Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: Medical Marijuana Ordered for NJ Claimant, DCA Affirms Fraud Conviction Restitution Order, Physician Indictments Snares So. Cal. QME, Corona QME Charged with Fraud – Keeps License, Last Pain Clinic Defendant Pleads Guilty, L.A. Times Expose Features LAPD Comp Fraud, LAPD Employee Sentenced for Fraud, WCAB Updates Subpoenas – Do You Need Them?, New Non-Opioid Pain Killer in Late Stage Trials, InsurTech Pilot Launches Farm Worker Program.
A new California Workers’ Compensation Institute (CWCI) analysis offers a preliminary look at Utilization Review (UR) and Independent Medical Review (IMR) outcomes involving pharmaceutical requests for California injured workers since the state implemented a workers’ comp formulary in January of this year,
In October 2015, Governor Brown signed AB 1124 mandating the adoption of an evidence-based formulary for medications prescribed to California injured workers and calling on the state Division of Workers’ Compensation to incorporate the formulary into its Medical Treatment Utilization Schedule (MTUS). The intent of the legislation was twofold: 1) to ensure that medications provided to injured workers meet evidence-based standards; and 2) to reduce delays and frictional costs associated with pharmaceutical UR and IMR.
The CWCI analysis uses data from 141,643 pharmaceutical requests and UR decisions from the first five months of 2017 and 2018, and 58,604 IMR decisions from the first four months of those same two years to measure and compare pre- and post-formulary UR and IMR prescription drug outcomes. Specifically, the study measures the pre- to post-formulary changes in:
– the percentage of Utilization Reviews and Independent Medical Reviews involving pharmaceutical requests;
– the mix of pharmaceutical UR decisions involving requests for drugs categorized by the formulary as Exempt, Non-Exempt, or Not Listed, and – – the UR approval, modification, and denial rates for each category;
– the mix and approval rates for pharmaceutical IMR decisions involving Exempt, Non-Exempt, and Not Listed drugs;
– the proportion of Exempt drugs co-prescribed with Non-Exempt or Not Listed drugs that were reviewed by UR and IMR; and
– the proportion of UR and IMR decisions involving opioid requests and the UR approval and IMR uphold rates for those requests.
The findings show that the proportion of UR decisions involving prescription drug requests fell from 44.5 percent in the pre-formulary period to 40.7 percent in the first five months of 2018, a relative decline of 8.5 percent.
At the same time, the percentage of UR decisions in which a prescription drug request was denied was unchanged at 14.6 percent, while 85.4 percent were either approved as submitted or approved with a modification.
UR decisions involving opioid requests showed little change, edging down from 30.6 percent in the pre-formulary period to 30.0 percent after the formulary took effect, though the UR approval rate for opioids showed a sharper decline, falling from 72.3 percent to 68.8 percent.
Meanwhile, the percentage of IMR decisions involving UR modifications or denials of opioids increased from 29.2 percent prior to the formulary’s implementation to 33.6 percent under the formulary, while the IMR uphold rate for opioid modifications or denials showed a modest increase, rising from 90.1 percent to 91.4 percent.
The Institute study represents only a preliminary look at pharmaceutical UR and IMR data from the first few months that system stakeholders were transitioning into the formulary.
More time is needed to identify changes in prescribing patterns and other aspects of the formulary regulations that could impact UR and IMR disputes, so CWCI will continue to monitor the results and take an expanded look at first-year formulary outcomes in a study scheduled for 2019. In the meantime,
CWCI has issued its initial analysis in a Spotlight Report, “Initial UR and IMR Prescription Drug Outcomes Under the California Workers’ Comp Formulary.”
Last Thursday, Merck & Co announced price cuts to some of its medicines, including a 60 percent reduction to a hepatitis C treatment, after President Trump criticized drugmakers for failing to help reduce healthcare costs for consumers.
Amid heightened political scrutiny over the high cost of prescription medicines and promises by Trump that drug price reductions were coming, New Jersey-based Merck became the first major drugmaker to announce voluntary price decreases.
And Reuters reports that in addition, Merck said it would lower the list price by 10 percent of six other older drugs with minuscule sales. It also said it would not increase the average net price of other medicines in its portfolio of products by more than the inflation rate annually.
Trump, who has vowed to help reduce the cost of prescription drugs to consumers, expressed anger at drugmakers over planned price hikes. In a tweet on July 9, he said they “should be ashamed” and that his administration would respond.
Under direct pressure from Trump, Pfizer Inc, the largest U.S. drugmaker, said it would delay July 1 price increases until the end of the year or until the president’s blueprint for lowering drug costs goes into effect.
Swiss drugmaker Novartis followed this week, saying it would not raise prices in the United States for the rest of the year.
Although Pfizer and Novartis only promised delays to price hikes, Trump said they decided to not increase prices. He has not yet commented on Merck’s announcement.
“This decision (by Merck) is a response to President Trump’s blueprint and reflects the industry’s understanding that the President is serious about bringing change to our drug markets,” U.S. Health and Human Services Secretary Alex Azar said in a statement.
Trump made lowering prescription drug prices a top 2016 presidential campaign issue.
In May, he unveiled a “blueprint” to lower drug prices that appeared to largely spare drugmakers and instead took aim at “middlemen,” such as health insurers and pharmacy benefits managers, which demand hefty rebates in exchange for broad access to patients.
The cost of healthcare is expected to be a major campaign issue ahead of November midterm elections, with control of the House of Representatives and the Senate.
It is at least the second time a workers’ compensation judge in New Jersey has ruled in favor of a petitioner asking his employer to foot the bill for medical marijuana.
The New Jersey Law Journal reports that a workers’ compensation judge has ordered a New Jersey municipality to pay for an injured worker’s medical marijuana, brushing aside an insurance carrier’s objections stemming from the drug’s status as a controlled substance under federal law.
It is at least the second time a workers’ compensation judge in New Jersey has ruled in favor of a worker asking his employer to foot the bill for medical marijuana. But for insurance companies who write workers’ compensation policies for employers reluctant to jump on the cannabis bandwagon, concerns over the disparity between state and federal law remains.
Workers’ Compensation Judge Lionel Simon ruled on June 28 that Freehold Township must pay for medical marijuana for Steven McNeary, who suffers from muscular spasticity, according to documents. The ruling was first reported in the blog of open government activist John Paff.
A lawyer for carrier PMA Group argued that New Jersey’s medical marijuana law is pre-empted by federal law designating it as illegal, and also cited a recent ruling from the Maine Supreme Court holding that an insurance carrier can’t be ordered to pay for marijuana when it is prohibited under federal law.
Lawyers for PMA Group and for another carrier in the Freehold case, Qual-Lynx, aren’t saying whether they’ll appeal.
Simon’s ruling in McNeary v. Township of Freehold is at least the second in which a workers’ compensation judge in New Jersey ordered an employer to pick up the bill for medical marijuana use by an injured worker. In December 2016, Judge Ingrid French ordered the carrier for 84 Lumber to pay for medical marijuana used by Andrew Watson, who suffered a hand injury on the job. The insurance carrier for 84 Lumber did not appeal that ruling, said Philip Faccenda, the Cherry Hill attorney who represented petitioner Andrew Watson.
In the Freehold case, Simon declined to follow the Maine court’s June 14 ruling in Bourgoin v. Twin Rivers Paper. In that case, citing the conflict between Maine’s medical marijuana law and the federal Controlled Substances Act, the court overruled a lower court that ordered a carrier to pay for marijuana for an injured worker.
The Maine ruling discusses at length the penalties an employer and insurance company could face for violating the Controlled Substances Act, and workers’ comp underwriters are “going to take note and take it into account when they’re making policy decisions,” Kutner said.
The judge in the Freehold case said that both state and federal drug laws were intended to curb the distribution and use of illicit drugs and curtail drug-related crime.
“I don’t think the New Jersey Medical Marijuana Act is in conflict with that. Certainly I don’t understand how a carrier who will never possess, never distribute, never intend to distribute these products, who will merely sign a check into an attorney’s trust account, is in any way complicit with the distribution of illegal narcotics,” he said, according to a transcript. “What else is important to note here is in this, Mr. McNeary’s case, there is a documented medical need and the concern is that Mr. McNeary is going to become addicted to opioids.”
What is InsurTech?
In an over-simplified world, many see InsurTech as being the technology behind insurance. In the real world, however, InsurTech is a term applied to the many segments of new technology that are disrupting the insurance space: smartphone apps, consumer activity wearables, claim acceleration tools, individual consumer risk development systems, online policy handling, automated compliance processing, and more.
InsurTech is not just an increase in the way that technology is disrupting the insurance industry, but is also changing consumer expectations and demands. Take for example the way that Uber has changed consumer travel preferences and demands, while uprooting a well established and once thriving industry.
Last February, InsurTech startup ChronWell raised $4.5 million in a Series A funding round which the company said “will be used to fund the first phase of the company’s platform which covers triage, on-site care, care coordination and personalized assistance service.”
The Fort Lauderdale based company has now launched a pilot program in California which is aimed to disrupt the state’s workers’ compensation system with technology-enabled triage and care coordination services.
The mobile platform for workers’ compensation will be used by California Farm Management (CFM) to help injured farm workers in the state.
CFM started in August of 2005 to serve the farming community throughout California. It is a collective of farmers who have pooled their resources to successfully self-insure. The CFM collective provides workers’ compensation coverage to approximately 90,000 employees.
ChronWell’s application is being deployed with one of CFM’s largest employers, Cream of the Crop Companies, which employs 5,000 to 7,000 workers, depending on the season. The pilot program will use ChronWell’s Recovry solution, which addresses on-site injuries and direct care for the best results.
“Our mission is to bring empathy back into healthcare and help injured workers recover faster by providing transparent, patient-centric services,” said ChronWell CEO Joe Rubinsztain. “Partnering with SIS for our pilot program is a perfect fit. Self-insured groups can truly benefit from innovative solutions that optimize recovery for injured workers.”
ChronWell’s AI-powered platform covers triage, on-site care, care coordination and personalized assistance service. If an employee gets injured on the job, they can go to the ChronWell platform and consult with a healthcare professional who, backed by AI, will determine the best course of action by recommending self-care, on-site care or a healthcare facility. The service also provides follow-ups with the worker and manages the claim.
“The workers’ compensation system is broken,” according to Rubinsztain, who said a complex healthcare system, overloaded claims adjusters, legacy technology systems, stringent bureaucratic requirements and mountains of paperwork are just some of the issues compounding to slow claimant service, which triggers poor customer satisfaction and a high litigation rate.
The Workers’ Compensation Appeals Board has approved new and updated subpoena forms.The fillable forms are posted on the DWC website and will also be made available at the district offices.
There are two types of subpoenas. The first, called subpoena, compels a person to testify before a court, or other legal authority.
The second, called subpoena duces tecum (pronounced “doo-seez tee-kum”), requires a person to produce documents, materials, or other tangible evidence. A subpoena may be requested in any kind of litigation. But these new subpoenas are to direct the appearance of persons or the production of documents or other tangible things before the Workers’ Compensation Appeals Board.
Subpoenas can also be used to compel the attendance of a witness or the production of documents at a deposition.
There is now a new form for a Subpoena (DWC WCAB 30), as well as a new form for a Subpoena Duces Tecum (DWC WCAB 32)
Both a subpoena and a subpoena duces tecum require personal service of the subpoena on the witness. Service of a subpoena should be accomplished by a registered process server, or peace officer. There are alternatives such as when the witness agrees to accept the subpoena in some other way, or to voluntarily appear and produce.
Service of subpoenas may be costly and time consuming.
An alternative to actually physically serving a subpoena on a party, is a process known as a “Notice to Appear” or “Notice to Produce.”
One of the WCAB Rules of Practice and Procedure (California Code of Regulations, Title 8, Section 10532) states that “A notice to appear or produce in accordance with Code of Civil Procedure Section 1987 is permissible in proceedings before the Workers’ Compensation Appeals Board.”
CCP Section 1987 then specifies that service of a subpoena on “a party to the record of any civil action or proceeding or of a person for whose immediate benefit an action or proceeding is prosecuted or defended or of anyone who is an officer, director, or managing agent of any such party or person,” is not required if you use a Notice to Appear more than 10 days before appearance is required. And documents can be required by way of a Notice to Produce if served more than 20 days before required.” However a Notice to Appear and Produce cannot be used on a non-party. Non-parties must always be served with a subpoena.
There are other requirements specified in CCP Section 1987 that must be carefully followed to use this alternative.
An experimental osteoarthritis drug developed by Pfizer Inc and Eli Lilly and Co achieved its main goal of lowering pain in a late stage trial, the companies said on Wednesday, potentially offering a safer alternative to opioids.
The experimental drug tanezumab is undergoing clinical trials for the treatment of various pain entities, including chronic low back pain, bone cancer pain, and interstitial cystitis. Tanezumab is part of an investigational class of pain medications known as nerve growth factor (NGF) inhibitors.
Tanezumab works by selectively targeting, binding to and inhibiting NGF. NGF levels increase in the body as a result of injury, inflammation or in chronic pain states.
By inhibiting NGF, tanezumab may help to keep pain signals produced by muscles, skin and organs from reaching the spinal cord and brain.
Tanezumab has a novel mechanism that acts in a different manner than opioids and other analgesics, including nonsteroidal anti-inflammatory drugs (NSAIDs), and in studies to date tanezumab has not demonstrated a risk of addiction, misuse or dependence.
The study demonstrated that patients who received two doses of tanezumab separated by eight weeks experienced a statistically significant improvement in pain, physical function and the patients’ overall assessment of their OA, compared to those receiving placebo.
“There is a substantial need for innovative new treatment options for osteoarthritis, as many patients are unable to find relief with currently available medicines and continue to suffer,” said Ken Verburg, tanezumab development team leader, Pfizer Global Product Development.
“We are encouraged by these results, which speak to the potential of tanezumab as a non-opioid treatment option for pain reduction and improvement in physical function in people living with osteoarthritis pain.”
Preliminary safety data showed that tanezumab was generally well tolerated, with approximately 1% of patients discontinuing treatment due to adverse events. Rapidly progressive osteoarthritis was observed in tanezumab-treated patients at a frequency of less than 1.5%, and was not observed in the placebo arm. There were no events of osteonecrosis observed in the trial. No new safety signals were identified.
In June 2017, Pfizer and Lilly announced that the U.S. Food and Drug Administration (FDA) granted Fast Track designation for tanezumab for the treatment of OA pain and CLBP.
Tanezumab is the first NGF inhibitor to receive Fast Track designation, a process designed to facilitate the development and expedite the review of new therapies that treat serious conditions and fill unmet medical needs.
Two local physicians were indicted by a federal Grand Jury as part of Operation “Spinal Cap,” which targeted a long-running health care fraud scheme that generated nearly $1 billion in fraudulent claims to the federal government, the state of California, and private insurers.
The scheme involved more than $40 million in illegal kickbacks paid to doctors and other medical professionals in exchange for referring thousands of patients who received surgeries and other services at Pacific Hospital.
Jacob Tauber, 66, of Beverly Hills, an orthopedic surgeon, and Serge Obukhoff, 62, of Malibu, a neurosurgeon, were charged for their roles in receiving illegal kickbacks to influence the referral of patients to Pacific Hospital. The indictment also includes honest services fraud and Travel Act charges against both Tauber and Obukhoff.
Tauber is currently listed by the DWC Medical Unit as a QME with offices in Beverly Hills, Glendale and Palm Desert. He is listed as a QME in the category of “Spine’ as well as “Orthopedic Surgery.”
According to the 65 page indictment, Tauber performed non-spinal surgeries and referred patients to other surgeons for procedures at Pacific Hospital of Long Beach. Obukhoff practiced out of various medical clinics in Southern California. Influenced by the promise of kickbacks and bribes, Tauber and Obukhoff caused patients with insurance or other covered claims to receive surgeries and services at Pacific Hospital.
The kickbacks involved Philip Sobol M.D. According to the indictment “Sobol would receive remuneration to induce his referral of patients potentially requiring surgery (“Sobol Referrals”) to a “stable” of doctors, including, from at least 2009, defendant TAUBER, and from at least in or about June 2011 to in or about May 2012, defendant OBUKHOFF, who would both know of Sobol’s kickback arrangement with Pacific Hospital, and who would facilitate that arrangement by performing surgery on Sobol Referrals at Pacific Hospital. The illegal kickback and bribe payments would be provided to Sobol under the guise of pharmacy and option agreements.”
In the same indictment, Tauber was separately charged with receiving illicit payments to refer urinalysis specimens to a specific lab. According to the indictment “Advanced Practice Serv1ces, Inc., doing business as Advance Pharmacy Services (“APS”), was a “marketing” entity owned and controlled by Drobot Jr. that steered ancillary service referrals, purchases, and orders involving magnetic resonance imaging (“MRis”), toxicology testing, and durable medical equipment (“DME”) to business affiliates that paid APS for generating such business.”
The case is being investigated by the United States Postal Service, Office of the Inspector General and the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorneys Ashwin Janakiram of the Major Frauds Section and Joseph T. McNally and Scott D. Tenley of the Santa Ana Branch Office.
Cynthia Ann Smith owned and operated a flower shop in Menlo Park.
In 2015, a multi-agency task force investigated Smith’s business, which revealed she failed to pay correct workers’ compensation insurance premiums and related payroll taxes over the course of several years.
Pursuant to a negotiated disposition, Smith pled no contest to count 1 workers’ compensation fraud (Ins. Code, § 11760, subd. (a) and count 14. failure to collect, account, or pay over required tax amounts.
Under the terms of the plea agreement it was agreed she would not be sentenced to state prison; she would be granted probation with a maximum of 90 days to be served in county jail; all other counts and allegations would be dismissed; the amount of restitution would be reserved and determined by the court subject to a Harvey waiver; and the court would consider reducing felony counts 1 and 14 to misdemeanors (Pen. Code, § 17) and terminating probation upon full payment of restitution.
At sentencing, the trial court suspended imposition of sentence, placed Smith on formal probation for five years, with terms and conditions including 90 days in county jail and imposition of statutory fines and fees. Smith objected to the restitution report and requested a restitution hearing.
At the hearing, Smith stipulated to restitution amounts awarded to the California Employment Development Department ($41,187 plus interest); to FTD Company ($61,783 plus interest); and to State Farm Insurance Company ($12,998 plus interest) Smith contested amounts claimed by James Waldschmidt. Waldschmidt asserted a restitution claim for over $100,000.
Waldschmidt testified at the restitution hearing that he met Smith in a bar in San Carlos in 2014. She offered him a place to live at her home in Menlo Park, a full-time job as a driver, and a rate of pay starting at $10 per hour. Waldschmidt totaled his work hours weekly and gave Smith a copy of the wage statement. He was never paid and claimed $45,000 for unpaid work and overtime.
The court ordered Smith to pay Waldschmidt $15,000 in restitution for unpaid wages including overtime hours, less an offset of $800 in unpaid rent, for a total of $14,200 plus interest. Smith appealed the restitution order. The Court of Appeal affirmed in the unpublished case of People v Cynthia Ann Smith.
A court may use any rational method of fixing the amount of restitution which is reasonably calculated to make the victim whole and which is consistent with the purpose of rehabilitation. (In re Brian S. (1982) 130 Cal.App.3d 523, 527.) Even though the amount was contested, the record does not indicate the court awarded anything in excess of the victim’s actual economic losses. (People v. Smith (2011) 198 Cal.App.4th 415, 431 [except under Pen. Code, § 1202.4, subd. (f)(3)(F), “restitution orders are limited to the victim’s economic damages”].) Smith fails to raise an arguable issue.
A Corona physician pleaded not guilty to charges of felony workers’ compensation insurance fraud and perjury, and can continue to practice medicine while his case proceeds.
Dr. Sanjoy Banerjee, 42, entered the pleas Monday in Riverside County Superior Court. Banerjee is free on bond. His next court date is Aug. 16.
Along with the arraignment, a judge turned down a request from the California Medical Board to keep Banerjee from practicing medicine until his case is resolved.
“His alleged conduct is not only unprofessional, but also dangerous, and evinces poor character, a lack of integrity, and and inability or unwillingness to follow the law,” the state’s recommendation to suspend Banerjee’s practice said.
The physician’s attorney countered that the state Medical Board had “failed to meet (the) basic threshold of showing a logical connection ” between the allegations of insurance fraud and perjury and Dr. Banerjee’s fitness or competence to practice medicine.”
The Riverside District Attorney’s Office has charged the QME May 29, 2018, with two counts of workers’ compensation insurance fraud and five counts of perjury.
Banerjee claims on his website that he is the Founder and Medical Director of Pacific Pain Care.
An investigation conducted by the DA’s Bureau of Investigation found that from November 2014 through December 2016, Banerjee, a Wildomar- and Corona-based workers’ compensation pain management doctor, allegedly illegally self-referred workers’ compensation patients to a clinical laboratory and an office-based surgical center he owned.
Through that laboratory and surgical center, Dr. Banerjee allegedly billed more than $180,000 for urine toxicology testing and/or epidural injections.
Dr. Banerjee also reportedly signed at least five doctor’s reports declaring under penalty of perjury he had not referred patients to his own companies. The investigation revealed that Dr. Banerjee referred some of his workers’ compensation patients to his business, Rochester Imperial Surgical Center, which was located in a patient exam room inside the Pacific Pain Care office suite in Wildomar.
The case, RIF1802535 is being prosecuted by Deputy DA Kristen Allison of the DA’s Insurance Fraud Team.