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Ruling Says Sacramento Bee Misclassified Carriers

A Sacramento Superior Court judge ruled that the Sacramento Bee misclassified its newspaper carriers as independent contractors when they were, in fact, employees. Judge Gerrit Wood found the newspaper had the right to control the manner and means of how the carriers performed their duties, making them employees under the law.

According to the story in Bizjournal, the Sacramento Bee plans to contest the ruling. Publisher and president Cheryl Dell called it a “bewildering” and “a failure of justice. The Bee is extremely disappointed in the decision and strongly believes that the individual newspaper carriers were properly classified as independent contractors,” Dell said in a statement. “Our classification of carriers as independent contractors is in full compliance with regulations issued directly to the newspaper industry by the state of California.”

Whether workers are employees or independent contractors is a hot issue in California and nationwide because it affects the cost of doing business and protections for workers. Employers do not pay unemployment, state disability and or workers’ compensation taxes for independent contractors, which means significantly lower payroll taxes and, potentially, a competitive edge when bidding for work.

Misclassification means payback time that can run in the millions. When litigation is protracted – as it is in this five-year-old class action – attorneys’ fees and court costs get cranked up, too.

The fight in this case was narrowed over time to whether carriers who worked for the Sacramento Bee any time between 2005 and 2009 should be reimbursed for mileage expanses because they were incorrectly classified as independent contractors. The decision follows a nine-week trial in Sacramento Superior Court earlier this year. With more than 5,100 people in the class, the mileage tab could be more than $21 million Callahan said.

How much The McClatchy Co., parent company to The Sacramento Bee, has paid lawyers to defend the case is unknown. But plaintiffs’ attorneys costs so far are more than $12 million – and McClatchy often had four or more lawyers in court, Callahan said.

“We got the decision,” said John Poulos, the Sacramento attorney who represents the newspaper. “In our view, it’s problematic and lowers the state of California regulations that govern newspaper carriers relative to employment or independent contractor status. Our evidence at trial showed the Bee complied.” If the tentative decision holds, plaintiffs’ attorneys will have to provide records that document the mileage expenses, Poulos said. Then the newspaper can file an appeal. An appeal cannot be filed until the decision is finalized. If there is not an appeal, the case moves to the damages phase.

Filed in 2009, the cases goes back to 2005 because there is a four-year statute of limitations. The issue doesn’t apply after 2009 because the newspaper gradually shifted to a third-party distribution channel. Distribution was mixed during the time period of the lawsuit.

Final Hospital Outpatient Departments and ASC Fee Schedule Now Effective

The Acting Administrative Director of the Division of Workers’ Compensation (DWC) has amended Title 8, Code of Regulations Section 9789.32 of the hospital outpatient departments and ambulatory surgical centers (HOPD/ASC) fee schedule regulations . The amendment was filed with the Secretary of State on September 23, 2014.

The amendment corrects the payment methodology formula set forth in Section 9789.32(1)(c)(B)(ii) for service s rendered on or after September 1, 2014.

As set forth in Labor Code section 5307.1(c)(1), the maximum facility fee for services performed in a hospital outpatient department, shall not exceed 120 percent of the fee paid by Medicare for the same services performed in a hospital outpatient department. Senate Bill 863 also required that for services rendered in ambulatory surgical centers on or after January 1, 2013, the maximum facility fee shall not exceed 80 percent of the fee paid by Medicare for the same services performed in a hospital outpatient department.

Effective Jan. 1, 2013, the Acting Administrative Director amended the HOPD/ASC fee schedule (Title 8, California Code of Regulations, sections 9789.30 et seq.), to implement Senate Bill 863 as it relates to the OMFS HOPD/ASC fee schedule.

In March of 2014, the Division initiated a rulemaking action to amend the HOPD/ASC fee schedule as follows: 1. Transition payment policies from the pre-2014 OMFS physician fee schedule to the OMFS RBRVS-based physician fee schedule; 2. Eliminate the alternative payment methodology for hospital outpatient and ASC services rendered on or after September 1, 2014; and in accordance with changes to Medicare’s fee-related structure and payment rules for the hospital outpatient departments prospective payment system (OPPS), adjust the Workers’ Compensation Multiplier (which included the additional percentage added to the Medicare Multiplier for outliers).

On May 22, 2014, after considering public comments received during a public hearing and one written comment period, the Acting Administrative Director submitted the amended regulations to the Office of Administrative Law for file and print only. The amended regulations were filed with the Secretary of State on June 3, 2014. The regulations are effective for services rendered on or after September 1, 2014.

The objective of the current rulemaking action is to amend the OMFS HOPD/ASC fee schedule to correct the payment methodology for “Other Services” that are paid according to the RBRVS Practice Expense relative value units. The RBRVS conversion factor should be applied in the payment methodology instead of the HOPD/ASC Workers’ Compensation Multiplier that was adopted by the HOPD/ASC fee schedule regulations. Correcting the payment methodology to include the application of the RBRVS conversion factor is beneficial because payment would otherwise be incorrectly calculated.

This amendment is necessary to correct the formula to include the application of the RBRVS Conversion Factor instead of the HOPD/ASC Workers’ Compensation Multiplier, otherwise erroneous payment calculations will occur for this group of services. The current formula incorrectly uses the HOPD/ASC multiplier when the services are paid according to the RBRVS-based physician services fee schedule payment factors. Without application of the RBRVS conversion factor, the Practice Expense relative values could not be converted into a dollar amount. (The RBRVS conversion factor takes into account the multiplier.)

L.A. Probation Officer Faces Fraud Charges

A Los Angeles County Probation officer was arrested Tuesday for allegedly filing false workers’ compensation documents, according to L.A. County Probation Chief Jerry Powers.

Cynthia Wesley, a detention officer assigned to Central Juvenile Hall, was arrested at 10:30 p.m. Tuesday night on one count of filing a fraudulent insurance claim and one count of falsifying worker’s compensation documents, Powers told KPCC, adding that Wesley was booked into Temple City Sheriff’s station Tuesday night and was released on Wednesday on $60,000 bail.

KPCC reported last week on abuse of workers’ compensation and disability policies among county probation officers.

Powers said Probation Department officials made the arrest in conjunction with the Los Angeles County Sheriff’s Department.

Wesley’s disability claim was labeled as suspicious by county probation investigators in May, according to Powers. A closer look by both probation and California Department of Insurance investigators revealed Wesley allegedly “manufactured” some of the claim forms she submitted to a supplemental disability insurance company to get benefits the department says she wasn’t entitled to.

FBI Says 4.5 Million Community Health Systems Records Stolen by China Hackers

Your medical information is worth 10 times more than your credit card number on the black market.

Last month, the FBI warned healthcare providers to guard against cyber attacks after one of the largest U.S. hospital operators, Community Health Systems Inc,, with facilities nationwide and in California, said Chinese hackers had broken into its computer network and stolen the personal information of 4.5 million patients. Security experts say cyber criminals are increasingly targeting the $3 trillion U.S. healthcare industry, which has many companies still reliant on aging computer systems that do not use the latest security features. “As attackers discover new methods to make money, the healthcare industry is becoming a much riper target because of the ability to sell large batches of personal data for profit,” said Dave Kennedy, an expert on healthcare security and CEO of TrustedSEC LLC. “Hospitals have low security, so it’s relatively easy for these hackers to get a large amount of personal data for medical fraud.”

Interviews with nearly a dozen healthcare executives, cybersecurity investigators and fraud experts provide a detailed account of the underground market for stolen patient data. The data for sale includes names, birth dates, policy numbers, diagnosis codes and billing information. Fraudsters use this data to create fake IDs to buy medical equipment or drugs that can be resold, or they combine a patient number with a false provider number and file made-up claims with insurers, according to experts who have investigated cyber attacks on healthcare organizations.

Medical identity theft is often not immediately identified by a patient or their provider, giving criminals years to milk such credentials. That makes medical data more valuable than credit cards, which tend to be quickly canceled by banks once fraud is detected. Stolen health credentials can go for $10 each, about 10 or 20 times the value of a U.S. credit card number, according to Don Jackson, director of threat intelligence at PhishLabs, a cyber crime protection company. He obtained the data by monitoring underground exchanges where hackers sell the information.

The percentage of healthcare organizations that have reported a criminal cyber attack has risen to 40 percent in 2013 from 20 percent in 2009, according to an annual survey by the Ponemon Institute think tank on data protection policy. Founder Larry Ponemon, who is privy to details of attacks on healthcare firms that have not been made public, said he has seen an increase this year in both the number of cyber attacks and number of records stolen in those breaches. Fueling that increase is a shift to electronic medical records by a majority of U.S. healthcare providers.

Marc Probst, chief information officer of Intermountain Healthcare in Salt Lake City, said his hospital system fends off thousands of attempts to penetrate its network each week. So far it is not aware of a successful attack. “The only reason to buy that data is so they can fraudulently bill,” Probst said.

Healthcare providers and insurers must publicly disclose data breaches affecting more than 500 people, but there are no laws requiring criminal prosecution. As a result, the total cost of cyber attacks on the healthcare system is difficult to pin down. Insurance industry experts say they are one of many expenses ultimately passed onto Americans as part of rising health insurance premiums. Consumers sometimes discover their credentials have been stolen only after fraudsters use their personal medical ID to impersonate them and obtain health services. When the unpaid bills are sent on to debt collectors, they track down the fraud victims and seek payment.

The government’s efforts to combat Medicare fraud have focused on traditional types of scams that involve provider billing and over billing. Fraud involving the Medicare program for seniors and the disabled totaled more than $6 billion in the last two years, according to a database maintained by Medical Identity Fraud Alliance. “Healthcare providers and hospitals are just some of the easiest networks to break into,” said Jeff Horne, vice president at cybersecurity firm Accuvant, which is majority-owned by private equity firm Blackstone Group. “When I’ve looked at hospitals, and when I’ve talked to other people inside of a breach, they are using very old legacy systems – Windows systems that are 10 plus years old that have not seen a patch.”

Owner of Emmanuel Medical Supply in Long Beach Convicted in Federal Fraud Case

The former owner of a Long Beach, California, medical supply company was sentenced to serve 30 months in prison and ordered to pay $1,490,532 in restitution for his role in a scheme to provide unnecessary power wheelchairs to Medicare patients, resulting in $2.6 million in fraudulent claims to Medicare.

According to court documents, Akinola Afolabi, 55, of Long Beach, California, was the owner and president of Emmanuel Medical Supply, a durable medical equipment supply company in Long Beach. From June 2006 through September 2009, Afolabi provided medically unnecessary power wheelchairs and other medical equipment to Medicare beneficiaries, and submitted fraudulent claims to Medicare for this equipment. Afolabi admitted that he paid “marketers” to obtain Medicare beneficiary information that he used on the false claims. Afolabi admitted that prescriptions for the equipment and related medical documents were fraudulent, and that some of the beneficiaries did not even receive the wheelchairs or other medical supplies that were billed.

From June 2006 through September 2009, Afolabi submitted approximately $2,668,384 in fraudulent claims to Medicare for power wheelchairs and related services, and Medicare paid approximately $1,490,532 on those claims.

The case was investigated by the FBI and 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. This case is being prosecuted by Trial Attorney Fred Medick of the Criminal Division’s Fraud Section.

Living in a Disadvantaged Neighborhood Worsens Pain Outcomes After Trauma

Individuals living in disadvantaged neighborhoods have worse musculoskeletal pain outcomes over time after stressful events such as motor vehicle collision than individuals from higher socioeconomic status neighborhoods, even after accounting for individual characteristics such as age, sex, income, education, and employment status. Since apportionment under SB 899 is based upon “causation”, medical evaluators may wish to consider this study when determining the actual cause behind an the AMA Guides pain add-on rating.

According to the summary by the University of North Carolina School of Medicine, individuals living in disadvantaged neighborhoods have worse musculoskeletal pain outcomes over time after stressful events such as motor vehicle collision than individuals from higher socioeconomic status neighborhoods, even after accounting for individual characteristics such as age, sex, income, education, and employment status.

These were the findings of a multi-site research study led by Samuel McLean, MD, MPH, associate professor of anesthesiology and emergency medicine at the University of North Carolina School of Medicine. The results of the study were published online by the journal Pain. “We all like to believe that we are immune to the circumstances of our environment,” said Dr. McLean. “These results suggest that when it comes to chronic musculoskeletal pain development after traumatic/stressful events, the poet John Donne was right ” ‘No man is an island.’ “

The investigators enrolled 948 European-American individuals who presented to emergency care centers in four U.S. states for evaluation after car accidents. Patients were enrolled at the time of their presentation for emergency care, and then received follow-up evaluation at 6 weeks, 6 months, and 12 months. Approximately 90 percent of participants completed follow up at each time point.

Information regarding each study participant’s neighborhood environment was determined by geocoding their home address to a “census tract.” A census tract is the smallest territorial unit for which population data are available in the U.S. Census tract data was then used to determine neighborhood socioeconomic status using the Socioeconomic Position Index. This index generates a total score by averaging scores of the following measures: percent unemployed, percent below the U.S. poverty line, percent with high school education or less, percent of expensive homes (owner-occupied homes worth $300,000 or more) in the neighborhood, and median household income.

After adjusting for individual-level factors including participant sex, age, highest level of educational attainment, family income, and employment status, living in a more disadvantaged area was found to increase pain burden in the months after the car accident. Results remained significant after adjustment for receiving opioids at the time of emergency care, litigation status, obesity (body mass index), at-risk drinking habits prior to the accident, and mental health status prior to the accident.

There are many ways that living in a poor neighborhood might increase pain across time after a car accident. One potential factor is that living in a disadvantaged neighborhood increases stress and has been shown to affect the function of an individual’s stress (i.e., “fight or flight”) system. To test this hypothesis, the investigators collected blood samples from participants, and evaluated whether those participants with a common genetic variant which makes one more vulnerable to stress were more affected by the adverse effect on pain of living in a disadvantaged environment. The investigators found that this was the case: those without the genetic variant were relatively unaffected, whereas those with the gene had large and clinically significant differences in pain outcomes depending on their neighborhood environment.

“This finding suggests that the increased stress of living in a disadvantaged neighborhood affects biological systems in the body in ways that increase pain and worsen pain outcomes,” said Dr. McLean. “These results also add further evidence that stress systems are involved in the development of chronic pain. This is really important, because we have to understand the biology in order to be able to develop better preventive interventions.”

First author of the study is Jacob Ulirsch, BS, a former collaborator in Dr. McLean’s lab. UNC co-authors include Mark A. Weaver, PhD, research assistant professor in the UNC Gillings School of Global Public Health; and Andrey V. Bortsov, research assistant professor in the UNC Department of Anesthesiology. This research was supported by a grant R01 AR056328 from the National Institutes of Health.

Survey Shows Californians Turn on Obamacare

The Affordable Care Act continues to divide Californians, who remain skeptical four years after its passage despite the state’s relatively smooth launch in which more than 1.2 million people enrolled in health insurance coverage.

A new survey released late Tuesday found some 42 percent of state residents generally view the law favorably, while 46 percent harbor unfavorable opinions. Support is down somewhat since May, before a wave of targeted TV ads began in a handful of competitive congressional districts.

Democrats view the law positively while an overwhelming majority of Republicans (80 percent) see it unfavorably. Of the 1 in 5 Californians who say that they were aided by the law, 31 percent say that it allowed them or a family member to obtain or retain health care. Meanwhile, of the 1 in 5 who said they have been harmed by the law, more than half reported it led to higher costs while about 20 percent say it made it more difficult to get coverage.

The survey, by the Public Policy Institute of California, also determined likely voter sentiment on other major issues:

City of Santa Monica Reports 12% Increase in Comp Costs

Workers’ compensation costs continue to rise as the City of Santa Monica spent $6.9 million on injured employees in fiscal year 2013-14. Costs grew 12 percent, or $850,000, over the previous year, according to city risk managers. According to the report in the Santa Monica Daily Press, claim frequency remains high and older city employees in physically demanding jobs are experiencing more severe injuries. These older employees are requiring costly and intensive medical treatment, like back surgeries and knee replacements. Even city officials tasked with handling these matters are having medical problems: Two employees in the Workers’ Compensation Unit were out on extended (non-industrial) medical leave.

“Relative to indemnity payments, the Workers’ Compensation Reform legislation enacted by the State in 2012 increased the permanent disability benefit payment schedule by 30 (percent) over a two year period,” city officials said. Most of the administrative costs stayed the same, with the exception of legal costs, which rose 11 percent. If the worker hires legal representation, city officials said, they are, in turn, required to hire one.

Medical costs made up $3.6 million worth of total costs. Lost wages and residual impacts from injuries comprised another $3.3 million. Of the latter category, about half, $1.6 million, covered temporary disabilities while the other half, about $1.7 million, covered permanent disabilities. There were 86 claims settled last fiscal year compared to 55 settlements in the year before. “The City is controlling what it can,” the report said. “These efforts, however, are not sufficient to offset the financial impact of the internal/external factors dogging the program. Given this, Risk Management staff expects the City’s workers’ compensation costs to continue to rise. There are no ‘magic bullets’ to reverse this trend in the short-term, and as such, the City can expect to increase its contribution to the Workers’ Compensation Self Insurance Fund during the next two-year budget cycle.”

The rising costs, city officials said, are not going to disappear. “Staff predicts this trend will continue into the next two-year budget cycle and result in higher contributions to the Workers’ Compensation Self Insurance Fund,” they said. City officials have, they said, saved some money by making some changes. They are, for instance, returning injured employees to modified positions while they recover. This program saved nearly a quarter million dollars according to the report. “The City also revamped the medical bill review process and selected a new medical bill review provider this past year,” city officials said. “The new provider enables the City to obtain better pricing on medical procedures through accessing more cost-effective insurance plans.” This move saved between $100,000 and $200,000 according to city officials.

New MPN Regulations Take Effect

The changes to theMedical Provider Network (MPN) regulations became effective on August 27, 2014. The Division of Workers’ Compensation (DWC) is required to assign a unique MPN ID number to each approved MPN within 90 days of the effective date of the revised MPN regulations. The assigned MPN ID number for each approved MPN can be found on the DWC website in the “DWC Assignment of Unique Medical Provider Network Identification Numbers” report. Please note an MPN ID number has been assigned to all MPNs that have been approved regardless of their current approval status.

The DWC will no longer accept paper submissions of MPN Applications, Plans for Reapproval, or Notice of Medical Provider Network Plan Modifications. All submissions to the DWC must be on compact discs or flash drives in a word-searchable PDF format. The updated fillable form Cover Page for Medical Provider Network Application or Plan for Reapproval [DWC Mandatory Form – Section 9767.4 – 08/14] and the updated fillable form Notice of Medical Provider Network Plan Modification §9767.8 [DWC Mandatory Form – Section 9767.8 – 8/14] can be found online.

Although the filing of a Notice of Medical Provider Network Plan Modification is only required for a material change to an MPN as set forth in §9767.8, all MPNs must comply with the amended MPN regulations. Current MPNs must be prepared to provide the DWC with an explanation of how they are complying, if requested. For example, MPNs should be able to provide the URL to their Internet website and their roster of treating physicians if requested by DWC. In addition, MPNs should be able to provide MPN medical access assistant contact information if requested by DWC.

The DWC is currently updating the MPN FAQs and will post the revised FAQs soon.

WCAB Rules UR Process Applies to MPN Physicians

Alan Moelleken, M. D., a member of the State Fund’s MPN, recommended that applicant, Rochelle Stock, be furnished with a hospital bed for her home as treatment for her admitted 1990 injury. The request was denied after a 5/13/2014 review by Daniel Weinberg, M. D./ EK Health, the State Fund’s Utilization Review report. At a hearing brought to obtain this recommended care, Stock objected to the admission of the UR report claiming it was “inadmissible because the treatment denied was recommended by a physician in defendant’s Medical Provider Network.” The WCJ ruled the UR report was admissible and denied the request for this medical treatment in a June 20, 2014 Finding and Award.

Applicant filed a petition for reconsideration. The WCAB dismissed the petition for reconsideration, since the WCJ’s determination was not a final order subject to reconsideration. Instead it treated applicant’s petition as seeking removal to the Appeals Board. After removal the WCAB affirmed the WCJ’s Findings and Award in the panel decision of Stock v Camarillo State Hospital.

The WCAB concurred with the WCJ that applicant’s required participation in her employer’s MPN does not prohibit defendant from referring an MPN physician’s request for authorization of medical treatment to UR and Independent Medical Review. Contrary to applicant’s contentions, by its adoption of the MPN system, the Legislature did not evince an intent to preclude a defendant from seeking UR review of an MPN physician’s request for authorization of medical treatment. The law and the implementing administrative rules provide mechanisms for review of disputed treatment recommendations through UR, whether or not the treating physician is in the employer’s MPN. Both the UR provisions and the MPN provisions of the Labor Code provide that a treating physician’s request for authorization of medical treatment must be reviewed by a physician competent to evaluate the specific clinical issues, without distinction as to whether the physician is selected through the MPN. (Cf. Labor Code section 461 O(e) and Labor Code section 20 46 I 6(f).) Similarly, the definition of a primary treating physician in Administrative Director’s Rule 9767.1 and Rule 9785(a)(J) both include a physician within an MPN.

When a defendant does not approve a treatment request from applicant’s primary treating physician, the defendant must refer the request to a UR physician. Here, Dr. Moelleken’s request that applicant be provided a hospital bed was clearly intended to provide applicant relief from the effects of her industrial injury under the terms of her award of further medical treatment. She has had a two level lumbar fusion, suffers from radiculopathy, Grade 2 spondylolisthesis with instability and foraminal stenosis at two levels above the fusion. Applicant cannot sleep on a flat bed and has been sleeping in a recliner. She has been trying to obtain a hospital bed for four years. In all of that time, she has not been able to enjoy a restful night sleep.

The UR denial of the request for a hospital bed was based upon “silence” in the MTUS guidelines, and the absence of “high quality studies” and “no exceptional factors … in the documentation submitted to consider this request as an outlier to the guidelines. There is no other documentation to support the medical necessity of a hospital bed. As such, the medical necessity of the request has not been established and the request is non-certified.”

The WCAB noted that there is a hierarchy of standards to be applied to a review of the medical necessity of a request for approval of medical treatment, under Rule 9792.10.1 ( 4)(A)-(F). If the MTUS is “silent,” and there is no “peer-reviewed scientific and medical evidence,” the reviewer may consider nationally recognized professional standards, expert opinion, generally accepted standards of medical practice and “treatments that are likely to provide a benefit to a patient for conditions for which other treatments are not clinically efficacious.” It does not appear that the UR denial considered whether other standards may be applicable, as there was insufficient documentation or explanation provided to support the efficaciousness of Dr. Moelleken’s request. Further review of this request will be by Independent Medical Review.