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Judge Rejects Lien Claimants’ Motion for DIR Contempt

The federal courtroom battle over the survival of the new automatic stay law governing liens filed by indicted medical providers has been more than one year of mostly unsuccessful litigation.

Dr. Eduardo Anguizola, while facing multiple counts of insurance fraud filed by Orange County prosecutors, is one the plaintiffs who claims Labor Code 4615 – the automatic lien stay law – violates the procedural component of the due process clause because it immediately stays all liens without notice or a hearing.

Soon after this suit was filed, Governor Brown signed AB 1422 into law which was adverse to his federal claim. AB 1422 contains a new LC 4615 subsection (e) which reads “The automatic stay required by this section shall not preclude the appeals board from inquiring into and determining within a workers’ compensation proceeding whether a lien is stayed pursuant to subdivision (a) or whether a lien claimant is controlled by a physician, practitioner, or provider.”

Last December the federal court issued a restraining order against the DIR. It limited stays to instances where the lien claimant was given proper notice, and required a hearing before the WCAB should any of them claim they should not be subject to a stay. It was a partial victory for plaintiffs who sought more restraint.

In February 2018, the plaintiffs filed two new motions, one asking the court to hold the DWC in contempt, and the other, alternatively to reconsider its December 2017 ruling. The court just denied both motions.

The defendants also filed a new motion to dismiss certain claims in the First Amended Complaint. The court granted the motion, and dismissed the first, second, third, fourth, and fifth claims (except for the facial due process component of the fourth claim for relief) without prejudice. As to the sixth and seventh claims for relief (the Supremacy Clause claim and the Takings Clause claim), the Court dismissed those claims with prejudice. The plaintiffs have until May 17 to file a Second Amended Complaint.

In support of the motion for contempt the plaintiffs argued that defendants have “employed new, bizarre, and unprecedented procedures, which they recently manufactured to continue the farce that the Section 4615 provides due process to aggrieved lien claimants.” They cited as examples that procedures used at lien conferences are not within WCAB’s usual procedures and are thus violate the injunction. The Court responded by noting “that WCAB judges have a wide latitude to develop the record and obtain evidence.”

After reviewing other arguments based upon claims of ex-parte communications, and illegal regulations the court concluded “In sum, the Court does not find clear and convincing evidence to hold Defendants in contempt of the December 22, 2017 Order.”

AI Expected to be Center of Health Care Strategies

In December 2017, Amazon, JPMorgan Chase and Berkshire Hathaway announced the formation of a new healthcare company which would use technology to provide high-quality healthcare to patients and families more simply, and at a more reasonable cost.

In 2016, U.S. per-person healthcare expenses were $10,348, more than double that of other first-world countries that offer universal health coverage ($4,752 in Canada, $4,600 in France, $4,708 in Australia, and $4,192 in the UK). Despite these costs, U.S. medical care is not altogether accurate or safe; medical errors kill more Americans annually than AIDS and motor vehicle incidents. Yet somehow modern medicine has escaped large-scale reform from automation and systems engineering.

According to the story in Forbes, Amazon has the potential to change this market. Its decision is modeled after tech giants like Alibaba and Tencent, which have been experimenting with employee healthcare software in China for many years and whose initial targets included online medical advice, drug tracking systems and more recently, artificial intelligence.

However, if Amazon intends to succeed where other industry giants have failed, it is essential for it to build infrastructure that can leverage cutting-edge medical technologies. As the saying goes, “If you want something you have never had, you must be willing to do something you have never done.” In 2018, this means Amazon needs to implement AI software for continuous analytics of automatically structured big data and advanced research technology.

According to The New York Times, over 130 Chinese tech companies were applying AI to increase efficiency and accuracy in overburdened Chinese hospitals. An example use case included the use of machine learning to identify diabetic retinopathy, which extends the capacity of Chinese ophthalmologists who are overburdened. Only 20 eye doctors are available for every 1 million persons, half of what is found in the U.S.

California workers’ compensation now limits medical care to “evidence based medicine.” Contrary to popular belief, experimental science in medicine is relatively new. Before the introduction of evidence-based medicine in the 1990s, the majority of Western medical advice was based on observational science and expert opinion. Evidence-based medicine has signified a historical shift in the way Western medical doctors view and treat patients.

What is concerning to many health experts is that more than half of current treatments may not be evidence-based. Historically, some very common – and invasive – procedures have turned out to have no benefit or even to be harmful. For instance, a 2018 study showed that stent placement for heart disease, a procedure that can cost up to $14,000, works no better than a placebo to increase exercise tolerance on a cardiac stress test.

If a healthcare technology disruptor that introduces AI with continuous analytics of automatically structured big data can display statistically significant observational evidence that is more likely to be accurate, the same system can be easily adapted to facilitate large-scale experimental validation studies in clinical trials. This could be disruptive, efficient and beneficial for medicine.

Supreme Court Uses “ABC” Test for Employment Finding

The California Supreme Court ruled that companies that want to classify their workers as independent contractors must prove the workers are running their own businesses. The ruling could help thousands of drivers for ride-hailing companies like Uber and Lyft, as well as other gig economy workers. The case is Dynamex Operations West vs. Superior Court,.

Dynamex is a nationwide same-day courier and delivery service that operates a number of business centers in California. Dynamex offers on-demand, same-day pickup and delivery services to the public generally and also has a number of large business customers – including Office Depot and Home Depot.

Prior to 2004, Dynamex classified its California drivers as employees and compensated them pursuant to this state’s wage and hour laws. In 2004, Dynamex converted all of its drivers to independent contractors after management concluded that such a conversion would generate economic savings for the company.

Under the current policy, all drivers are treated as independent contractors and are required to provide their own vehicles and pay for all of their transportation expenses, including fuel, tolls, vehicle maintenance, and vehicle liability insurance, as well as all taxes and workers’ compensation insurance.

Two individual delivery drivers, suing on their own behalf and on behalf of a class of allegedly similarly situated drivers, filed a complaint against Dynamex Operations West, Inc. alleging that Dynamex had misclassified its delivery drivers as independent contractors rather than employees.

After an earlier round of litigation in which the trial court’s initial order denying class certification was reversed by the Court of Appeal (Lee v. Dynamex, Inc. (2008) 166 Cal.App.4th 1325), the trial court ultimately certified a class action.

In response to the trial court’s later denial of Dynamex’s subsequent motion to decertify the class, Dynamex filed the current writ proceeding in the Court of Appeal which rejected its arguments.

Dynamex filed a petition for review in the Supreme Court, challenging only the Court of Appeal’s conclusion that the wage order definitions of “employ” and “employer” discussed in Martinez v. Combs (2010) 49 Cal.4th 35, 64, are applicable to the question whether a worker is properly considered an employee or an independent contractor for purposes of the obligations imposed by an applicable wage order.

The Supreme Court affirmed the Court of Appeal and concluded it is appropriate to look to a standard, commonly referred to as the “ABC” test, And it agreed that the standard for determining the employee or independent contractor question set forth in this court’s decision in Borello, (48 Cal.3d 341) is not the sole applicable standard.

Under this test, a worker is properly considered an independent contractor to whom a wage order does not apply only if the hiring entity establishes: (A) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact; (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and (C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

The ABC test presumptively considers all workers to be employees, and permits workers to be classified as independent contractors only if the hiring business demonstrates that the worker in question satisfies each of three conditions.

The ruling did not address other issues, such as payment of work expenses, workers’ compensation and unemployment benefits, which are covered by separate laws.

DWC Adjusts Pathology and Clinical Laboratory Section of OMFS

The Division of Workers’ Compensation has posted an order adjusting the pathology and clinical laboratory section of the Official Medical Fee Schedule (OMFS) to conform to changes in the Medicare payment system, as required by Labor Code section 5307.1.

Effective for services rendered on or after April 1, 2018, the maximum reasonable fees for pathology and laboratory services shall not exceed 120% of the applicable fees set forth in the April 2018 quarterly update to Medicare Clinical Laboratory Fee Schedule, contained in the electronic file “18CLABQ2” which is adopted and incorporated by reference

Outpatient clinical laboratory services are paid based on the Medicare Part B Clinical Laboratory Fee Schedule (CLFS) in accordance with Section 1833(h) of the Social Security Act.

Payment is the lesser of the amount billed, the local fee for a geographic area, or a national limit. In accordance with the statute, the national limits are set at a percent of the median of all local fee schedule amounts for each laboratory test code.

Each year, fees are updated for inflation based on the percentage change in the Consumer Price Index. However, legislation by Congress can modify the update to the fees.

The order adopting the OMFS pathology and clinical laboratory fee schedule is effective for services rendered on or after April 1, 2018 and can be found on the DWC website.

Sealed DEA Database Helps Opioid Litigants

An amended complaint naming additional drug firms believed to have helped fuel West Virginia’s opioid epidemic has been filed in federal court after attorneys for by Cabell County received drug distribution data from the federal government last week.

The drug-reporting database, ARCOS, is a comprehensive drug reporting system that monitors the flow of the DEA-controlled substances from the time they are created to when they get into the hands of patients. The data were ordered to be turned over to the case’s complainants under seal and none of the information has been made public.

Paul T. Farrell Jr., who is a co-leader in an opioid litigation case involving hundreds of cities nationwide that started in Cabell County, said the disclosure of this information, which includes 27 gigabyte of raw data, not only allows him to see the transactions between manufacturers and wholesalers, but also the transactions between the wholesalers and the pharmacies in Cabell County.

“We are going to be able to track pills and figure out how it is we got the volume of pills that came flooding into our hometown,” he said. “If this were the Daytona 500 … this is the green flag.”

The companies added in the amended complaint are seven manufacturers as well as companies associated with them, including Purdue Pharma, Actavis, Cephalon, Janssen, Endo, Insys Therapeutics and Mallinckrodt, because of their alleged improper marketing of the opioids they manufactured.

Although the Drug Enforcement Administration highly objected to releasing the information, plaintiffs in the national prescription opiate litigation won their request that ARCOS data for years 2006 to 2015 for any type of transactions involving the drugs oxycodone, hydrocodone, hydromorphone and fentanyl be made available to them for the litigation.

The documents and court orders relate to 500 civil complaints, according to Farrell, filed in federal courts across the nation alleging drug firms, manufacturers and distributors breached their duty to monitor, detect, investigate, refuse and report suspicious orders of prescription opiates coming into West Virginia over the past several years – a duty the lawsuit claims companies had under the Controlled Substance Act of 1970.

Cabell County was among the first to file a lawsuit against the “Big Three” distributors -McKesson Corp., Cardinal Health and AmerisourceBergen Drug Corp., and several other pharmacy companies, which are named in a majority of the lawsuits.

The filings started in West Virginia after a 2016 Charleston Gazette-Mail investigation revealed similar data, stating between 2007 and 2012 that the “Big Three” shipped 423 million pain pills to West Virginia, which has about 1.8 million citizens, before the number of pills started to decrease.

The information Farrell and other plaintiffs’ attorneys have would expand on that data.

Some of that data could have been revealed Wednesday in seven amended complaints filed by Farrell, but Dan Polster, the U.S. district judge in Cleveland overseeing the case, agreed the complaints could be filed under seal, meaning out of the public’s view.

The motion to file under seal, filed by plaintiffs in the case, stated the seal was necessary to ensure compliance with previous court orders requiring the Drug Enforcement Administration drug-reporting database data to be sealed.

After receiving the DEA data last week, Farrell said he filed an order Wednesday amending the Cabell County civil complaint to include additional manufacturers and distributors they did not initially name due to the data not being made available.

Imperial County Woman Sentenced for Insurance Fraud

Teresa Baker, 60, was sentenced in Imperial County Superior Court to 30 days in jail, 60 days home detention, three years formal probation, and ordered to pay restitution of $124,029 after fraudulently collecting monthly payments on disability insurance while working full-time at three different employers.

Baker claimed an injury to her back in October of 1998 after a fall while employed by Valley Independent Bank in El Centro.

Due to the alleged injury, Baker claimed to the insurer, she was unable to work.

The California Department of Insurance launched an investigation after receiving a referral from the Standard Insurance Company claiming that Baker had been working from May 2007 through October 2013 while collecting disability benefits.

The investigation revealed that Baker collected more than $100,000 in disability payments she was not entitled to. During this same time, Baker worked for the Brawley Public Scales, Sun Community Federal Credit Union, and the Brawley School District as a substitute teacher.

Baker was arrested on June 30, 2017 and subsequently pleaded guilty to one felony count of insurance fraud on January 4, 2018.

This case was prosecuted by the Imperial County District Attorney’s Office.

Modesto Physician Arrested in Opioid Case

A Modesto physician, Sawtantra Kumar Chopra, 71, was arrested and charged with prescribing opioids to patients outside the usual course of professional practice and not for a legitimate medical purpose.

On April 19, 2018, a federal grand jury in Fresno brought a 22-count indictment against Chopra. He was arrested at his home in Modesto.

According to the indictment, between March 2017 and March 2018, on 22 occasions Chopra prescribed highly addictive, commonly abused prescription drugs, including hydrocodone, alprazolam (Xanax), and Promethazine with codeine syrup – outside the usual course of professional practice and not for a legitimate medical purpose.

These controlled substances affect the central nervous system and may only be prescribed when medically required.

If convicted, Chopra faces a maximum statutory penalty of 20 years in prison. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

This is Dr. Chopra’s second run-in with the law.

In 2002, he was charged with violating federal kickback law in the United States District Court, for the Eastern District of California. Prosecutors claimed he knowingly solicited and received kickbacks for referring some of his patients to Family Medical Home. He was paid $2,500 per month plus a percentage of Family Home profits. He also received basketball tickets to the Sacramento Kings games. On May 28, 2002 he plead guilty to the one count filed against him.

Disciplinary charges were filed against him by the California Medical Board on July 12, 2002 as a result of his conviction. He entered into a Stipulated Settlement and Disciplinary Order in May 2003.

This new case is the product of an investigation by the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse Drug Diversion Team, the Drug Enforcement Administration, the Federal Bureau of Investigation, and the IRS Criminal Investigation. Assistant U.S. Attorney Vincenza Rabenn is prosecuting the case.

Physician to Serve 5 Years for Illegal Prescribing

A doctor who operated a medical clinic in Lynwood was sentenced to 60 months in federal prison for illegally issuing prescriptions for powerful narcotics and sedatives without a medical purpose, mostly for young “patients” who paid cash.

Dr. Edward Ridgill, 65, a resident of Indio, California, was sentenced by United States District Judge S. James Otero.

During the sentencing hearing, Judge Otero said, “With all due respect to Dr. Ridgill, he is not a doctor. He has a license to practice, [but] he is not practicing medicine.” The judge also noted Ridgill’s prior history of improperly writing prescriptions, which “reveals he has not learned his lesson from the past.” Sentencing follows a one-week trial late last year in which a federal jury found Ridgill guilty of 26 felony counts of illegally distributing controlled substances.

Prosecutors presented evidence that Ridgill illegally prescribed the opioid painkiller hydrocodone, which is often sold under the brand name Norco; alprazolam, best known by the brand name Xanax; and carisoprodol, a muscle relaxer often sold under the brand name Soma.

Young “patients” traveled from places as far away as Victorville, Palmdale and Desert Hot Springs to Ridgill’s clinic in order to obtain prescriptions from Ridgill, where his “illegal drug business enabled him to work a mere three hours a day at his Lynwood office in exchange for significant amounts of cash,” according to a sentencing memorandum filed by prosecutors.

During the trial, the jury heard that, in 2014 alone, Ridgill wrote nearly 9,000 prescriptions, and the vast majority of those prescriptions were for hydrocodone, alprazolam and carisoprodol, typically for the maximum strength. Jurors also heard testimony about undercover DEA operatives who received prescriptions from Ridgill in exchange for cash. In 201Ridgill physically deposited more than $175,000 in cash. According to court documents, the testimony showed that Ridgill’s “initial physical exams were cursory, and far from the fulsome type of exam required to justify prescribing high doses of controlled substances.”

Law enforcement authorities executed federal search warrants on Ridgill’s residences and medical office in March 2015. At that time, authorities recovered multiple pre-written prescriptions for controlled substances, as well as cash lining patient files and stuffed in the drawers containing those files, which prosecutors argued demonstrated that Ridgill operated a cash-for-drugs business.

The jury deliberated for approximately 30 minutes in December 2017 before finding Ridgill guilty of 26 counts of distributing controlled substances outside the course of professional practice and without a legitimate medical purpose. Specifically, Ridgill was convicted of 13 counts of distributing hydrocodone, nine counts of distributing alprazolam, and four counts of distributing carisoprodol.

Another LAPD Officer Arrested for Comp Fraud

A Los Angeles Police Department officer assigned to the Van Nuys Station is facing allegations of workers’ compensation fraud. A felony arrest warrant had been issued for Officer John Bailey, 43, who was taken into custody on Tuesday.

The warrant stemmed from an investigation by the LAPD’s Special Operations Division, Worker’s Compensation Fraud Unit into a medical claim filed by Bailey in early 2018.

Bailey is accused of knowingly committing workers’ compensation fraud and receiving benefits under false pretenses, according to the LAPD. He lives in San Bernardino County, and was jailed in lieu of $60,000 bail, police said. An update on his custody status was not immediately available and it was unclear if he had retained an attorney.

There have been several arrests made within the LAPD for workers’ compensation fraud just this year.

In March, felony charges were filed against a retired LAPD officer in an alleged workers’ compensation fraud case. Former Officer Terry Johns, 56, was arrested by detectives with the Department’s internal affairs division, officials said. A criminal complaint accused Johns of eight counts, including workers compensations insurance fraud, insurance fraud, and attempted perjury under oath.

The arrest was made after an undercover surveillance investigation in which detectives were sent to see if the ex-officer was really injured, as he had claimed in official documents.

In January, a nine-year veteran of the Los Angeles Police Department, whose last assignment was with the Valley Traffic Division, was arrested on suspicion of workers’ compensation fraud. Jason Gordon, 48, of Los Angeles County was arrested on Jan. 17 on a felony arrest warrant related to workers’ compensation fraud and attempted perjury, the Los Angeles Police Department said.

Also in January, Gerald Pully, 51, an 18-year city employee, was last assigned to the LAPD’s Records and Identification Division was charged with one count of workers’ compensation fraud after exaggerating the extent of his injuries while receiving money from the department.

Hospitals Forced to Post Standard Prices

CMS announced Tuesday it may require that hospitals post charge information as part of the proposed 2019 Inpatient Prospective Payment System rule. And price transparency that drives down medical costs can only be good news for the workers’ compensation industry.

Few hospitals nationally offer patients accurate, individualized information about how much they’ll have to pay for medical services, experts say.

The Affordable Care Act already mandates publishing charges, but the provision hasn’t been enforced.

Updated guidelines would require hospitals to post a list of their current standard charges online in a machine-readable format by Jan. 1 and to update the information annually, according to the proposed rule. “This could be in the form of the chargemaster itself or another form of the hospital’s choice,” it reads.

CMS Administrator Seema Verma said the new requirements, which were foreshadowed in a speech last month by HHS Secretary Alex Azar, are part of the Trump administration’s efforts to encourage patients to become better-educated decisionmakers. “We are just beginning on price transparency,” she said.

“We are just beginning on price transparency,” said Verma. “We know that hospitals have this information and we’re asking them to post what they have online.”

Hospitals are required to disclose prices publicly, but the latest change would put that information online in machine-readable format that can be easily processed by computers. It may still prove to be confusing to consumers, since standard rates are like list prices and don’t reflect what insurers and government programs pay.

The proposed requirement to publish charges is likely to prove controversial and complicated to implement. Simply posting inflated retail prices as listed on a hospital’s chargemaster won’t be helpful to most patients, experts say.

“Posting gross charges is misleading and inflammatory,” said Joe Fifer, CEO of the Healthcare Financial Management Association, which has published price transparency guidelines. “I’d rather CMS focus on actual payments hospitals receive and what patients are responsible for.”

Some experts also questioned if publishing prices will help reduce prices. A study by the Health Care Cost Institute found that less than 7% of total U.S. healthcare spending stems from services for which patients truly can comparison shop.

The price lists may still be confusing to consumers, though, because standard rates are like list prices and don’t reflect what insurers and government programs pay. “Given the inherent complexity of hospital billing, making prices easy to understand is clearly a lot easier said than done,” says Shawn Gremminger, of Families USA.