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Martin Brady Reappointed to CHSWC

The Department of Industrial Relations (DIR) and the Commission on Health and Safety and Workers’ Compensation (CHSWC) announced the reappointment of Martin Brady to the commission, where he has served since 2012.

Governor Brown reappointed Brady as the public employer representative.

CHSWC Commissioners are appointed by the Governor and the Legislature. Labor Code 75 establishes that two of the employer members and two of the labor members of the Commission shall be appointed by the Governor for a total of four members.

Brady has been executive director at the Schools Insurance Authority since 1997, where he was a risk management and prevention manager from 1988 to 1997. He is a director of the California Association of Joint Powers Authority and the California Coalition on Workers Compensation. He earned a Master of Arts degree in physical education from California State University, Fresno.

CHSWC is a joint labor-management body created by the workers’ compensation reform legislation of 1993. CHSWC is charged with examining the health and safety and workers’ compensation systems in California and recommending administrative or legislative modifications to improve their operation. The Commission was established to conduct a continuing examination of the workers’ compensation system and of the state’s activities to prevent industrial injuries and occupational illnesses and to examine those programs in other states.

CHSWC also administers the Worker Occupational Safety and Health Training and Education Program (WOSHTEP), which sponsors workplace health and safety training programs and distributes educational materials on job safety.

This position does not require Senate confirmation.

Study Says “Inefficient” Prescribing Wastes Billions of Dollars

Nearly $73 billion was spent in the U.S. between 2010 and 2012 on brand name medications instead of less expensive alternatives, according to a new study. A large portion of that was spent by patients, the researchers found.

“Prescription drug prescribing during the time of this paper was not efficient and still isn’t efficient,” said lead author Dr. Michael Johansen, of Ohio State University in Columbus. “The number we’re spending on prescription drugs is really large. At least from what this paper shows, patients are bearing a disproportionate amount of the inefficiencies in our prescribing.”

One way to make prescribing more efficient is to order less expensive generic drugs to take the place of brand name medications. For example, instead of prescribing AstraZeneca’s Crestor, a statin drug for lowering high cholesterol, doctors might prescribe rosuvastatin, which is the less expensive generic form of Crestor.

Another, less widely accepted approach is known as therapeutic substitution. With therapeutic substitution, the patient would still receive a statin drug, but maybe not the same one he was taking before. He might receive atorvastatin, for example, which is the generic form of Pfizer’s Lipitor. Or he might receive simvastatin, the generic form of Merck’s Zocor. The patient would receive the least expensive drug in the same class of medications.

To see how much could possibly be saved with therapeutic substitution, Johansen and his co-author Dr. Caroline Richardson of the University of Michigan in Ann Arbor analyzed 2010-2012 data on 107,132 medication users.

As reported in JAMA Internal Medicine and summarized by Reuters Health, about 62 percent of participants reported using prescription drugs, and about a third were using a medication that was eligible for therapeutic substitution. Of the $760 billion spent on prescription drugs during the study period, about $73 billion may have been unnecessarily spent on brand name drugs, the researchers found. And nearly $25 billion of the $175 billion that patients paid out-of-pocket for their drugs during that time might have been saved by therapeutic substitutions.

The key to moving toward therapeutic substitution is to coordinate with doctors, said Johansen. It might be the case, he said, that a patient needs to take a specific generic drug for a specific reason.

His concerns are echoed in an editorial by Dr. Joseph Ross, JAMA Internal Medicine associate editor and associate professor at Yale University in New Haven, Connecticut. “To achieve the benefits of within-class substitution, we need wider adoption of systematic protocols, aligned with physician judgment, as to when such substitutions are beneficial and when not,” he wrote.

Johansen thinks it will take a lot of different interventions at different levels to overcome reluctance to implement therapeutic substitution, but policy efforts will probably be helpful. “Essentially the feeling you get with this is very similar to how people felt when generics were coming out,” he said. But, he pointed out, “The acceptance of generic drugs has improved.”

Two So Cal Doctors Convicted After Two Week Trial

After a two-week trial in Los Angeles, two doctors were found guilty of federal health care fraud charges for falsely certifying that Medicare patients were terminally ill, and therefore qualified for hospice care, when the vast majority of them were not actually dying. The doctors were found guilty of participating in a scheme related to the Covina-based California Hospice Care (CHC). CHC submitted approximately $8.8 million in fraudulent bills to Medicare and Medi-Cal for hospice-related services.

Sri Wijegoonaratna, known as Dr. J., 61, of Anaheim, who was found guilty of seven counts of health care fraud; and Boyao Huang, 43, of Pasadena, was found guilty of four counts of health care fraud. The two are scheduled to be sentenced on August 15, at which time each will face a statutory maximum sentence of 10 years in federal prison for each count of health care fraud.

“A number of patients admitted to California Hospice Care testified at trial, showing that they did not require end-of-life care,” said United States Attorney Eileen M. Decker. “In fact, only a small percentage of patients later died – notwithstanding the two doctors declaring that they needed hospice care. This scheme is one of many that has victimized public health care programs and, in the end, the taxpayers who fund these important programs. We will continue to investigate these fraudulent schemes, shut down the operations and incarcerate those responsible for stealing from the system.”

Four other defendants who were named in a federal grand jury indictment in September 2014 have pleaded guilty to health care fraud charges and are pending sentencing (except for one defendant who has been accepted into a diversion program). Those other defendants include a Placentia woman who purchased CHC in 2007 and operated the facility after being charged and incarcerated in another health care fraud scheme. Priscilla Villabroza, 70, previously pleaded guilty in December to one count of health care fraud and is scheduled to be sentenced on June 20.

As part of the CHC fraud scheme, Villabroza and her daughter – who was the nominal owner while Villabroza was in custody – paid patient recruiters known as “marketers” or “cappers” to bring in Medicare and Medi-Cal beneficiaries. CHC nurses performed “assessments” to determine whether the beneficiaries were terminally ill and, regardless of the outcome, Wijegoonaratna and Huang certified that the beneficiaries were terminally ill – even though the vast majority of them were not dying. CHC personnel altered medical records in response to Medicare audits to make the beneficiaries appear sicker.

The evidence at trial showed that Wijegoonaratna also recruited patients into the scheme and received tens of thousands of dollars in kickbacks. “Not only did defendant Wijegoonaratna refer beneficiaries to CHC in exchange for illegal kickbacks, but he also created fraudulent diagnoses and falsely certified that the referred beneficiaries were terminally ill, even though the overwhelming majority of CHC beneficiaries were not terminally ill, so that CHC could qualify for reimbursement from Medicare,” prosecutors wrote in court documents filed in relation to the trial. The California Medical Board has revoked Wijegoonaratna’s medical license.

The investigation into California Hospice was conducted by the United States Department of Health and Human Services, Office of Inspector General; the Federal Bureau of Investigation; the California Bureau of Medi-Cal Fraud & Elder Abuse; and IRS Criminal Investigation.

Todd Kelly Announces Retirement from His Firm

Todd Kelly, a Senior Partner, has announced his retirement from the firm of Floyd, Skeren & Kelly, LLP,.

Given his youth, he stated that he may undertake charitable projects in addition to his active involvement in the Boy Scouts, engage other business pursuits, look into other legal disciplines, or look into other avenues within workers’ compensation that involve neither litigation nor competition with FSK.

Mr. Kelly started with the Law Offices of John B. Floyd as an undergraduate college student and never looked back. During college and law school he was with us explained Mr. Floyd. When he passed the bar we were Floyd & Skeren and welcomed him in as a new attorney.

Mr. Kelly was made a partner in 1998 and the firm took on the Floyd, Skeren & Kelly name in 1998. Todd, as he is known to his friends and associates was an integral part of the firm’s growth over the last decade. He is known at the firm as not only a hard-nosed litigator but a knowledgeable marketer as he knows well the clients’ needs to defend their interests and to do so in a straight forward and economic fashion.

Although he is leaving the firm, Senior Partner’s Amanda Manukian and John Langevin aptly described that he will be gone but only a phone call away when his wisdom is needed.

The whole firm, but particularly the partners, will miss his presence, sense of humor and friendship.

DJ Faces Jail Time for Forged Certificate of Insurance

Carlos Rojas, 33, of Huntington Beach, surrendered to the Los Angeles Police Department on a warrant obtained by California Department of Insurance detectives and is facing a felony charge of forgery.

Rojas, doing business as ALIST Entertainment, allegedly submitted a fraudulent certificate of liability insurance to the nightclub, Avalon Hollywood, where he hosted an event titled College Club Night. During the event, a fight ensued that led to the performing disc jockey being injured. The injured disc jockey attempted to file a workers’ compensation claim against the Avalon Hollywood nightclub.

Investigations by both the insurance company and the California Department of Insurance revealed neither Rojas nor ALIST Entertainment was a client and revealed that Rojas allegedly provided the nightclub with a forged certificate of liability insurance.

Once it was determined the promoter did not have the required liability insurance, the injured DJ attempted to file a claim against the nightclub, which left the club liable for all workers’ compensation, legal and administrative fees associated with the claim.

The DJ has the option of pursuing his claim through the California Uninsured Employers Benefits Trust Fund, which was established to provide payment to injured employees of illegally uninsured employers like Rojas.

Bail was set at $40,000. Rojas was released on his own recognizance. This case is being prosecuted by the Los Angeles County District Attorney’s Office

New CWCI Study Shows “Positive” Recent Trends in Opioid Prescriptions

Despite a growing awareness of the problems and long-term repercussions associated with opioid use, utilization of these drugs in California’s workers’ compensation system has expanded to the point where they now comprise the single largest category of medications prescribed to injured workers.

A number of CWCI studies have tracked this growth, the most recent being an analysis published in May 2014 that measured utilization and payment trends for Schedule II opioids such as oxycodone, morphine, and fentanyl, as well as less potent, but still potentially addictive Schedule III opioids (primarily hydrocodone combination drugs such as Vicodin, Norco and Lortab).

The results of the 2014 analysis showed that except for a brief dip following the enactment of SB 899 in 2004, use of Schedule II opioids had risen steadily, increasing nearly sixfold from 1.3 percent of all workers’ compensation prescriptions in 2002 to a record 7.3 percent in the first half of 2013. Furthermore, the study noted that although the growth rate for Schedule II opioids plateaued after 2010, use of these drugs remained at an all-time high and payments for these painkillers had increased from about 4 percent of all California workers’ compensation prescription dollars in 2005 to nearly 20 percent in the first half of 2013.

Use of less powerful Schedule III drugs fell to a post reform low in 2005 and remained fairly level thereafter. From 2005 through the first half of 2013, these drugs consistently accounted for about 20 percent of the prescriptions dispensed to injured workers and around 10 percent of the prescription dollars.

Now a new CWCI report updates and expands upon those earlier findings using data from more than 10.8 million workers’ compensation prescriptions that were dispensed to injured workers in California between January 2005 and December 2014. Aggregate payments for these prescriptions totaled $1.1 billion.

Several measures of opioid utilization that increased in the first several years of the study period have showed decline in recent years.

1) The number of opioid prescriptions per user increased from 3.38 in 2005 to a peak of 4.43 in 2009 and then declined to 4.10 in 2012.
2) The average number of morphine equivalents per opioid prescription increased from 473 in 2005 to a. peak of 550 in 2007 and then declined to 422 in 2012.
3) Morphine equivalents per opioid user increased from 1,599 in 2005 to a. peak of 2,355 in 2008 then decreased to 1,728 in 2012.
4) Opioids increased from 27.0 percent of all prescription drugs dispensed to California injured workers in 2005 to a peak of 31.8 percent in 2008 and then declined to 27.2 percent in 2014. Even with the recent decline, however, opioids have remained the number one prescription category in both use and payments since 2006.
5) In 2005, 15.9 percent of every dollar paid for an opioid was for a brand name drug; by 2009, the percentage had more than tripled to 49.4 percent. However, between 2009 and 2014, the proportion of brand name opioids declined to 41.0 percent as the use of the lower cost generic opioids increased relative to brand name opioids.

The CWCI concluded that “These recent trends are positive, so it will be important to monitor them and to explore what may be driving them as this information may be useful to those charged with shaping policies to govern the use of opioids in workers’ compensation.”

Claimant Faces Fraud Charges for not Disclosing Prior History

A Pomona woman was charged with workers’ compensation fraud after investigators found undisclosed medical records showing she had lied about a pre-existing condition.

Melissa Halsell, 48, of Pomona, surrendered to detectives of the California Department of Insurance Fraud Division at the Pomona Police Department and was booked on one felony count of workers’ compensation fraud and one count of attempted perjury after allegedly filing a workers’ compensation claim for a pre-existing medical condition and denying she had received prior treatment.

After working at MV Transportation for three months, Halsell filed a workers’ compensation claim alleging she was injured on the job. An investigation by California Department of Insurance detectives revealed Halsell had pre-existing injuries and had received prior medical treatment for them. During a deposition Halsell denied ever receiving treatment. The claim was ultimately denied after her extensive, undisclosed medical records were discovered.

Bail is set for $30,000. This case is being prosecuted by the Los Angeles County District Attorney’s Office.

Injured Worker Cannot Assign Structured Settlement for Cash

Albert Matthews settled his workers’ compensation claim with a structured settlement approved by the WCAB. The settlement provided for monthly payments of $2,800 for life, with ten years guaranteed. The employer’s insurer assigned the obligation to make the monthly payments to Liberty Assignment Corporation through a qualified assignment under federal tax law. (26 U.S.C. § 130(c).) The structured settlement agreement provided that the payments to Matthews “cannot be accelerated, deferred, increased or decreased” by Matthews. Liability for the monthly payments was funded through an annuity purchased from Liberty Life Assurance Company.

Three years later, Matthews filed in superior court a request for entry of a clerk’s judgment on the workers’ compensation award, pursuant to Labor Code section 5806. The clerk entered the judgment “in conformity with the Order Approving Compromise & Release.” WC then moved for entry of a qualified order approving assignment of the judgment from Matthews to WC Funding Group, Inc., a factoring company.

WC Funding alleged Matthews and WC entered into an “Agreement to Assign Award,” by which Matthews agreed to convert his workers’ compensation compromise and release into a civil judgment, then assign his right, title, and interest in the judgment to WC Funding. In exchange, he would receive a lump-sum payment of $40,343.34 on court approval of the transaction. He would also receive monthly payments of $1,950 from WC until 2021, when the payments would return to $2,800 per month for life. Matthews stated he would use the lump sum to pay his delinquent mortgage in order to avoid foreclosure on his house.

The trial court denied WC’s motion, concluding that converting the workers’ compensation award to a judgment was prohibited by Labor Code 4900. The Court of Appeal affirmed the dismissal in the published opinion in Matthews v Liberty Assignment Corporation.

Labor Code 4900 provides that “[n]o claim for compensation……is assignable before payment.” The term “claim for compensation” has been interpreted expansively. The Court said it “is evident that the legislature intended that there should be no assignment of claimant’s rights whatsoever and that the award should be paid by the one against whom it was made directly to the claimant and to no one else.”

“Because of the unique nature of workers’ compensation awards and the judgments entered on those awards, we believe a workers’ compensation award is not assignable simply because a judgment on the award has been entered. In a workers’ compensation proceeding, the WCAB may determine all relevant matters and enter an award. (§§ 5301, 5313.) Alternatively, if the parties reach a compromise, the WCAB may approve it and enter an award based on the compromise and release agreement. (§§ 5002, 5003.) WCAB approval is mandatory: “No release of liability or compromise agreement is valid unless it is approved by the appeals board or referee.” (§ 5001.)

The parties to the workers’ compensation proceeding put the terms of their structured settlement into a compromise and release agreement. The WCAB ordered that the compromise and release agreement be approved and entered it as the award to Matthews. Thus, the anti-assignment language became part of the WCAB’s award.

Surveillance at Gym Leads to Another Claimant Arrest

Johana Magnolia Paredes, 45, of Bellflower, was arrested by California Department of Insurance detectives on two felony counts of workers’ compensation insurance fraud after allegedly misrepresenting her injuries to collect $39,953 in disability payments that she was not entitled to.

Paredes claimed she injured her right wrist while working at the UCLA Medical Center. An investigation by the California Department of Insurance and video evidence revealed Paredes was able to exercise at the gym using her right hand and right shoulder with no limitations. Upon reviewing the video evidence, the Panel Qualified Medical Examiner stated Paredes had misrepresented her injuries and he would not have authorized additional disability payments or medical treatment if he had witnessed the video surveillance earlier.

Paredes was booked by the Los Angeles Sheriff’s Department on May 2, 2016. Bail is set at $30,000. This case is being prosecuted by the Los Angeles County District Attorney’s Office.

“The disability system is an important lifeline for people truly injured and unable to work,” said Commissioner Jones. “People who take advantage of the system do so at the expense of business and taxpayers.”.

Court of Appeal Affirms Dismissal of City of LA Employee Hazing Lawsuit

Roshea Maderer worked as a typist for Los Angeles Department of Water and Power. She alleges that, on December 24, 2012, an incident took place in which fellow employees threatened and verbally abused her in front of approximately 75 fellow employees at an office holiday party. Maderer claims that employees threatened to kick her in the face, falsely accused her of engaging in sexual encounters, and accused her of being a racist, a child molester, a liar, a thief, and a rat.

Maderer filed a complaint with LADWP managers shortly after the incident occurred. Managers interviewed Maderer and her alleged attackers, and the City’s Equal Employment Opportunity Section (EEOS) initiated a formal complaint. In the absence of a response from the EEOS, Maderer filed a civil complaint alleging that LADWP had denied her right to due process under the United States Constitution by failing to investigate the incident, and she also alleged violations of state law.

The City removed the case to federal court where after a series of motions the federal law related claims were dismissed after which the federal court remanded the case to the trial court with respect to the state claims. At that point the trial court sustained without leave to amend the City’s demurrer. The court found (1) that Maderer had not identified any statutory basis for liability, as required by Government Code section 815; (2) that she had not alleged that she had presented the claim to the City prior to filing the suit, pursuant to Government Code sections 911.2 and 945.4; and (3) that the only recovery available for injuries of the type Maderer alleged she had suffered was through the workers’ compensation system.

The Court of Appeal sustained the dismissal in the unpublished case of Maderer v City of Los Angeles.

The trial court granted the City’s demurrer in part because it found that Maderer had not identified a statute allowing her to bring a suit against the City for the hazing injuries she alleges she suffered, as required by Government Code section 815 which provides that “[e]xcept as otherwise provided by statute: [¶] (a) A public entity is not liable for an injury, whether such injury arises out of an act or omission of the public entity or a public employee or any other person.” Maderer failed to identify a statute creating City liability for the hazing injuries she claims she suffered.

The trial court identified two other bases for granting the demurrer. First, the trial court found that the attacks Maderer described in her complaint were examples of “[f]lare-ups, frustrations, and disagreements among employees [that] are commonplace in the workplace and may lead to ‘physical act[s] of aggression.’ ” (Torres v. Parkhouse Tire Service, Inc. (2001) 26 Cal.4th 995, 1009.) Because actions like these are expressions of human nature which are inseparable from working together and are inherent in the working environment, the court found that Maderer could not seek recovery for her injuries outside the workers’ compensation system.

Finally, the trial court found that Maderer had failed to satisfy the claim presentation requirements expressed in Government Code sections 911.2 and 945.4, under which a plaintiff must present a personal injury claim to the public entity defendant within six months of the accrual of the cause of action.

With regard to these issues the Court of Appeal noted “We need not address these issues because Maderer’s failure to identify a basis for city liability pursuant to Government Code section 815 was sufficient to justify the trial court’s decision to sustain the City’s demurrer. Even if Maderer were correct with respect to the workers’ compensation and claim presentation arguments, the court’s decision to dismiss her case would still have been proper.”