Menu Close

Author: WorkCompAcademy

Beauty Pageant Contestant Charged With Comp Fraud

Pageant contestants seek the spotlight, but it was the limelight — on the Internet — that proved to be the incriminating evidence against a beauty pageant contestant collecting worker’s compensation for a fractured toe.

Shawna L. Palmer of Riverside started collected workers’ compensation benefits in March after fracturing her toe as a clerk at Stater Bros. Markets, according to a news release from the California Department of Insurance. She told her doctor during multiple visits that she couldn’t put weight on her foot or wear shoes for an extended period of time.

But a YouTube video of the 2014 Miss Toyota Long Beach Grand Prix beauty contest showed otherwise: She was seen walking around in high heels “without any signs of discomfort,” according to the Department of Insurance. “This suspect made the job of our departments’ detectives easier by openly participating in high profile events,” Insurance Commissioner Dave Jones said in a statement.

The news release said 22-year-old Palmer participated in at least two beauty contests while collecting workers’ compensation, even though her doctor had provided her an orthopedic boot, crutches and instructed her not to work.

According to officials, Shawna Lynn Palmer claimed to her employer March 10 that she was unable to continue working due to a foot injury she sustained as a clerk at Stater Bros. During multiple doctors visits, Palmer said she could not place any weight on her foot, could not wear any type of shoe for a period of time and could not move it in any direction. Palmer’s doctor provided her with an orthopedic shoe and crutches, and ordered her to refrain from working, along with elevating her foot whenever possible.

While collecting benefits, Palmer participated in at least two beauty contests, where she was seen walking in high heels without any signs of discomfort. It was the unusual delay back to work, however, that led investigators to look closer into the claim. Palmer was arrested after video evidence revealed her participation in the 2014 Miss Toyota Long Beach Grand Prix beauty contest.

If convicted, Palmer faces up to one year in county jail, three years of probation and must pay $24,000 in restitution.

Convicted Claimant Fakes Robbery – Then Fakes PTSD Claim

The former assistant manager at an East Los Angeles Bank of America branch certainly had nerve. According to the story in the Los Angeles Times, first she pretended to be a victim of armed assailants as she helped to rob the bank where she worked. Then, still playing the victim, she asked the bank to pay for her robbery-induced post-traumatic stress disorder. It was all a sham, according to investigators.

Aurora Barrera, 33, had just been sentenced to nine years in federal prison for her role in the dramatic 2012 robbery when she was arrested last week on the additional charge of filing a fraudulent workers’ compensation claim. Reyes “Ray” Vega, 35, of Bell was also convicted in March of conspiracy to commit bank robbery and bank robbery, with a special allegation of assault by use of a dangerous weapon.

It all started on Sept. 5, 2012, when Barrera walked into her own bank branch wearing what she said was a bomb and persuaded her colleagues to empty the vault and leave the cash outside for her assailants. She claimed they had kidnapped her and held her at gunpoint before strapping explosives to her at her Huntington Park home.

Barrera filed the PTSD claim two days later, and the bank’s insurance company soon began paying out. The company paid her more than $35,000 in disability benefits and covered more than $9,000 in medical bills associated with the alleged workplace injury, according to California Department of Insurance spokeswoman Nancy Kincaid.

But the bomb was later discovered to be a fake – a flashlight wrapped in black electrical tape – and so was the rest of the story, investigators determined. Barrera was an accomplice, not a victim, and at her sentencing last Wednesday she was ordered to turn herself in to authorities in early September. Evidence presented during the four-day trial in Los Angeles federal court showed Vega masterminded the robbery, which netted about $565,000. One of the cooperating witnesses, Richard Menchaca, testified that in a meeting with Vega hours after the heist, it was agreed that Barrera would get $100,000 “because she took the most risks.” The fake bomb was so convincing that after Barrera took the money from the safe a Los Angeles County sheriff’s bomb robot was used to pry the device off the woman.

Barrera’s co-worker at the bank that day saw part of the license plate of the car that took the money away, according to prosecutors. Investigators identified the vehicle as belonging to the father of her then-boyfriend, Vega, and tracked his movements that day to a Day’s Inn. Security video shows the car and Vega meeting with two other men involved in the heist. Subsequent phone records and text messages tied the ring together, according to Asst. U.S. Atty. Justin Rhoades.

On Thursday morning, police knocked on the door of her Downey home to settle one more account, Workers’ Compensation fraud.

“It’s shocking to think that Barrera, a trusted financial institution manager, would be a co-conspirator in a bank robbery and staged kidnapping, and then have the audacity to file a bogus workers’ comp claim for traumatic stress and believe she could get away with it,” Insurance Commissioner Dave Jones said.

Only a fraction of the $565,500 stolen from the bank has been recovered. So in addition to their prison sentences, Barrera and her co-conspirators, including a former boyfriend, have been ordered to pay $557,300 in restitution. “Where’s the money?” U.S. District Judge Manuel L. Real loudly asked Barrera, at the time of her sentencing who stood silently before him and declined to address the court. About $8,000 of the stolen cash has been recovered, Assistant U.S. Attorney Justin Rhoades said.

The prosecutor said Barrera used her knowledge of the bank’s operations “to rob her own company of half-a-million dollars” and obstructed justice by causing law enforcement to “go looking for two black men” instead of the real culprits.Barrera, who could not be reached for comment, faces up to another five years behind bars on the insurance fraud charge.

DWC Posts Annual WCJ Ethics Report

The Division of Workers’ Compensation has posted the 2013 ethics advisory committee’s annual report on its web site. The workers’ compensation ethics advisory committee is a state committee independent from the DWC that is charged with reviewing and monitoring complaints of misconduct filed against workers’ compensation administrative law judges. The ethics advisory committee is required to make a public report each year summarizing activities in the previous calendar year. WCALJs are not subject to review by the California Commission on Judicial Performance, the agency which is responsible for investigating misconduct complaints directed at judges serving on the Supreme, Superior and Appellate courts.The Ethics Advisory Committee is composed of nine members, each appointed by the Administrative Director of the DWC’s for a term of four years. The EAC is assisted in carrying out its functions by an attorney and secretary on the staff of the DWC.

Any person may file a complaint with the EAC. Complaints must be presented in writing and the EAC will accept anonymous complaints. An EAC case is typically opened as a result of receipt by the DWC of a letter from an injured worker, an attorney, or lien claimant who has been a party to a proceeding before a workers’ compensation administrative law judge employed by the DWC and the complaint alleges ethical misconduct by the WCALJ. In 2013, the DWC had authority over 167 active judges in 24 district office locations. The EAC considered a total of 34 of the 37 new complaints it received in the calendar year of 2013, in addition to 3 complaints pending from 2012. Most of the complaints (24) were filed by unrepresented workers. Two each were filed by applicant and defense attorneys.

Of the 33 resolved complaints, the EAC identified one complaint resulting in judicial misconduct. In that case an unrepresented applicant, complained that the judge threatened and harassed the complainant, and the complainant claimed his well-being was in danger. Complainant attached the transcript of the hearing wherein the judge stated, “if you interrupt me one more time, you will deeply regret it. I have been sitting trying to say things, and you have been constantly interrupting me. I am on the bench, and I will suffer no more interruptions.” Complainant alleged that the judge said this in a very loud voice. Following its review of the complaint, the Committee identified an ethical violation of the Code of Judicial Ethics. Based upon that conclusion, the Committee has recommended further action. Appropriate action has taken place.

One of the more interesting situations that were not resolved involves an anonymous complainant who complained that the judge acted unprofessionally during hearings in the courtroom. At a hearing, a brand new attorney, accompanied by a senior member of the firm, was making a first appearance before the judge. When the young attorney was introduced, the judge loudly questioned the young attorney in front of all parties present as to whether or not the attorney had been informed by other members of the bar that the WCALJ is a “real bitch.” Parties in the courtroom were shocked and dismayed by the judge’s unprofessional behavior. The complaint was made anonymously because of the fear of retaliation by the judge. This was one of three complaints filed after the Final EAC meeting of 2013. The outcome of this complaint will no doubt appear in next years report.

WCAB Rules Parties May Stipulate to Use AME Instead of IMR Process

Carolyn Bertrand, while employed during the period of 1989 to March 4, 2002, as a counselor by the County of Orange, permissibly self-insured, sustained an industrial cumulative trauma injury to her low back and neck. The case was resolved by way of Stipulated Findings and Award and Order, dated July 20, 2004, finding applicant sustained 38% permanent disability and need for further medical treatment based upon the opinion of the AME, Dr. Wilson. In “other stipulations,” the parties provided that: “Settlement based upon the report of AME Lynn Wilson. Future medical care to be provided pursuant to his opinion. When practical, Applicant will notify Defendant of need for treatment prior to obtaining same. For any future disputes regarding treatment or permanent disability, the parties will return to the A .M .E.”

Applicant filed a Declaration of Readiness to Proceed to Expedited Hearing on April 22, 2014, citing the issue of her entitlement to medical treatment based upon an untimely UR denial and defendant’s failure to forward all relevant medical evidence. In a pre-trial statement prepared May 14, 2014, the parties delineated the issue as whether the 2013 Labor Code section changes creating the IMR process, or the parties’ stipulations, control the resolution of medical treatment disputes.

The WCJ concluded that the language in the parties’ stipulation means that the UR process in Labor Code section 4610 is not applicable to disputes involving medical treatment, as the UR process was in place at the time the parties entered into their stipulations and they knowingly waived that existing legal right by contractually agreeing to a different process to resolve medical treatment disputes. Further, the WCJ found that the subsequent statutory change creating the IMR process to review a contest of a UR decision, does not nullify the parties’ contractual waiver.

The employer sought reconsideration contending that the WCJ’s order to return to the AME misconstrued the parties’ stipulation, and that the intent of the stipulation was to return to the AME in the event of a dispute after the Utilization Review (UR) process, and not to circumvent UR. Defendant asserts, however, that the new Independent Medical Review (IMR) process supersedes the parties’ stipulation to have the AME resolve treatment disputes.

The WCAB concurred with the WCJ that the parties may contractually waive their right to pursue the statutory review processes in favor of submitting disputes over medical treatment to a specified AME, a request for medical treatment must be submitted to UR before a dispute has arisen. The WCAB thus found in the panel decision of Bertrand v County of Orange that the defendant must submit a request for medical treatment to UR before a dispute may be referred to the AME for resolution.

“The WCJ correctly held that the new !MR process for reviewing a UR denial of medical treatment may be waived by the parties’ stipulation to bypass statutory review in favor of submitting their disputes to the AME. The recent change to IMR as the method of review of medical treatment disputes, as provided in Labor Code section 4610.6, does not supersede the parties’ stipulation as defendant argues. A change in law does not relieve a party from a lawfully entered stipulation. (See Fireman’s Fund Insurance Company v. Workers’ Comp. Appeals. Bd. (Allen) (2010) 181 Cal.App.4th 752 [75 Cal.Comp.Cases 1] [CJGA not entitled to void stipulation to pay 50% of medical treatment award after subsequent appellate decisions clarified law that CJGA had no liability.].)”

“However, the WCJ’s view that the parties’ stipulation necessarily avoids the UR process is not persuasive. While the parties’ stipulation provides that they will refer medical treatment disputes to the AME, it does not specify what process they intended to circumvent by that referral. Jn order to implement the parties’ stipulation to have medical treatment disputes referred to the AME, there must be a dispute between the parties over a specific treatment request. For a dispute to exist there must first be a UR denial, otherwise there would be no dispute to refer to the AME.”

Employers Holdings California Comp Strategy Pays Off

Employers Holdings Inc., the provider of workers’ compensation insurance in the western U.S., stock price rallied after second-quarter earnings beat analysts’ estimates. Officials reported in a conference call that revenues increased 10% and earned premiums increased nearly 8%. The company is at a record high in the number of areas including book value per share, the market value of its portfolio, total number of policies and total in-force premium. Net earned premium was 8% higher than last year’s second quarter, driven by increases in policy count average policy size and net rate. The stock jumped 11 percent and narrowed the decline this year to 33 percent for the Reno, Nevada-based insurer.

Chief Executive Officer Douglas Dirks has been seeking to limit losses in California by raising prices and slowing policy count growth, after higher-than-expected claims in 2013. The sharp increase in open litigated indemnity claims that it experienced in the fourth quarter of 2013 in Southern California, did not continue into the first or the second quarters of this year. While the percentage of litigated indemnity claims in Southern California remained stable in the first two quarters of this year, it has experienced a decline in the number of new claims with legal representation at the outset of the claim. And while the cost of claims in California is higher than elsewhere in the nation, due in large part of litigation, Employer’s average paid cost for open medial and indemnity claim has been significantly lower than the industry average in California. California continues to represent 60% of its total book in terms of in-force premium and 57% of total in-force policies. California policy count increased just 2.7% year-over-year at June 30th, and policy count in all of its states excluding California increased 5.1%.

Court of Appeal Limits Definition of LC 4558 Power Press Exception

O’Neil Watrous suffered serious injuries while operating a Fenn 5F swaging machine in the course and scope of his employment with LeFiell Manufacturing Company. Watrous filed a civil complaint against his employer alleging a violation of Labor Code section 4558, the power press exception to the exclusive remedy of workers’ compensation.

A Fenn 5F swaging machine is used to reduce a larger diameter tube to a smaller diameter. The swaging operation uses a process whereby hammers are actuated within the machine and used against dies that change the shape at the end of the tube. The swaging process compresses the metal so that the end of the tube is smaller in diameter, thicker, and stronger than the rest of the tube. The door had been removed from the Fenn 5F swaging machine that Watrous was operating at the time of the accident. The purpose of the door is for access, and when necessary, to change the dies. The door also functions to hold the dies in place while the power press is in operation. There is an opening in the center of the door to feed the material to be swaged into the bed of the Fenn 5F swaging machine. Instead of the door, a metal pressure plate was held in place by clamps.

Watrous was standing approximately six feet from the Fenn 5F swaging machine at the time of the accident and was removing a tube from the machine following the swaging process. He was injured when a piece of metal hit him in the eye. His 4558 theory was that the tube he was removing from the swaging machine struck the pressure plate assembly, causing the part to be “violently dislodged and launched into [his] eye and occipital lobe.” LeFiell brought its summary judgment motion asserting that the door was not a point of operation guard as a matter of law. Thus, his injury did not fall within the section 4558 exception. The trial court denied the motion and concluded there was a triable issue of fact as to whether a door that was removed from the Fenn 5F swaging machine operated by plaintiff O’Neil Watrous was a point of operation guard. LeFiell filed a petition for writ of mandate challenging an order denying its summary judgment motion. The Court of Appeal reversed in the published opinion of LeFiell v Superior Court.

Section 4558’s exemption from workers’ compensation exclusivity applies, by the statute’s own plain and express terms, only to material-forming machines utilizing a die. Machines using other types of tools to cut material are not within the statute’s application, even if they would meet a regulatory agency’s definition of power press. The Supreme Court in the Rosales decision (22 Cal.4th at p. 286) rejected importing the definition of “power press” promulgated by the Occupational Safety and Health Standards Board (Cal. Code Regs., tit. 8, § 4188, subd. (b)) into section 4558. Section 4558 provides its own definition of ‘power press – a definition that limits the category to machines using dies. Thus the Court of Appeal rejected Watrous’s attempt to import general industry safety regulations into section 4558.

A peremptory writ of mandate issue directing the trial court to vacate its order denying LeFiell’s motion for summary judgment and enter a new and different order granting the summary judgment motion.

Commercial Insurance Broker Pleads Guilty to Embezzling Premiums

Matthew Arriaga, 37, of Ventura pleaded guilty to four counts of felony grand theft after embezzling more than $99,440 in premiums prior to his arrest in October of 2013. While out on bail, Arriaga continued his criminal activity which added to his charges and landed him back in custody.

“The fact that this former insurance agent lied to consumers and then continued to commit the same crime while out on bail is appalling,” said Insurance Commissioner Dave Jones. “California has a vibrant insurance marketplace and the criminal activity of those looking to degrade the trust of professional agents will not be tolerated.”

A Department of Insurance investigation revealed that Arriaga was collecting premium payments for commercial liability policies and failing to place the policies with an insurance company. In some instances Arriaga would forward funds after his clients’ policies were canceled due to lack of payment. According to investigators, while out on bail and working under a suspended license, Arriaga continued to embezzle funds from at least two additional victims. After insurance investigators discovered  the continued criminal activity, with cooperation with the Ventura County District Attorney’s Office, Arriaga’s bail was revoked and he remained in custody from May 19, 2014 until his conviction.

Arriaga is the second suspect to plead guilty to multiple felony charges stemming from an investigation into a wholesale and retail commercial insurance agency co-owned by Arriaga. Last April, David Patrick Clark, 53, pleaded guilty to one count of Grand theft and has been sentenced to 90 days in Ventura County Jail, five years formal felony probation and ordered to pay more than $97,445 in restitution to victims. third suspect, James Fayed III, 40, who worked with Arriaga and Clark, is due in Ventura County Superior Court on September 29, 2014 for a preliminary hearing on four felony counts of grand theft by embezzlement.

DME Company Owner Found Guilty in a 10-Year, $8.3 Million Fraud Scheme

On July 31, 2014, a federal jury in Los Angeles found that the former owner of a durable medical equipment (DME) supply company located in Carson, California, was guilty of health care fraud charges relating a 10-year scheme in which Medicare was fraudulently billed more than $8 million for DME that was not medically necessary.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney André Birotte Jr. of the Central District of California, Special Agent in Charge Glenn R. Ferry of the Department of Health and Human Services Office of Inspector General (HHS-OIG) Los Angeles Region, Assistant Director in Charge Bill L. Lewis of the FBI’s Los Angeles Field Office and Special Agent in Charge Erick Martinez of the IRS-Criminal Investigation’s (IRS-CI) Los Angeles Field Office made the announcement.

Olufunke Ibiyemi Fadojutimi, 42, of Carson, California, is a registered nurse and the former owner of Lutemi Medical Supply. He was found guilty after trial of one count of conspiracy to commit health care fraud, seven counts of health care fraud and one count of money laundering. Sentencing will be scheduled at a later date.

The trial evidence showed that between September 2003 and January 2013, Fadojutimi and others paid cash kickbacks to patient recruiters and physicians for fraudulent prescriptions for DME, such as power wheelchairs, that the Medicare patients did not actually need. Fadojutimi and others then used these prescriptions to bill Medicare for the power wheelchairs and other DME. Approximately $8.3 million in false and fraudulent claims were submitted to Medicare, and Medicare paid almost $4.3 million on those claims.

The case is being investigated by HHS-OIG Los Angeles Region, the FBI and IRS-CI Los Angeles Field Office. The case is being prosecuted by Trial Attorneys Fred Medick and Blanca Quintero of the Criminal Division’s Fraud Section, and was previously prosecuted by the Fraud Section’s Jonathan T. Baum.

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.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,900 defendants who have collectively billed the Medicare program for more than $6 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

Independent Medical Review Records Submission Process Improved

The Division of Workers’ Compensation (DWC) has posted an update on improvements for submitting independent medical review (IMR) records.

Beginning with letters sent Monday, August 4, 2014, the Independent Medical Review Organization, Maximus Federal Services, will be including with each Notice of Assignment and Request for Information (“NOARFI”) a cover sheet with barcodes. This barcoded sheet will help ensure that documents submitted are associated with the appropriate IMR case quickly and with improved accuracy.

Parties responding to the NOARFI should include this barcoded sheet on the top of each document submission. An example of the barcoded sheet is posted online. DWC will continue to post updates and notifications regarding improvements in the IMR system on the IMR updates page.

Insurers Consider Cost-Effectiveness of Commercial Weight Loss Strategies

As weight loss becomes more about health than vanity, insurers might increasingly be footing the bill for non-surgical reducing methods, researchers say. And they’ll want to know which ones are the best investment. And such might be the case in California workers’ compensation where a weight loss program may be ordered as part of treatment for a physical injury or a pre-surgical recommendation that is delaying the case.

In a new analysis reported by Reuters Health, the popular Weight Watchers program and the drug Qsymia were the most cost-effective strategies to lose weight. If a third-party payer didn’t cover the high cost of Jenny Craig’s food, that would be the most effective plan, the study found. “To me the main message is that there are only a few viable options for weight loss,” Eric Finkelstein told Reuters Health in an email. “(Weight Watchers) and Qsymia currently provide the best bang for the buck but Jenny Craig is most effective.” Finkelstein is the study’s lead author from the Duke-National University of Singapore Graduate Medical School and the Duke Global Health Institute. He’s also worked with Jenny Craig, Weight Watchers and a number of companies that manufacture weight loss drugs.

Insurers and employers are under increasing pressure to cover weight loss strategies for their customers and employees, Finkelstein said. “As such, they care both about the costs and potential benefits,” he said. “To date, no study has been conducted that compares all programs against each other.”

For the new analysis, Finkelstein and his co-author reviewed randomized controlled trials – the “gold standard” of medical research – that evaluated non-surgical weight loss strategies over at least one year. They then paired those results with data on prices to estimate the cost per kilogram of weight loss and cost per “quality adjusted life year,” which is the cost for each year of life gained by using the program or drug. After excluding studies that lasted less than a year or had other problems, their analysis included Weight Watchers and Vtrim, both diet and lifestyle programs, the Jenny Craig meal-replacement program and the drugs Qsymia, Lorcaserin and Orlistat.

The researchers found that the average cost per kilogram (2.2 pounds) lost ranged from about $155 for Weight Watchers to about $546 with the Roche drug Orlistat, which is available by prescription as Xenical or over-the-counter as Alli. The second most cost-effective strategy at about $204 per kilo was Qsymia, a drug from VIVUS, Inc., which provided some support for the study. The Vtrim program was the third most cost-effective strategy per kilo of weight lost, followed by Jenny Craig, the drug lorcaserin – marketed as Belviq by Arena Pharmaceuticals GmbH. Orlistat was the most expensive per kilo.

Insurers and policymakers often prefer to consider treatments based on their cost per quality adjusted life year gained, and typically interventions are considered effective if that cost is less than $50,000. The researchers found that Weight Watchers, at $34,630, was the cheapest program per quality adjusted life year gained. It was followed by Qsymia, which is more effective at fostering weight loss, but more expensive at $54,130 per quality adjusted life year gained.

“As an individual the choice of which to choose should be based on perceived costs and benefits and all may be viable options given (their) benefits that extend beyond (cost-effectiveness) analysis,” Finkelstein said. Those benefits include the taste of food and convenience, for example.

As someone paying for the program, however, he said he would limit his investment to programs proven to work and those that have the participant take on some cost responsibility, such as weight loss success. Finkelstein also cautioned that these results are based on clinical trial results. Participants often receive the programs, food or drugs for free. “Real world results could be better or worse,” he said.