Author: WorkCompAcademy

For years, it was hard to miss the billboards and radio jingles for a weight-loss surgery center that promised, “Let your new life begin, call 1-800-GET-THIN.”

But on Wednesday, federal prosecutors charged that the Lap-Band surgery operation was at the center of a massive fraud scheme that forced patients to undergo unnecessary tests, falsified medical tests to justify surgeries and cheated insurers and patients out of $250 million.

Julian Omidi, 49, of West Hollywood, and Mirali Zarrabi, 55, of Beverly Hills, were arrested pursuant to a federal indictment that alleges a host of criminal charges stemming from GET THIN’s Lap-Band (or bariatric) surgery and sleep study programs between May 2010 and March 2016.

Two corporations controlled, in part, by Omidi – Surgery Center Management, LLC (SCM), and Independent Medical Services, Inc. (IMS) – are also named in the 37-count superseding indictment that was unsealed this week.

The indictment contains charges of mail fraud, wire fraud, false statements, money laundering and aggravated identity theft.

Omidi, a physician whose license was revoked in 2009, controlled, in part, the GET THIN network of entities, including SCM and IMS, that focused on the promotion and performance of elective, Lap-Band weight-loss surgeries. Omidi established procedures requiring prospective Lap-Band patients – even those covered by insurance plans he knew would never cover Lap-Band surgery – to have at least one sleep study, and employees were incentivized with commissions to make sure the studies occurred, according to the indictment. The purpose of the sleep studies was to find a second reason – a “co-morbidity,” such as sleep apnea – that GET THIN would use to convince the patient’s insurance company to pre-approve the Lap-Band procedure.

After patients underwent sleep studies – often with little indication that any doctor had ever determined the study was medically necessary – GET THIN employees, acting at Omidi’s direction, allegedly often falsified the results to reflect that the patient had moderate or severe sleep apnea, and that they suffered from severe daytime sleepiness. Omidi then caused those falsified sleep study reports to be used in support of GET THIN’s pre-authorization requests for Lap-Band surgery.

Relying on the false sleep studies – as well as other false information, including patients’ heights and weights – insurance companies authorized payment for some of the proposed Lap-Band surgeries. The indictment alleges that GET THIN received at least $38 million for the Lap-Band procedures.

Even if the insurance company did not authorize the surgery, GET THIN still was able to submit bills for approximately $15,000 for each sleep study, receiving millions of dollars in payments for these claims, according to the indictment. The insurance payments were deposited into bank accounts associated with the GET THIN entities.

The victim health care benefit programs include TriCare, Anthem Blue Cross, UnitedHealthcare, Aetna, Cigna and others.

In 2014, the government seized more than $110 million in funds and securities from accounts held by individuals and entities involved in the criminal scheme described in the indictment, including Omidi. The government is seeking forfeiture of some or all of those funds in the criminal case, and also intends to pursue civil forfeiture of some or all of the assets.

Sorrento Therapeutics, Inc. received approval from the U.S. Food and Drug Administration for its non-opioid painkiller patch, ZTlido (lidocaine topical system) 1.8%.

ZTlido is indicated for the relief of pain associated with post-herpetic neuralgia (PHN), also referred to as post-shingles pain. ZTlido is a major advancement in analgesics because of its proprietary adhesion technology demonstrating 12-hour wear with efficient lidocaine delivery, even during exercise. ZTlido was designed to solve a problem that is commonly reported with transdermal/topical patches: they don’t stay on.

“Post herpetic neuralgia is a perfect example of why we have an opioid crisis,” William Pedranti, chief operating officer at the Sorrento subsidiary SCILEX told Reuters. “There’s no opioids that are approved by the FDA to treat PHN (but) the number 1 prescribed product first-line is an opioid.”

“Topical lidocaine is an important option for healthcare providers to have in their armamentarium for treating PHN, a difficult-to-treat neuropathic pain,” stated Dr. Jeff Gudin, Director, Pain Management and Palliative Care, Englewood Hospital and Medical Center. “The Centers for Disease Control and Prevention’s guideline of non-opioid treatments for chronic pain recognizes topical lidocaine as an alternative first-line therapy. ZTlido now offers providers and patients this option.”

According to recent IMS data, more than 100 million prescription lidocaine patches were sold in the US in 2017. Sorrento intends to have Scilex complete the final steps necessary to commercial launch of ZTlido in the US with the objective to make the product commercially available to patients sometime in 2018.

ZTlido is comprised of a non-aqueous adhesive material containing 1.8% lidocaine, which is applied to a non-woven polyester felt backing and covered with a polyethylene terephthalate (PET) film release liner. The release liner is perforated in the middle and removed prior to application to the skin. The size of the topical system is 10 cm × 14 cm x 0.08 cm thick. ZTlido is indicated for relief of pain associated with post-herpetic neuralgia. It should be applied only to intact skin.

The treatment’s approval puts the bandage-like patch into a market currently split between Endo International Plc’s Lidoderm, which has been on the market for nearly 20 years, and generic versions of that product.

ZTlido improves upon Lidoderm by offering better adhesion and delivers equivalent doses of the pain-relieving active ingredient, lidocaine, more effectively, the company said.

“We’re not saying that it (ZTlido) is a massively better product,” Raghuram Selvaraju, an analyst at H.C. Wainwright said. “It is an incrementally better product, which we believe, is going to be actively promoted.” Selvaraju expects U.S. sales of the drug to peak at $1.1 billion in 2025.

In 2012, a five-man crew of employees of Key Energy Services, Inc. was working on an oil rig. A large sections of tubing was being pulled out of the well hole. A wet box was being used to deflect a liquid that was coming out with the tubing, in order to avoid getting crew members wet.

A sudden release of pressure from the well tubing caused a powerful blast; which blew the wet box upward and into a tree. After the blast, Norberto Gomez was found lying on the floor, with a head wound; he was hospitalized with a fractured skull.

The DIR Division of Occupational Safety and Health was notified, and dispatched an investigator. Cal/OSHA requested Key Energy’s Form 300 log, which is a log in which employers are required to record work-related injuries.

In June 2013, the Division issued four citations to Key Energy, including a citation for failing to fully complete the Form 300 log entries. The Form 300 citation was based on the failure to include complete information in column F, identifying the “object/substance that directly injured or made person ill.”

Key Energy appealed the citations. The ALJ issued a decision upholding the Form 300 citation and imposed a $450 penalty. Key Energy petitioned for reconsideration. The Board denyied the petition for reconsideration. Key Energy then petitioned the superior court for a writ of mandate directing the Board to vacate its decision on the citation in issue. The trial court denied the writ. Key Energy appeals that denial.

The employer contends substantial evidence did not support the Board’s finding that it violated the regulation. The court of appeal concluded that substantial evidence supports the finding of violation in the unpublished case of Key Energy Services, Inc. v. Cal. Occupational Safety and Health Appeals Bd.

The heading of Form 300 column F states: “Describe injury or illness, parts of body affected, and object/substance that directly injured or made person ill. (e.g. Second degree burns on right forearm from acetylene torch).” For Gomez’s injury, the entry in column F reads: “Fractured skull-Forehead.”

The ALJ rejected Key Energy’s argument that it was only required by the regulation to “use” Form 300, not to fully complete it. “It would be pointless to require employers to use the form 300, but not require them to fill it out correctly and completely.” The ALJ added: “Even if Employer were unsure as to what actually caused the injury on December 10, 2012, Employer could have recorded ‘unknown’ in column ‘F.’ “

The court of appeal noted that the record contains no evidence supporting Key Energy’s argument. It offered no evidence regarding the reason for its omission of information from column F of Form 300 for Gomez’s accident. Shortly after the accident that injured Gomez, Key Energy conducted itself as if the wet box were the object that directly injured him. The record contained substantial evidence that Gomez was struck by the wet box.

Richard Johnson worked as a firefighter for the City of South San Francisco (CSSF) from March 1973 to October 2001. He then worked for the City of Pacifica (Pacifica). He was exposed to known carcinogens during each period of employment. He was diagnosed nasopharyngeal cancer in 2007.

The cancer was found to have initially manifested itself during 2005, when Johnson first noted symptoms of nasal obstruction. The disability was found to have occurred in 2007, during Johnson’s employment with Pacifica.

Johnson filed a workers’ compensation claim against Pacifica. He invoked the presumption of section 3212.1 that cancer manifesting during (or within certain periods following) employment as a firefighter that involves exposure to known carcinogens arose out of and in the course of that employment.

Pacifica denied liability and joined CSSF as a party to the case. CSSF eventually settled with Johnson for all of his cancer-related compensation, and it then sought contribution from Pacifica. An arbitrator denied the petition, ruling that evidence of the latency period for the cancer suffered by Johnson showed the injurious exposure under section 5500.5(a) occurred during Johnson’s earlier employment with CSSF. The Workers’ Compensation Appeals Board (WCAB) upheld and adopted the arbitrator’s order.

CSSF petitioned for review, contending the WCAB, in adopting the arbitrator’s determination, erroneously utilized a more lenient preponderance evidentiary standard in applying section 5500.5(a), rather than the more stringent cancer presumption rebuttal standard provided in section 3212.1. The Court of Appeal affirmed the WCAB in the published case of City of South San Francisco v WCAB, City of Pacifica.

Labor Code section 3212.1 establishes a presumption that cancer manifesting during and for a specified period following employment in certain public safety positions, including firefighters, arose out of and in the course of that employment.

Section 5500.5, subdivision (a) (section 5500.5(a)), however, limits employer liability for a cumulative injury to the employer who employed the applicant during the one year preceding the earliest of (1) the date of injury or (2) the last date of injurious exposure to the hazards that caused the injury. Thus, either CSSF or Pacifica would be potentially responsible for compensation for the entire injury, dependent upon the proper application of section 5500.5(a).

The arbitrator determined the date of injury was in 2007. The dispositive issue was whether the last injurious exposure resulting in the injury occurred during CSSF or Pacifica employment.

The Court of Appeal ruled that an employer is not liable under section 5500.5(a) absent evidence that exposure during that employment was a contributing cause of the disease or injury, i.e., that the exposure was injurious.

Section 3212.1 does not eliminate the requirement that an industrial injury be proximately caused by the hazardous exposure. Instead, it applies presumptions of a causal link between exposure to the industrial hazard (a known carcinogen) and the manifested injury (cancer), unless the employer disproves the existence of such a link.

A medical doctor was arrested on federal charges of illegally selling prescriptions without a legitimate medical purpose to undercover operatives who visited the physician’s Victorville medical office.

Wendell Mark Street, 66, of Las Vegas, was arrested without incident at his residence by special agents with the Drug Enforcement Administration.

Street is a 1981 graduate of the Medical College of Wisconsin. He practiced at 14075 Hesperia Road in Victorville, Street surrendered his California medical license in 2016.

The 44 page Accusation filed by the California Medical Board in December 2014 essentially details prescriptions written to a number of patients who are identified only by their first and last name initials. Details are provided on how each of them was prescribed controlled substances in violation of law or professional standards. By February 23, 2016, Street and his attorney, Thomas Chapin Esq., signed a Stipulated Surrender of License.

The arrest is the result of a 10-count indictment returned by a federal grand jury on February 9. The indictment charges Street with five counts of illegally distributing the painkiller oxycodone and five counts of illegally distributing the tranquilizer alprazolam (often sold under the brand name Xanax). Street allegedly issued the prescriptions in 2013 in exchange for cash “while acting and intending to act outside the usual course of professional practice and without a legitimate medical purpose.”

Street allegedly wrote prescriptions without performing any physical examinations in exchange for $200 to $300 in cash from each of two undercover investigators with the California Medical Board and an informant. During the investigation into Street, investigators executed a search warrant at his Victorville office in 2014.

Street is expected to make his initial appearance in the United States District Court in Las Vegas. The five counts related to illegal distribution of oxycodone each carry a statutory maximum penalty of 20 years in federal prison. The five counts related to alprazolam each carry a sentence of up to five years in prison.

This case is being prosecuted by Assistant United States Attorney Victoria A. Degtyareva of the Organized Crime Drug Enforcement Task Force.