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Injury Reported Contemporaneously With Termination Barred by LC 3600(a)(10)

Noe Morales claims he sustained an injury on March 23, 2011 while employed by FMF Racing. Applicant testified that he hurt his elbow at work when he was working with a hammer and missed hitting a part, but the hammer kept going and he felt his elbow pop. Though he acknowledged that he was aware of the company policy to report injuries immediately, he did not report his injury at work that day. Because his arm hurt and was swollen, he did not go to work the following day. However, he did not seek medical treatment, testifying that he was waiting for his employer to check it out and send him to a clinic. He testified that he called into work the next morning and left a message on an answering machine to report that he hurt his elbow and was not coming into work. The employer denies knowledge any such phone call.

He returned to work around 6:00 am on the third day, still having pain in his right elbow. Though he testified that he did not seek medical treatment the previous day because he was waiting to inform his employer and be sent to a medical clinic, he did not tell his supervisor, Mr. Raul Ruiz, that he had injured his elbow on March 23, 2011. He did not tell anyone at the company why he missed work the day before, because he had already left the message. He did not confirm with anyone whether the message he left the day before had been received. He worked until 2:30 in the afternoon, when he was called into the office for a meeting with Mr. Beck, the Human Resource Manager, who told him that he was being terminated because he did not come into work the day before. Applicant testified that he offered to show them his cell phone to show that he had called in on March 24, but they did not want to see it. Applicant acknowledged that he had been repeatedly written up for being tardy or absent. He was given warnings and placed on probation in 2006, 2008 and 2010. He was suspended from work for one week on December 27, 2010, for chronic absenteeism. According to Mr. Beck, applicant begged for his job back. and when told he could not have it back, applicant reported the injury to his right elbow.

The essential question in this case is whether the evidence demonstrates that the employer had knowledge of applicant’s claim of injury prior to, or subsequent to, applicant’s notice of termination. While initially concluding in a Findings and Order issued July 30, 2012, that applicant’s claim is barred, the WCJ reversed himself and issued the instant determination in which he found the prior notice requirement was satisfied by the injured worker’s report of his injury contemporaneously with the notice of termination. The employer filed a petition for reconsideration which was granted, and the WCAB reversed the finding in the panel decision of Noe Morales v FMF Racing and Westland Insurance.

Labor Code section 3600(a)(10) provides that no compensation shall be paid for an injury that occurs prior to a notice of termination unless applicant establishes that the employer received notice of the injury prior to the notice of termination, or there are medical records that contain evidence of the injury prior to the notice of termination. Here, in contrast to Dover v. Fresh Start Bakeries, Inc. (2006) Cal.Wkr. Comp. P.D. LEXIS 53, wherein the bar of Section 3600(a)(IO) was held inapplicable where the injured worker gave notice of his injury at his first opportunity, which was contemporaneous with his notice of termination, applicant’s delay in notifying his supervisor of his injury was not caused by his supervisor’s absence from work. There is no evidence that applicant was incapable of reporting his injury on March 23, 201. In fact, he testified that he was aware of his employer’s policy that he should report his injury immediately. Applicant has offered no reason for his failure to comply with this policy on March 23, 2011.

On these facts, the WCAB found that the employer’s affirmative defense of a post-termination claim should be sustained. Accordingly, the Panel granted defendant’s petition for reconsideration and amended the Joint Findings and Award to find applicant’s claim of injury on March 23, 2011 is barred under Labor Code 19 section 3600(a)(l0).

WCAB Posts Notice of Additional Modifications to Rules of Practice and Procedure

The Workers’ Compensation Appeals Board has modified the text of the proposed amendments to its Rules of Practice and Procedure that were the subject of a public hearing on April 16, 2013. The WCAB has posted the proposed modifications and related documents on its website. The originally proposed new and amended Rules and related documents may also be found there.

Members of the public are invited to present written comments regarding the proposed modifications by 5 p.m. on Thursday, July 25, 2013. The WCAB will consider only comments it has received by that time.

The address for submission of comments by e-mail is The address for submission of comments by mail is: Neil P. Sullivan, Assistant Secretary and Deputy Commissioner, Workers’ Compensation Appeals Board, P.O. Box 429459, San Francisco, CA 94142-9459. The address for submission of comments by delivery service or personal delivery is: Neil P. Sullivan, Assistant Secretary and Deputy Commissioner, Workers’ Compensation Appeals Board, 455 Golden Gate Avenue, Ninth Floor, San Francisco, CA 94102. The WCAB will consider all timely written comments. It encourages all interested members of the workers’ compensation community to participate in this important process.

Former NFL Player Consolidated Action Ordered to Mediation

The National Football League and thousands of former football players who have sued the league for allegedly hiding the dangers of brain injury while profiting from the sport’s violence have been ordered to try to resolve the case in mediation. U.S. District Judge Anita Brody in Philadelphia federal court, who is overseeing the litigation, on Monday ordered both sides to meet with mediator Layn Phillips, a retired federal judge, in an effort to settle the dispute. In the brief order, Brody said she would hold off on ruling on the NFL’s motion to dismiss the case until September 3 to give the two sides an opportunity to make progress. Many of these former players also have claims pending before the California WCAB.

More than 4,000 players have accused the league of glorifying football’s ferocity while concealing the risks of concussions and long-term brain damage as a result of repeated hits to the head. The league has said it disclosed what information it had regarding research into brain trauma. It has also argued that the lawsuit is inappropriate because the issue of player safety is governed by the collective bargaining agreements negotiated between the league and the players’ union.

Phillips, currently a partner in the California law firm Irell and Manella, served four years as a federal judge in Oklahoma City. The case is In re National Football League Players’ Concussion Injury Litigation, U.S. District Court for the Eastern District of Pennsylvania, No. 12-2323.

And Bloomberg News reports that former National Football League players Courtney Anderson, Larry Centers and others settled a dispute with the organization over an arbitration decision that bars them from seeking workers compensation in California. Dozens of players sued in federal court in San Francisco seeking to overturn the arbitration order. The “cases fully settled as to all plaintiffs except for plaintiff Sean Berton,” according to a filing after a 45-minute settlement conference. The document didn’t provide details.

The players were required under a December arbitration award to withdraw claims in California and banned from claiming they are entitled to the benefits, according to the complaint filed by Centers in February.

Greg Aiello, an NFL spokesman, had no immediate comment. Margaret Prinzing and Roy LaFrancis, attorneys for the ex-players, didn’t immediately respond to an e-mail message seeking comment on today’s filing. The cases are Centers v. National Football League Management Council, 13-00882, and Anderson v. National Football League Management Council, 12-06386, U.S. District Court, Northern District of California (San Francisco).

Gardena DME Supplier Gets Five Years for Fraud

The owner and operator of a durable medical equipment (DME) supply company was sentenced to serve five years in prison in connection with a health care fraud scheme involving Latay Medical Services, a DME company based in Gardena, California. Bolademi Adetola, 47, of Harbor City, Calif., was sentenced today by U.S. District Judge George H. Wu in the Central District of California. In addition to her prison term, Adetola was sentenced to serve three years of supervised release and ordered to pay $4,555,198 in restitution.

According to the story in the Imperial Valley News, on March 1, 2013, Adetola was convicted by a jury in federal court in Los Angeles of one count of conspiracy to commit health care fraud and 12 counts of health care fraud. During trial, the evidence showed that Adetola, as the former owner and operator of Latay, fraudulently billed millions of dollars to Medicare for DME that was either never provided to its Medicare beneficiaries or was not medically necessary.

The trial evidence showed that between January 2005 and October 2009, Adetola paid cash kickbacks for fraudulent prescriptions for DME, such as power wheelchairs and hospital beds. The evidence at trial showed that a co-conspirator physician wrote prescriptions for power wheelchairs and other DME that the Medicare beneficiaries did not need and ultimately never used. The co-conspirator physician testified that Adetola paid him cash kickbacks for every fraudulent prescription that he wrote for the DME and that Adetola used his prescriptions to bill Medicare for the power wheelchairs and other DME. Several Medicare beneficiaries testified that they were lured to medical clinics with the promise of a free recliner sofa, only to receive power wheelchairs that they did not need and did not want. According to the testimony, the beneficiaries were unsuccessful in their attempts to reject delivery of the power wheelchairs from Adetola’s supply company.

In addition, the trial evidence showed that Adetola billed Medicare for DME supposedly provided and delivered to Medicare beneficiaries who were deceased at the time of service. One particular claim submitted by Adetola to Medicare showed that the Medicare beneficiary’s death preceded the date the Medicare beneficiary supposedly signed for the service.

As a result of this fraud scheme, Adetola submitted and caused the submission of over $8.4 million in false and fraudulent claims to Medicare, and received over $4.5 million on those claims.

The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California. The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.

FDA Approves New Drug for Opioid Addiction

The U.S. Food and Drug Administration has approved Swedish drugmaker Orexo AB’s drug to treat opioid addiction. The tablet, Zubsolv, dissolves under the tongue. It combines the drugs buprenorphine and naloxone and will compete with similar products, Subutex and Suboxone, made by Britain’s Reckitt-Benckiser Group Plc. Orexo said its drug offers a benefit to patients over Suboxone because less is required to achieve the same effect. It also has a menthol flavor that it said patients in a study preferred.

According to the report in Reuters Health, nearly three out of four prescription drug overdoses are caused by painkillers known as opioids that include such drugs as oxycodone, hydrocodone, fentanyl, methadone and codeine, according to the Centers for Disease Control and Prevention, and since 2003 have caused more overdose deaths than cocaine and heroin combined.

In March, the FDA rejected a drug similar to Orexo’s from Titan Pharmaceuticals Inc and asked for additional data proving it worked. Titan’s drug, Probuphine, is a long-acting version of Suboxone that is implanted under the skin.

To date, the market for buprenorphine has been dominated by Reckitt, a consumer goods company whose products range from cleaning supplies to condoms. Suboxone and Subutex generated sales of roughly $1.3 billion in 2012.

Orexo said opioid dependence affects nearly 5 million people in the United States and that only 20 percent receive treatment. The company said it expects peak sales of the drug to be at least $500 million.

Suboxone and Subutex lost market exclusivity in 2009, and while generic competitors introduced cheap copies of Subutex, they were slow to develop alternatives to Suboxone. In the meantime, Reckitt persuaded many physicians to switch from Suboxone tablets to Suboxone Film, a newer, patent-protected wafer-like strip that patients dissolve under the tongue. At the end of 2012, according to Reckitt, Suboxone Film had captured 64 percent of the market.

Earlier this year, the FDA approved generic versions of Suboxone tablets from Amneal Pharmaceuticals LLC and Actavis Inc. The agency also said, in April, that it would not approve any generic versions of the original form of OxyContin, which could be crushed and snorted for a quick high. OxyContin’s maker, Purdue Pharma LP, stopped shipping its branded version of the drug in August. It now sells a reformulated version that is less easy to abuse.

Second Carrier Exits California Health Care Market

A second health insurer notified state regulators Tuesday that it will stop selling individual policies in California. UnitedHealthcare announced it will no longer offer individual insurance plans after the end of the year. It will focus instead on its core business of group plans for large and small employers. The announcement comes two weeks after Aetna Inc. said it also plans to exit California’s individual insurance market. Both insurers avoided participating in the state exchange that is being established as part of the Affordable Care Act. State Insurance Commissioner Dave Jones says the departure of UnitedHealthcare and Aetna is bad news for consumers. “While both UnitedHealthcare and Aetna have a very small share of California’s individual health insurance market, their departure means less choice, less competition, and more market consolidation by the remaining big three health insurers – Anthem Blue Cross, Blue Shield of California, and Kaiser – which means an increased likelihood of even higher prices from those health insurers downstream,” Jones, a Democrat, said in a statement.

According to 2011 figures compiled by the California HealthCare Foundation, Anthem Blue Cross, Blue Shield and Kaiser have 87 percent of the individual market. Aetna had approximately 60,000 people covered by individual policies as of March 31, 2013, and it projects it will have approximately 50,000 people covered by individual policies at the end of 2013, when the company exits the individual market. United Healthcare, through its subsidiary PacifiCare, had approximately 10,000 individual policyholders late in 2012. Policyholders from both companies have been informed they can keep their existing health insurance until December 31, 2013. Aetna and United Healthcare policyholders will be able to purchase health insurance from other health insurers inside and outside the new California health benefits exchange. Starting Oct. 1, those seeking to buy their own health insurance will be directed to Covered California, the state’s new exchange, where 13 insurance carriers will sell individual policies. Aetna and UnitedHealthcare chose not to participate in the exchange.

Carriers Report S.B. 866 Lien Provisions Are Reducing Costs

The Insurance Journal reports that the S.B. 863 lien provisions seem to be reducing costs. EMPLOYERS Insurance, a monoline workers’ comp carrier that conducts more than 60 percent of its business in California, where it also sees more than half of its claims, is reporting that the lien fees are already easing the company’s losses. “It will save us on medical costs, and it will save us on defense costs,” said Christina Ozuna, vice president of claims for the Western Region for EMPLOYERS. Ozuna said it’s too soon to provide estimates on how much cost savings there will be, but she said they will be worth noting. “We believe we’re going to have significant cost savings,” she said.

Those savings should continue due to the January en banc decision in the case of Figueroa v. B.C. Doering Co., in which the WCAB detailed the process for lien activation and the consequences for not activating a lien prior to a lien conference set after 2013. The WCAB ruled the lien activation fee must be paid prior to the commencement of a lien conference, and if the lien claimant fails to pay, its lien must be dismissed with prejudice. In Figueroa WCAB ruled the judge was required to dismiss the case and that the failure to enter into negotiation or provide a proper notice is not excuse from paying the fee.

Operationally, carriers like EMPLOYERS will still be required to negotiate, Ozuna said, adding, “but going forward we’ll see many liens fall out of the system.” She added, “We’re seeing many, many dismissals of liens out of the system.” The dismissals are having a direct impact on EMPLOYERS by reducing the cost of defense of these liens, however some people are still poking at the loopholes in the lien filing process, she said. Instead of liens, many copy services and interpreting agencies with charges they want paid have acted to avoid the fees by instead filing petitions for costs. “Their argument is they are not medical providers and are not trying to provide claim for cost in the form of a lien,” Ozuna said. “This is their effort to sort of get outside of that.”

As far as liens go, Estelle Freeman, claims supervisor for Carl Warren and Co. in Tustin, Calif. said, while the organization has not felt the full impact of the new law, she’s noticed some changes. “I have noticed a lot more lien claimants trying to aggressively settle their liens before the case goes to a hearing to avoid paying the lien filing and/or lien activation fee,” Freeman said.

In fact, it appears that in 2012 in anticipation of the lien fees taking affect several lien filers got aggressive and made their claims as soon as possible, according to WCIRB’s Actuarial Committee. According to the committee, there was a sharp increase in lien filings in the fourth quarter of 2012 in anticipation of new lien filing and activation fees as part of SB 863. Citing Department of Workers’ Compensation data, WCIRB notes that nearly 1.2 million liens were filed in 2012 compared with less than 500,000 in 2011.

The lawmaker who originally introduced the lien filing fees before they were integrated into the workers’ comp reform bill was state Sen. Ted Lieu, D-Torrance, who had intended the bill to eliminate some of these loopholes that allow people to game the system. However, there was one thing he didn’t intend, and that was to make the fees retroactive. To fix that Lieu has authored cleanup legislation, Senate Bill 258, which clarifies that liens assigned prior to Jan. 1, 2013 can still be pursued even if the medical provider is still in business. “To do otherwise would probably be unconstitutional,” said Ray Sotero, a spokesman for Lieu.

DWC Posts Third Notice of Modifications to SJDB Regulations

A third15-day notice of modification to the supplemental job displacement benefit regulations has been distributed to interested parties and posted to the DWC website. Members of the public are invited to present written comments regarding the proposed modifications to by 5 p.m., July 18, 2013. The proposed modifications include changes to Section 10117. “Offer of Work; Adjustment of Permanent Disability.” Subdivision (f) is deleted and the subdivisions were relettered to accommodate the change in order.

Section 10133.31. “Supplemental Job Displacement Nontransferable Voucher for Injuries Occurring on or After 1/1/13” has been changed. Subdivision (f)(5) is amended to allow injured workers to submit written bids from a computer retailer to obtain payment for the purchase of computer equipment because they may not have the funds to purchase the equipment up-front. If the injured worker receives funds based upon submission of a written bid, the injured worker will be required to submit receipts. Failure to submit receipts will result in a $1,000 deduction from the total amount allowable by the voucher.

Section 10133.32. Form DWC-AD 10133.32 “Supplemental Job Displacement Nontransferable Voucher for Injuries Occurring on or After 1/1/13” has also been changed. A separate Request for Purchase of Computer Equipment was added to the form. Injured workers can submit either a written bid from a computer retailer or receipts of purchase. Following the purchase, receipts for the computer equipment must be submitted to the claims administrator.

Finally, in Section 10133.34. “Offer of Work for Injuries Occurring on or After 1/1/13” subdivision (b)(4) was deleted and the subdivisions were renumbered to accommodate the change in order.

The notice, text of the regulations, and forms can be found on the proposed regulations page.

DWC Obtains Extension of Emergency Regulations Until October 1

The Office of Administrative Law has granted the Division of Workers’ Compensation’s requests for readoption of the six sets of emergency regulations that implemented major reform provisions of Senate Bill 863: supplemental job displacement benefit vouchers, interpreter services, qualified medical evaluator regulations (QME), independent medical review (IMR), independent bill review (IBR) and lien filing fee regulations. The emergency regulations, which were initially approved by OAL on Jan. 1, will remain in effect until Oct. 1, unless another 90-day readoption is requested.

On July 1, DWC filed its certificate of compliance for the interpreter services with OAL and requested an Oct. 1 effective date. DWC expects to issue revised supplemental job displacement benefit voucher regulations for a 15-day comment period this week. In the near future, DWC will also issue revised QME revised QME, IMR, IBR and lien filing fee regulations for 15-day comment periods.

DWC will continue to keep the public informed regarding its progress with the ongoing regulatory process.

SCIF Distributes $100 Million Dividend After Surge in Income

State Fund will begin issuing dividend payments to eligible policyholders in early July. The $100 million dividend will be paid on the 2012 policy year; eligible policyholders will receive approximately 10% of their 2012 estimated annual premium.

“The dividend is a direct result of sound investment returns and improved efficiencies at State Fund,” said Tom Rowe, State Fund President and CEO. “We are committed to helping make California business possible and this dividend supports a brighter future for employers.”

Last year, State Fund declared a $50 million dividend. Since its inception in 1914, State Fund has paid more than $5 billion in dividends to policyholders – a record unparalleled among all California workers’ compensation insurance carriers.

State Fund’s Annual Report for 2012 was released last April. The report shows a significant increase in net income for California’s largest workers’ comp insurer. For 2012, State Fund’s income before dividends totaled $458 million, which was $279 million more than the prior year.

The report also indicates that State Fund reduced annual fixed expenses by $150 million dollars compared to 2009, and expects to achieve annual savings of more than $300 million by the end of 2014. These savings will help State Fund maintain fair pricing and bring value to a larger swath of the available market. State Fund announced a rate reduction of 7% effective March 1, 2013.

State Fund maintained a balanced investment portfolio that was focused on both credit quality and investment yield (99.3% of the $18.2 billion bond portfolio was rated NAIC 1, the NAIC’s highest quality credit class). The weighted average credit quality of the overall bond portfolio was Aa1/AA by Moody’s and Standard and Poor’s, respectively. Book yield at December 31, 2012 was 4.10%, down from 4.43% at December 31, 2011.