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Landscaper Pleads Guilty to Double Dipping

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The Ventura County District Attorney’s Office reports that a Santa Paula man pleaded guilty to defrauding Pacific Compensation Insurance, his employer’s workers’ compensation carrier.

Jose Alvizo-Rodriguez (DOB 6/2/71) pled guilty to one count of violating Insurance Code section 1871.4(a), felony workers’ compensation insurance fraud.

Alvizo-Rodriguez was employed at Daley Landscaping in Ojai. On July 2, 2016, he reported an on-the-job injury to his employer.

He was sent to a doctor who placed him off work on temporary total disability (TTD). Daley Landscaping’s insurer, Pacific Compensation Insurance, was required to pay Alvizo-Rodriguez two-thirds of his salary while he was off work receiving medical treatment for his injury.

In August 2016, Alvizo-Rodriguez began working for Coastal Farm Labor Service in Oxnard.

He never told his new employer he was on TTD. In addition, he failed to report to Daley Landscaping and Pacific Compensation that he was back at work full time earning income.

Each TTD check he received contained a warning in both Spanish and English directing him to report any income, and that failure to do so could result in criminal prosecution.

Alvizo-Rodriguez will be sentenced on July 19, 2018, at 9:00 a.m., in courtroom 12 of the Ventura Superior Court, County of Ventura. He faces a maximum sentence of up to five years in jail and a fine of $150,000.

This case was the result of an investigation by the District Attorney’s Bureau of Investigation.

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No Homeowner Liability for Construction Workers’ Death

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Bhupinder Kalkat hired JKD Construction as the framing contractor for the construction of his large house in Live Oak California. The contract provided that JKD was responsible for compliance with all Cal-OSHA requirements for safety and fall protection. The contract also required JKD to carry current workers’ compensation and liability insurance.

Amador Gudino was an employee of JKD and worked on the framing of Kalkat’s house. On October 18, 2012, he fell to death while working on a second story balcony. A Cal-OSHA investigation determined the framing work was conducted without adequate fall protection. Cal-OSHA found several violations, most relating to the absence of fall protection.

Gudino’s survivors and heirs, his wife and three children, received workers’ compensation benefits. The heirs alleged entitlement to increased benefits due to JKD’s serious and willful misconduct. The matter was resolved by a compromise and release.

The heirs brought suit against Kalkat and others. The complaint alleged negligent exercise of retained control, negligent provision of required safeguards and precautions, negligent provision of unsafe equipment, negligent selection of contractor, and breach of a non-delegable duty.

Kalkat moved for summary judgment, contending workers’ compensation was the heirs’ exclusive remedy. Kalkat argued that under Privette v. Superior Court (1993) 5 Cal.4th 689 he had no liability as the hirer of an independent contractor.

The heirs argued that under McKown v. Wal-Mart Stores, Inc. (2002) 27 Cal.4th 219 (McKown) a hirer of an independent contractor was liable for furnishing unsafe or defective equipment and that was what happened here. Further, Kalkat knew there were inadequate fall protections but failed to provide adequate alternatives. He provided a forklift that he knew had defective brakes. The heirs argued this evidence supported the inference that Kalkat’s actions were unreasonable and negligent.

The trial court granted the motion for summary judgment, finding no evidence the forklift contributed to the accident. The court entered judgment for Kalkat. The judgment was affirmed in the unpublished case of Gudino v. Kalkat.

On appeal, the heirs contend Privette does not control because Kalkat furnished unsafe equipment–a forklift with defective brakes–that affirmatively contributed to Gudino’s death. They further contend there is a triable issue of fact as to whether Kalkat retained control over safety conditions at the job site and negligently exercised that control.

After a review of the law and evidence, the Court of Appeal ruled that the heirs failed to raise a triable issue of fact to bring this case within an exception to the limits on liability explained by Privette.

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Fraud Rings Infect Rural Hospitals

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Last February Anthem Blue Cross sent a letter to Sonoma West Medical Center and Palm Drive Healthcare District, demanding repayment and threatening legal action. According to Anthem, the hospital “appears to have conspired with several third parties to fabricate or misrepresent claims for toxicology testing services that were improperly billed to Anthem.”

According to Anthem, the fraudulent billing began after the hospital partnered with Durall Capital Holdings, a Florida company, and Durall’s testing laboratory, Reliance Laboratory Testing. In exchange for more than $2 million, the cash-strapped hospital agreed to conduct toxicology testing for Durall.

Sonoma West denied that they did anything wrong. However they discontinued the practice nonetheless. The Palm Drive Health Care District is now seeking bids for the purchase of its Sebastopol hospital, a move brought on by ongoing financial struggles and debt,. Alanna Brogan, executive director of the district, said the need to sell the hospital became clear after the hospital’s lucrative but controversial lab services were suspended.

The Sonoma West story may be just the tip of a large iceberg of fraud rings that infect rural hospitals.

In March, CBS News investigated questionable billing at rural hospitals in Georgia and Florida. It found that some rural hospitals have become hugely profitable because insurance providers reimburse them at much higher rates. These out-of-the-way hospitals have become gold mines for enterprising health care executives looking for a way to quietly make a quick buck.

Records showed the money was being paid out for drug screens – toxicology tests on urine samples collected from all over the country. Some of the testing was conducted at Durall’s lab, Reliance, in Sunrise, Florida, but everything was billed through Chestatee Regional Hospital, a 49-bed hospital, has been operating for more than 40 years in rural north Georgia. As a rural hospital, it can bill at a higher rate than other facilities.

Documents show Durall’s lab made $67 million billing tests through another rural hospital in Graceville, Florida. A similar deal Durall made with Sonoma West Medical Center in northern California has generated more than $31 million in the last eight months. Last year, Durall bought two more rural hospitals in Georgia and Alabama.

CBS News now reports that in 2016, Missouri state auditor Nicole Galloway began examining the finances of several rural hospitals in her state. One was Putnam County Memorial, a 15-bed hospital in Unionville, Missouri, struggling to keep its doors open.

Her team discovered a management company called Hospital Partners had swooped in weeks before Putnam was about to close, promising to turn it around. They made deals with labs around the country to funnel billing for blood tests and drug screens through Putnam, which collects higher reimbursement rates as a rural hospital. Putnam kept about 15 percent; most of the money was wired back to the labs and the management company.

“Essentially the hospital appeared to act as a shell company for these questionable lab billings,” Galloway explained. “In a six-month period, the hospital funneled through about $92 million in revenues. To put that in perspective, the previous year their total revenues were $7.5 million.”

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Supreme Court Sides With Employers on Arbitration Agreements

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In an important 5-4 decision, the U.S. Supreme Court held, for the first time, that class or collective action waivers, particularly in wage/hour cases, and contained in arbitration agreements between employers and employees are valid and enforceable. Companies can use arbitration clauses in employment contracts to prohibit workers from banding together to take legal action over workplace issues. The vote was 5 to 4, with the court’s more conservative justices in the majority.

The court’s decision in Epic Systems Corp v Lewis could affect some 25 million employment contracts.

In each of these cases, an employer and employee entered into a contract providing for individualized arbitration proceedings to resolve employment disputes between the parties.

Each employee nonetheless sought to litigate Fair Labor Standards Act and related state law claims through class or collective actions in federal court. Although the Federal Arbitration Act generally requires courts to enforce arbitration agreements as written, the employees argued that its “saving clause” removes this obligation if an arbitration agreement violates some other federal law and that, by requiring individualized proceedings. They claim the agreements in these cases violated the National Labor Relations Act.

The employers countered that the Arbitration Act protects agreements requiring arbitration from judicial interference and that neither the saving clause nor the NLRA demands a different conclusion.

Until recently, courts as well as the National Labor Relations Board’s general counsel agreed that such arbitration agreements are enforceable. In 2012, however, the Board ruled that the NLRA effectively nullifies the Arbitration Act in cases like these, and since then other courts have either agreed with or deferred to the Board’s position.

The U.S. Supreme Court sided with the employers. “Congress has instructed in the Arbitration Act that arbitration agreements providing for individualized proceedings must be enforced, and neither the Arbitration Act’s saving clause nor the NLRA suggests otherwise.”

Writing for the majority, Justice Neil M. Gorsuch said the court’s conclusion was dictated by a federal law favoring arbitration and the court’s precedents. If workers were allowed to band together to press their claims, he wrote, “the virtues Congress originally saw in arbitration, its speed and simplicity and inexpensiveness, would be shorn away and arbitration would wind up looking like the litigation it was meant to displace.”

Justice Ruth Bader Ginsburg read her dissent from the bench, a sign of profound disagreement. In her written dissent, she called the majority opinion “egregiously wrong.” In her oral statement, she said the upshot of the decision “will be huge under-enforcement of federal and state statutes designed to advance the well being of vulnerable workers.”

Because wage and hour class and collective actions are quite costly for employers to defend against, this decision should cause employers in Connecticut (and nationwide) to re-evaluate their employment relationships with employees and consider enacting wide-ranging arbitration agreements that include class-action and collective action waivers.

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Cal Supreme Court Sets Hearing in CompPartners Case

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Two years ago the Court of Appeal opened the Pandora’s box of potential litigation against utilization review physicians in the published case of Kirk King v Comppartners, Inc. The California Supreme Court granted a Petition to Review the case, potentially leading to an end to this litigation expansion nightmare.

Oral argument in the case is now set for Tuesday, May 29, 2018, at 9:00 AM in the San Francisco Supreme Court.

Kirk King suffered anxiety and depression due to chronic back pain resulting from the back injury at work in 2008. In 2011, he was prescribed an anti-anxiety medication known as Klonopin to be provided through Workers’ Compensation. The request for this medication was sent to UR.

Naresh Sharma, M.D, an anesthesiologist who conducted the utilization review determined the drug was unnecessary and decertified it. As a result, Kirk was required to immediately cease taking the Klonopin. Typically, a person withdraws from Klonopin gradually by slowly reducing the dosage. Due to the sudden cessation of Klonopin, King suffered four seizures, resulting in additional physical injuries.

In September 2013 another request for Klonopin was made by the PTP. Ali, a psychiatrist, conducted a second utilization review and also determined Klonopin was medically unnecessary. Neither Sharma nor Ali examined Kirk in-person, and neither warned Kirk of the dangers of an abrupt withdrawal from Klonopin. Sharma and Ali were employees of CompPartners a Workers’ Compensation utilization review company.

King then sued CompPartners, Inc. and Sharma for (1) professional negligence; (2) negligence; (3) intentional infliction of emotional distress; and (4) negligent infliction of emotional distress. Kirk’s wife, Sara King, sued for loss of consortium. The trial court sustained defendants’ demurrer without leave to amend. The Court of Appeal sustained the demurrer but reversed the denial of leave to amend.

CompPartners contended the Labor Code set forth a procedure for objecting to a utilization review decision, and that procedure preempted the Kings’ complaint. The Kings contend the trial court erred in sustaining the demurrer because their causes of action are not preempted by the Workers Compensation Act.

The Court of Appeal said that “To the extent the Kings are faulting Sharma for not communicating a warning to Kirk, their claims are not preempted by the WCA because that warning would be beyond the “medical necessity” determination made by Sharma. To the extent the Kings are faulting Sharma for incorrectly deciding the medical necessity decision because Klonopin was medically necessary until Kirk was weaned, and thus a particular number of pills, e.g., 10, 20, should have been authorized for weaning, the Kings’ claims are preempted by the WCA because the Kings are directly challenging Sharma’s medical necessity determination.”

The decision concluded that the trial court “should have granted the Kings leave to amend because it is possible… that, when more details are provided they could support a conclusion that, under the circumstances, the scope of Sharma’s duty included some form of warning Kirk of or protecting Kirk from the risk of seizures.”

The King case will be the workers’ compensation high profile case until resolved by the California Supreme Court. The list of Amicus parties already includes many stakeholder organizations such as the California Workers’ Compensation Institute, the California Chamber of Commerce, the California Applicant’s Attorneys Association and more. Workers’ compensation UR and IMR seems to be constantly under attack. The King case provided another opportunity to open the floodgates of litigation against employers, and vendors in the compensation echosphere.

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Riverside Chiropractor Arrested

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A Riverside chiropractor was charged by the Riverside County DA’s Office with 47 felony counts related to an insurance fraud and kickback scheme.

Curtis Wayne Montgomery, DOB: 6-1-58, of Riverside, has been charged with three counts of insurance fraud, 28 counts of receiving commission for referring clients, and 16 counts of money laundering.The charged crimes are alleged to have happened from 2011 through 2016.

Montgomery was arrested on May 11, 2018. He posted bail and was released from custody that same day. When he was released on bail, Montgomery was given a court date for arraignment of July 16, 2018.

In March of this year, Riverside County DA’s investigators learned that more than $300,000 in payments had been made from Montgomery to a company called Providence Scheduling, which was designed to field phone calls from injured workers and then funnel those people to doctors and chiropractors throughout California.

The two men who owned and operated Providence Scheduling, Carlos Arguello and Fermin Iglesias, have already entered guilty pleas to federal charges. Arguello and Iglesias required medical providers refer a certain number of patients to outside companies for medical equipment, imaging, and other treatments.

However, the two men owned these outside companies and therefore were able to bill insurance companies for services. If doctors and chiropractors failed to refer enough patients to these outside companies, the two men would stop or slow the number of patients they would refer to the medical providers which then could incentivize the providers financially to refer patients for unnecessary or ineffective treatments.

The case against Montgomery is the result of Operation Backlash, an extensive FBI-led undercover investigation that revealed a widespread workers’ compensation kickback scheme, including attorneys, doctors and medical providers who referred patients for health services in exchange for money. The Operation was first announced in November 2015 when the initial round of federal indictments was handed down.

San Diego chiropractor Steven J. Rigler and San Diego workers’ compensation attorney Sean O’Keefe previously pleaded guilty to federal charges.

Las year, the U.S. Attorney’s Office announced federal indictments against patient recruiters, Fermin Iglesias, Carlos Arguello, Miguel Morales and four corporations. The corporations are Providence Scheduling, Inc., Medex Solutions, Inc., Prime Holdings International, Inc. and Meridian Medical Resources, Inc., doing business as Meridian Rehab Care.

The three federal defendants were accused of recruiting individuals to file workers’ compensation claims resulting from an on-the-job injury. The defendants then directed these patients to specific chiropractors who, in exchange for dozens of new workers’ compensation patients each month, agreed to meet a quota set by the defendants for referrals of the new patients for ancillary goods and services such as MRIs and durable medical equipment from specific providers.

According to the indictment, Providence Scheduling oversaw the scheduling of applicants recruited by defendant Arguello and others, and their assignment to a primary treating physician, which included chiropractors. Defendants Iglesias and Arguello decided which physicians were eligible to receive applicants from defendant Providence Scheduling.

Prosecutors claim the purpose of the conspiracy was to fraudulently obtain money from insurers by submitting claims for ancillary procedures and DME that were secured through a pattern of bribes and kickbacks in the form of an illegal cross-referral scheme in exchange for the referral of patients to particular providers of ancillary procedures.

Near the end of March, 2017, Providence Scheduling entered into a Plea Agreement to plead guilty.

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Three Running for California Insurance Commissioner

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The June 5 primary election features Democrats Dr. Asif Mahmood and Sen. Ricardo Lara against former commissioner Steve Poizner for the position of the head of the California Department of Insurance.

Early primary voting starts Monday and the top two finishers will advance to November’s general election.

The position is one that gets little attention, but has a broad impact on Californians. The insurance commissioner runs an office with 1,400 employees and a budget of $250 million. The Department of Insurance enforces insurance laws, licenses and regulates companies, and investigates fraud.

Poizner, 61, a wealthy Silicon Valley entrepreneur, actually held the job previously. He served one term as a Republican and then spent $25 million of his fortune in an unsuccessful run for governor in 2010. He hopes voters remember his four years as commissioner and are willing to vote for an independent for an office that he said should be free of politics.

His priorities for the office are to: ensure homeowners are adequately insured against devastating wildfires and other natural disasters, crack down on health insurance fraud and help companies develop better insurance policies against cybercrime.

“If I can get a robust cyber insurance market rolling in California, then it will not only help protect businesses in terms of a huge financial liability, but insurance companies will also help enforce better cyber hygiene in order to clean up the security of their computer networks,” he said. “That’s a really big deal.”

Mahmood, 57, who grew up in rural Pakistan, is a political neophyte who initially was running for lieutenant governor and then decided insurance commissioner was a better fit with his medical experience.

Although the commissioner has much less sway over health insurance, which is largely regulated by other departments, Mahmood is making health care his top priority. He wants to preserve the Affordable Care Act, supports government-run health care for everyone, better mental health care and better disaster preparation.

Lara, 43, who has unsuccessfully pushed for state-run health insurance for Californians, is positioning himself as a counterweight to President Donald Trump and his campaign website said he will put consumers ahead of “corporations, the billionaire class, the pharmaceutical or the insurance companies.”

Lara won the Democratic Party endorsement and has support from many unions and prominent party lawmakers.

By the third week in April, Mahmood was leading in campaign donations. He had raised over $1 million during the year and had about $900,000 remaining. Poizner had pulled in just under $500,000 and had about $400,000 left. Lara, who got $625,000 since Jan. 1, had just over $175,000.

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FDA Approves First Non-Opioid – for Opioid Withdrawal

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The U.S. Food and Drug Administration approved Lucemyra for the mitigation of withdrawal symptoms to facilitate abrupt discontinuation of opioids in adults.

While Lucemyra may lessen the severity of withdrawal symptoms, it may not completely prevent them and is only approved for treatment for up to 14 days. Lucemyra is not a treatment for opioid use disorder (OUD), but can be used as part of a broader, long-term treatment plan for managing OUD.

Opioid withdrawal includes symptoms – such as anxiety, agitation, sleep problems, muscle aches, runny nose, sweating, nausea, vomiting, diarrhea and drug craving – that occur after stopping or reducing the use of opioids in anyone with physical dependence on opioids.

In patients using opioid analgesics appropriately as prescribed, opioid withdrawal is typically managed by slow taper of the medication, which is intended to avoid or lessen the effects of withdrawal while allowing the body to adapt to not having the opioid.

In patients with OUD, withdrawal is typically managed by substitution of another opioid medicine, followed by gradual reduction or transition to maintenance therapy with FDA-approved medication-assisted treatment drugs such as methadone, buprenorphine or naltrexone; or by various medications aimed at specific symptoms, such as over-the-counter remedies for upset stomach or aches and pains.

“Today’s approval represents the first FDA-approved non-opioid treatment for the management of opioid withdrawal symptoms and provides a new option that allows providers to work with patients to select the treatment best suited to an individual’s needs,” said Sharon Hertz, M.D., director of the Division of Anesthesia, Analgesia and Addiction Products in the FDA’s Center for Drug Evaluation and Research.

The safety and efficacy of Lucemyra was supported by two randomized, double-blind, placebo-controlled clinical trials of 866 adults meeting Diagnostic and Statistical Manual-IV criteria for opioid dependence who were physically dependent on opioids and undergoing abrupt opioid discontinuation.

The FDA is requiring 15 postmarketing studies, including both animal and human studies. Additional animal safety studies will be required to support longer-term use (such as during a gradual opioid taper in pain patients discontinuing opioid analgesics) and use in children.

The FDA granted this application Priority Review and Fast Track designations, and an independent FDA advisory committee supported the approval of Lucemyra at a meeting held March.

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Fraud Claim May Close Sonoma West Medical Center

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The Palm Drive Health Care District is seeking bids for the purchase of its Sebastopol hospital, a move brought on by ongoing financial struggles and debt, district officials said Tuesday afternoon.

A request for proposals, which was released Tuesday, seeks a buyer who will operate Sonoma West Medical Center as an acute care hospital or “other health care” facility, said Alanna Brogan, executive director of the district.

Brogan said the need to sell the hospital became clear after the hospital’s lucrative but controversial lab services were suspended. Those services were called off earlier this year after insurance giant Anthem Blue Cross accused the hospital and health care district of participating in a business fraud scheme with a Florida-based medical laboratory company.

Anthem said the scheme resulted in more than $13.5 million in improper payments to the medical center. Hospital and district officials deny the allegation.

According to hospital financial data released Tuesday, the hospital took in $1.5 million in revenue in April with operating expenses of $2.3 million, an operating loss of $800,000.

Officials said district and hospital staff have taken a number of steps to improve operations and revenue collections at the hospital, but old debt continues to cripple the hospital. “We’ve done a lot to improve revenue, we just need to know what our options are going forward,” Brogan said.

Closure of Sonoma West Medical Center would leave West County without a full-service hospital and emergency room services.

Dennis Colthurst, president of the district board, said he had hoped the district would not be forced to sell the hospital under the current circumstances. The financial difficulties facing Sonoma West Medical, formerly called Palm Drive Hospital, are not uncommon for rural hospitals across the country. Many of them struggle to compete against larger health care providers such as Kaiser Permanente and Sutter Health.

Colthurst said he wanted the facility to remain as a full-service hospital with an emergency room and insisted it would succeed with the right health care provider at the helm. He said district voters have repeatedly made that clear.

“At the end of the day, the West County needs a hospital with an emergency room with full services for the community,” he said. “To me, having the emergency room is vital.”

But district board member Jim Horn, a strong critic of the hospital’s current management organization, Sonoma West Medical Center, Inc., said he thought it was unlikely a large health care organization would be willing to operate the facility as a hospital.

He said district and hospital supporters have had informal talks with health care providers in the area for the last year to no avail. He said that when the Petaluma Avenue hospital first closed in April 2014, district board members sought to get someone to operate it as an urgent care center with radiology services, but received no response.

Horn said the district may ultimately be forced to issue another request for proposals allowing the buyer to operate the hospital as something other than a medical facility.

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Worldwide Facilities adds Workers’ Compensation Products

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National wholesale insurance brokerage and managing general agent Worldwide Facilities has created a new workers’ compensation division.

Worldwide Facilities is a national insurance wholesale broker and managing general agent established in 1970, Its team of insurance specialists has access to virtually every specialty domestic and international insurance market.

But, Davis Moore, CEO of Worldwide Facilities, noted that while his firm has a diverse range of products, it did not have brokers specializing in workers’ compensation until now. “This is a $53-billion segment of the industry, and we sensed a need to expand our capabilities in this area,” he said.

The company has branch offices in major metropolitan areas – including Los Angeles, San Francisco, San Diego, Irvine, South Bay, Phoenix, Orlando, Tampa, Atlanta, Savannah, Chicago, Austin, New York, Dallas, Houston, Hartford, Nashville, Salt Lake City, Boston, Palm Springs, Morehead City, and Seattle.

The team has seven workers’ compensation specialists led by Senior Vice President Todd Pollock in the firm’s office near Boston, an office it opened in February when Pollock joined the firm.

Pollock is a 23-year veteran in the insurance industry with a specialization in the workers’ compensation field. He started his career at EBI Companies. In 2001, Pollock joined the PMC Insurance Group as a workers’ compensation broker. Prior to joining Worldwide Facilities, Pollock was with Keating, where he served as president and managing partner of workers’ compensation.

The new workers’ compensation division offers more than a dozen markets available for nationwide risk placement.

“Our markets will accommodate any size risk, both new and difficult to place. This new division strives to provide a package of expertise, market knowledge and the highest quality service,” said Pollock.

The minimum premiums start at $1,000, and there is no maximum. Loss-sensitive options may be available for larger insureds. Most classes are accepted, including higher-hazard exposures such as healthcare, transportation, and construction.

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