Author: WorkCompAcademy

Zurich American Insurance Company of Illinois issued a workers’ compensation policy to the former parent of Accuire, LLC.

Accuire separated from its parent company and sought a short-term workers’ compensation policy from Zurich based on the experience modification rating it shared with its former parent. As payment under that agreement, Zurich charged Accuire an initial amount, which the parties agree constituted an estimate, subject to adjustment based on a payroll audit to be completed at the conclusion of the policy period.

Shortly after, the California Workers’ Compensation Insurance Rating Bureau increased Accuire’s experience modification rating and Zurich issued an endorsement reflecting this change to Accuire.

Zurich conducted its payroll audit and provided the results to Accuire. Based on the audit, Zurich demanded payment of an additional premium totaling $491,614. Accuire refused to pay because, notwithstanding any endorsements or rate changes, it claimed that Zurich had orally assured Accuire that its rates and costs would remain the same as they had been under the policy covering its former parent.

Zurich then sued Accuire for breach of contract and moved for summary judgment. Accuire failed to timely oppose the summary judgment motion under the district court’s local rules. A week after the local rule deadline passed, Accuire filed an ex parte application for leave to file a late opposition and attached its proposed response to the motion. The district court denied the application in a minute order and then granted Zurich’s motion for summary judgment.

Accuire appealed the summary judgment. The 9th Circuit Court of Appeals affirmed the summary judgment in the unpublished case of Zurich American Insurance Company of Illinois v Accuire LLC.

The district court’s order granting summary judgment analyzed and correctly rejected on the merits the defenses raised to enforcement of the contract.

Specifically, it held that under California law, Accuire’s parol evidence of prior assurances about rates and costs is inadmissible to contradict the terms of a fully integrated agreement like the one between Accuire and Zurich.

Moreover, it found similarly meritless Accuire’s claims that it cannot be bound because its representative failed to read the contract before agreeing to it, or that Zurich improperly modified rates by endorsement.

In sum, none of the purported disputes of material fact offered by Accuire on appeal precluded the district court from granting summary judgment.

The Division of Workers’ Compensation announces that the 2021 minimum and maximum temporary total disability rates will increase on January 1, 2021. The minimum TTD rate will increase from $194.91 to $203.44 and the maximum TTD rate will increase from $1,299.43 to $1,356.31 per week.

Labor Code Section 4453(a) (10) requires the maximum and minimum weekly earnings upon which TTD is based be increased by an amount equal to percentage increase in the State Average Weekly Wage (SAWW) as compared to the prior year. The SAWW is defined as the average weekly wage paid to employees covered by unemployment insurance as reported by the U.S. Department of Labor for California for the 12 months ending March 31 in the year preceding the injury. In the 12 months ending March 31, 2020, the SAWW increased from $1,325 to $1,383—an increase of 4.3774 percent.

The calculation of the 2021 SAWW increase is as follows:
2021 SAWW – 2020 SAWW/2020 SAWW
$1,383-$1,325 = 58/1325 = 4.3774%

The calculation of 2021 minimum TTD rate for 2021 is as follows:
Minimum earnings for 2020 x SAWW increase x 2/3 = minimum TTD rate for 2021
292.36 x 1.043774 = $305.16 minimum TTD earnings x 2/3 =$203.44 minimum rate for 2021

The calculation of maximum TTD rate for 2021 is as follows:
Maximum earnings for 2020 x SAWW increase x 2/3 = maximum TTD rate for 2021
1949.15 x 1.043774 = $2,034.47 maximum TTD earnings x 2/3 = $1356.31 maximum rate

Under Labor Code Section 4659(c), workers with a date of injury on or after January 1, 2003 who receiving life pension (LP) or permanent total disability (PTD) benefits are also entitled to have their weekly LP or PTD rate adjusted based on the SAWW.

SAWW figures may be verified using the U.S. Department of Labor’s Unemployment Insurance Database.

Almirante Perez, 43, of Highland, was arraigned on multiple felony counts of insurance fraud and tax evasion after allegedly underreporting employees and wages in an attempt to reduce his businesses’ insurance premiums and payroll taxes by over $2.5 million.

Perez was the owner of Capital Janitorial Services, Cal Best Service Group Inc., Southern Pacific Janitorial Group and United Pacific Contractors Inc., from March 2013 to November 2018.

An investigation by the Department of Insurance revealed Perez failed to report employees and wages to his workers’ compensation insurance carrier and to the Employment Development Department (EDD). The investigation discovered $1,982,597 in underreported premium fraud and $609,430 in payroll taxes owed to the EDD.

It is further alleged, as to some of the counts, that the offenses alleged are related felonies, a material element of which is fraud and embezzlement, which involved a pattern of related felony conduct, and the pattern of related felony conduct involved the taking of, and resulted in the loss by Republic Underwriters Insurance Company, NorGuard Insurance Company, dba Atlas General Insurance Company, and Ohio Security Insurance Company of more than five hundred thousand dollars ($500,000).

These allegations subject Almirante Perez to the additional punishment provided for in Penal Code sections 186.11(a)(2), which is the aggravated white collar crime enhancement. White collar crime generally refers to non-violent crime, often involving professionals, for financial gain. White collar crime may involve small amounts of money or millions of dollars. The penalties for white collar crimes in California depend, in part, on the extent of the alleged crime.

The Insurance Commissioner said that “Legitimate businesses and California consumers pay the price when business owners cheat the system by illegally underreporting employees and wages.”

Perez was arraigned on October 22, 2020, at San Bernardino County Superior Court and pleaded not guilty to all charges. The San Bernardino County District Attorney’s Office is prosecuting this case.

The Division of Workers’ Compensation has issued a notice of public hearing for the amendment of the Medical-Legal Fee Schedule, which can be found at California Code of Regulations, title 8, sections 9793-9795.

The public hearing will be held via Zoom on Monday, December 14, 2020 at 10 a.m. Options for participation are at the bottom of this notice.

The proposed amendments to the medical-legal fee schedule include, but are not limited to, the following:

— A 25% increase in the multiplier used for setting fees for evaluations.
— Standardization of the fee that can be charged for a missed appointment.
— Flat fees for comprehensive, follow-up, and supplemental medical-legal evaluations.
— A single rate for review of medical records based upon the amount of pages reviewed.
— A meet and confer requirement for records sent to the physician.
— Elimination of complexity factors from the Medical-Legal Fee Schedule.
— An increased modifier for reports dealing with psychiatric issues.
— An increase in the hourly fee for medical-legal testimony.

The implementation of a predominantly fixed fee for all procedure billing codes is anticipated to reduce frictional costs. Moving to a flat-fee-based schedule and removing complexity factors is contemplated to reduce the incidence of disputes over billing.

The fee schedule was formulated after multiple stakeholder meetings where carriers, employers, physicians, and medical management companies were able to provide input. In addition, the proposed regulations were revised after review of the results of a 15-day comment period from a prior forum posting of the proposed regulations. The notice and text of regulations can be found at the proposed regulations page.

The proposed amendment to revise the Medical-Legal Fee Schedule is exempt from the rulemaking provisions of the Administrative Procedure Act. However, DWC is required under Labor Code sections 5307.3 and 5307.4 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 new regulations online.

Members of the public may attend the public meeting as follows:

— Computer: Join from PC, Mac, Linux, iOS or Android: https://dir-ca-gov.zoom.us/j/92474087436
— Or Telephone Dial options: +1 253 215 8782 +1 301 715 8592 +1 312 626 6799 +1 346 248 7799 +1 669 900 6833 +1 929 205 6099 USA 1 (866) 434-5269 (US Toll Free) – Conference code: 956474
— Find local AT&T Numbers: https://www.teleconference.att.com/servlet/glbAccess?process=1&accessNumber=2532158782&accessCode=956474

Members of the public may review and comment on the proposed regulations no later than December 15, 2020.

The Los Angeles County District Attorney’s Office announced that a chiropractor and a claims adjuster have been charged with conspiring to process false insurance claims for payment amounting to more than $1.6 million.

65 year old Agop Sarafian, the claims adjuster of La Crescenta, and 65 year old Shahe Kevork Topjian, the chiropractor of Granada Hills, each face one felony count of insurance fraud in case BA491001. Their arraignment will be scheduled at Department 30 of the Foltz Criminal Justice Center.

HIs office was located at 22030 Clarendon Street, Suite 111, in Woodland Hills. His NPI number is 1477817898 and was assigned on June 2012. The practitioner’s primary taxonomy code is 111N00000X with California license number 21857.

Head Deputy Marc Beaart of the Healthcare Fraud Division said that the alleged insurance fraud occurred between June 8, 2007 and November 25, 2019. In November 2019, State Compensation Insurance Fund where Sarafian worked began an internal investigation before the California Department of Insurance and the Los Angeles County District Attorney’s Office became involved.

The pair is accused of defrauding State Fund by setting up fake workers’ compensation lien settlements to receive undeserved insurance payouts.

If convicted as charged, the defendants each face a maximum sentence of five years in county jail.

The case remains under investigation by the California Department of Insurance, Fraud Division.