Author: WorkCompAcademy

Insurer Travelers Companies Inc’s quarterly profit beat analysts’ estimates on Thursday, as improved underwriting and lower catastrophe losses offset a decline in net investment income, sending its shares to a more than one-year high. Shares of the Dow-component rose as much as 4.2 percent to $141.52, levels last seen in March 2018. The stock was also the second-biggest boost to the Dow Jones Industrial Index.

Travelers is considered a bellwether for the insurance industry. The company said net written premiums rose 3 percent to $7.06 billion in the first quarter, with growth across all business lines.

Investors were particularly focused on its commercial auto insurance business, which has been posting losses for several years as more plaintiffs lawyers jockey to represent accident victims.

However, Travelers raised premium rates for auto insurance in the first quarter, helping to contribute a 6 percent rise in gross written premiums in its insurance business. This also did not lead to a drop in renewal rates and retentions, business insurance head Gregory Toczydlowski said on a call with analysts.

The company on Thursday reported that catastrophe losses, net of reinsurance, fell by $161 million to $193 million after wildfires and hurricanes dented its earnings over the past two years.

The company reported a combined ratio of 93.7 percent, compared with 95.5 percent a year earlier. A ratio below 100 percent means the insurer earns more in premiums than it pays out in claims.

A weak spot in the quarter, however, was net investment income , which fell 3.5 percent to $582 million due to lower private equity returns after a slowdown in market activity in the first quarter.

Insurers typically invest money they get from premiums in bonds and equities to earn profits, and a downturn in markets spells bad news for them.

The company’s net income rose 19 percent to $796 million, or $2.99 per share, in the quarter ended March 31. Core income was $2.83 per share, which beat analysts’ estimates of $2.74 per share, according to IBES data from Refinitiv. Total revenue rose 5 percent to $7.67 billion.

Cal/OSHA has cited an agricultural employer and a farm labor contractor more than $100,000 combined in proposed penalties after a worker was fatally crushed by a bin dumper at a walnut processing and packing facility in Tehama County.

On October 6, 2018, forklift operators at Crain Walnut Shelling in Los Molinos were filling bins with walnuts, which were then dumped into a hopper for processing. A temporary worker for Cal North Farm Labor, Inc. was instructed to clean the area around the equipment. The worker was under an 800-pound bin dumper when it emptied its load and automatically lowered to the ground, crushing him.

Cal/OSHA’s investigation determined the employer did not evaluate workplace hazards and the worker did not receive safety training from Crain Walnut Shelling or Fresno-based Cal North Farm Labor, Inc. before being assigned to clean concrete and machinery at the walnut processing facility.

“Working near large moving parts of equipment and machinery can be deadly,” said Cal/OSHA Chief Juliann Sum. “Employers must identify and evaluate workplace hazards and unsafe conditions and provide effective training to employees before they begin a new job assignment.”

Investigators found that Crain Walnut Shelling failed to ensure that the walnut bin dumper they designed included proper machine guards or lockout/tagout procedures to protect workers who maintain the machinery. Crain also failed to provide an extension tool for cleaning the area, which would have significantly minimized potential crushing hazards. Cal/OSHA identified four serious violations and issued four citations with proposed penalties totaling $67,500.

Citations were also issued to Cal North Farm Labor, Inc. for their failure to ensure that workers are trained on hazards related to cleaning and servicing around the bin dumper.

Cal/OSHA issued two citations classified as serious with proposed penalties of $33,750. Failure to develop and follow steps to de-energize or block the use of equipment, otherwise known as lockout/tagout procedures, before cleaning or working on machinery can result in serious or fatal workplace injuries. Cal/OSHA offers an eTool to help employers comply with lockout/tagout regulations and develop an effective safety program.

Some 60 doctors, pharmacists and other licensed medical professionals in five states are being charged in connection with illegally prescribing more than 32 million pain pills, in some cases for sexual favors, federal prosecutors said Wednesday.

The people charged across 11 federal districts, include 31 doctors, seven pharmacists, eight nurse practitioners, and seven other licensed medical professionals, the Justice Department said. The cases involve more than 350,000 prescriptions for controlled substances across Ohio, Kentucky, Tennessee, Alabama, and West Virginia. The arrests were the latest effort to combat the nationwide opioid epidemic.

In one case filed in Tennessee, a nurse practitioner who branded himself the “Rock Doc,” allegedly prescribed powerful and dangerous combinations of opioids and benzodiazepines, sometimes in exchange for sexual favors; over approximately three years, the doctor allegedly prescribed approximately 500,000 hydrocodone pills, 300,000 oxycodone pills, 1,500 fentanyl patches, and more than 600,000 benzodiazepine pills.

In another case in Ohio, a doctor who is alleged to have been at one time the highest prescriber of controlled substances in the state, and several pharmacists are charged with operating an alleged “pill mill” in Dayton, Ohio. According to the indictment, between October 2015 and October 2017 alone, the pharmacy allegedly dispensed over 1.75 million pills.

A Kentucky dentist was charged for alleged conduct that included writing prescriptions for opioids that had no legitimate medical purpose and that were outside the usual course of professional practice, removing teeth unnecessarily, scheduling unnecessary follow-up appointments, and billing inappropriately for services.

In yet another case, a doctor was charged for allegedly prescribing opioids to Facebook friends who would come to his home to pick up prescriptions, and for signing prescriptions for other persons based on messenger requests to his office manager, who then allegedly delivered the signed prescriptions in exchange for cash.

In addition Attorney General Barr and U.S. Attorney Thomas T. Cullen announced that the Appalachian Regional Prescription Opioid (ARPO) Strike Force will expand into the Western District of Virginia, making it the tenth ARPO Strike Force district.

ARPO is a joint law enforcement effort that brings together the resources and expertise of the Health Care Fraud Unit in the Criminal Division’s Fraud Section (HCF Unit), the U.S. Attorney’s Offices for ten federal districts in six states, as well as law enforcement partners at the FBI, HHS Office of the Inspector General (HHS-OIG) and U.S. Drug Enforcement Administration (DEA).

In addition, HHS announced that since June 2018, it has excluded over 2,000 individuals from participation in Medicare, Medicaid and all other Federal health care programs, which includes more than 650 providers excluded for conduct related to opioid diversion and abuse.

Since July 2017, DEA has issued 31 immediate suspension orders, 129 orders to show cause, and received 1,386 surrenders for cause nationwide for violations of the Controlled Substances Act.

12 defendants taken into custody in August 2017 on federal drug trafficking charges that allege they diverted at least 2 million prescription pills – including oxycodone and other addictive and dangerous narcotics – to the black market. Two grand jury indictments claimed the activity took place through a series of sham Southern California clinics that periodically opened and closed in a “nomadic” style

Authorities have now announced that the ringleaders, two San Fernando Valley brothers have pleaded guilty to federal criminal charges, admitting that they conspired to distribute powerful narcotics such as hydrocodone and oxycodone via sham medical clinics that hired corrupt doctors who wrote fraudulent prescriptions to black market customers.

Minas Matosyan, a.k.a. “Maserati Mike,” 38, of Encino, and Hayk Matosyan, 32, of Granada Hills, each pleaded guilty on Monday to one count of conspiracy to distribute a controlled substance. United States District Judge Philip S. Gutierrez has scheduled a July 15 sentencing hearing for the brothers, each of whom faces a statutory maximum sentence of 20 years in federal prison.

The Matosyan brothers were arrested in August 2017 pursuant to a grand jury indictment that charged 12 defendants in a scheme to divert at least 2 million prescription pills for sale on the black market. A September 10 trial date has been scheduled for most of the remaining defendants.

According to his plea agreement, Minas Matosyan admitted to controlling the sham clinics and hiring corrupt doctors who allowed their names to be used on fraudulent prescriptions in exchange for kickbacks. Minas Matosyan also admitted to stealing the identities of other doctors and then issuing prescriptions in those doctors’ names, either by personally acquiring prescription pads in the doctors’ names or by arranging for other co-conspirators to do so. The elder Matosyan also admitted to staffing receptionists at the clinics who would falsely verify the phony prescriptions when pharmacists called to verify them.

Minas Matosyan sold narcotic prescriptions to black market customers – either directly or through couriers – and also sold bulk quantities of hydrocodone and oxycodone he had acquired from phony prescriptions filled at pharmacies by other customers.

In May 2016, Minas Matosyan spoke with a doctor and offered him a “very lucrative position” where the doctor would “sit home making $20,000 a month doing nothing,” according to the plea agreement. After the doctor declined the offer, Matosyan stole the doctor’s identity, sending a co-conspirator a text message containing the doctor’s full name, medical license number and national provider identifier number that the co-conspirator used to order prescription pads in the doctor’s name. Over the next two months, Matosyan and his co-conspirators sold fraudulent prescriptions purportedly issued by the victim doctor for at least 9,450 pills of oxycodone and 990 pills of hydrocodone, the plea agreement states.

Hayk Matosyan admitted in his plea agreement that he aided the conspiracy by serving as a courier of oxycodone or related proceeds from the sale of oxycodone.

The investigation in this case is being conducted by the Drug Enforcement Administration; Internal Revenue Service Criminal Investigation; the U.S. Department of Health and Human Services – Office of Inspector General; the Ventura County Sheriff’s Office, Pharmaceutical Crimes Unit; and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.

The primary investigative agencies received substantial assistance from the Los Angeles County Sheriff’s Department, the Los Angeles Police Department, the California Department of Justice, and the Orange Police Department.

This matter is being prosecuted by Assistant United States Attorney Benjamin Barron of the Organized Crime Drug Enforcement Task Force.

State Compensation Insurance Fund’s 2018 Annual Report is now available. Important financial highlights include:

— Net income of $187 million, up from $40 million the previous year.
— Earned net premiums of $1.3 billion.
— Combined ratio of 134.7 percent – about 15 points lower than the previous year of 149.4 percent.

A combined ratio of more than 100% means that an insurance company had more losses plus expenses than earned premiums and lost money on its operations. The combined ratio is essentially calculated by adding the loss ratio and expense ratio. The loss ratio is calculated by dividing the total incurred losses by the total collected insurance premiums. The lower the ratio, the more profitable the insurance company and vice versa.

By comparison, in 2015 the WCIRB reported a state wide combined ratio of below 100%, the first report below that level since 2007. By 2017 it reported a state wide combined ratio of 91%. Thus, by comparison the SCIF ratio of $134.7 percent is an expensive outlier.

State Fund’s premium slightly increased in 2018. The increase of premium was due to the net effect of the increase of premium audits, and the decreases in premium rates and policy counts.

State Fund had a $460 million underwriting loss in 2018 compared to a $658 million underwriting loss in prior year. The 2018 underwriting loss decreased due to an additional $217 million LAE reserves strengthening for prior accident years in 2017.

In 2018, net investment income and realized gain on sale of equity decreased by $46 million mainly due to the abnormally higher capital gains realized in 2017 as a result of the termination and portfolio liquidation of an equity portfolio manager.

The board of directors did not declare dividends for 2018 and 2017. State Fund realized a net income of $187 million and $40 million for years ended December 31, 2018 and 2017.

“State Fund’s financial position remained strong in 2018, allowing us to continue to deliver on our purpose – providing fairly priced workers’ compensation insurance, helping keep workplaces safe, and restoring injured workers,” said Vern Steiner, President and CEO.

In his president’s letter accompanying the financial report, Steiner also discusses how State Fund is driving improvements in a number of business areas including a new Innovation Design Center, an expanded workplace safety website, and enhanced online policy services.