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Author: WorkCompAcademy

LAPD Reserve Officer Not An Employee for FEHA Claims

In 1990, Frank Estrada became a reserve officer for the Los Angeles Police Department. As an applicant for the reserve officer position, Estrada acknowledged in writing that “As a member of the Police Reserve Corps, I am not a regularly salaried officer of the [Department] and am not entitled to compensation for services rendered as a Police Reserve Officer.” Although Police Reserve Officers are volunteers who serve gratuitously, the City deems these individuals to be “employees” for the limited purpose of extending them workers’ compensation benefits. Such benefits are not remuneration; rather, they help to make the volunteers whole, in the event they are injured while performing their duties.

In 1995, while on duty, Estrada was involved in a traffic collision and sustained leg and back injuries. In 1996, while on duty, Estrada again was involved in a traffic collision and injured his right shoulder. In both instances, he obtained workers’ compensation benefits and continued to receive benefits, as his injuries were not fully resolved.

In October 2004, the Food and Drug Administration (FDA) served a search warrant on Estrada’s nutritional supplement company, Body Basics, Inc. Thereafter, Estrada was the subject of a personnel complaint by the Department’s Internal Affairs Division. The personnel complaint alleged that while Estrada was off duty, he “inappropriately sold a product containing sildenafil citrate, the active ingredient of Pfizer’s trademark prescription drug Viagra.” Administrative proceedings following an investigation resulted in Estrada’s termination in December 2007, after 17 years as a reserve officer.

Estrada filed suit against the City, alleging: disability discrimination under FEHA (Gov. Code, § 12945.2, subd. (l)) (first cause of action); retaliation for filing workers’ compensation claim (Lab. Code, § 132a) (second cause of action); and intentional infliction of emotional distress (IIED) (third cause of action). Estrada subsequently withdrew the second cause of action, and the third cause of action was eliminated on demurrer. Thus, this matter proceeded only on the first cause of action, the FEHA claim.

The trial court determined “as a matter of law that [Estrada] could not prove the elements of his first cause of action for disability discrimination in violation of the [FEHA] on the ground that [Estrada] is not an employee for purposes of the FEHA.” Estrada appealed the decision claiming that the trial court erred in concluding the definition of “employee” for purposes of his FEHA discrimination claim is governed by the City’s civil service rules; a charter city, such as Los Angeles, cannot opt out of complying with state laws that address statewide concerns; FEHA defines “employee” broadly and looks to case law for a more useful definition; FEHA reflects matters of statewide concern and cannot be trumped by the City’s civil service rules; including the City’s police reserve officers within the definition of “employee” is consistent with the public policy expressed in FEHA and is reasonably related to the statewide concerns addressed in FEHA.

The Court of Appeal rejected these arguments and sustained the dismissal in the published case of Estrada v City of Los Angeles. In “order to recover under the discrimination in employment provisions of the FEHA, the aggrieved plaintiff must be an employee.” However, the statutory definition of ‘employee’ found at Gov. Code section 12926, subdivision (c), does not actually define who is an employee under the FEHA. The definition of ‘employee’ contained in FEHA regulations is more helpful. These were interpreted in the case of Mendoza v. Town of Ross (2005) 128 Cal.App.4th 625, 632. Mendoza found “there is nothing within the FEHA or its legislative history evincing an intent to depart from the requirement that compensation of some sort is indispensable to the formation of an employment relationship.” Thus the Court concluded that “Estrada was a volunteer who served without remuneration. He was appointed to a volunteer position, rather than to a position in the classified civil service. Accordingly, Estrada was not an employee of the City.”

Feds Cut Back on Health-Care Fraud Investigations

Federal officials are scaling back several high-profile health-care fraud and abuse investigations as a result budget and staff cuts, including an audit of the state insurance exchanges that are set to open later this year as a key provision of the Affordable Care Act.

The Department of Health and Human Services’s Office of Inspector General, which investigates Medicare and Medicaid waste, fraud and abuse, is in the process of losing a total of 400 staffers, about 20 percent of its workforce from its peak strength of 1,800 last year. About 200 of those staffers will have departed by the end of this year, and the other 200 are slated to be gone by the end of 2015.

“As OIG’s budget resources decline, so do our enforcement and oversight activities,” reads an agency document obtained by the Center for Public Integrity. The OIG noted that it “will not be able to keep pace” with the rapid growth of taxpayer-subsidized health care anticipated under the Affordable Care Act, the signature health reform effort of the Obama administration.

Several of the canceled projects were included in the agency’s 2013 “work plan,” which serves as a barometer for suspected fraud or billing abuse. One of them was a planned audit into computer security at state marketplaces – known as exchanges – that will sell individual health insurance policies under the Obama health-care law. The inspector general’s office said “time pressures” to get the exchanges up and running by Oct. 1 may increase risks that states will fail to shield private medical information from “hacker exploits, unauthorized data access and data theft or manipulation.” In addition, the OIG document said, about $3.8 billion in grant money to develop the exchanges is “potentially at risk for wasteful spending.” Seventeen states are planning to run their own exchanges, while the rest will be operated by the federal government or in state-federal partnerships.

An investigation to determine if nursing homes overuse controversial antipsychotic drugs in treating the elderly and which of these drugs are prescribed most often has been cancelled. The canceled initiative was supposed to identify nursing homes that failed to follow federal rules requiring that patients “be free from unnecessary drugs.”

Another canceled probe includes a study of crooked suppliers of costly durable medical equipment, such as wheelchairs and other medical devices used in the home, who manage to stay in business even after federal officials revoke their billing privileges. The durable medical equipment market has long been troubled by questionable expenditures. The audit was to target merchants in South Florida, a hotbed of Medicare and Medicaid fraud.

OIG officials contend their investigations typically return $8 for every dollar invested. They reported fiscal 2012 expected recoveries of about $6.9 billion and more than 1,100 criminal and civil investigations of individuals or health care businesses. News of the budget crunch first surfaced during questioning at a June 24 hearing of the Senate Committee on Homeland Security and Governmental Affairs. One official said at the hearing that existing staff was stretched so thin that the agency had failed to act on 1,200 complaints over the past year alleging wrongdoing – a number expected to rise.

DWC Posts Proposed Changes to WCIS Medical Data Format

In 1993 the California legislature directed the Division of Workers’ Compensation to put together comprehensive information about workers’ compensation in California. The result is the Workers’ Compensation Information System (WCIS). The WCIS has 4 components: the First Reports of Injury (FROI) reporting guidelines were implemented March 1, 2000. The Subsequent Reports of Injury (SROI) reporting guidelines were implemented July 1, 2000. Reporting of annual summary of benefits began January 31, 2001. Medical bill payment reporting regulations were adopted on March 22, 2006.

Regulations require medical services with a date of service on or after September 22, 2006 and a date of injury on or after March 1, 2000 to be transmitted to the DWC. Medical services are required to be reported to the WCIS by all claims administrators handling 150 or more total claims per year.

Electronic data interchange (EDI) is the computer-to-computer exchange of data or information in a standardized format. In California workers’ compensation, medical EDI refers to the electronic transmission of detailed medical bill payment records information from senders to the DWC. Medical bill payment data are transmitted in a format standardized by the American National Standards Institute (ANSI). The International Association of Industrial Accident Boards and Commissions (IAIABC) adapted the ANSI file standard to workers’ compensation.

The Division of Workers’ Compensation (DWC) is planning to transfer the Workers’ Compensation Information System (WCIS) from International Association of Industrial Accident Boards and Commissions (IAIABC) Medical Release 1.1 to IAIABC Medical Release 2 in the fall of 2014. This migration has significant transaction improvements that address the industry’s needs. In general it is believed to be efficient and easier to implement. Moreover, it puts in synch the CA WCIS data collection with the Divisions electronic billing regulation that went into effect on October 2012. It will also bring the WCIS data collection to the current industry standard of doing business between providers and insurers.

The California Electronic Data Interchange (EDI) Implementation Guide for Medical Bill Payment Records for Release 2 and the programming logic for validating incoming data for the new release are posted to the online forum, so that members of the public may review and comment on the proposal. This Guide is adopted by the Administrative Director of the Division of Workers’ Compensation pursuant to the authority of Labor Code sections §138.6, and §138.7. The Guide contains the California – specific protocols and excerpts from the IAIABC EDI Implementation Guide for Medical Bill Payment Records Release 2, explains the technical design and functionality of th e WCIS system, testing options for the trading partners, instructions regarding the medical billing data elements, and reporting standards and requirements.

The forum has been posted online the DWC forums web page under “current forums.” Comments will be accepted on the forum until 5 p.m. on Aug. 5.

Cal/OSHA Enforcing Heat Illness Prevention Regulations

Shade, water, and breaks. These are just some of the state requirements employers must provide to their outdoor workers. Employers who fail to do so are penalized with an order that stops all outdoor operations. This summer, Cal-OSHA has already issued 2 prohibiting orders to California employers. The first was at Etchegaray Farms in Tulare County after a field worker was found unresponsive in what’s being investigated as a possible heat-related death.

The second was at Reitz Ranches in Fresno County. The order was still in effect Monday morning after inspectors found no shade, drinking water, or a first aid kit on hand earlier this month.

Ag leaders say there are no excuses for businesses not in compliance. “No matter how many classes you take, how much you train and materials, there’s going to be some businesses that aren’t going to follow the rules. And when they get caught, they need to pay the penalty,” said Manuel Cunha, Nisei Farmers League. Cunha says the ag industry is doing better to prevent heat-related illnesses. “Farmers and farm labor contractors change their schedules, starting earlier, and getting done at 12 or 1 o clock the latest.

Still, inspectors will be out to make sure heat-related illnesses are prevented. And even though Cal-OSHA is still investigating many of these heat-related cases, they can still issue citations.

WCAB Reverses Lakers Player Almaraz/Guzman Based Award

Horace Grant played professional basketball from 1987 through March 12, 2004, when he injured his hip and was unable to continue in that line of work. His last year of employment as a professional athlete was with the defendant Los Angeles Lakers . In 2011, applicant filed a claim of cumulative trauma industrial injury against the Lakers.

The WCJ relied upon the reporting of applicant’s two QMEs to find that applicant was 90% permanently disabled without apportionment to any non-industrial factors. The WCJ implicitly accepted the view expressed by Dr. Styner that the AMA Guides do not straightforwardly apply to the applicant because he is a professional athlete and not a “normal person,” and that the holding in the consolidated Almaraz/Guzman cases authorized the physician to construe the AMA Guides in a way that “allows for a higher rating.”

Dr. Styner justified his rating with the following comments. “Mr. Grant was a professional basketball player for a long period of time, Professional basketball is a profession that is very exclusive and requires the participants to be in superb condition. Professional basketball players are also required to deal with daily severe pain and to be able to perform with severe pain. Furthermore, as part of the conditioning process, the basketball player must stay in tip top shape in order to be able to keep his job. This involves repetitive lifting, running, jumping, squatting, etc while lifting weights far in excess of what the average person can lift. Based on the unique qualifications required to be a professional basketball player, it is simply unreasonable to use the usual charts in the AMA Guides to rate this patient. These charts were designed to measure impairment in the average worker, not a top tier professional athlete such as Mr. Grant. Fortunately for the patient, the recent Almaraz/Guzman ruling has allowed the physician to rate the patient using the any [sic] chart within the AMA Guides that he feels is appropriate and that is what I did in my report of 8/2011. I continue to stand by my rating of this patient.”

The WCAB reversed the award in the panel decision of Horace Grant v Los Angeles Lakers ruling that “Dr. Styner’s application of the AMA Guides and understanding of the Almaraz/Guzman holding are incorrect, and his reporting is not substantial evidence in support of the WCJ’s decision.”

The WCAB reasoned that “Dr. Styner is correct in noting that there is a relationship between an injured worker’s occupation and the level of permanent disability that results from certain injuries. However, that occupational factor is already accounted for in the rating string. In this case, the DEU rater applied the occupational variant of 590J, which represents the most physically strenuous occupations. Thus, reference to applicant’s occupation as a professional athlete as reason to use other than the usual charts and tables in the AMA Guides to rate whole person impairment is unjustified. Moreover, Dr. Styner’s deviation from the usual method of measuring impairment under the AMA Guides just to obtain higher whole person impairment is contrary to the holding in Almaraz/Guzman.”

Because the WCJ’s relied upon medical reporting that is not substantial medical evidence, the December 5, 2012 decision was rescinded and the case was returned to the trial level for further proceedings.

Orange County Physician Gets 3.5 Year Prison Sentence

An Orange County doctor accused of bilking Medicare of nearly $3 million in fraudulent claims was sentenced to federal prison and ordered to pay restitution. Dr. Augustus Ohemeng, a 62-year-old Buena Park resident, was sentenced to three and-a-half years in federal prison, followed by three years of supervised release. U.S. District Judge Christina A. Snyder also ordered Ohemeng to pay nearly $2 million in restitution.

According to the story in CBS Los Angeles News, Ohemeng was convicted last March on six counts of healthcare fraud after an investigation into Pacific Clinic in Long Beach, where Ohemeng served as medical director. During his tenure, Ohemeng recruited Medicare patients and billed the federal program for needless tests and procedures, according to evidence presented at trial. Prosecutors said the doctor also signed and sold hundreds of fraudulent prescriptions for power wheelchairs and other equipment to medical supply companies that in turn billed Medicare for millions.

Court documents alleged that nearly all of the prescriptions for wheelchairs signed by the doctor “were written for people who could walk” and that many of the phony prescriptions were signed and left blank to be filled in by his office manager.

Ohememg was among 10 defendants charged with healthcare fraud resulting from an investigation into Pacific Clinic, Ivy Medical Supply in Anaheim and Santos Medical Supply in South Los Angeles. Federal prosecutors said that all 10 had either entered guilty pleas or been convicted by a jury as of Monday.

Anthem Blue Cross Opts Out of Covered California Exhange

Health insurance giant Anthem Blue Cross is spurning California’s new insurance market for small businesses, a potential setback in the state’s rollout of the federal healthcare law. Anthem, a unit of WellPoint Inc., is California’s largest insurer for small employers. The Los Angeles Times reports that the company’s surprising move raised concerns about the state’s ability to offer competitive rates and attract businesses to its new Covered California exchange that opens Jan. 1. Friday’s disclosure made Anthem the first big insurer in California to publicly pass on the small-business pool. Some other big names, such as UnitedHealth Group Inc. and Aetna Inc., have already opted out of California’s larger exchange for individual consumers. Anthem’s decision in California underscored that the small-business exchanges are the most susceptible to a lack of interest among insurers.

The state’s largest for-profit health insurer isn’t abandoning the small employer market, which is limited to firms with 50 or fewer workers. It said it would keep selling coverage to small companies outside the exchange, and it also remains one of 13 health insurers that will offer policies to individuals in Covered California.

Anthem led California with 31% of the small-employer market in 2011, according to the most recent Citigroup data. Kaiser Permanente was a close second with a 28% share, followed by Blue Shield of California with 18% of small firms. Both Kaiser and Blue Shield are expected to participate in the small-group exchange. Nonetheless, Anthem’s move caught many observers off guard. “That’s really surprising and not a good thing for the exchange,” said Micah Weinberg, a senior policy advisor at the Bay Area Council, an employer-backed San Francisco group. “Anthem is a very major player in the small-group market and you want a broad range of insurers, particularly the most compelling brand names.”

Covered California sought to downplay any potential fallout on rates and employer choice, likening Anthem’s departure to one airline pulling out of a highly competitive market. “We don’t think it will have a huge impact,” said exchange spokesman Dana Howard. “There are other companies that are just as big. This will be a competitive market.” Employers will learn more early next month when Covered California announces the health insurers and their proposed rates for the small-business exchange. In the first few years, the state estimates up to 200,000 small-business workers and family members may get coverage through the state’s market.

One concern for health insurers selling in exchanges is that too many customers with big medical bills pick a certain company and it absorbs a higher share of the medical costs among that population. “The reality is that risk is not spread equally in an exchange,” said Bruce Jugan, an insurance agent in Montebello and president of, which sells health insurance to individuals and businesses. “If SHOP can offer comparable plans with lower rates then they will get a lot of business, even without Anthem Blue Cross participating,” Jugan added.

Anthem has come under fire from regulators recently over rate hikes for small businesses. Last month, California Insurance Commissioner Dave Jones asked the exchange to bar Anthem from its small-group market because of what he viewed as unreasonable premium increases. “I think Anthem withdrew because they felt they would be excluded or at a minimum they didn’t want to face additional debate” over their rate hikes, Jones said Friday. Covered California had said it would consider the commissioner’s request alongside other factors. Anthem said the recommendation by Jones had no bearing on its decision to drop out.

Drugmaker Settles Illegal Kickback Case for $15 Million

Last week biopharmaceutical company Amgen Inc. paid the United States more than $15 million to resolve allegations that the Ventura County company provided illegal financial incentives to physicians and physician groups to induce them to prescribe the cancer drug Xgeva. Amgen, which is headquartered in Thousand Oaks, paid the money today pursuant to a settlement agreement with the United States to resolve allegations that it violated the Medicare Anti-Kickback Statute and the federal False Claims Act. The Medicare Anti-Kickback Statute prohibits anyone from offering, paying, soliciting or receiving anything of value to generate referrals for items or services payable by any federal health care program.

Xgeva, which is the brand name of the drug denosumab, was approved by the Food and Drug Administration in late 2010 for use with certain cancer patients undergoing chemotherapy. It is most commonly prescribed for patients with metastatic bone disease in order to prevent skeletal-related adverse events.

In order to increase sales of Xgeva, Amgen used data purchase agreements – which the company called the “Deep Dive” contracts – to provide financial incentives to oncologists and urologists to prescribe Xgeva. The original plan for the Deep Dive contracts called for Amgen to pay doctors to fill out a short survey on the Internet on how they were treating patients with bone cancer, including which drugs were used – whether or not Xgeva was prescribed. However, Amgen altered the original Deep Dive program design by increasing the amount of money it would pay doctors, and by offering such payments only to doctors who prescribed Xgeva for their patients. Amgen’s Xgeva marketing team also was not supposed to know the identities of the doctors who received Deep Dive contracts, but team members had access to that information. Additionally, in a further effort to influence doctors to prescribe Xgeva, Amgen provided cash payments characterized as honoraria to oncologists and urologists for participating in audience response sessions, data market research surveys, and “treatment trends” advisory board programs which touted the benefits of Xgeva.

This settlement resolves a lawsuit filed under the qui tam, or “whistleblower,” provisions of the False Claims Act, which allow private citizens with knowledge of fraud to bring civil actions on behalf of the United States and share in any recovery. The case, which was filed last year in federal court in Los Angeles by two Amgen employees – United States ex rel. Davis et al. v. Amgen Inc., et al., CV12-00570-R (MRWx) – was unsealed last week after the United States elected to take over part of the case and negotiated the settlement with Amgen. The two men who originally filed the lawsuit, William Davis and Spencer Miller, will collectively receive $2.75 million as part of the settlement.

The United States Attorney’s Office for the Central District of California, and the Justice Department’s Civil Division, handled the civil settlement. This matter was investigated by the U.S. Department of Health and Human Services, Office of Inspector General.

WCAB Extends Deadline for Comments on Proposed Rules Until August 9

On July 9, 2013, the Workers’ Compensation Appeals Board announced its intent to modify the text of proposed amendments to its Rules of Practice and Procedure that had been the subject of a public hearing on April 16. The announcement stated that written comments regarding the proposed modifications would have to be received by the WCAB by 5 p.m. on July 25.

Following this announcement, some members of the workers’ compensation community requested the WCAB to extend the time for submitting written comments. The WCAB agreed that a limited extension of time was reasonable. Therefore, the WCAB extended the time for submitting written comments by an additional 15 days to Friday, August 9 by 5 p.m. The WCAB will consider only comments it has received by that time.

As previously announced, the proposed modifications to the initially proposed Rules and related documents are posted on the WCAB’s website. The originally proposed new and amended Rules and related documents may also be found at this site.

Additionally, to facilitate further public comments, the WCAB is presently in the process of adding to its website all public comments it has received regarding the proposed Rules amendments. The documents to be posted will include the written comments the WCAB received on or before April 16, a transcript of the April 16, public hearing, and the written comments the WCAB has received in conjunction with the July 9 announcement. The posting of these written comments will be periodically updated until the August 9 closure of the written comment period.

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 written comments regarding the proposed Rules modifications it receives by Friday, August 9 at 5 p.m. It encourages all interested members of the workers’ compensation community to participate in this important process.

New Study Shows Cell Therapy Benefits for Disc Pain

Scientists have developed a new method of stopping or reversing disability and pain caused by degenerative disc disease in the spine using cell therapies, according to a proof-of-concept study published in the journal Biomaterials and summarized by Medical News Today. Researchers from the Duke Pratt School of Engineering at Duke University in Durham, North Carolina, have developed new biomaterials capable of delivering a booster shot of reparative cells to the nucleus pulposus (NP), effectively stopping pain caused by degenerative disc disease. The NP is the “jelly-like” cushioning found between the spinal discs. According to the researchers, the NP tissue distributes pressure and provides spine mobility, helping to soothe back pain.

Previous laboratory research has proven that re-implanting NP cells can delay disc degeneration, the researchers say. But Aubrey Francisco of the Department of Biomedical Engineering at Duke says that although many companies offer cell delivery strategies in a attempt to stop disc degeneration, the methods are poor, ineffective and “allow cells to quickly migrate out of and away from the injection site.”

Lori Setton of the Department of Biomedical Engineering and the Department of Orthopaedic Surgery at Duke, says: “Our primary goal was to create a material that would be liquid at the start, gel after injection in the disc space, and keep the cells in the location where they’re needed. Our second goal was to create a material that would provide the delivered cells with the environmental cues to promote their persistence and biosynthesis.”

The way the new biomaterials work are by keeping the cells in place and triggering a process which mimics laminin, a protein found in native NP tissue. Laminin is usually found in juvenile but not degenerated discs. The protein allows injected cells to attach and remain in place with the delivered biomaterial. Laminin could also enable the cells to survive for a longer period, as well as producing more of the “appropriate extracellular matrix or structural underpinning of the discs that help stop degeneration.” With this in mind, the scientists developed a “gel mix” designed to reintroduce NP cells to the intervertebral disc (IVD) area.

The gel is made up of three components; protein laminin-111 – which has been chemically modified – and two polyethylene glycol (PEG) hydrogels which can attach to the modified laminin. Once injected, the gel holds the cells in place. This gel was injected into rats’ tails, the same way the cells would be delivered to a patient. The needle was held in place in the thin outer layer of the tails for one minute while the gel entered the rat’s IVD area.

Results show that the gel began to solidify after 5 minutes, and by 20 minutes it was set. Using a luciferase biomarker to monitor the progress of the biomaterials, the researchers were able to see that more cells remained in place 14 days after the injection when conducted with the new biomaterial carrier, compared to cells delivered via methods requiring a liquid suspension, in which cells usually remain in place for 3 to 4 days. The preliminary results from this study could have a positive impact on the future of cell therapy.