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Author: WorkCompAcademy

WCIRB Report Shows Major Decrease in Opioid Use

The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) has released its Early Indicators of High-Risk Opioid Use and Potential Alternative Treatments study report. The study compares characteristics of claims involving high levels of opioid use to claims with similar injury mix and injured worker age that involved only a lower dose of opioids.

Since 2012, the use of opioids has significantly and continuously declined in the California workers’ compensation system. The share of claims with at least one opioid prescription 12 months after the injury decreased from 42% of all claims that had any drug prescription in the same time frame in 2013 to 20% in 2017. In 2017, the average cost of opioid prescriptions per 100 claims was down by almost 80% from 2013. The precipitous reduction in opioid prescriptions has contributed to a lower level of overall pharmaceutical use in the workers’ compensation system.

The downward trend of opioid prescriptions may be leading to a shift in the patterns of medical treatments for California’s injured workers. This potential shift could also result in more utilization of alternative measures in place of high levels of opioid use. Therefore, early identification of injured workers who may be using high doses of opioids and thus experiencing more adverse effects of opioids could facilitate early provision of alternative treatments and also help identify key system cost drivers.

— About 2.5 percent of all Accident Year 2013 (AY2013) claims with any opioid prescription involved high-risk opioid use within 12 months of the date of the injury compared with 1.4 percent of AY2016 claims.
High-risk opioid use claims incurred significantly higher medical and indemnity costs than similar lower-dose use claims, and they tended to remain open longer.
High-risk opioid use claims were much more likely to involve permanent disability benefits than similar lower-dose claims.
— During the first six months of treatment, the number of opioid prescriptions per AY2013 claim was 50 percent lower on lower-dose use claims compared to the similar high-risk claims, contributing to 50 percent lower total drug payments per claim.
Early indicators of high-risk opioid use include obtaining similar opioids from multiple dispensers, having overlapping opioid prescriptions, using extended-release/long-acting opioids and concurrently using opioids and benzodiazepines.
— Physical therapy, acupuncture and chiropractic services – as well as nonsteroidal anti-inflammatory drugs and non-narcotics – were used significantly more on similar lower-dose use claims than on high-risk use claims.

The full study report is available in the Research section of the WCIRB website.

Two More Drugmakers Resolve Kickback Charges for $125 M

Two pharmaceutical companies – Astellas Pharma US, Inc., and Amgen Inc. – have agreed to pay a total of $124.75 million to resolve allegations that they violated the False Claims Act by illegally paying the Medicare co-pays for their own high-priced drugs.

The two companies first announced an alliance in 2013. Amgen, the world’s largest independent biotechnology company, and Astellas Pharma Inc., a leading Tokyo-based global pharmaceutical company, announced the companies entered into a strategic alliance to provide new medicines to help address serious unmet medical needs of Japanese patients.

According to the allegations, Astellas and Amgen conspired with two co-pay foundations to create funds that functioned almost exclusively to benefit patients taking Astellas and Amgen drugs. As a result, the companies’ payments to the foundations were not ‘donations,’ but rather were kickbacks that undermined the structure of the Medicare program and illegally subsidized the high costs of the companies’ drugs at the expense of American taxpayers.

Amgen and Astellas each entered five-year corporate integrity agreements with OIG as part of their respective settlements. The integrity agreements require the companies to implement measures, controls, and monitoring designed to promote independence from any patient assistance programs to which they donate.

In addition, the companies agreed to implement risk assessment programs and to obtain compliance-related certifications from company executives and Board members.

To date, the Department of Justice has collected over $840 million from eight pharmaceutical companies (United Therapeutics, Pfizer, Actelion, Jazz, Lundbeck, Alexion, Astellas, and Amgen) that allegedly used third-party foundations as kickback vehicles.

April 22, 2019 News Podcast

Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: Drugmaker’s Unorthodox Bid to Protect Patents – Epic Fail, Sutter Health Resolves Inflated Risk Score Claims for $30M, $100K in Cal/OSHA Penalties for Fatal Injury, Two Employers Fined $300K For Finger Amputation, Car Wash Issued $2.36 Million in Wage Theft Citations, 60 Arrested in National 32 Million Pain Pill Bust, Ringleaders of Sham Clinics Plead Guilty, U.S. Physical Therapy Inc., Acquires Third IIP Company, SCIF Suffers $460M Underwriting Loss – No Dividends.

LC 5814.5 Attorney Fee Requires Specific Award

Miguel Pena claimed injury to the head, neck, back, shoulders and psyche. The employer disputed injury to his psyche, but not to the other body parts pied. An award found applicant needed future medical care, but did not decide AOE-COE to the psyche.

Later a psychological PQME diagnosed major depression, pain disorder and cognitive disorder that was 100% industrially-based. Future treatment recommendations were made for treatment.

Pena requested authorization for treatment with Dr. Lorant,.a secondary treater for psyche. Defendant responded asking “if there has been an RFA for sessions with Dr. Lorant..”

In response, applicant filed a Declaration of Readiness to Proceed on the issue of treatment for his psyche, as well as a Petition for Penalties under section 5814 and attorney’s fees under section 5814.5.

The issues at trial included injury AOE/COE to the psyche, a penalty for failure to promptly provide or authorize medical care to the psyche and fees under section 5814;5 if a penalty is assessed.

The WCJ found an unreasonable delay in authorizing medical care, and assessed a penalty of 25% of the first visit with Dr. Lorant, and found that applicant’s attorney was entitled to fees under section 5814.5 in an amount to be adjusted between the parties. The F&A did not contain a finding of fact regarding injury AOE/COE to applicant’s psyche. After reconsideration, a WCAB panel agreed with the penalty, and a split panel disagreed with the attorney fee award in the case of Pena v Agua Systems. Commissioner Sweeney wrote a dissenting Opinion.

Applicant’s psychiatric condition was found to be industrially caused by the PQME and treatment was recommended. The record does not reflect that defendant raised any issues with the PQME conclusions or attempted to conduct discovery to challenge those conclusions prior to or during the trial.

The record therefore does not support genuine doubt by defendant from a medical or legal standpoint for liability for benefits in relation to applicant’s psychiatric condition. Once applicant requested treatment for his psychiatric condition per his July 6, 2018 request, defendant was obligated to provide it.

Defendant fails to cite any authority for its contention that the mere selection of a physician to provide medical treatment itself constitutes a RF A for a “specific course of proposed medical treatment” subject to UR. There is no specific course of treatment being proposed by applicant’s selection of Dr. Lorant as a secondary treater; this is simply a request for an opportunity to be seen by a psychiatrist who can then report to applicant’s primary treating physician (PTP) on what treatment, if any, is necessary to cure or relieve from the effects of applicant’s psychiatric condition.

But fees under 5814.5 are only permissible where applicant has incurred fees in specifically enforcing a prior award. That did not occur here. There was no prior award for treatment to applicant’s psyche at the time of the trial.

In other words, the second trial was not conducted to enforce a prior award so there can be no award for attorney’s fees under section 5814.5.

First Prosecution of CEO and CCO of Large Drug Distributor

Criminal charges have been filed against Rochester Drug Co-Operative, Inc. (“RDC”), one of the 10 largest pharmaceutical distributors in the United States; Laurence F. Doud III, the company’s former chief executive officer; and William Pietruszewski, the company’s former chief compliance officer, for unlawfully distributing oxycodone and fentanyl, and conspiring to defraud the DEA.

Prosecutors also filed a lawsuit against RDC for its knowing failure to comply with its legal obligation to report thousands of suspicious orders of controlled substances to the DEA.

Prosecutors also announced an agreement and consent decree under which RDC agreed to accept responsibility for its conduct by making admissions and stipulating to the accuracy of an extensive Statement of Facts, pay a $20 million penalty, reform and enhance its Controlled Substances Act compliance program, and submit to supervision by an independent monitor.

Assuming RDC’s continued compliance with the Agreement, the Government has agreed to defer prosecution for a period of five years, after which time the Government will seek to dismiss the charges. The consent decree is subject to final approval by the court.

U.S. Attorney Geoffrey S. Berman said: “This prosecution is the first of its kind: executives of a pharmaceutical distributor and the distributor itself have been charged with drug trafficking, trafficking the same drugs that are fueling the opioid epidemic that is ravaging this country. Our Office will do everything in its power to combat this epidemic, from street-level dealers to the executives who illegally distribute drugs from their boardrooms.”

Prosecutors alleged, RDC knowingly and intentionally violated the federal narcotics laws at the direction of its senior management, including Doud and Pietruszewskiby, by distributing dangerous, highly addictive opioids to pharmacy customers that it knew were being sold and used illicitly. RDC supplied large quantities of oxycodone, fentanyl, and other dangerous opioids to pharmacy customers that its own compliance personnel determined were dispensing those drugs to individuals who had no legitimate medical need for them.

RDC allegedly took steps to conceal its illicit distribution of controlled substances from the DEA and other law enforcement authorities. Among other things, RDC made the deliberate decision not to investigate, monitor, or report to the DEA pharmacy customers that it knew were diverting controlled substances for illegitimate use.

The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Fresno Pharmacist Arrested

A Madera pharmacist and two others were arrested in connection with a conspiracy to distribute oxycodone and hydrocodone.

On April 11, a federal grand jury returned a 42-count indictment, charging Ifeanyi Vincent Ntukogu, 44, of Fresno, a pharmacist, with one count of conspiracy to distribute and possess with intent to distribute controlled substances and 17 counts of distribution of controlled substances.

Kelo White, 38, of Fresno, was charged with one count of conspiracy to distribute and possess with intent to distribute controlled substances and 12 counts of possession with intent to distribute controlled substances.

Donald Ray Pierre, 50, of Fresno, was charged with one count of conspiracy to distribute controlled substances, 10 counts of possession with intent to distribute controlled substances, and two counts of identity theft.

According to court documents, Ntukogu owned and operated New Life Pharmacy in Madera. Between December 2014 and November 2018, Ntukogu filled fraudulent prescriptions for oxycodone and hydrocodone, Schedule II controlled substances, then dispensed the controlled substances to White and Pierre.

Ntukogu was arrested at the New Life Pharmacy in Madera and White and Pierre were arrested at their homes in Fresno.

If convicted, Ntukogu, White and Pierre each face a maximum statutory penalty of 20 years in prison and a $1 million fine in connection with the drug charges. Additionally, Pierre faces a maximum statutory penalty of 20 years in prison and a $250,000 fine in connection with the identity theft charges. Any sentence, however, would 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.

This case is 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. Attorney Melanie L. Alsworth is prosecuting the case.

FDA Approves Generic Naloxone Nasal Spray

Injured workers, and others have become addicted to opioid medications, which can easily lead to overdose death. Naloxone treatment is now a safety strategy to hopefully avoid this deadly consequence. It is become more available and less expensive as an option for those on this medication.

The Food and Drug Administration granted final approval of the first generic naloxone hydrochloride nasal spray, commonly known as Narcan, a life-saving medication that can stop or reverse the effects of an opioid overdose.

The agency is also planning new steps to prioritize the review of additional generic drug applications for products intended to treat opioid overdose, along with the previously announced action to help facilitate an over-the-counter naloxone product.

This approval is the first generic naloxone nasal spray for use in a community setting by individuals without medical training; however, generic injectable naloxone products have been available for years for use in a health care setting.

The FDA also has previously approved a brand-name naloxone nasal spray and an auto-injector for use by those without medical training.


More generally, in an effort to promote competition to help reduce drug prices and improve access to safe and effective generic medicines for Americans, the agency is taking a number of new steps as part of its Drug Competition Action Plan. These steps include important work to improve the efficiency of the generic drug approval process and address barriers to generic drug development.

The FDA also remains focused on several additional priorities to address the opioid crisis, including: decreasing exposure to opioids and preventing new addiction; fostering the development of novel pain treatment therapies; supporting treatment of those with opioid use disorder; and improving enforcement and assessing benefit-risk.

Naloxone nasal spray does not require assembly and delivers a consistent, measured dose when used as directed. This product can be used for adults or children and is easily administered by anyone, even those without medical training. The drug is sprayed into one nostril while the patient is lying on his or her back and can be repeated if necessary.

The use of naloxone nasal spray in patients who are opioid-dependent may result in severe opioid withdrawal characterized by body aches, diarrhea, increased heart rate (tachycardia), fever, runny nose, sneezing, goose bumps (piloerection), sweating, yawning, nausea or vomiting, nervousness, restlessness or irritability, shivering or trembling, abdominal cramps, weakness and increased blood pressure.

E-mods Used to Prequalify Contractors for Bidding

An employer’s experience modification rating, also called E-mods or EMR, is determined by dividing a company’s actual workers’ comp claim losses by the expected losses for the company’s specific occupations. The EMR plays a vital role in determining the premium a company pays.

The State of California and other public authorities, major utilities, private project owners and prime contractors for years have used the rating as a one-size-fits-all way to gauge a contractor’s safety record. Three consecutive years of EMR are usually considered, excluding the most recent year. Some treat a company with one EMR blip as a contracting untouchable.

EMRs are sometimes treated as vital to prequalification of a contractor to bid on a project. One sign of that trend occurred this year when the National Council on Compensation Insurance (NCCI) – the insurer-owned workers’ comp rate-making entity covering most states – added to its published material a boilerplate disclaimer against using EMRs to prequalify employers.

This new language is designed to raise awareness on this important topic and to reinforce the intended purpose of an experience rating worksheet for using the rate only to adjust the premium, according to Kathy Antonello, NCCI’s chief actuary. “This is consistent with the information we have provided to the public and the industry that it’s not appropriate to use E-mods to compare the relative safety of employers. The E-mod should be used for its intended purpose.”

A more comprehensive evaluation of safety performance usually includes other data and information – such as the reason for the higher EMR, style of the safety program, qualifications of the safety managers or U.S. Occupational Safety and Health Administration (OSHA) data used to calculate rate of injuries per hours worked – a different type of statistic.

Changing the deeply entrenched practice of using EMRs to prequalify contractors may not be as simple as writing a few articles and publishing a disclaimer, however. Companies that understand the value placed by owners and prime contractors on safety know that a low EMR impresses them as much as do held-down costs. “It will take a generation” to get out of the habit of using EMRs as a quick take on a company’s safety record, says one industrial construction contractor’s safety director. “There are union shop stewards who talk about EMRs on a regular basis.”

At a recent construction conference of the International Risk Management Institute, where Antonello, in a presentation, repeated cautions against using EMRs to prequalify, an insurance director at a large construction firm turned to someone sitting near him and said, “We use our EMR to compete all the time.”

Smaller contractors are the biggest losers in the “EMR equals safety” mindset, insurance brokers report. Fewer hours worked maximizes the effect of a single claim.

“Setting these strict experience mod-factor thresholds can discriminate against smaller or midsized companies, disqualifying them from bidding on projects, despite their having an excellent safety and injury history,” wrote Sonja Guenther, a workers’ compensation specialist at Denver financial consultant IMA Financial Group, in a recent report on the issue. Larger contractors, with the help of consultants, can find ways to drive down their EMR that have little if anything to do with their actual safety record, critics add.

Travelers Beats Wall Street Estimates

Insurer Travelers Companies Inc’s quarterly profit beat analysts’ estimates on Thursday, as improved underwriting and lower catastrophe losses offset a decline in net investment income, sending its shares to a more than one-year high. Shares of the Dow-component rose as much as 4.2 percent to $141.52, levels last seen in March 2018. The stock was also the second-biggest boost to the Dow Jones Industrial Index.

Travelers is considered a bellwether for the insurance industry. The company said net written premiums rose 3 percent to $7.06 billion in the first quarter, with growth across all business lines.

Investors were particularly focused on its commercial auto insurance business, which has been posting losses for several years as more plaintiffs lawyers jockey to represent accident victims.

However, Travelers raised premium rates for auto insurance in the first quarter, helping to contribute a 6 percent rise in gross written premiums in its insurance business. This also did not lead to a drop in renewal rates and retentions, business insurance head Gregory Toczydlowski said on a call with analysts.

The company on Thursday reported that catastrophe losses, net of reinsurance, fell by $161 million to $193 million after wildfires and hurricanes dented its earnings over the past two years.

The company reported a combined ratio of 93.7 percent, compared with 95.5 percent a year earlier. A ratio below 100 percent means the insurer earns more in premiums than it pays out in claims.

A weak spot in the quarter, however, was net investment income , which fell 3.5 percent to $582 million due to lower private equity returns after a slowdown in market activity in the first quarter.

Insurers typically invest money they get from premiums in bonds and equities to earn profits, and a downturn in markets spells bad news for them.

The company’s net income rose 19 percent to $796 million, or $2.99 per share, in the quarter ended March 31. Core income was $2.83 per share, which beat analysts’ estimates of $2.74 per share, according to IBES data from Refinitiv. Total revenue rose 5 percent to $7.67 billion.

April 15, 2019 News Podcast

Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: Employer Has Burden to Obtain Physicians RTW Form, Nurse Indicted for “Darknet” Sales of Opioids, Cannabis Shops – Illegally Uninsured and Tax Evasion, Sutter Medical Center Neurosurgeon Arrested for Comp Fraud, DWC Posts First Report on IBR Since SB 863, Mostly Good News From WCIRB Report, WCIRB Sees No Need for Mid-year Filing, More Gig Workers Seek Exemption from ABC Test, ICD 11th Edition to Include Chinese Medicine, Injured Tesla Workers Claim Foul Play.