a misdemeanor violation of Labor Code section 3700.5.

The District Attorney filed criminal charges on May 14, 2019. The case was investigated by District Attorney Investigator George Costa.

July 1, 2019 News Podcast

Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: Encompass Health to pay $48M to Resolve Fraud Claim, Bankruptcy Judge May Halt Opiate Trials, Statewide Sweep Nabs 169 Illegal Contractors, Attorney Pleads Guilty in Oxycodone Sales Case, Gig Companies Adapt to ABC Test, Wearable Technology WorkComp Game Changer, WCIRB Submits 2020 Regulatory Filing, Claims Data Links Opioid Prescriptions as Family Risk Factor, “Non-Profit” Hospitals Report Massive Profits, Major Cannabis Research Industries Collaborating.

48% of Doctors Considering Career Change

Are health insurance policies creating nightmares for physicians and hazards for their patients? A new study finds that nearly nine in ten doctors believe barriers set by insurance plans have led to worsened conditions for patients in need of care.

Researchers with Aimed Alliance, a non-profit that seeks to protect and enhance the rights of health care consumers and providers, say that doctors are so fed up with the constant headaches caused by insurers, two-thirds would recommend against pursuing a career in medicine, and nearly half (48%) are considering a career change altogether.

For the study, the organization polled 600 physicians in the U.S. practicing either family medicine, internal medicine, pediatrics, or obstetrics/gynecology. The group sought to understand the extent to which insurance policies impact primary care physicians, their practices, and their patients on a day-to-day basis. They also wanted to get a better understanding of mental health issues among providers, as well as the causes behind the national provider shortage.

Researchers found that physicians don’t think very highly of health insurance companies, and believe they’re putting patients at risk with policies such as prior authorizations ahead of filling prescriptions. In fact, 87% of doctors say patients’ conditions have grown worse because of such red-tape regulations, and 83% worry the patients will suffer prolonged pain as a result.

Prior authorizations are especially bothersome for doctors. More than nine in ten (91%) of those surveyed think the policy delays necessary care for patients. Similarly, the same number of doctors agree insurers engage in “non-medical switching,” which forces patients to take less costly – but potentially less effective – medicines.

Such policies are stressing many physicians out. Thirty-seven percent say half or more of their daily stress is caused by insurance issues, and 65% feel they’re facing greater legal risks because of decisions made by insurers. The vast majority (85%) are left frustrated by such issues, and many admit to taking their anger and emotions out on their staff and even family members.

“I can understand why many of the respondents reported that they would not recommend this career to anyone else,” Dr. Shannon Ginnan, medical director of Aimed Alliance, tells StudyFinds. “As practitioners, much of our time is spent on burdensome paperwork required from health insurers for our services to be paid for. This prevents us from spending as much time on patient care as we would like, and it doesn’t take much for all this paperwork to interfere with the services that we provide.”

To Ginnan’s point, the survey showed that 77% of doctors have had to hire more staffers to handle the heavier administrative load from insurance work. Ninety-percent say they have less time to spend with patients because of the burden.

As for the aspect of insurers’ policies that doctors would like to see changed most, the majority (55%) agreed on an insurers’ ability to override the professional judgment of physicians. About nine out of ten (87%) respondents felt that insurer personnel interfere with their ability to provide individualized treatments for each patient.

Beyond the harm that doctors say insurance policies cause patients in need of care, they also agree that patients are taking a hit in their bank accounts too. Doctors believe that insurers are contributing to the rising cost of healthcare more than anything else, including pharmaceutical companies, government policies, lawsuits, or hospitals.