Author: WorkCompAcademy

Herbert Allen Kelly III, 65, of Rancho Murieta, owner of Kelly Roofing Company, was arrested Friday on six felony counts of workers’ compensation fraud after allegedly underreporting his business’ payroll and number of employees resulting in a loss to his insurer of $50,000.

On January 12, 2015, while employed with Kelly Roofing Company, a worker slipped and fell from a roof at a jobsite, falling approximately 25 feet. As a result of the employee’s injuries, a workers’ compensation claim was opened with Kelly’s insurer, State Compensation Insurance Fund (SCIF), and to date SCIF has paid approximately $730,175 in medical and disability payments. Following the incident, Cal/OSHA conducted an inspection of the jobsite with Kelly who advised he had three employees.

SCIF conducted audits of Kelly Roofing Company on a yearly basis to verify premium and payroll. Kelly reported approximately $31,685 in payroll for the December 2012 to December 2013 policy period, yet reported $0 in payroll and no employees for the remainder of the policy period, 2014 through 2018.

During the SCIF audit for policy period 2015, when the accident occurred, Kelly reported he had no employees. However, SCIF noted Kelly Roofing Company had a workers’ compensation claim in January 2015. Kelly alleged he only paid the injured worker $500 for a single day of work and did not have any payroll records for him.

Department of Insurance detectives served search warrants on both Kelly and Kelly Roofing Company’s bank accounts and conducted an audit of bank records. Detectives discovered approximately $89,781 in total audited payroll with up to 15 possible employees. The department confirmed Kelly Roofing Company had employees during the period when Kelly claimed he had no employees and no payroll. The audited payroll was ultimately forwarded to SCIF who determined Kelly Roofing Company owed approximately $50,000 in unpaid past premiums.

This case is being prosecuted by the Sacramento County District Attorney’s Office.

In June 2018, federal officials charged 601 people in the largest bust of health care fraud in U.S. history. The national takedown was across 58 federal districts.

Southern California criminal cases named a total of 33 defendants. Nine new defendants being charged as part of Operation “Spinal Cap.” The scheme that was spearheaded by Michael Drobot, the former owner of Pacific Hospital in Long Beach.

One of the high profile defendants in that Operation, Daniel Capen, of Manhattan Beach, an orthopedic surgeon, has agreed to plead guilty to conspiracy and illegal kickback charges. Capen accounted for approximately $142 million of Pacific Hospital’s claims to insurers, on which the hospital was paid approximately $56 million.

Another was Timothy J. Hunt, of Palos Verdes Estates, also an orthopedic surgeon, who referred spinal surgery patients to Capen and other doctors. He has agreed to plead guilty to a conspiracy charge involving his receipt of illegal kickbacks stemming from various financial relationships with Pacific Hospital and related entities.

In a sentencing memo filed by his attorneys this September, Hunt in his letter to the Court, said he was persuaded to accept what appeared to be an option contract to buy his practice at a time when he had no other option to hold onto his medical practice due to financial extortion by his late father’s 4th wife.

He claims “he was induced to participate in this arrangement by sophisticated parties, Tino Bernadett and Michael Drobot, the owners of Pacific Hospital, and their counsel, who assured Dr. Hunt that the arrangement was legal.”

“Bernadett and Drobot even gave Dr. Hunt a legal contract memorializing the option agreement that he took to his lawyer, who approved it (although the lawyer was not privy to all the details of the actual arrangement.)”

His attorneys conclude by saying that because “of these facts and circumstances, it is understandable – though not excusable – that Dr. Hunt got involved in something he should have realized was clearly illegal and deliberately turned a blind eye to the obvious problems with Bernadett’s and Drobot’s proposal.”

Subsequently, the court entered the following order: “it is the judgment of the Court that the defendant, Timothy James Hunt, is hereby committed on Count 1 of the 16-Count Indictment to the custody of the Bureau of Prisons for a term of twenty four (24) months.” Upon release he is to have supervised release for the term of three years. He is to report to the designated institution by November 12, 2019.

A deferred restitution hearing is set for December 20, 2019 at 11:30 a.m.

Researchers may have found a way to press pause on spinal disc injuries, giving doctors more time to treat them before worse issues develop.

The Penn Medicine-led team discovered that cells in the outer region of spinal discs become stressed and kick off a subpar healing process after injuries, which researchers then found can temporarily be blocked with drugs that calm the cells down. This study, conducted using specially engineered biomaterials and small animal models, was published in Nature Biomedical Engineering.

“This work sheds light on some of the challenges we are going to face in slowing disc degeneration and preventing back pain,” said Edward Bonnevie, PhD, a post-doctoral fellow in Penn Medicine’s McKay Orthopaedic Research Laboratory. “Most spine research focuses on the inner part of the disc, but our work highlights the fact that we need to treat the whole disc, and we believe doing so may lead to the identification of new targets for therapy.”

Discs in the spine are pressurized and structured similarly to water balloons, with water-attracting proteins in the inner portion restrained by an outer layer of fibrous tissue containing cells that are under a constant stretch. The discs are designed to cushion the vertebrae from directly and painfully contacting each other. Bonnevie, senior author Robert L. Mauck, PhD, a professor of Orthopaedic Surgery and director of the McKay Lab, and their fellow researchers decided to focus their research on the often overlooked outer region of the discs.

“We know that cells in the inner region undergo changes as a result of disc injury and degeneration, and researchers have tried to restore function to those cells,” Bonnevie said. “But you can think of that like trying to fill up a water balloon that already has holes — it isn’t a viable treatment option by itself.”

In biomaterials the researchers created to mimic tissue of the outer region of discs, they saw that when an injury like a slipped disc occurs and pressure is lost, the suddenly released tissue becomes disorganized. When this happens, they found in small animal models that it results in the generation of repair tissue that did not resemble the normal tissue, but instead had characteristics of scar tissue.

Additionally, they found that programmed cell death — known as apoptosis — occurs quickly, within 24 hours of the injury. This poses a challenge because, unlike other areas in the body, cells in the discs lack a blood supply and cannot easily repopulate with the new cells needed for regeneration.

With the discoveries of why disc cells respond the way they do upon pressure loss, the team found that using a biological inhibitor of cell contraction, such as fasudil, could effectively “relax” the cells from the shock of suddenly losing their typical stretched state. Once relaxed, the cells would delay their default healing response, which has the potential to buy doctors what is called a “therapeutic window” to intervene.

“These data show us that treating disc injuries very soon after injury is essential, before this transition in phenotype occurs and the scar tissue forms. This could be done using inhibitors like fasudil applied systemically, or potentially in combination with surgical implantation of biomaterials that are designed to restore the native tissue structure and function,” Mauck explained.

Existing law provides that certain peace officers, firefighters, and other specified state and local public employees are entitled to a leave of absence without loss of salary while disabled by injury or illness arising out of and in the course of employment.

The leave of absence, or “4850 time” is in lieu of temporary disability payments or maintenance allowance payments otherwise payable under the workers’ compensation system.

Assembly bill AB-346 would have added police officers employed by a school district, county office of education, or community college district to the list of public employees entitled to a leave of absence without loss of salary, in lieu of temporary disability payments, while disabled by injury or illness arising out of and in the course of employment.

Without passage of AB 346, if a local public agency wants to grant employees certain benefits of employment, it is able to accomplish that goal without need for a statutory change. In fact, the City of Los Angeles has provided “4850-like” benefits to a range of employees without need of a statute mandating the benefit for those employees. Thus some argued that the collective bargaining process, and not legislation, may be the better approach to enhancing the benefits of this class of employee.

According to the author, school peace officers face the same inherent dangers as other safety officers, and should receive the same benefits. In particular, the author notes that school district police officers employed by the Los Angeles Unified School District already receive this benefit. The author notes that in 2014, there were an estimated 700 peace officers employed by school districts and community college districts, and that 410 of these worked for Los Angeles Unified.

Thus, approximately 60% of school police officers already have this benefit.

The proposed law was widely supported by at least 13 organizations or pubic employee unions, and there was no organized opposition to the law.

The California Legislature sent Newsom 1,042 bills this year, with more than 70% of them landing on his desk in the state Capitol around the time that lawmakers adjourned last month.

When the dust settled on Sunday, the legal deadline to act, Newsom’s veto rate was looking as if it would be quite low until he rejected 68 of the 80 bills left to consider in the final hours this Sunday, including AB 346. Newsom said most of the bills he vetoed on Sunday were because of money concerns.

A licensed acupuncturist pleaded guilty to federal criminal charges and admitted fraudulently billing Amtrak’s health care plan for millions of dollars’ worth of acupuncture, massages and facials that either were medically unnecessary or were never provided.

Guiqiong Xiao Gudmundsen, 52, a.k.a. “Kimi” Gudmundsen, of Anaheim Hills, pleaded guilty to one count of health care fraud and one count of money laundering.

Gudmundsen owned Healthy Life Acupuncture Center, which operated in Riverside and in Los Angeles. From January 2008 until December 2015, Gudmundsen recruited Amtrak employees to visit Healthy Life and then, among other things, billed the Amtrak health care plan for acupuncture, which she knew wasn’t being provided, according to her plea agreement.

Gudmundsen also admitted to billing the health plan for medically unnecessary services such as massages and facials, as well as for work-related injuries she knew the Amtrak plan did not cover. She also provided medical services to non-Amtrak health care plan participants and then billed the plan for it under the name of an actual Amtrak plan participant, the plea agreement states. Gudmundsen admitted that she regularly waived co-payments, co-insurance, and deductibles for Amtrak health care plan participants, something the plan did not permit.

Gudmundsen also knowingly and routinely funneled her ill-gotten gains through bank accounts opened in the names of a shell company and her relatives, according to the plea agreement.

The government estimates the total loss to the Amtrak health plan to be at least $3.8 million.

United States District Judge Dolly M. Gee has scheduled a January 22 sentencing hearing, at which time Gudmundsen will face a statutory maximum sentence of 30 years in federal prison.

This matter was investigated by Amtrak Office of Inspector General, IRS Criminal Investigation, and the U.S. Department of Labor, Employee Benefits Security Administration. This case is being prosecuted by Assistant United States Attorneys Scott D. Dubois and Jenna Williams of the General Crimes Section.