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Author: WorkCompAcademy

March 4, 2019 News Podcast


Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: WCAB Panel Rejects Combined Ratings, Massive So. Cal. Comp Fraud Ring Sentenced, Agent Prosecuted for Theft of Comp Premiums, Two So. Cal. Insurance Agents Face Premium Theft Charges, FBI Seeking Victims of Comp Policy Fraud Scheme, Another Attempt at “Medicate for All” Gets Underway, Researchers Develop Targeted and Precise Drug Delivery, Berkshire Hathaway to Exit Comp Market?, SCIF Launches SafeAtWorkCa Web App, Employers Face March 2 Deadline for Form 300A.

WCAB Says UR Time Limits are Mandatory

Jorge Orozco was a carpenter for Southland Framers. On September 7, 2001, he sustained and industrial injury to his back, neck, and head, and filed three claims for benefits.

His primary treating physician noted in 2012 that he was ambulating with a wheeled walker and that his wife was providing continuous home care services for him. He said “Patient requires home care assistance. He is a candidate at least eight hours a day, five days a week for home care assistance to assist with bathing, dressing, food preparation, laundering, and cleaning.” The request was later increased to 12 hours a day.

On May 15, 2012, Anthem Workers’ Compensation, and the PTP agreed that, as part of the UR process, “a relatively expedited RN evaluation should be done to assess the patient’s needs.”

On July 25, 2014, 26 months after this agreement, the nurse case manager performed the evaluation. She found applicant “requires maximum assistant with the majority of his activities of daily living.” She recommended home health care assistance 12 hours per day, seven days a week to assist applicant with nutritional meal preparation, grocery shopping, grooming, hygiene, transfers into and out of the shower, bathing, dressing, transportation services and assistance in and out of vehicles, home cleaning, laundry, opening medication bottles, and verbal reminders to take medications.

The PTP reviewed nurse case manager’s report and adopted its recommendations in his own October 13, 2014 report. On October 17 he submitted an RFA to the employer.

On December 9, 2014, the RFA was denied on the grounds that the Medicare Benefits Manual indicates “services should be part-time and not exceeding 28 hours per week, and authorization should not be made if these services are regularly performed by a member of the patient’s household.” The RFA was received on November 25, 2014, and the decision to deny was made on December 8, 2014.

The WCJ found that defendant did not conduct timely utilization review of the May 9, 2012 and November 25, 2014 requests for authorization (RFAs) for home health care services. The WCJ also found that defendant was liable for home health care services after May 1, 2012, up to 12 hours a day, seven days a week.

Defendant contended on reconsideration that the WCJ erred by awarding home health care services, arguing that she should not have found that the UR determination was untimely, among other arguments. The WCAB affirmed the WCJ’s decision in the case of Orozco v Southland Framers, SCIF.

Here, the initial delay was timely. However, no UR determination issued within the statutory period, “14 days from the date of the medical treatment recommendation by the physician.” (Former L.C. § 4610(g)(l).).

The RFA was received no later than November 25, 2014. Former AD Rule 9792.9.l(e)(3), in effect at the time of defendant’s UR determination, provided in pertinent part, “[A] decision to modify, delay, or deny shall be communicated to the requesting physician within 24 hours of the decision, and shall be communicated to the requesting physician initially by telephone, facsimile, or electronic mail.” (Former Cal. Code Regs., tit. 8, § 9792.9.l(e)(3).

The record reflects that defendant’s UR notified the PTP of the determination on December 9, 2014, nine working days after receipt of the RFA on November 25, 2014, and four days after the statutory time period lapsed. Therefore, the Board has jurisdiction to determine the medical necessity of the requests for home health care services.

Comp Startup Rides Wave of Global Dealmaking

Analysts at Research and Markets, predict that the global insurance market will reach $1.11 billion by 2023, fueled by growth in verticals like health, property, casualty, and life insurance.

Moreover, according to a recent analysis of CB Insights data by XL Innovate, over $1 billion has been invested in commercial insurance startups since 2015.

And FinTech Global estimates that deals totaled $2.5 billion in the first three quarters of 2018 – an 89.8 percent increase year-over-year.

Riding this wave is Pie Insurance, a Washington, D.C.-based workers’ compensation insurance provider that just announced it has raised $45 million in a series B funding round led by SVB Capital, with participation from Sirius Group, Greycroft, Moxley Holdings, Aspect Ventures, and Elefund. This follows an $11 million series A round in July and brings Pie’s total capital raised to $61 million.

CEO John Swigart, previously a senior executive at Esurance, says the fresh capital will be used to expand Pie’s geographic footprint and add new distribution sources.

Pie was founded in 2017 and operates as a managing general agency for Sirius America Insurance company. It sold its first insurance policy in March 2018 and claims to have generated nearly $10 million in written premiums from the “thousands” of small businesses among its customers.

It claims it saves those customers an average of 30 percent, thanks to a proprietary analytics backend that identifies risk, prices policies, and eliminates steps from the purchase process.

Is policies are available in 19 markets across the country: Arizona, Arkansas, California, Colorado, Georgia, Iowa, Illinois, Kansas, Kentucky, Louisiana, Maryland, Michigan, Nebraska, New Mexico, New York, North Carolina, Pennsylvania, Tennessee, and Texas.

Facing It’s First Trial – Purdue Pharma Explores Bankruptcy

Business Insurance reports that OxyContin maker Purdue Pharma LP is exploring filing for bankruptcy to address potentially significant liabilities from thousands of lawsuits alleging the drug manufacturer contributed to the deadly opioid crisis sweeping the United States, people familiar with the matter said Monday.

Purdue and its wealthy owners, the Sackler family, are under pressure to respond to mounting litigation accusing the pharmaceutical company of misleading doctors and patients about risks associated with prolonged use of its prescription opioids.

Purdue denies the allegations, arguing that the U.S. Food and Drug Administration-approved labels for its opioids carried warnings about the risk of abuse and misuse associated with the drugs.

Filing for Chapter 11 protection would halt the lawsuits and allow the drugmaker to negotiate legal claims with plaintiffs under the supervision of a U.S. bankruptcy judge, the sources said.

More than 1,000 lawsuits accusing Purdue and other opioid manufacturers of using deceptive practices to push addictive drugs that led to fatal overdoses are consolidated in an Ohio federal court.

A lesser-known opioid case: Oklahoma v. Purdue Pharma, is scheduled for trial in May in Norman, Oklahoma. The Oklahoma trial could presage many of the arguments the jury may be presented in the national case set in the fall on 2019.

The Oklahoma lawsuit seeks to hold Purdue and three other opioid-makers, Allergan, Cephalon and Janssen Pharmaceuticals, responsible for economic damages to the state and its residents stemming from the opioid addiction and overdose crisis.

The presiding judge in the Oklahoma case ruled that television cameras may be used in the courtroom, every detail of what promises to be a dramatic trial could be broadcast to the American public, potentially affecting the outcome of any future opioid trials.

A Purdue bankruptcy filing is not certain, the sources said. The Stamford, Connecticut, drugmaker has not made any final decisions and could instead continue fighting the lawsuits, they said.

Purdue tapped law firm Davis Polk & Wardwell LLP for restructuring advice, Reuters reported in August, fueling concerns among litigants including Oklahoma Attorney General Mike Hunter that the company might seek bankruptcy protection before the trial.

Feds Prevail in Another Compounder Case

45-year-old former pharmaceutical representative Holly Blakely, of San Antonio, TX, pleaded guilty for her role in an $8 million health care fraud scheme that netted her over $1 million.

The 30 count indictment filed in 2017, portrays her as one piece in a conspiracy targeted by a wide-ranging investigation of pharmacies that provide compound pain medication to military veterans and others with private insurance.Investigations of pharmacies that provide compound pain medication took place in at least four states.

Blakely was scheduled for trial in February. Instead she pleaded guilty to one conspiracy to commit wire fraud, health care fraud, bribery, and paying kickbacks. She now faces up to five years in federal prison. She remains on bond pending sentencing scheduled for June 13, 2019.

As part of her plea, Blakely admitted her role in a scheme to defraud health care benefit programs by paying over $400,000 in kickbacks and bribes to health care providers that prescribed compounded medications to individuals who did not need the medications.

She and her co-conspirators attempted to disguise the kickbacks and bribes to health care professionals by writing fictitious and back-dated “consulting agreements.” In many instances, They submitted prescriptions to compounding pharmacies for patients that had never seen a medical professional.

Moreover, Blakely and her co-conspirators would occasionally forge the signature of a medical professional on prescriptions.

Blakely admitted that she conspired with two compounding pharmacies that would submit claims for reimbursement to health care benefit programs for compounded medications based on the prescriptions.

In exchange for her role in the conspiracy, the two compounding pharmacies paid Blakely approximately $1,147,885.14. Health care benefit programs reimbursed the two compounding pharmacies approximately $8,846,972.24 based on the claims submitted in connection with the compounded medications.

in 2015, the federal government reached a settlement with one of them, MediMix Specialty Pharmacy of Jacksonville, Florida, and a top-referring physician, Dr. Ankit Desai, for more than $3.7 million.

Under the deal, the parties resolved allegations that, from Jan. 1, 2009, until December 2014, Dr. Desai sent hundreds of prescriptions to MediMix. Desai was married to a vice president of MediMix.

SCOTUS Taxes Railroad Compensation Benefits

The Supreme Court has ruled that payments to injured employees for lost wages by a railway company are taxable under the Railroad Retirement Tax Act (RRTA).

The opinion in BNSF Railway Co. vs. Loos by Justice Ruth Bader Ginsburg, in which six other justices joined, likens the payments to wages under the Social Security system.

Michael Loos sued BNSF Railway Co. under the Federal Employers’ Liability Act (FELA) for injuries he received while working at BNSF’s rail yard. A jury awarded him $126,212.78, with $30,000 of that amount ascribed to wages lost during the time Loos was unable to work.

BNSF claimed that the lost wages constituted “compensation” that is taxable under the Railroad Retirement Tax Act (RRTA) and asked to withhold $3,765 of the $30,000 to cover Loos’s share of the RRTA taxes.

The District Court and the Eighth Circuit rejected BNSF’s requested offset, holding that an award of damages compensating an injured railroad worker for lost wages is not taxable under the RRTA.

But the high court has now overturned those lower courts with this ruling that a railroad’s payment to an employee for working time lost due to an on-the-job injury is taxable “compensation” under the RRTA.

The RRTA is a self-sustaining retirement benefits system for railroad workers that is funded by a payroll tax on both railroads and their employees, referring to the railroad’s contribution as an “excise” tax and the employee’s share as an “income” tax. The Railroad Retirement Act (RRA) entitles railroad workers to various benefits.

Taxes under the RRTA and benefits under the RRA are measured by the employee’s “compensation,” which both statutes define as “any form of money remuneration paid to an individual for services rendered as an employee.”

According to the court, the railroad retirement system mirrors that of the Social Security system. The Federal Insurance Contributions Act (FICA) taxes employers and employees to fund benefits distributed pursuant to the Social Security Act (SSA). Tax and benefit amounts are determined by the worker’s “wages,” the Social Security equivalent to “compensation.” Both the FICA and the SSA define “wages” employing language resembling the RRTA and the RRA definitions of “compensation.”

Citing previous decisions, the court held that “compensation” under the RRTA “encompasses not simply pay for active service but also pay for periods of absence from active service” provided that the remuneration in question stems from the “employer-employee relationship.”

Justice Gorsuch filed a dissenting opinion in which Justice Thomas joined.

Drugmakers Cave Under Relentless Price Pressure

Reuters reports that Drugmaker Eli Lilly plans to sell a half-price version of its popular insulin injection Humalog, as it fends off criticism about rising drug prices in the United States.

Major drugmakers including Lilly, a leading producer of insulin, have come under fire from patients and lawmakers over the rising cost of the life-saving medication used to treat diabetes.

U.S. senators last week grilled executives from major drug companies, calling their pricing practices “morally repugnant”.

Lilly’s rebranded product will be called Insulin Lispro, while Humalog, which makes $3 billion in annual sales, will remain available for those wishing to access it through existing insurance plans.

The cost of insulin for treating type 1 diabetes in the United States has nearly doubled over a five-year period, leading some patients to put their own health at risk by rationing the medication.

The list price for Lilly’s authorized generic, to be sold only in the United States, will be $137.35 per vial.

Two senators last month launched an investigation into rising insulin prices, writing to Lilly and other leading manufacturers, asking them why the cost of the nearly 100-year-old medication had rapidly risen.

The price of Lilly’s Humalog rose from $35 to $234 per dose between 2001 and 2015, a 585 percent increase, the senators, Republican Chuck Grassley and Democrat Ron Wyden, had said.

Grassley on Monday called Lilly’s announcement “good news” in a Twitter post but added it was “only 1 piece of puzzle” and more needed to be done. Wyden said via email that Lilly’s move would be a part of the Senate Finance Committee’s investigation.

Meanwhile, Novo Nordisk and Sanofi SA, two other major insulin producers, told Reuters they were already taking steps to make insulin more affordable.

Novo said it was offering insulin at $25 per vial at many national pharmacy chains and had a program to help uninsured patients. Its insulin has a list price of $137.70.

Two So. Cal. Insurance Agents Face Premium Theft Charges

Two recent California Department of Insurance investigations have led to the arrests of insurance agents who allegedly stole tens of thousands of dollars from clients and failed to place insurance coverage for those clients, exposing them to significant financial risk.

Maria Aquino, 34, of South Gate, was charged with multiple felony counts of embezzlement and theft for allegedly pocketing over $48,000 in clients’ insurance premium payments and failing to place insurance coverage for her clients between 2011 and 2018.

The premium payments collected by Aquino, while doing business as Kino Insurance and Tax Services, were never sent to insurance carriers.

Aquino falsified certificates of insurance for more than eight clients in order to hide her embezzlement. Aquino’s license was revoked on July 12, 2018.

In a separate case, Chih Ming Huang, also known as James Huang, 41, of Rowland Heights, was charged with multiple counts of embezzlement, theft and forgery after allegedly stealing nearly $14,000 dollars from more than three clients and also failing to place insurance coverage for his clients.

After receiving a complaint from Farmers Insurance, where Huang had been previously employed, the department found that between 2011 and 2013, Huang embezzled premium payments by placing coverage for clients then canceling the coverage without his clients’ knowledge.

Cancelling the coverage generated refund checks to his clients, which he received because he had changed their address on record to a location he controlled.

Huang then applied the refunds to policies in the names of his aliases and cancelled those polices to get refunds in his own name, which he deposited into his personal bank account. The department is taking immediate action against Huang’s license.

Both of these cases are being prosecuted by the Los Angeles County District Attorney’s Office. Aquino surrendered on February 27, 2019 to the Downey Police Department. Huang will surrender on March 4, 2019.

SCIF Launches SafeAtWorkCa Web App

State Fund announced it has launched SafeAtWorkCA.com, a new online safety resource designed to help California employers protect their workers and build cultures of safety.

The new site features a variety of safety-related resources, including:

– – Workplace safety fundamentals customized for a variety of industries
– – Safety meeting topics and plans
– – Updates on legislative and regulatory changes that impact California businesses
– – State Fund’s 2019 in-person safety seminar schedule

“Our new online safety resources provide California employers and employees with the information and tools they need to better incorporate safety best practices into their everyday work,” said Lauren Mayfield, senior vice president of Safety and Health Services at State Fund.

“By making it easier to find safety-related information and tools, we can help businesses make safety a priority before the job starts, and that leads to fewer on-the-job injuries and, ultimately, lower rates for our customers.”

Employers can also ask their own workplace safety questions using the site’s “Ask the Expert” feature. When an employer asks a question, one of State Fund’s workplace safety experts will respond within 48 hours.

Visit SafeAtWorkCA.com for more information.

Researchers Develop Targeted and Precise Drug Delivery

If traditional drug delivery were a type of painting, it might be akin to paintball. With good aim, a majority of the paint ends on the bullseye, but it also drips and splashes, carrying streams of paint across the target.

If the drug needs to enter the bloodstream and circulate throughout your body for treating disease wherever it may be, this paintball-like delivery system may work. But it won’t work for targeted and precise drug delivery.

A more acute delivery approach would look more like “painting by numbers,” a technique that would allow precise delivery of a certain amount of drugs to an exact location. Researchers at the James McKelvey School of Engineering and the School of Medicine at Washington University in St. Louis are developing the tools necessary for such a drug delivery system, which they call cavitation dose painting.

Their research was published online this week in Scientific Reports.

Using focused ultrasound with its contrast agent, microbubbles, to deliver drugs across the blood-brain barrier (FUS-BBBD), the research team, led by Hong Chen, assistant professor of biomedical engineering at McKelvey School of Engineering, and assistant professor of radiation oncology at the School of Medicine, was able to overcome some of the uncertainty of drug delivery.

This method takes advantage of the microbubbles expanding and contracting when they interact with the ultrasound, essentially pumping the intravenously-delivered drug to wherever the ultrasound is pointing.

To determine where and how much of the drugs were being delivered, the researchers used nanoparticles tagged with radio labels to represent drug particles, then used positron emission tomography (PET) imaging to track their whereabouts and concentrations. They could then create a detailed image, showing where the nanoparticles were going and in what concentrations.

There’s one hitch, though. “The problem is, PET imaging is expensive and associated with radioactive exposure,” Chen said.

So the team turned to passive cavitation imaging (PCI), an ultrasound imaging technique that has been under development by several groups for imaging the spatial distribution of microbubble cavitation, or the oscillation of microbubbles in the ultrasound field.

To determine whether PCI could also accurately determine the amount of drugs at a certain location, they correlated a PCI image with a PET image (which they knew can quantify the concentration of radioactive agents).

“We found there’s pixel by pixel correlation between the ultrasound imaging and the PET imaging,” said Yaoheng Yang, the lead author of this study and a second-year PhD student in the Department of Biomedical Engineering. The PCI image, therefore, can be used to predict where a drug goes and how much drug is there. Hence, she called the new technique cavitation dose painting.

Going forward, Chen believes this method could drastically change the way some drugs are delivered. Using cavitation dose painting in tandem with focused ultrasound will allow doctors to deliver precise amounts of drugs to specific locations, for example, targeting different areas of a tumor with exactitude.

“I think this cavitation dose painting technique in combination with focused ultrasound-enabled brain drug delivery opens new horizons in spatially targeted and modulated brain drug delivery,” Chen said.

She has recently received a $1.6 million grant from the National Institutes of Health (NIH)’s National Institute of Biomedical Imaging and Bioengineering to work on combining intranasal drug delivery and focused ultrasound (FUSIN) with this research.