Author: WorkCompAcademy

Miami lawyers expect a recent state court victory to pave the way for billions of dollars from liability and workers’ compensation insurance carriers across the nation to flow back to Medicare and its beneficiaries.

The attorneys, John Ruiz and Frank Quesada of the firm MSP Recovery, are going after major liability insurers for allegedly shirking their duty to reimburse Medicare benefit providers for conditional payments. Under the Medicare Secondary Payer law known by the acronym MCP, the government can recover double damages from a primary payer that fails to pay Medicare back for medical expenses covered by a liability policy

The home page of the firm boasts of the slogan aimed to attracted its clients who are Medicare Advantage insurance companies, challenging them to “DISCOVER YOUR LOSSES – RECOVER WHAT’S YOURS.”

According to the report in Daily Business Review, “Between 8 to 10 percent of all claims that are made through Medicare or Medicare Advantage Organizations are the responsibility of another payer,” Ruiz said – think car crashes, slip-and-fall accidents and workers’ compensation claims. “That’s a substantial amount because Medicare is paying in the vicinity of $600 billion a year.”

No attorney had ever secured class certification under the Medicare Secondary Payer law. A nuanced interplay between federal and state laws made it difficult to establish common issues of law and fact.

But MSP Recovery overcame those obstacles in Miami-Dade Circuit Court, where Judge Samantha Ruiz Cohen certified a class in a lawsuit against the auto insurer Ocean Harbor Casualty Insurance, a primary payer for thousands of Medicare Part C beneficiaries. In a 101-page decision, the judge ruled Medicare Advantage Organizations and others who contract with the government to provide Medicare benefits could sue Ocean Harbor as a class following an August federal appellate court decision.

That Eleventh Circuit decision, which arose from the Southern District of Florida case Humana v. Western Heritage, established that secondary payers could recover from a liability insurer if the case met three conditions: the defendant was a primary payer, the defendant failed to provide for primary payment or appropriate reimbursement, and the damages amount was established.

In state court, Ruiz Cohen ruled Ocean Harbor could not challenge the damages amounts because there was no evidence the auto insurer administratively contested any amounts paid, and the time for any administrative appeal had expired. Because of that failure to contest the reimbursement claims, all primary payer disputes arise under the Medicare Act, she ruled.

“Each class member will have incurred the same type of injury proximately caused by the same defendant based on the same general factual scenario, a failure to pay or reimburse as a primary payer for medical bills that resulted from an automobile accident during the claims period,” she wrote in the February order.

The judge also noted MSP Recovery has developed a sophisticated system to identify claims by collecting and matching data including Centers for Medicare & Medicaid Services reports, automobile crash reports, ambulance records, insurance declaration sheets and no-fault personal injury protection payout sheets.

The national penchant for claim “analytics” used to search for fraudulent claims may be a sword that swings both ways. “We’re able to figure out if someone that has had an incident – a car accident, a slip-and-fall – if another insurance carrier has reported to the government that they have a primary payer responsibility,” said Ruiz, also known for his variety of business enterprises, such as La Ley Sports.

That system has allowed the 30-attorney firm with roughly three dozen partner firms across the country to divide claims into categories and file lawsuits across the country on behalf of more than 100 health plans. Their firms boasts of about 17 class actions pending in state and federal courts across the nation.  Targeted defendants include companies such as Allstate Property & Casualty, Liberty Mutual, State Farm Mutual Automobile, Geico and others.

The class certification ruling is on appeal. Ocean Harbor attorney Shannon McKenna of Conroy Simberg in Hollywood said the company does not comment on pending litigation.

Ruiz and Quesada believe their cases will not only recover billions of dollars but will push primary payers to follow the law. The attorneys have already seen liability insurers change their payment practices because of the litigation.

“Before, it was almost like, ‘Catch me if you can,'” Ruiz said. “Now that we caught them, they are doing things differently.”

Sacramento Lopez brought an action against plaintiffs Elena Delgadillo and Jesus Cortes in 2009 (the Lopez litigation), alleging he had suffered injuries in a fall from the roof of plaintiffs’ property in Hayward, where he was working as their employee.

Lopez also alleged  Delgadillo and Cortes had violated Labor Code requirements to pay overtime wages and provide meal and rest breaks. Plaintiffs Delgadillo and Cortes tendered the defense of the Lopez litigation to their business owner’s insurance carrier, United States Liability Ins. Co. (USLI), which denied plaintiffs’ claim.

Plaintiffs’ insurance policy contained the following exclusions pertinent to this case: “d. Workers’ Compensation And Similar Laws [¶] Any obligation of the insured under a workers’ compensation, disability benefits or unemployment compensation law or any similar law. [¶] e. Employer’s Liability [¶] “Bodily Injury’ to: [¶] (1) An ’employee’ of the insured arising out of and in the course of: [¶] (a) Employment by the insured; or [¶] Performing duties related to the conduct of the insured’s business[.] [¶] . . . [¶] This exclusion applies: [¶] (1) Whether the insured may be liable as an employer or in any other capacity . . .”

Plaintiffs Delgadillo and Cortes brought this action against USLI. Their causes of action for breach of contract and breach of the covenant of good faith and fair dealing were based on the theory that USLI had a contractual obligation to defend and indemnify them in the Lopez litigation. The remaining causes of action alleged in addition that USLI, through an agent, misled plaintiffs as to the coverage it would provide.

USLI demurred to the second amended complaint, primarily on the ground the policy did not cover Lopez’s claims for bodily injury or Labor Code violations.

The trial court sustained the demurrer to the Delgadillo and Cortes action against USLI without leave to amend. It took judicial notice of the verdict form for the negligence claim in the Lopez litigation, which indicated Lopez sustained his injury during the course of his employment by Delgadillo and Cortes. Because the policy explicitly excluded coverage for bodily injury sustained by an employee in the course of employment, the court ruled, plaintiffs could not state a cause of action for breach of contract against USLI.

The court of appeal affirmed the dismissal in the unpublished case of Delgadillo v. United States Liability Ins. Co..

The trial court correctly concluded the policy provided no potential for coverage, and therefore USLI had no duty to defend plaintiffs in the Lopez litigation and there was no breach of contract. Plaintiffs suggest no theory upon which their remaining causes of action for breach of the implied covenant of good faith and fair dealing, fraud, deceit, and intentional infliction of emotional distress may be maintained in the absence of a duty to defend.

Operation Backlash, has been an extensive FBI-led undercover investigation that revealed a widespread workers’ compensation kickback scheme, including attorneys, doctors and medical providers who referred patients for health services in exchange for money.

Operation Backlash was first announced in November 2015 when the initial round of federal indictments was handed down. San Diego chiropractor Steven J. Rigler and San Diego workers’ compensation attorney Sean O’Keefe previously pleaded guilty to federal charges.

“When law enforcement became aware of the scam, we began following the trail of dirty money and it took us in many different directions,” San Diego District Attorney Bonnie Dumanis said. “The circle of criminal conduct continues to widen with today’s charges, and we expect additional indictments and arrests in the future.”

As alleged in one of the indictments, Los Angeles radiologist Ronald Grusd paid bribes to a San Diego chiropractor in exchange for patient referrals. The bribes were funneled to the chiropractor via Grusd’s corporation, Willows Consulting, a shell company. The checks were labeled “professional services,” but this was allegedly a sham.

Grusd’s practice, California Imaging Network Medical Group, has clinics in San Diego, Los Angeles, Beverly Hills, Fresno, Rialto, Santa Ana, Studio City, Bakersfield, Calexico, East Los Angeles, Lancaster, Victorville and Visalia.

Trial in the case pending against Grusd was set for June 6, 2017. On March 31, 2017, Defendants Grusd, California Imaging Network Medical Group, and Willows Consulting Company rejected a plea offer in this case.

On April 7, his attorneys moved for a continuance, claiming that they did not have sufficient time to prepare his defense. Last December they say they were provided with digital discovery documents by the prosecutors which were placed on a 2 terabyte drive that can hold millions of documents and recordings. Prosecutors responded objecting to a trial continuance beyond August. No ruling has been made, thus the Grusd case remains in process with an unknown trial date.

The U.S. Attorney’s Office also announced federal indictments against additional defendants. They include patient recruiters, Fermin Iglesias, Carlos Arguello, Miguel Morales and four corporations. The corporations are Providence Scheduling, Inc., Medex Solutions, Inc., Prime Holdings International, Inc. and Meridian Medical Resources, Inc., doing business as Meridian Rehab Care.

The three federal defendants are accused of recruiting individuals to file workers’ compensation claims resulting from an on-the-job injury. The defendants then directed these patients to specific chiropractors who, in exchange for dozens of new workers’ compensation patients each month, agreed to meet a quota set by the defendants for referrals of the new patients for ancillary goods and services such as MRIs and durable medical equipment from specific providers.

According to the indictment, Providence Scheduling oversaw the scheduling of applicants recruited by defendant Arguello and others, and their assignment to a primary treating physician, which included chiropractors. Defendants Iglesias and Arguello decided which physicians were eligible to receive applicants from defendant Providence Scheduling.

Prosecutors claim the purpose of the conspiracy was to fraudulently obtain money from insurers by submitting claims for ancillary procedures and DME that were secured through a pattern of bribes and kickbacks in the form of an illegal cross-referral scheme in exchange for the referral of patients to particular providers of ancillary procedures.

Near the end of March, 2017, Providence Scheduling entered into a Plea Agreement to plead guilty. The Agreement has been filed with the federal court, but remains sealed until processed through a Magistrate Judge review and then to final disposition by the federal judge in charge of the case.

A medical doctor who fled the United States nearly 15 years ago and faked his own death to avoid prosecution in a healthcare fraud case was sentenced to 29 months in federal prison for fleeing justice.

Tigran Svadjian, 58, a naturalized U.S. citizen originally from Armenia who was residing in Newport Beach prior to fleeing the country in September 2002, was sentenced late this afternoon by United States District Judge Michael W. Fitzgerald.

Svadjian pleaded guilty in November to one count of unlawful flight to avoid prosecution.

In a case filed in 2002 in United States District Court in Sacramento, Svadjian, who operated medical clinics in Los Angeles and Fresno, had agreed to plead guilty in a $2.4 million scheme to defraud Medi-Cal by submitting bills for tests that had not been performed, in many cases because the “patients” were dead. After being ordered to appear in federal court in the Eastern District of California for an arraignment in that case, he fled to Russia, leaving behind his wife and son.

On October 24, 2002, the United States Embassy in Moscow received notification that Svadjian had died of pneumonia and that his body had been cremated. Relying on this false information, the Embassy then issued a report documenting the death, and Svadjian’s defense counsel submitted that report to federal prosecutors.

When he pleaded guilty, Svadjian admitted that he paid a Russian police officer in 2002 to submit an official report about his death to the United States Embassy. Soon after, Svadjian obtained a fraudulent Russian passport in a different name and relocated to Hurghada, Egypt, where he occasionally worked as a scuba instructor.

In January 2013, after lengthy and unsuccessful attempts to locate Svadjian or to obtain further confirmation of his death, prosecutors in the Eastern District of California dismissed the healthcare fraud case.

Svadjian was taken into custody by Egyptian authorities on August 1 – nearly 14 years after he fled the United States. Svadjian had been deported to Egypt by Ukrainian authorities after they determined he was travelling on a fraudulent Lithuanian passport. Egyptian authorities discovered in his residence an old United States passport with his true name.

Svadjian “did not simply flee from prosecution,” prosecutors wrote in a sentencing memorandum filed with the court. “Instead, defendant planned and implemented a sophisticated, fraudulent scheme that involved bribing foreign officials, using false statements to mislead U.S. State Department officials into creating a false death certificate, and submitting that false certificate to federal prosecutors. Defendant then hid from U.S. authorities through the use of false identities for approximately 15 years. He abandoned his wife, son, and parents, and started a whole new life without them because he did not want to spend time in prison.”

The Justice Department has joined a California whistleblower’s lawsuit that accuses insurance giant UnitedHealth Group of fraud in its popular Medicare Advantage health plans.

Justice officials filed legal papers to intervene in the suit, first brought by whistleblower James Swoben in 2009, on Friday in federal court in Los Angeles. On Monday, they sought a court order to combine Swoben’s case with that of another whistleblower.

According to the report by Salon.com, Swoben has accused the insurer of “gaming” the Medicare Advantage payment system by “making patients look sicker than they are,” said his attorney, William K. Hanagami. Hanagami said the combined cases could prove to be among the “larger frauds” ever against Medicare, with damages that he speculates could top $1 billion.

UnitedHealth spokesman Matt Burns denied any wrongdoing by the company. “We are honored to serve millions of seniors through Medicare Advantage, proud of the access to quality health care we provided, and confident we complied with program rules,” he wrote in an email.

Medicare Advantage is a popular alternative to traditional Medicare. The privately run health plans have enrolled more than 18 million elderly and people with disabilities – about a third of those eligible for Medicare – at a cost to taxpayers of more than $150 billion a year.

Although the plans generally enjoy strong support in Congress, they have been the target of at least a half-dozen whistleblower lawsuits alleging patterns of overbilling and fraud. In most of the prior cases, Justice Department officials have decided not to intervene, which often limits the financial recovery by the government and also by whistleblowers, who can be awarded a portion of recovered funds. A decision to intervene means that the Justice Department is taking over investigating the case, greatly raising the stakes.

“This is a very big development and sends a strong signal that the Trump administration is very serious when it comes to fighting fraud in the health care arena,” said Patrick Burns, associate director of Taxpayers Against Fraud in Washington, a nonprofit supported by whistleblowers and their lawyers. Burns said the “winners here are going to be American taxpayers.”

“This is not one company engaged in episodic bad behavior, but a lucrative business plan that appears to be national in scope,” Burns said.

On Monday, the government said it wants to consolidate the Swoben case with another whistleblower action filed in 2011 by former UnitedHealth executive Benjamin Poehling and unsealed in March by a federal judge. Poehling also has alleged that the insurer generated hundreds of millions of dollars or more in overpayments.

When Congress created the current Medicare Advantage program in 2003, it expected to pay higher rates for sicker patients than for people in good health using a formula called a risk score.

But overspending tied to inflated risk scores has repeatedly been cited by government auditors, including the Government Accountability Office. A series of articles published in 2014 by the Center for Public Integrity found that these improper payments have cost taxpayers tens of billions of dollars.

“If the goal of fraud is to artificially increase risk scores and you do that wholesale, that results in some rather significant dollars,” Hanagami said.

David Lipschutz, senior policy attorney for the Center for Medicare Advocacy, a nonprofit offering legal assistance and other resources for those eligible for Medicare, said his group is “deeply concerned by ongoing improper payments” to Medicare Advantage health plans.

The two whistleblower complaints allege that UnitedHealth has had a practice of asking the government to reimburse it for underpayments, but did not report claims for which it had received too much money, despite knowing some these claims had inflated risk scores.

The Justice Department has said it also is investigating risk-score payments to other Medicare Advantage insurers, but has not said whether it plans to take action against any of them.