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CWCI Study Shows 36.2% Drop in Hospitalizations

A new study from the California Workers’ Compensation Institute shows the steep drop in the number of inpatient hospitalizations involving California injured workers over the past decade was largely due to the ongoing decline in spinal fusions and a more recent decline in lower extremity joint surgeries.

The study reviews discharge data compiled by the state Office of Statewide Health Planning and Development (OSHPD) on 35.9 million inpatient hospital stays from 2010 through 2019 paid by workers’ compensation, Medicare, Medi-Cal and private insurance, in order to identify workers’ compensation inpatient trends and to compare the volume and types of California inpatient hospitalizations covered by workers’ compensation to those covered by the three other systems.

Workers’ comp is by far the smallest of the medical delivery systems reviewed, accounting for just 0.4 percent of all inpatient stays in 2019, which is not surprising given that it has only accounted for between 1.4 percent and 1.6 percent of California healthcare costs over the past decade.

However, over the same 10-year span the study found that the number of workers’ comp inpatient hospitalizations declined 36.2 percent, more than twice the 15.9 percent decline noted for private coverage, and in sharp contrast to the 4.0 percent increase in Medicare and the 14.5 percent increase in Medi-Cal hospitalizations.

The study found that a key factor leading to the reduction of workers’ comp inpatient stays was the sharp decline in the number of injured workers receiving spinal fusions, which fell 53.1 percent between 2010 and 2019, a decline that was spurred by multiple factors including the adoption of utilization review and independent medical review programs requiring that treatment meet evidence-based medicine standards, the elimination of duplicate payments for implantable devices used in spinal surgeries, and fraud convictions that led to the sale of hospitals that had a high volume of workers’ comp back surgeries.

At the same time the overall number of work injury claims declined and there were technological and procedural advances that allowed more services to be provided in outpatient settings, prompting the growth of ambulatory surgery centers and an expansion of services at those facilities.

The study notes that spinal fusions were not the only type of workers’ compensation inpatient hospitalizations that saw a significant decline, as the number of workers’ comp discharges associated with lower extremity joint replacements has gradually declined in each of the past five years, falling from 2,727 workers’ comp discharges in 2014 to 2,140 in 2019, a net decrease of 21.5 percent.

In addition to tracking inpatient trends for California workers’ compensation, Medicare, Medi-Cal and private plans over the 10-year study period, the study also provides detailed data showing the breakdown of workers’ comp inpatient stays among the top 5 Major Diagnostic Categories (MDCs); the proportion of surgical vs. “medical” (non-surgical) hospitalizations in each of the 4 payer groups; the top 5 workers’ comp surgical and medical inpatient discharges by diagnostic-related group (MS-DRG) in 2019; the breakdown of the top 10 workers’ comp MS-DRGs across payer groups in 2019; the volume and prevalence of spinal fusion surgeries by payer group from 2010 through 2019; and the top 10 hospitals for workers’ comp inpatient care as well as the 10 hospitals with the highest ratio of workers’ compensation inpatients to total inpatients.

CWCI members and subscribers can access the report in the Research section and others can purchase it for $14 from the online Store. CWCI members may also log in to the Research section to access an updated version of CWCI’s Inpatient Hospitalization Claim Interactive Tool.

Travelers Launches Global Companion Plus+ for Foreign Risk

The Travelers Companies, Inc. announced the launch of Global Companion Plus+. This new product builds upon the company’s broad property and casualty offerings for U.S. firms with foreign exposures.

Features of Global Companion Plus+ include:

Primary Foreign Voluntary Workers Compensation: Protects employees who are working outside of their home countries.
— Financial Interest: Provides a separate $1 million limit for U.S.-based companies as an extra layer of protection when an eligible foreign subsidiary suffers a covered loss.
— Global Panel Counsel Service: Helps businesses in need of legal assistance abroad find in-country representation experienced in local regulations and languages.
— Emergency Evacuation Coverage: Offsets the cost of employees who must evacuate while abroad. This now includes coverage for natural disasters, political unrest and endemic disease.

“Even if a business does not have a physical foreign footprint, having international customers, worldwide vendors or employees who occasionally travel to different countries could create exposures that may not be covered by a typical domestic business insurance policy,” said Tony Giannone, Vice President of the Multinational Accounts Practice at Travelers. “We have updated our Global Companion Plus+ product to include a more robust offering that fills coverage gaps for our customers who could experience claims or lawsuits outside of the U.S.”

Travelers provides global coverage in conjunction with its strategic alliances in the International Network of Insurance (INI), which includes major international insurance companies from more than 150 countries. As the INI’s exclusive U.S. insurer, Travelers is able to offer customers access to experts around the world who have a deep understanding of local laws, regulations, customs and services, including specialized local claim professionals coordinated through Travelers’ Global Claim team.

INI Partners are independent insurers as well as experienced leaders within their respective markets. Each network partner is approved by the INI Board of Directors and follows the same contractual membership obligations and service guideless worldwide. Partners carefully picked based on defined criteria such as: financial strength, servicing capabilities and experience and claims handling expertise.

To learn more about Global Companion Plus+, visit

Employers Increase Deep Cleaning and Sanitizing Stations

Business Insurance reports that most employers invested in providing sanitizing stations, increasing deep cleaning of common areas and hanging signage to educate workers on COVID-19 prevention and hygiene, according to a study conducted by the National Safety Council released Friday.

National Safety Council Itasca, Illinois-based NSC researchers surveyed 334 safety and health decision-makers for organizations with at least 250 employees across the U.S. to determine what safety practices the companies were implementing, how much they were spending on COVID-19 prevention and what effect those safety practices were having on productivity, performance and the spread of the virus.

The researchers surveyed employers primarily in manufacturing, construction, retail and office operations, as well as other industries, between July 14, and Aug. 4, finding that companies spent on average slightly more than $5,000 per employee on safety practices, which ranged from making remote work possible to providing personal protective equipment and hand sanitizer.

Among the most common safety practices adopted by employers was offering hand sanitizers throughout the facilities (80%), requiring face masks/shields or other personal protective equipment (75%) and requiring operators to sanitize work surfaces, machines, stations and tools at the beginning and/or end of each shift (72%), the study revealed.

More than three-quarters of surveyed employers also increased the frequency of deep cleaning (71%), added COVID-19 educational signage (70%), created employee self-reporting symptom and positive screening protocols (69%) and implemented remote working for non-essential employees (69%).

Of the industries, retailers were the most likely to use temperature screening (70%) and spend the most per employee on COVID-19 prevention, followed by educational services and health care and social services.

At the time of the survey, employers in construction reported the highest number of confirmed COVID-19 cases among workers, followed by retail trade and educational services.

Woman Sentenced to 2.5 Years for $374K EDD Fraud

Angela Stubblefield, 49, of Tacoma, Washington, was sentenced by U.S. District Judge Kimberly J. Mueller to two years and six months in prison and ordered to pay $219,871 in restitution for a disability benefits fraud and identity theft scheme.

According to court documents, between June 14, 2013, and May 1, 2017, Stubblefield and co-defendant Katherine Decker participated in a scheme to defraud the State of California by filing fraudulent claims for disability insurance benefits with the California Employment Development Department (EDD).

In furtherance of the scheme, Decker and Stubblefield used Decker’s position as an employee with the EDD to file fraudulent claims for disability benefits and to fraudulently extend existing disability claims, using the names and identities of real persons with and without their knowledge. In total, the conspiracy resulted in 15 fraudulent disability claims, resulting in a loss to the EDD of approximately $373,566.

Stubblefield was ordered to report to begin service of her sentence by Feb. 1, 2021. On Sept. 14, Stubblefield’s co-defendant Katherine Decker was sentenced by Judge Mueller to three years and seven months in prison for the disability benefits fraud and identity theft scheme.

“EDD employees rigorously work to protect the confidentiality of our claimant’s information and the integrity of the Disability Insurance program for Californians in need,” said EDD Director Sharon Hilliard. “We are grateful for the partnership of our federal and state partners in prosecuting any violator of that policy to the fullest extent of the law.”

This case was the product of an investigation by EDD’s Investigation Division and the Federal Bureau of Investigation. Assistant U.S. Attorneys Shea J. Kenny and Amy S. Hitchcock prosecuted the case.

November 2, 2020 – News Podcast

Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: Court Sustains Gardena PD Service Officer Fraud Conviction. SCIF Claims Adjuster and Chiropractor Face Fraud Charges. San Diego Internist Convicted for Illegal Opioid Prescribing. Technical Training School Owner Sentenced for $30M Fraud. DWC Sets Zoom Hearing on Changes to Med-Legal Fees. National Battle Heats Up Over Future of Gig Economy. WCAB Reinstates 5 Rules in 2 New En Banc Decisions. DWC Adds 11 New Telehealth Codes Into OMFS.
Is Agili-C the Future of Joint Repair? COVID-19 Vaccine Likely by End of Year.

October Workers’ Comp COVID-19 Claim Count Dwindles

The California workers’ compensation COVID-19 monthly claim count may have peaked in July, but the latest tally by the California Workers’ Compensation Institute shows that as of November 2, there have been 50,592 COVID-19 claims reported to the state Division of Workers’ Compensation so far this year – including 282 death claims.

That translates to 1 out of every 9 California job injury claims reported for accident year 2020.

The latest figures show that after climbing rapidly over the first 7 months of this year and hitting a record 14,453 claims in July, the number of COVID-19 workers’ compensation claims reported to the DWC began to dwindle. The updated count shows 6,710 claims with August injury dates, 3,779 claims with September injury dates, and 2,016 claims with October injury dates.

A significant number of claims from September and October could still be reported, but the initial claim counts from both these months were well below the early counts from June and July, so even accounting for the reporting lag associated with COVID-19 claims, those figures suggest a significant downtrend.

CWCI now projects that there could ultimately be 15,786 COVID-19 claims with July injury dates, 6,910 claims with August injury dates, 4,535 claims with September injury dates, and 5,242 claims with October injury dates, which puts the projected number of COVID-19 claims for the first 10 months of 2020 at 57,833.

Notably, denial rates for COVID-19 claims have stabilized within a narrow range, holding between 28.7 percent and 31.3 percent from April through August, while denial data on September and October claims is still too green for analysis as many of those claims remain under investigation.

The distribution by industry shows that COVID-19 claims remain heavily concentrated among a small number of industry sectors, with more than three quarters of the claims from the first 10 months of this year involving workers in health care (37.1 percent); public safety/government (15.0 percent); manufacturing (8.3 percent); retail (7.9 percent); transportation (5.1 percent), and food service (4.4 percent).

The data on claims reported through October is included in the latest update to CWCI’s COVID-19 and Non-COVID-19 Interactive Claim Application, an online tool that integrates data from CWCI, the DWC, and the Bureau of Labor and Statistics.

CWCI updates its COVID-19/Non-COVID 19 data app with new data every two weeks and plans to expand its features as more data on claim type and systemwide costs become available.

The application is available to the public.

COVID-19 Vaccine Candidate 90% Effective in Phase 3 Study

Pfizer and its collaborator BioNTech released early study results Monday indicating that their vaccine, BNT162b2, prevented more than 90% of infections with the virus that causes COVID-19. This conclusion was based on the first interim efficacy analysis conducted on November 8, 2020 by an external, independent Data Monitoring Committee (DMC) from the Phase 3 clinical study.

Details of the announcement include:

The vaccine candidate was found to be more than 90% effective in preventing COVID-19 in participants without evidence of prior SARS-CoV-2 infection in the first interim efficacy analysis.
— The analysis evaluated 94 confirmed cases of COVID-19 in trial participants.
The study enrolled 43,538 participants, with 42% having diverse backgrounds, and no serious safety concerns have been observed; Safety and additional efficacy data continue to be collected.
Submission for Emergency Use Authorization to the U.S. Food and Drug Administration is planned for soon after the required safety milestone is achieved, which is currently expected to occur in the third week of November.
The clinical trial will continue through to final analysis at 164 confirmed cases in order to collect further data and characterize the vaccine candidate’s performance against other study endpoints.

Pfizer and BioNTech are continuing to accumulate safety data and currently estimate that a median of two months of safety data following the second (and final) dose of the vaccine candidate – the amount of safety data specified by the FDA in its guidance for potential Emergency Use Authorization – will be available by the third week of November.

Additionally, participants will continue to be monitored for long-term protection and safety for an additional two years after their second dose.

Dr. Albert Bourla, Pfizer Chairman and CEO said “We are reaching this critical milestone in our vaccine development program at a time when the world needs it most with infection rates setting new records, hospitals nearing over-capacity and economies struggling to reopen. With today’s news, we are a significant step closer to providing people around the world with a much-needed breakthrough.”

Along with the efficacy data generated from the clinical trial, Pfizer and BioNTech are working to prepare the necessary safety and manufacturing data to submit to the FDA to demonstrate the safety and quality of the vaccine product produced.

Based on current projections it expects to produce globally up to 50 million vaccine doses in 2020 and up to 1.3 billion doses in 2021. Pfizer and BioNTech plan to submit data from the full Phase 3 trial for scientific peer-review publication.

DWC Posts 2019 Audit Report

The Division of Workers’ Compensation has posted the 2019 DWC Audit Unit annual report on its website.

The Audit Unit annual report provides information on how claims administrators audited by the DWC performed and includes the Administrative Director’s ranking report for audits conducted in calendar year 2019. Out of the 40 companies ranked in this audit, congratulations to the following for ranking in the top 5 companies.

1. Sierra Pacific Industries/Anderson.
2. Northern California Special District Authority/Elk Grove.
3. Association of California Water Agencies/Joint Powers Ins. Authority/Roseville.
4. Applied Risk Services, Inc./Omaha, NE.
5. Acclamation Insurance Management Services/Fresno.

The Audit Unit annual report details the results of audits conducted in 2019 and provides the name and location of each insurer, self-insured employer, and third-party administrator audited during that time.

This report to the Legislature summarizes audits conducted in accordance with Labor Code sections 129 and 129.5 to assure that injured workers, and their dependents in the event of their death, are provided with all benefits due them in an expeditious manner. The audit findings, by law, must detail the number of files audited, the number and type of violations cited, and the amount of an undisputed compensation found due and unpaid to the injured worker.

The DWC Audit & Enforcement Unit completed 48 audits, of which 38 were routinely selected for PAR. In addition, another 10 audits were selected, of which 2 were target audits based on the failure of a prior audit, and 8 audits were based on credible referrals and/or complaints filed with the Audit Unit. The PAR audit subjects consisted of 16 insurance companies, 9 self-administered/self-insured employers, 22 third-party administrators (TPA), and 2 insurance companies/third-party administrators that combined claims-adjusting locations.

Performance of insurers, self-insured employers, and third party administrators subject to profile audit review and full compliance audit is rated in accordance with the performance standards set annually by the Administrative Director.

The DWC Administrative Director’s 2019 Audit Ranking Report lists, in ascending order by performance rating, the administrators audited in calendar year 2019.

WCIRB Publishes 2020 Geo Study

The Workers’ Compensation Insurance Rating Bureau has just published its 2020 Geo Study – A Report on California Regional Differences. There are sharp differences in cost characteristics across regions of the state. This report highlights those differences.

Key findings include:

— Even after controlling for regional differences in wages and industry mix, indemnity claim frequency is significantly higher in the Los Angeles (LA) Basin and significantly lower in the San Francisco Bay Area.
— Regional differences in indemnity claim frequency have been fairly consistent over time and across industries. During all available years, the LA/Long Beach region has had the highest frequency, and the Peninsula/Silicon Valley region has had the lowest. The difference between these regions has grown over time. Since 2013, the largest improvement in relative indemnity claim frequency is in the Fresno/Madera region, and the greatest deterioration is in the Imperial/Riverside and the San Luis Obispo (SLO)/Santa Barbara regions.
Pharmaceutical costs throughout the state have dropped dramatically over the last several years, and the prevalence of opioid prescriptions for claims with pharmaceutical payments has also dropped dramatically. The largest decreases in pharmaceutical costs have occurred in Southern California regions, which had the highest pharmaceutical spending at the beginning of the study period. This has decreased the differences in pharmaceutical costs across regions over time.
— The share of cumulative trauma claims as a percent of all claims is much higher in the LA Basin than in other parts of the state, and that gap has generally widened over time.
Medical-legal costs are significantly higher in the LA Basin and Santa Monica/San Fernando Valley regions than in the remainder of the state.
— Paid allocated loss adjustment expenses (ALAE) are significantly higher in Southern California regions.
— The share of open indemnity claims has decreased substantially in all regions since 2013. The largest decreases have been in the LA Basin regions that had the highest initial open indemnity claim shares. These changes have narrowed regional differences over time.
— The share of indemnity claims with incurred costs greater than $250,000 at third report level is higher in regions that tend to have lower indemnity frequency.
— The share of total claims that arise out of exposure to COVID-19 is higher in regions with lower relative indemnity frequency.

Fraudulent Drug Treatment Program Owners Plead Guilty

An Inglewood woman and her mother-in-law, who both ran a South Los Angeles drug and alcohol abuse treatment program, each pleaded guilty to a health care fraud charge for fraudulently submitting more than $500,000 in claims for services that did not qualify for reimbursement or were never provided.

Mesbel Mohamoud, 47, and her mother-in-law, Erlinda Abella, 66, also of Inglewood, pleaded guilty to one count of health care fraud in separate hearings before United States District Judge Philip S. Gutierrez.

Mohamoud was the owner and executive director of The New You Center Inc. (TNYC), located in the Vermont Knolls neighborhood of South Los Angeles. Abella, who co-founded TNYC with Mohamoud in 2005, was the company’s program director. TNYC had contracts to provide medically necessary substance abuse treatment services through the Drug Medi-Cal program to adults and teenagers in Los Angeles County.

According to Mohamoud’s and Abella’s plea agreements, from January 2009 to December 2015, TNYC submitted false and fraudulent bills for counseling sessions that were not conducted at all, were not conducted at authorized locations, or did not comply with Drug Medi-Cal regulations regarding the length of sessions or the number of clients.

Mohamoud and Abella also allegedly caused TNYC to bill for clients who did not have a substance abuse problem, to falsify documents related to services supposedly provided to clients, and to forge client signatures on documents such as sign-in sheets.

For example, in September 2013, TNYC submitted a fraudulent claim for Medi-Cal reimbursement in the amount of $62.15 for a three-hour counseling session for a client on August 17, 2013 – the same day when the client was hospitalized and did not receive any counseling from TNYC.

In court documents, Mohamoud further admitted she knew that among the acts Abella directed TNYC counselors to engage in included enrolling clients in TNYC’s substance abuse treatment program even if the clients had used drugs or alcohol only occasionally or even just once.

Mohamoud and Abella admitted that TNYC submitted approximately $527,313 in false and fraudulent claims for group and individual substance abuse counseling services and was paid $260,101 on those claims.

Judge Gutierrez scheduled a January 25, 2021 sentencing hearing for Abella and a February 8, 2021 sentencing hearing for Mohamoud, at which time each of them will face a statutory maximum sentence of 10 years in prison.

The FBI, the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse, and the U.S. Department of Health and Human Services, Office of Inspector General investigated this matter.  Assistant United States Attorney Cathy J. Ostiller of the Major Frauds Section is prosecuting this case.

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