Author: WorkCompAcademy

Two doctors, Susan Vergot and Carl Lindblad, were sentenced in a San Diego federal court for participating in a health care fraud scheme that bilked TRICARE – the health care program that covers United States service members – out of tens of millions of dollars by prescribing thousands of exorbitantly expensive compounded drugs to patients they never saw or examined.

Dr. Vergot and Dr. Lindblad were sentenced to 24 and 28 months in custody, respectively. The custodial portion of each defendant’s sentence will be split between prison and home confinement. Each was also sentenced to pay a $15,000 fine.

“This conspiracy inflicted nearly $65 million in actual losses to TRICARE, the health care benefits program relied upon by millions of our military members and their families,” said U.S. Attorney Robert Brewer. “It is hard to imagine a more outrageous example of selfish doctors stealing from the U.S. health care system believing they were exempt from providing necessary care.”

Compounded medications are specialty medications mixed by a pharmacist to meet the specific medical needs of an individual patient. Although compounded drugs are not approved by the Food and Drug Administration (FDA), they are properly prescribed when a physician determines that an FDA-approved medication does not meet the health needs of a particular patient, such as if a patient requires a particular dosage or application or is allergic to a dye or other ingredient.

According to the sentencing memorandum, as part of this conspiracy a team of individuals worked to recruit and pay Marines, primarily from the San Diego area, and their dependents – all TRICARE beneficiaries – to obtain compounded medications that would be paid for by TRICARE. This information was sent to Choice MD, the Tennessee medical clinic that employed Dr. Vergot and Dr. Lindblad.

Dr. Vergot and Dr. Lindblad then wrote prescriptions for the TRICARE beneficiaries, despite never examining the patients. Once signed by the doctors, these prescriptions were not given to the straw beneficiaries, but sent directly to particular pharmacies controlled by co-conspirators, most often a small pharmacy, The Medicine Shoppe in Bountiful, Utah, which filled the prescriptions and mailed the drugs to the patients in California.

Between November 2014 and June 2015, Drs. Vergot and Lindblad authorized 6,694 prescriptions, for which their co-conspirators billed TRICARE a staggering $89,725,000. Of this amount, over $65 million was for prescriptions written for straw TRICARE beneficiaries in the Southern District of California.

Defendants Vergot and Lindblad are the second and third defendants sentenced in this matter. CFK, Inc., the corporate owner of The Medicine Shoppe, was sentenced previously. A nurse practitioner, Candace Craven, previously pleaded guilty, as have the patient recruiters, including Joshua Morgan, Kyle Adams, Daniel Castro, Jeremy Syto, and Bradely White. All await sentencing.

Jimmy and Ashley Collins, the owners of Choice MD, were charged by Superseding Indictment in June 2020. Their case remains pending.

According to the latest tally by the California Workers Compensation Institute, the number of independent medical reviews used to resolve California workers’ compensation medical disputes fell sharply in the first half of 2020.

Under California law every workers’ comp claims administrator must have a Utilization Review program to assure that the care provided to injured workers is supported by clinical evidence outlined in medical guidelines adopted by the state. Most treatment requests are approved by UR, but in 2012 state lawmakers adopted IMR to give injured workers a chance to get an independent medical opinion on treatment requests that UR physicians deny or modify.

IMR took effect for all claims in July 2013 so CWCI began monitoring IMR activity in 2014.

In its latest review, the Institute tallied 70,273 IMR decision letters issued in the first half of 2020 in response to applications submitted to the state, compared to 85,318 letters issued in the first six months of 2019 (-17.6%). Once again, about 40% of the letters included decisions on multiple services, but with the decline in letter volume, the total number of primary service decisions fell by 19.3% from 148,069 in the first half of 2019 to 119,514 in the first half of 2020.

While IMR volume was down, a review of IMR outcomes in the first half of this year noted little change. After reviewing the medical records and other information provided to support a disputed treatment request, IMR doctors upheld the UR physician’s modification or denial of the service in 88.8 percent of the IMRs in the first half of this year compared to the 88.2 percent uphold rate from 2019.

As has been the case since IMR was first adopted prescription drug requests accounted for the largest share of the January through June IMR decisions (39.8 percent), though that percentage is down from nearly half of all IMR disputes prior to the state’s adoption of the opioid and chronic pain treatment guidelines at the end of 2017 and the Medical Treatment Utilization Schedule Prescription Drug Formulary in January 2018.

Even with the guidelines and the formulary, opioids still accounted for 29.2 percent of the 2020 prescription drug IMRs – down only slightly from 30.9 percent in 2019.

Requests for physical therapy; injections; durable medical equipment, prosthetics, orthotics and supplies (DMEPOS); diagnostic imaging; and surgery together comprised 40 percent of the IMRs from the first half of 2020, while all other medical service categories combined accounted for 20.2 percent of the disputed requests. The 2020 uphold rates for the various service categories ranged from 80.1 percent for psych services to 91.3 percent for DMEPOS.

As in the past, a small number of physicians continued to account for most of the disputed medical services that went through IMR this year. The top 10 percent of physicians identified in the IMR decision letters issued in the 12 months ending in June 2020 accounted for 83 percent of the disputed service requests during that period, while the top 1 percent (97 providers) accounted for 40 percent of the disputed service requests.

Additional data and analyses on the IMR data through June 2020 has been published in a CWCI Bulletin, which CWCI members and subscribers will find under the Communications tab at www.cwci.org.

Gov. Gavin Newsom signed a new workers’ compensation presumption law Thursday, that will expand access to workers’ compensation for front-line workers affected by the coronavirus pandemic, and those who encounter an “outbreak” in the workplace.

Senate Bill 1159 creates a rebuttable presumption of infection for people like grocery store employees, health care workers, firefighters and law enforcement officers who believe they contracted the coronavirus at work. The new law also creates a presumption of infection whenever there is a workplace outbreak over a two-week span of time.

SB 1159 is effect immediately as an urgency statute and will remain in effect through Jan. 1, 2023.

SB 1159 imposes an onerous administrative burden on California employers, and their workers’ compensation claim administrators.

The third category of presumptions – the outbreak group (L.C. 3212.88) – works administratively by requiring every employer in the state with five or more employees to report information about any employee who tests positive for COVID-19, to their workers’ compensation claims administrator within three days.

The workers’ compensation claim administrator must use this information to keep a count on COVID-19 testing at each site location, and when the criteria of 4 or more (or 4% of the workforce) in 14 days is met, apply the presumption to the “outbreak group” of cases reported during that 14 day window.

There is a $10,000 penalty for failure to meet the three day reporting requirement or to provide a fraudulent report.

This new law applies “retroactively” to pending claims, which means that employers and claim administrators have to go back in time and collect this data from millions of California employers of more than 5 people immediately. They have 30 calendar days to report on the retroactive claims now that the bill has been signed.

In terms of the employers of first responder employees (L.C. 3212.87 the second group), although L.C. 3212.87 does not have a specific reporting requirement, those                             .

While for example a peace officer is not in the third “outbreak group” they may work side-by-side with non first responders.

It would appear reasonable that counting positive tests of first responders who work in the same setting as non-first responders would be an obligation in terms of applying the presumption standard to the outbreak group.

Newsom also signed a new law that will require employers to report coronavirus outbreaks to their local public health department within 48 hours and to employees who may have been exposed within one business day.

Assembly Bill 685 also gives the California Division of Occupational Safety and Health (Cal/OSHA) the authority to close a worksite or place of employment that is actively exposing workers to the risk of contracting the virus.

AB 685 will also remain in effect through Jan. 1, 2023.

The Covid-19 pandemic has forced companies to rethink the way people work. To stem the spread of the disease, companies recognized the need to decentralize their staff. Working from home became the new standard. One major corporation after another announced their plans for remote work. Some companies, such as Twitter, provided the chance for staff to work remotely forever.

Maintaining large office spaces in cities, such as New York and San Francisco, is extremely expensive and the taxes are astronomical. Having people work from their own homes or in lower-cost cities is an attractive option for the chief financial officers to shave off large expenditures and save money.

Forbes reports that Stripe, the fast-growing fintech payments company, has an interesting deal for its employees. They could be paid $20,000 to relocate from high-priced cities to lower-cost locations. Sounds good, right? Here’s the catch – the workers who take up the offer will have to take a 10% cut to their compensation.

In addition to Stripe, other companies have made similar-type offers. VMware – a California-based publicly traded software company that provides cloud computing and virtualization software and services – announced that employees who work remotely will get a pay cut if they move out of Silicon Valley to live in less-costly cities.

According to Bloomberg, “employees who worked at VMware’s Palo Alto, California, headquarters and go to Denver, for example, must accept an 18% salary reduction. Leaving Silicon Valley for Los Angeles or San Diego means relinquishing 8% of their annual pay.” Rich Lang, VMware’s senior vice president of human resources, offered a positive alternative. When a person relocates and works remotely, they “could get a raise if they chose to move to a larger or more expensive city.”

Facebook CEO Mark Zuckerberg vowed to allow his employees to continue working remotely. Zuckerberg said, “We’re going to be the most forward-leaning company on remote work at our scale.” Employees will have to tell their bosses if they move to a different location. Zuckerberg forewarned his personnel, saying those who flee to lower-cost cities “may have their compensation adjusted based on their new locations.” The chief executive added, “We’ll adjust salary to your location at that point. There’ll be severe ramifications for people who are not honest about this.”

Just as there is heated debate over reopening the economy too quickly, there are contradicting actions of leading corporations that reflect a reticence to fully embracing the work-from-home revolution. Google, Amazon and Facebook have recently leased, built or purchased corporate real estate, bucking the remote movement. They are playing it safe by both offering people the chance to work from home, but also expanding their office footprint – in case the work-from-home trend slowly dissipates.