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Author: WorkCompAcademy

Conviction is Good Example of Identity Theft in Pursuit of Pain Pills

Medical identity theft has become one of the fastest growing heathcare fraud problems in the nation. Some uninsured patients have been found to use false identification simply to secure free medical care. In a more serious situation, this case reported by the Monterey County District Attorney shows how identity theft can be used in an emergency room to obtain a free supply of illegal pain medication. The lesson here is to be more vigilant in workers’ compensation claim processing to make sure that medical services were actually delivered to the injured worker, especially when pain medication is involved.

Julian Demitre Rosario, age 22, was sentenced by the Honorable Wendy Duffy for insurance fraud and unlawful use of personal identifying information. The defendant was placed on five years of felony probation, ordered to serve 210 days in custody, be subject to search and seizure and pay victim restitution. The court retained jurisdiction over victim restitution for Premier Insurance, Blue Shield, CHOMP and the two individuals whose identity the defendant used to obtain medical treatment. The estimation of the total restitution is approximately $50,000. The defendant was immediately remanded into custody after sentencing.

During the month of July, 2014 on four different dates, the defendant went to CHOMP’s emergency room complaining of abdominal pain. Each time the defendant was seeking to obtain narcotics. He informed personnel of his true name one time, a variation of his name another time and two other individuals’ names the other two times. On the last date while the defendant was receiving treatment from a doctor, another emergency room doctor recognized the defendant and that he was using a false identity and insurance. CHOMP personnel contacted Monterey Police who responded, interviewed the defendant and then arrested him. The defendant had been contacted by police regarding similar allegations on a previous occasion. During the two contacts, he gave inconsistent versions of who he was, his age, and why he was at the hospital.

The case was investigated by Monterey Police Officer Amy Carrizosa and District Attorney Investigator Mark Trueblood. This case was handled by the Healthcare Fraud Unit of the Monterey County District Attorney’s Office. This unit aggressively investigates and prosecutes prescription drug fraud and insurance fraud in Monterey County. The unit also investigates and prosecutes cases involving use of another’s identity to secure healthcare benefits; healthcare related embezzlement; unlawful healthcare solicitations/referrals; fraudulent or inflated pharmacy billings; prescription fraud and abuse; out-patient surgery center fraud; and fraudulent disability claims.

Uninsured Seaside Contractor Convicted Again

The California underground economy of unlicensed contractors seems unrelenting in the state’s battle to require licensure and insurance.

Jose Valdez, age 41 of Seaside, pled guilty to one felony count of fraudulent use of a contractor’s license in violation of Business and Professions Code section 7027.3 and one misdemeanor count of failing to secure workers’ compensation insurance in violation of Labor Code section 3700.5. Valdez was doing business as Angel Valdez Landscaping. The defendant will be sentenced by the Honorable Larry E. Hayes on November 4, 2014. Based upon his plea, Valdez was found in violation of probation of a 2010 case involving similar conduct.

On March 17, 2014, Contractor State License Board [CSLB] Investigator David Leary discovered Valdez’ employees working on a landscape remodel at a small condominium association in Seaside. Valdez had informed the association that he was a licensed contractor having been in business for twenty years. The project had been in the planning stage for several years and the association had gone through a bidding process ultimately accepting the defendant’s bid.

Investigator David Leary recognized Valdez from a prior case in 2010 that was prosecuted. The defendant admitted using his business license number as he did not have a contractor’s license. The defendant also admitted to having employees but did not have workers’ compensation insurance.

Fraudulent use of a contractor’s license has a penalty of sixteen months, two or three years in state prison and a fine of up to $10,000. Additionally, all employers are required to secure workers’ compensation insurance for their employees so that there is an assurance of adequate medical coverage and other benefits for employees for any work-related injuries that may occur. Failure to secure workers’ compensation insurance has a penalty of up to one year in jail and up to double the amount of the premium owed as a fine payable to the California State Treasury for the Uninsured Employers Fund. Homeowners can check to see if a contractor is licensed by going to the CSLB website..

What to Shop For in Hip and Knee Implants

Surgeries for industrial claims that require implants are very costly. Surprisingly, few patients are even aware of who manufactured the implant, why the one they received was chosen, or what would have been the best choice. Neither is this analysis routinely performed by claims or UR. One would think that choice of product might make a difference in treatment outcome. But surprisingly, a new study reviewed by Medical News Daily says that several new and widely used hip and knee implants appear to have no clinically relevant improved benefits compared with older, more established implants. A review of the evidence was published on

Furthermore, the safety of several new technologies “could be compromised,” warn the researchers, who call for improved stakeholder oversight to prevent patients from being further exposed to new devices “without proper evidence of improved clinical benefits and safety.” Since the failures of some metal on metal hip implants were brought to light, the introduction of new joint implants has been the focus of major scientific and policy discussions.

An International research team, led by Art Sedrakyan, Associate Professor at Weill Cornell Medical College in New York, argues that the momentum for change generated by these recent high profile failures is important and there is an urgent need to evaluate the evidence for introducing new implants. Working with the US Food and Drug Administration (FDA), they reviewed the evidence for five recently introduced and widely used implantable devices for total joint replacement surgery.

Data from clinical trials and observational studies involving 15,384 implants in 13,164 patients and data from national joint registries were used to compare safety and effectiveness over existing, well-proven and comparable devices for the same condition. After study design and quality were taken into account, none of the five device innovations was found to improve functional or patient-reported outcomes. Comparative data with well-established alternative devices (over 1.2 million implants in registries) did not show improved device survival.

The researchers also found higher rates of repeat surgery (revisions) associated with three of the new devices, used in both hip and knee replacement surgery. “We did not find convincing high-quality evidence supporting the use of five substantial, well-known and already implemented device innovations in orthopaedics,” they say. “Furthermore, none of these five technologies were found to be safer or to have better survival compared to the established implants.” This indicates that new technologies “are being introduced to the commercial market without sufficient high-quality evidence for improved benefit over existing, well-proven and safe but equally suitable alternative implant solutions,” they argue.

They call for improved stakeholder oversight “to prevent patients from being further exposed to these or future innovations introduced without proper evidence of improved clinical efficacy and safety.” These data “shine a light on the limited regulatory oversight that exists in Europe, the US, and other countries regarding incremental device innovations,” write researchers at Brigham and Women’s Hospital and Harvard Medical School, Boston, in an accompanying editorial.

They support the study authors’ recommendation for controlled introduction of new versions of medical devices “so that they are not used widely until there is more clarity about their comparative effectiveness and safety.” They also call for better communication of the benefits and risks of new technology to patents “to inform their health care decision-making.” They conclude: “Reforms that provide for more robust post-market oversight of incremental innovations in medical device technologies will be key in helping to promote more rational use of these products.”

It would seem wise that Utilization Review professionals not only consider the question of medical necessity for a proposed surgery, but the science behind the implantable devices to be used before they are bought, paid for, and installed in a surgical process;

DIR Schedules Meeting to Review Cal/OSHA PSM Standards

The Department of Industrial Relations has scheduled a Process Safety Management (PSM) advisory committee meeting to review proposed changes to Cal/OSHA’s PSM standard. The changes focus on strengthening regulatory oversight on California’s oil refineries.The two-day meeting is open to the public and will be held on Tuesday, September 16 and Wednesday, September 17 from 9 a.m. to 5 p.m. at the Elihu Harris State of California Building’s 13th Floor Training Room, 1515 Clay Street, Oakland CA 94612.

DIR developed the draft regulatory proposal for a new PSM standard for the refinery sector in response to recommendations in a February report by the state’s Interagency Working Group on Refinery Safety.

“This advisory committee meeting is a pre-regulatory step in our ongoing efforts to strengthen oversight of refinery safety in California,” said DIR Director Christine Baker. “The proposed changes will provide a framework for anticipating, preventing and responding to refinery safety problems at the earliest possible point.” Cal/OSHA, the agency charged with enforcing workplace safety and health regulations, is the division of DIR which is leading the revision of PSM workplace safety requirements for refineries.

“I am pleased to see DIR take this important next step in accordance with the recommendations of the refinery safety working group,” said David Lanier, Secretary of the Labor and Workforce Development Agency, which includes DIR. “The proposed revisions and their thorough review reflects the administration’s ongoing commitment to improving refinery safety for workers and surrounding communities.”

In addition to proposing changes to existing PSM language, the draft proposal introduces new requirements in the following areas:

1) damage mechanism reviews
2) hierarchy of hazard controls analysis
3) human factors
4) management of organizational change
5) safeguard protection analysis
6) incident investigations
7) safety culture assessments

DIR’s notice of the proposed rulemaking along with the text of the proposed regulations have been posted online.

The draft proposal is part of an ongoing effort, coordinated by the Interagency Refinery Task Force, to improve the public and worker safety at the state’s oil refineries following the August 2012 explosion at Chevron’s Richmond Oil Refinery. The task force, headed by the California Environmental Protection Agency, was established to carry out the recommendations contained in the February report. In addition to the proposed PSM standard, the state has hired new inspectors to ensure that facilities are complying with health and safety laws.

Pharmacy Board Requests Comments on Proposed Compounding Regulations

In reaction to health hazards associated with compounded drugs, the California Pharmacy Board has been in the process of rulemaking to more closely regulate compounded drugs that are dispensed in California. The latest proposed regulations are now subject to a public regulation hearing: on November 4, 2014 at 10:30 a.m. at the Department of Consumer Affairs Headquarter Building Two located at 1747 N. Market Blvd., Room 186 in Sacramento, The 45-Day comment period: runs from September 5, 2014 to October 20, 2014.

Existing state and federal law specifically attempts to limit compounding to limited quantities for an identified patient with unique needs. This limit supposedly differentiates a manufacturer who is subject to FDA scrutiny, from a compounding pharmacist who is only scrutinized by individual states. The proposed regulations make changes to existing law on the topics of a definition of a “limited quantity” and how the distribution chain can occur from the compounding pharmacist to a dispensing physician who supposedly has a “limited quantity” of compounded medication on hand that escapes the definition of an FDA regulated “manufactured product.”

Unfortunately, the proposed regulations do not seem to consider the abuse that occurs in the California workers’ compensation arena when a seemingly endless supply of compounded pharmaceuticals are supplied in bulk to a dispensing physician, and then mechanically prescribed and dispensed to injured workers at inflated prices, all of which is claimed to be within the limits of existing federal and state law. What we see seems more like manufacturing than compounding for an identified patient. For this reason, NOW is a good time for the workers’ compensation community to alert the Pharmacy Board about the unique situation that now occurs quite often in our claims. Perhaps with our guidance, the current version of its regulations could be yet amended again to address the concerns that we see in claims about compounded pharmaceuticals. For those so inclined to make any comments to the Board of Pharmacy on its proposed compounded pharmaceutical regulations, they may read the materials on this page..

Under the current federal regulatory system, drug manufacturers are regulated by the Food and Drug Administration (FDA). Prior to the enactment of the Drug Quality and Security Act, compounding pharmacies were regulated by their respective states of residence. Compounding pharmacies also make drugs, but they are limited to producing small amounts in response to a specific patient’s prescription, or to create a small supply for an identifiable patient population to ensure continuity of treatment. The state-by-state approach to regulating compounding organizations yields inconsistent standards and varying levels of enforcement on an industry that ships dangerous drugs across state lines.

Included as part of the federal Drug Quality and Security Act (HR 3204) that became law on November 27, 2013, are provisions that establish provisions for federal regulation and oversight of large scale drug compounding by “outsourcing facilities.” The federal law sets forth voluntary requirements for licensure and enforcement of these entities. However, California’s law is more restrictive than the federal law in several areas. California will continue to require any pharmacy that is compounding sterile products for California residents or practitioners to possess licensure with the board and comply with California requirements as sterile compounding pharmacies.

SB 294 commencing July 1, 2014, expands the provisions of the California Pharmacy Law to prohibit a pharmacy from compounding or dispensing, and a nonresident pharmacy from compounding for shipment into this state, sterile drug products for injection, administration into the eye, or inhalation, unless the pharmacy has obtained a sterile compounding pharmacy license from the board. SB 294 also specifies requirements for the board for the issuance or renewal of a license, and requirements for the pharmacy as a licensee. SB 294 requires the board to adopt regulations to implement these provisions, and, on and after July 1, 2014, to review formal revisions to specified national standards relating to the compounding of sterile preparations to determine whether amendments to those regulations are necessary, as specified.

Additionally, there are compounding professional standards that are used across the nation known as the United States Pharmacopeia and The National Formulary (USP-NF). USP-NF is a book of public pharmacopeial standards. It contains standards for (chemical and biological drug substances, dosage forms, and compounded preparations), excipients, medical devices, and dietary supplements. USP-NF is a combination of two compendia, the United States Pharmacopeia (USP) and the National Formulary (NF). Monographs for drug substances, dosage forms, and compounded preparations are featured in the USP. Monographs for dietary supplements and ingredients appear in a separate section of the USP. Excipient monographs are in the NF. The U.S. Federal Food, Drug, and Cosmetics Act designates the USP-NF as official compendia for drugs marketed in the United States. A drug product in the U.S. market must conform to the standards in USP-NF to avoid possible charges of adulteration and misbranding.

At the October 2013 Board Meeting, the board moved to initial notice of proposed changes in the California’s compounding regulations (located in 16 California Code of Regulations Sections 1735 et seq. and 1751 et seq). This regulatory process has continued to develop the present version of proposed new regulations. .

“Medical Marijuana” Creeps Into New Mexico Comp System

In what many fear may become a workers’ compensation national trend, if not an avalanche, the New Mexico Court of Appeals ruled. that medical marijuana a doctor recommended for an injured worker’s pain must be paid for by the workers’ employer and insurer. Despite the drug’s federal classification as a controlled substance, the court found that New Mexico law entitled Gregory Vialpando to reimbursement for marijuana to treat the high-intensity pain that followed failed spinal surgeries for a workplace back injury.

Vialpando met the threshold for payments under workers’ compensation laws when his doctor recommended medical marijuana as reasonable and necessary for his treatment, the ruling states. The Aug. 29 decision supports a lower court finding that Vialpando’s participation in the New Mexico Department of Health’s Medical Cannabis Program constituted reasonable and necessary medical care, the standard for reimbursement set by the state’s Workers’ Compensation Act.

A doctor cited in the lower court’s 2008 compensation order said that Vialpando was taking narcotic-based pain relievers, but still suffered “from some of the most extremely high intensity, frequency, and duration of pain, out of all of the thousands of patients I’ve treated within my 7 years practicing medicine.” Last year, Vialpando’s doctor followed rules established by the 2007 Lynn and Erin Compassionate Use Act to recommended him for the medical marijuana program.

The New Mexico Court of Appeals rejected an argument from Vialpando’s employer that reasonable and necessary medical services must come from a health care provider. “By defining ‘services’ as including a product from a supplier that is reasonable and necessary for a worker’s treatment, the regulations do not contemplate that every aspect of a worker’s reasonable and necessary treatment be directly received from a health care provider. Such a requirement would be unworkable. A worker’s treatment may well require services that are not available from a health care provider. The most obvious of such services may be medical supplies or equipment,” the appeals court ruled.

Ben’s Automotive Services, Vialpando’s employer at the time of the accident, and, Redwood Fire and Casualty, its insurer, argued that medical marijuana must be treated as a prescription drug, and that the state’s medical marijuana program is not a licensed pharmacist or health care provider. The appeals court found that “medical marijuana is not a prescription drug,” but if it were, “our analysis would lead to the same conclusion.” “Indeed, medical marijuana is a controlled substance and is a drug. Instead of a written order from a health care provider, it requires the functional equivalent of a prescription – certification to the program. Although it is not dispensed by a licensed pharmacist or health care provider, it is dispensed by a licensed producer through a program authorized by the Department of Health,” the court wrote.

Vialpando’s employer and insurer claimed that an order to reimburse him for marijuana would force them to commit a federal crime, since federal law classifies the drug as a Schedule I controlled substance. “However, employer does not cite to any federal statute it would be forced to violate, and we will not search for such a statute,” Court of Appeals Judge James J. Wechsler wrote for the unanimous three-judge panel.

Ben’s and Redwood claimed that reimbursements would at the least violate federal public policy. But the appeals court rejected that, too. “Although not dispositive, we note that the Department of Justice has recently offered what we view as equivocal statements about state laws allowing marijuana use for medical and even recreational purposes.”

York Risk Services Acquires Sams and Associates

Donald K. Sams and Associates, Inc.,, an independent adjusting company headquartered in Granite Bay, California, announced they have been acquired by York Risk Services Group. York is a premier national provider of a full range of claims administration, managed care, and risk management and specialized loss adjusting services. The terms of the transaction, which was effective September 2, 2014, were not disclosed.

Sams and Associates provides a wide array of claims adjusting services in 12 western states and private investigative services in California. Don Sams, founder of Sams and Associates, will assume the role of President of the York Field Services Division. He will continue to be based in the Granite Bay office.

“We are pleased to be joining York Risk Services Group,” said Don Sams, “Both companies share a commitment to delivering high-quality claims management to and building long-term relationships with our clients. Becoming a part of York allows us to expand the services and expertise we offer our current clients and at the same time help build a premier, nationwide field services company. As we grow, that company will also provide our employees opportunities to advance,” Sams added.

“Combining the expertise and geographic footprint of Sams and Associates and York’s established Field Services teams strengthens our property and casualty service offerings to all our clients, and we are looking forward to expanding this key service area under Don’s leadership,” notes Rick Taketa, President and CEO of York. “In addition, this acquisition also helps York continue to build the bench strength of our Specialized Loss Adjusting team of General Adjusters. Don will work with Danny Miller, EVP YRSG and President of our SLA team on the strategic initiatives and growth of this important offering.”

Donald K. Sams and Associates, Inc. was founded January 1st, 1990 in Emeryville, CA by Don Sams. Sams and Associates has grown to become one of the leading independent adjusting firms in the western United States. Sams and Associates provides commercial and residential claim adjusting, TPA, contract claim department and special investigation unit services to their clients.

York Risk Services Group Inc. is a premier provider of risk management, claims handling, specialized loss adjusting, managed care, pool administration, loss control and other insurance services nationwide. ;York provides risk management and managed care solutions to a variety of strategic partners, including insurance carriers, self insureds, brokers, wholesalers, MGAs, programs, risk pools and public entities and delivers customized claims solutions for all lines of business, including property, liability, products liability, ocean and inland marine, environmental, transportation and logistics, construction and workers’ compensation. Based in Parsippany, New Jersey, York and has more than 4,000 employees in 85 offices throughout the United States.

Pacioma Insurance Broker Arrested for Premium Theft

Isidro Santillan, 53, of Pacoima, was arrested in August and charged with 13 counts of grand theft and three counts of commercial burglary. Santillan allegedly stole more than $100,000 by selling insurance policies and bonds to licensed contractors and not forwarding the premium to insurance companies. If convicted Santillan faces up to 12 years in state prison.

“When Santillan stole his client’s insurance premium money, he exposed business owners to great financial risk by leaving them without insurance coverage,” said Insurance Commissioner Dave Jones. “My enforcement team will aggressively investigate and bring to justice any insurance agent or broker that violates their fiduciary responsibility in the name of greed.”

Investigators allege Santillan, aka Art Sanchez, issued premium checks that did not require the payer’s signature, and then instead of sending these premiums to his clients’ insurers, he cashed the checks for his own personal use. Santillan did not forward premium payments to purchase policies for his clients, which left his victims at risk for uninsured losses.

Santillan attempted to cover up his theft by providing both falsified and legitimate certificates of insurance and premium finance agreements. In some instances, he allegedly made partial premium payments but the policies were later cancelled by insurers due to lack of full payment.

The Department of Insurance launched an investigation in late 2012 after receiving complaints about Santillan’s business practices regarding the sale of commercial auto, general liability, and worker’s compensation insurance and bonds. Some of his victims discovered cancelled checks that exceeded the cost of the insurance policy they had agreed to purchase.

The Department of Insurance is looking for additional victims in this case and encourages anyone that may have done business with Sid Santillan, Art Sanchez, Insurance Service Center or Isidro Santillan Insurance Services to contact the Investigation Division, Valencia Regional office at (661) 253-7500.

From Nose to Knee: Engineered Cartilage Regenerates Joints

Human articular cartilage defects can be treated with nasal septum cells. Researchers at the University and the University Hospital of Basel report that cells taken from the nasal septum are able to adapt to the environment of the knee joint and can thus repair articular cartilage defects. The nasal cartilage cells’ ability to self-renew and adapt to the joint environment is associated with the expression of so-called HOX genes. The scientific journal Science Translational Medicine has published the research results together with the report of the first treated patients.

Cartilage lesions in joints often appear in older people as a result of degenerative processes. However, they also regularly affect younger people after injuries and accidents. Such defects are difficult to repair and often require complicated surgery and long rehabilitation times. A new treatment option has now been presented by a research team lead by Prof. Ivan Martin, professor for tissue engineering, and Prof. Marcel Jakob, Head of Traumatology, from the Department of Biomedicine at the University and the University Hospital of Basel: Nasal cartilage cells can replace cartilage cells in joints.

Cartilage cells from the nasal septum (nasal chondrocytes) have a distinct capacity to generate a new cartilage tissue after their expansion in culture. In an ongoing clinical study, the researchers have so far taken small biopsies (6 millimeters in diameter) from the nasal septum from seven out of 25 patients below the age of 55 years and then isolated the cartilage cells. They cultured and multiplied the cells and then applied them to a scaffold in order to engineer a cartilage graft the size of 30 x 40 millimeters. A few weeks later they removed the damaged cartilage tissue of the patients’ knees and replaced it with the engineered and tailored tissue from the nose. In a previous clinical study conducted in cooperation with plastic surgeons and using the same method, the researchers from Basel recently already successfully reconstructed nasal wings affected by tumors.

“The findings from the basic research and the preclinical studies on the properties of nasal cartilage cells and the resulting engineered transplants have opened up the possibility to investigate an innovative clinical treatment of cartilage damage”, says Prof. Ivan Martin about the results. It has already previously been shown that the human nasal cells’ capacity to grow and form new cartilage is conserved with age. Meaning, that also older people could benefit from this new method, as well as patients with large cartilage defects. While the primary target of the ongoing clinical study at the University Hospital of Basel is to confirm the safety and feasibility of cartilage grafts engineered from nasal cells when transplanted into joint, the clinical effectiveness assessed until now is highly promising.

Clinical Laboratories Under Scrutiny for Kickbacks to Doctors

Some clinical laboratories have collected hundreds of millions of dollars from Medicare while using a strategy that is now under regulatory scrutiny: They paid doctors who sent patients’ blood for testing a fee for drawing the blood to be tested. According to a report in the Wall Street Journal, for some physician practices, payments totaled several thousand dollars a week. The practice is now under regulatory scrutiny as a potential “kickback” which would be unlawful under federal law.

At the heart of the current controversy is Health Diagnostic Laboratory Inc, a compnay that transformed itself from a startupin late 2008 into a major lab with $383 million in 2013 revenues, 41% of that from Medicare. Until late June, HDL paid $20 per blood sample to most doctors ordering its tests – more than other such labs paid. Other labs under investigation include Quest’s Berkeley HeartLab, Singulex Inc., Boston Heart Diagnostics Corp. and Atherotech Diagnostics Lab. Quest says Berkeley ended payments of $7.50 to $11.50 in 2011 when Quest bought Berkeley. HDL, Singulex, Boston and Atherotech say they stopped payments after a Special Fraud Alert on June 25 from the Department of Health and Human Services, which warned that such remittances presented “a substantial risk of fraud and abuse under the anti-kickback statute.” The fraud alert is part of an investigation the health agency’s Office of Inspector General is conducting with the Justice Department into doctor payments by HDL and several other labs specializing in cardiac-biomarker testing, people familiar with the investigation say.

According to the alert “This Special Fraud Alert addresses compensation paid by laboratories to referring physicians and physician group practices (collectively, physicians) for blood specimen collection, processing, and packaging, and for submitting patient data to a registry or database. OIG has issued a number of guidance documents and advisory opinions addressing the general subject of remuneration offered and paid by laboratories to referring physicians, including the 1994 Special Fraud Alert on Arrangements for the Provision of Clinical Laboratory Services, the OIG Compliance Program Guidance for Clinical Laboratories, and Advisory Opinion 05-08. In these and other documents, we have repeatedly emphasized that providing free or below-market goods or services to a physician who is a source of referrals, or paying such a physician more than fair market value for his or her services, could constitute illegal remuneration under the anti-kickback statute. This Special Fraud Alert supplements these prior guidance documents and advisory opinions and describes two specific trends OIG has identified involving transfers of value from laboratories to physicians that we believe present a substantial risk of fraud and abuse under the anti-kickback statute.”

The Special Fraud Alert describes two specific trends that present a substantial risk of fraud and abuse: Specimen Processing Arrangements and Registry Arrangements. According to the OIG, suspect Processing Arrangements typically involve payments from laboratories to physicians for certain specified duties, which may include collecting the blood specimens, centrifuging the specimens, maintaining the specimens at a particular temperature, and packaging the specimens so that they are not damaged in transport. The OIG also raised concerns with arrangements under which clinical laboratories pay physicians to collect and package patients’ swabs or urine specimens or provide free or below-market point of care urine testing cups to health care providers who use the cups to perform billable in-office testing.

The Special Fraud Alert also addresses suspect Registry Arrangements, whether they are referred to as “registries” or “observational outcomes databases” or by other terminology. Payments are made for establishing, coordinating, or maintaining databases, either directly or through an agent, purportedly to collect data on the demographics, presentation, diagnosis, treatment, outcomes, or other attributes of patients who had tests performed by the offering laboratories. Although Registry Arrangements take various forms, they typically involve payments from laboratories to physicians for certain specified duties, including submitting patient data to be incorporated into the Registry, answering patient questions about the Registry, and reviewing Registry reports. Under this scheme yhe laboratory requires, encourages, or recommends that physicians who enter into Registry Arrangements perform the tests with a stated frequency (e.g., four times per year). Compensation paid to physicians is on a per-patient or other basis that takes into account the value or volume of referrals.

Singulex says it paid $10, saying such fees were “a long-standing industry wide practice,” before the “government clarified their view.” Boston says it paid $15 and thought the practice lawful before the alert. Boston and Singulex didn’t include a $3 draw fee. Berkeley did include the $3, as did Atherotech, which says it paid $10, declining further comment.

It seems clear that the workers’ compensation community should also scrutinize the financial relationships between treating or evaluating physicians and the clinical laboratories they use. Financial payment seems to be a wide spread practice.

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