Author: WorkCompAcademy

Two executives at a South Los Angeles company that offered alcohol and drug abuse treatment services were arrested on federal charges that allege they defrauded the Medi-Cal program by submitting bills seeking more than $2 million for services that did not qualify for reimbursement or simply were never provided.

Mesbel Mohamoud, 45, of Inglewood, and her mother-in-law, Erlinda Abella, 63, also of Inglewood, were taken into custody without incident.

Mohamoud and Abella were named in a 23-count indictment returned by a federal grand jury on March 29. The indictment charges both defendants with 21 counts of health care fraud and two counts of aggravated identity theft in relation to the scheme that allegedly ran from 2009 through 2015.

Mohamoud is the owner and executive director of The New You Center (TNYC). Abella, who co-founded TNYC with Mohamoud in 2005, is the program director at the company. TNYC had contracts to provide medically necessary substance abuse treatment services through the Drug Medi-Cal program to adults and teenagers in Los Angeles County.

The indictment alleges that TNYC submitted false and fraudulent bills for counseling sessions that were not conducted at all, were not conducted at authorized locations, or did not comply with Drug Medi-Cal regulations regarding the length of sessions or the number of patients.

Furthermore, Mohamoud and Abella allegedly caused TNYC to bill for clients who did not have a substance abuse problem, to falsify documents related to services supposedly provided to clients, and to forge client signatures on documents such as sign-in sheets.

The charges in the indictment primarily relate to services provided to girls residing at Dimondale Adolescent Care Facility group homes in Lancaster, Long Beach and Carson, facilities where TNYC was not authorized to provide counseling.

The indictment alleges that TNYC submitted over $2 million in false and fraudulent claims for group and individual substance abuse counseling services and was paid more than $1.8 million based on these bills.

Both defendants are expected to be arraigned on the indictment in United States District Court.

If they were to be convicted of the charges in the indictment, Mohamoud and Abella each would face a statutory maximum sentence of 10 years in federal prison for each of the 21 health care fraud charges. Additionally, there is a two-year mandatory sentence associated with each of the aggravated identity theft counts.

This case is being investigated by the Federal Bureau of Investigation and the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse.

The case is being prosecuted by Assistant United States Attorney Cathy J. Ostiller of the Major Frauds Section.

A Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) is a financial agreement that allocates a portion of a workers’ compensation settlement to pay for future medical services related to the workers’ compensation injury, illness, or disease.

At time of settlement, employers submit the amount of the set aside for approval by CMS, and the amounts include significant sums for life time medication, often including opioids.

Over the last few years, the CMS estimate of future drug costs includes a calculation for opioids far in excess of what is reasonable, now that the opioid addiction crisis has focused more attention on drug addiction.

Finally, CMS has reacted to the opioid crisis and created new rules that may lower sums required by the WCMSA.

On April 2, 2018, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that updates Medicare Advantage Plan (MAP) and Medicare Part D policy changes.

The new rule provides the plans “with new tools to improve quality of care and provide more plan choices for MA and Part D enrollees.” CMS estimates that the changes will result in $295 million in savings a year for the Medicare program over 5 years (2019 through 2023), which will ultimately result in lower premiums.

Noteworthy of the policy change is CMS’ policy changes relative to the Implementation of the Comprehensive Addiction and Recovery Act of 2016 (CARA).

CARA requires CMS to establish through regulation a framework that allows Part D Medicare prescription plans to implement drug management programs.

Under such programs, the Part D plans can limit at-risk beneficiaries’ access to coverage for frequently abused drugs beginning with the 2019 plan year. CMS will designate opioids and benzodiazepines as frequently abused drugs.

CMS will utilize Drug Management Programs as well as clinical guidelines used to determine if a beneficiary is potentially at-risk, which are based on using opioids from multiple prescribers and/or multiple pharmacies.

Part D plans will be allowed to limit an at-risk beneficiary’s access to frequently abused drugs to a selected prescriber(s) and/or pharmacy(ies). CMS will exempt beneficiaries who are being treated for active cancer-related pain, are receiving palliative or end-of-life care, or are in hospice or long-term care from drug management programs.

Thus CMS has issued this final rule with the goal of managing use of long-term, high-dose opioid and benzodiazepine usage.

In 2019 when these rules take effect, CMS should apply similar thinking to Workers’ Compensation Medicare Set-Aside (WCMSA) approvals in which the beneficiary is treating with high-dosage opioids.

If the Medicare Part D plan would no longer be responsible for paying for the drugs, it should not be included in the WCMSA. Likewise, CMS policy in discouraging long-term, highly-abused opioids should be applied across all CMS policy, including WCMSA policy review.

The idea that the costs for caring for injured workers have shifted to Social Security Disability Insurance is being disputed by a recent study conducted by the National Council on Compensation Insurance Inc.

The study, released March 26,, as reported by the Insurance Journal, is focused on the interaction between SSDI and workers compensation benefits and explores cost-shifting that may occur between the two programs.

“There have been some allegations or thoughts that perhaps workers comp cuts in benefits or the tightening of compensability standards at the state level might induce injured workers to file for SSDI … we found that the majority of states did not decrease benefits with a specific focus on permanent partial disability and permanent total disability,” said Jim Davis, director and actuary for Boca Raton, Florida-based NCCI.

Looking at the overall amount that is paid through SSDI is important, according to Emily Spieler, a professor of law at Northeastern University School of Law in Boston.

“Over the last 20 years with changes in workers compensation laws, people have always gotten injured at work, they have gotten permanent partial disability settlements, they have tried to go back to work and haven’t been able to return. They will apply for Social Security disability, sometimes while they are receiving the partial benefits, but the amount that is paid out by Social Security over a lifetime for someone who has a workplace injury may be far higher than is paid by workers compensation,” said Ms. Spieler.

NCCI saw the biggest change occur in the number of SSDI applications during the 2007-2009 recession.

“The largest increase in SSDI applications was during the great recession and this is common across states … and that is in contrast or versus any kind of activity at the state level,” said Mr. Davis.

The number of Social Security Disability Insurance beneficiaries rose 58%, and SSDI expenditures grew 138%, to $143 billion from $60 billion, from 2001 to 2015. Since 2010, the number of SSDI beneficiaries has been relatively stable, and spending growth has moderated, according to the study.

In states like Illinois and Nebraska, a person who receives both workers comp permanent total disability benefits and SSDI, in these cases workers comp shoulders a greater portion of total benefits, according to Mr. Davis.

“We have two different programs here. They serve different purposes, and from time to time there might be changes, perhaps to better align the program to its original intent, and that’s what we have seen. We have seen some changes that can shift costs in either direction, but that is not necessarily a bad thing,” said Mr. Davis.

There are still some lingering questions, said Ms. Spieler.

“I think there are three questions, and this research addresses one of them,” she said. “The first is to what extent does workers compensation pay for the costs of disability arising out of injury or illness? – the second question is to what extent have what they call ‘benefit changes’ had an impact on this cost shift? And there I think the report is accurate – the third question is … whether changes in the law have led to reductions in the amount that people are getting in workers compensation, not because the weekly benefits are different but because the way claims are looked at is different.”

Christine Baker abruptly retired as Director of the Department of Industrial Relations last week. No public announcement of her decision has been made by the DIR.

Her decision comes as a surprise to the industry stakeholders. According to a post by Julius Young on his blog, her decision was announced by an email she sent last Friday to DIR employees.

Christine Baker was the first woman to serve as director of the Department of Industrial Relations.

Her experience comes from working with labor and management as chief of the Division of Labor Statistics and Research (1984-89), the deputy director for the Division of Workers’ Compensation (1990-94), and the executive officer of the California Commission on Health and Safety and Workers’ Compensation from its inception in 1994 until April 2011. During her tenure as executive officer, the commission’s role expanded to overseeing the health, safety and workers’ compensation systems in California and recommending administrative and legislative changes for improvement.

In April 2011, Christine was named acting director of DIR and was appointed director by Gov. Brown in December. The Senate Rules Committee voted unanimously to confirm her appointment in May 2012.

As director, Christine served as the state administrator of Apprenticeship, the administrator of the state OSHA Plan, an ex officio member of the California Self-Insurers’ Security Fund and an ex officio member of the State Fund board of directors.

Ms. Baker is president-elect of the International Association of Industrial Accident Boards & Commissions (IAIABC), and has chaired the California Insurance Commissioner’s Workers’ Compensation Fraud Focus Group and the advisory committee of the International Forum on Disability Management.

Ms. Baker is the recipient of numerous awards. Small Business California recognized Christine as one of its 2008 Small Business Heroes. In 2012, she received the Human Rights Award from the League of United Latin American Citizens.

The Riverside District Attorney announced that four men were arrested and charged with several felonies stemming from an alleged $8 million health care fraud scheme. The four who were charged with 33 counts were Brian Andrew La Porte, DOB: 7-7-75, of Poway, Dennis Davin Bonavilla, DOB: 1-17-79, of Murrieta, Jeffrey D. Ogletree, DOB: 7-21-74, of Meridian, Idaho, and Babar Iqbal M.D., DOB: 12-18-73, of Irvine

Dr. Babar Iqbal was the head of the Riverside Regional Surgery Center, and allegedly worked with two of the defendants to provide health care for fraudulently claimed “employees” they had sent his way. Iqbal told those people that Medi-Cal wouldn’t cover their treatment and had them sign papers for a free health insurance policy, a district attorney senior investigator said

The California Medical Board records claims that Babar Iqbal graduated Ross University School of Medicine in 2001, and that he is still currently licensed to practice in California with no record of disciplinary action.

Ross University School of Medicine (RUSM) is a private international medical school in Portsmouth, Dominica. It was founded in 1978.

In 1985 California state medical licensing officials began investigating RUSM, along with other medical schools located in the Caribbean. The officials released a report stating that RUSM at that time had nearly no admissions standards, and that the school was in the business of providing medical degrees to “everyone that wants one.”

La Porte, who along with Bonavilla formed the Kingmakers LLC in San Diego and Drexel Group LLC in Wildomar – firms that investigators said were shell companies with no actual employees. They also had connections to Free Choice Healthcare Foundation, an unregistered charity which claimed it was formed to help those in need pay health care premiums.

La Porte, who used the name La Porta in connection with the alleged shell companies set up for the scheme, was released from federal prison in 2013, where he was sent for his role in a $20 million mortgage fraud scheme charged in 2010, according to papers that seek a court review for the source of any bail money La Porte might offer.

Ogletree, in 2013 was a vice president for Hospital Sisters Health System The company operates 16 hospitals and healthcare systems in Illinois and Wisconsin and is based in Springfield Illinois.

Investigators said on Ogletree’s recommendation, Hospital Sisters Health System donated more than $5 million to Free Choice Healthcare Foundation in January 2015. The money was supposed to be used to provide health insurance to 333 poor people in the Midwest for one year.

Defendants received $5 million in fraudulent income through donations made under false pretenses, and another $3 million from illegal kickbacks of funds paid on fraudulent health insurance claims, according to Riverside County District Attorney Senior Investigator Maureen Filley in documents filed with the case in Riverside County Superior Court.

Iqbal’s Riverside Regional Surgery Center drew the attention of the district attorney’s office and the California Department of Insurance in December 2016 when 22 of 23 alleged employees for Kingmakers were treated at the Iqbal’s center within five weeks of getting health insurance policy, with initial claims totaling $4 million.

Investigators also moved in court to have assets frozen at several bank accounts linked to the defendants.