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Author: WorkCompAcademy

Cal/OSHA Responds to Tree-Trimming Fatalities

Following four recent tree-trimming workplace fatalities, Cal/OSHA is reminding workers and employers in this high-risk industry to take precautions to avoid accidents.

Cal/OSHA is investigating the four deaths, which occurred over the last six weeks, and has launched a statewide safety awareness campaign for tree service companies, landscapers and other businesses.

The four tree-trimming deaths under investigation include:

1) a worker in Mariposa County who was struck by a branch on December 1
2) a worker in San Bernardino County who suffocated when dry palm fronds collapsed and trapped him on December 4
3) a worker in Los Angeles County who fell approximately 60 feet when the branch he was tethered to broke on January 6
4) a worker in Siskiyou County who was struck by the tree he was cutting to clear power lines on January 9

“Cal/OSHA’s safety awareness campaign aims to protect the lives of tree service workers,” said Cal/OSHA Chief Juliann Sum. “Employers in this high-risk industry need to be aware of, and take steps to minimize, the hazards to their workers. We will cite employers that are not in compliance with safety requirements.”

Cal/OSHA investigated nearly 70 accidents involving tree work, including trimming or removal services, in the two-year period between October 1, 2014 and September 30, 2016. Nearly three out of four of these accidents (74%) resulted in a worker hospitalization, and 12 of the accidents involved the death of a worker.

As part of the Tree Work Safety Emphasis Program, Cal/OSHA inspectors throughout the state who observe unsafe tree trimming or tree removal operations will investigate possible violations. Inspectors will also respond to reports of unsafe operations.

The major causes of tree trimming injuries and fatalities include falls, electrical shock, being struck by a tree branch, chainsaw lacerations, palm tree skirt collapses and ladder accidents. For example, on December 30, 2015, a Wright Tree Service worker in Humboldt County accidently cut the lanyard used to secure himself to a tree and fell 54 feet to his death. The investigation revealed the employer failed to ensure the worker was using a required second point of attachment in his security system while he was operating a chain saw in a tree.

Cal/OSHA has resources available to help employees and employers prevent accidents like these, including a Tree Work Safety Guide, fact sheet and checklist.

Feds Wrap Up Fraud Case Against So. Cal Rehab Clinics

Simon Hong (who is also known as Seong Wook Hong), 55, a Brea man, who operated rehabilitation clinics in Walnut, Torrance and Los Angeles and defrauded Medicare out of approximately $3 million by billing for unneeded or unnecessary services has been sentenced to 121 months in federal prison.

Hong was found guilty in October of eight counts of healthcare fraud, nine counts of illegal kickbacks related to healthcare referrals and two counts of aggravated identity theft.

Hong owned physical therapy clinics operated by companies called Hong’s Medical Management, Inc., CMH Practice Solution, and HK Practice and Solution, Inc. As part of the scheme, Hong recruited Medicare beneficiaries and provided uncovered services like massage and acupuncture for them. Even though the beneficiaries did not receive actual physical therapy, Hong’s co-conspirators billed Medicare for physical therapy, and then funneled 56 percent of the reimbursement funds back to Hong.

Through this scheme Hong and his co-conspirators billed Medicare from the spring of 2009 until November 2013 and received approximately $2,929,775 in reimbursements, of which Hong received approximately $1,640,674. Hong was ordered to pay $2,929,775 in restitution.

Hong is one of 10 defendants who were charged in 2015 and early 2016 for healthcare fraud related to physical therapy. Eight others have pled guilty, and one, David Y. Kim, 54, of Los Angeles, remains a fugitive. Those previously convicted in the investigation are:

1) Joseff Sales, 39, of Buena Park, a co-owner and operator of Rehab Dynamics, who pleaded guilty to one count of healthcare fraud and one count of illegal kickbacks, and was sentenced last year to 51 months in prison;

2) Danniel Goyena, 39, of Buena Park, a co-owner and operator of Rehab Dynamics, who pleaded guilty to two counts of healthcare fraud and was sentenced last year to 51 months in prison;

3) Marlon Sonco, 39, of Sylmar, who pleaded guilty in June 2015 to conspiracy and is scheduled to be sentenced on January 23;

4) Eddieson Legaspi, 40, of Lomita, an employee of Rehab Dynamics, pleaded guilty to conspiracy to commit healthcare fraud and also was sentenced yesterday to 15 months;

5) Ohun Kwon, 50, of Fullerton, the owner/operator of E.K. Medical Management, which referred patients to Rehab Dynamics, pleaded guilty to conspiracy to commit healthcare fraud and was sentenced last year to 27 months in federal prison;

6) Leovigildo Sayat, 39, of Torrance, an employee of RSG Rehab, pleaded guilty to conspiracy to commit health care fraud and was sentenced last year to two years in prison;

7) Byong Chun “David” Min, 68, of Irvine, co-owner/operator of Glory Rehab Team, which operated as Dream Hospital in Orange County, who pleaded guilty to healthcare fraud and illegal kickbacks, also was sentenced yesterday to 45 months in prison; and

8) Jason S. Min, 35, of Irvine, David Min’s son, who was the other owner/operator of Glory Rehab, pleaded guilty last year to obstruction of justice and is scheduled to be sentenced on February 6.

These individuals should be precluded from recovery of any bills or liens that may be pending in California Workers’ Compensation cases as a result of new law that took effect this year.

In a separate case, Hong pleaded guilty last month to conspiracy to commit health care fraud in another scheme involving occupational and physical therapy services that were never provided to Medicare beneficiaries. Medicare suffered losses of approximately $2.4 million in relation to this scheme. Hong is scheduled to be sentenced in this case in Los Angeles federal court by United States District Judge George Wu on March 6.

Details Emerge on Prescription Drug Black Market Supply Chain

The U.S. Department of Justice announced that 56 year old Randy Crowell plead guilty to fraudulently distributing more than $100 million worth of prescription drugs obtained on a nationwide black market. Crowell used a Utah-based wholesale distribution company to sell illicitly procured drugs to pharmacies, which in turn dispensed them to unsuspecting customers.

Crowell, purchased more than $100 million worth of prescription medications from a sinister black market chain at a fraction of the legitimate prices for these drugs, before selling the same as new, legitimate bottles of medication to legitimate licensed pharmacies all over the country.  To maximize profits, Crowell and his co-conspirators focused on some of the most expensive medications on the market, including those used to treat HIV/AIDS.

Scheme participants targeted the cheapest possible source of supply for these drugs – Medicaid patients and other individuals who received these prescription drugs on a monthly basis for little or no cost, and who were then willing to sell their medicines rather than taking them as prescribed.

These Insurance Beneficiaries had prescriptions filled for medications each month at pharmacies across the country. And then sold their medications to low-level participants (“Collectors”) in the scheme who worked on street corners and bodegas and would pay cash – typically as little as $40 or $50 per bottle.

Because the ultimate goal of the scheme was to resell these medications as new at full price, Collectors and other scheme participants used lighter fluid and other potentially hazardous chemicals to remove the patient labels affixed when the bottles were initially dispensed to the Insurance Beneficiaries. This process, referred to as “cleaning” the bottles, was dangerous, as these hazardous chemicals could infiltrate the bottles, rendering the medication unfit for human consumption.

Collectors then sold these second-hand drugs to higher-level scheme participants (“Aggregators”) who bought dozens, and sometimes hundreds, of bottles at a time from multiple collectors before selling them to higher-level scheme participants with direct access to legitimate distribution channels, including corrupt wholesale companies like Crowell’s accomplices.

The corrupt wholesale companies then resold the bottles as new, at full price, to pharmacies, including potentially the very same pharmacies that initially dispensed these medications.

Crowell and others acting at his direction created false and fraudulent documents known as “pedigrees” for these medications, which purported to document the legitimate movement of these medications bought and sold by them.

Crowell pled guilty to one count of conspiracy to commit health care fraud, which carries a maximum term of 10 years in prison. As a part of the plea, Crowell also consented to the forfeiture of more than $13 million in scheme proceeds, including the full contents of his primary operating account.

Crowell will be sentenced on May 11, 2017, at 12:30.

L.A. Must Borrow Millions to Pay Unprecedented Claims

Los Angeles budget officials warned, in a January 6 memo, that the City needs to immediately borrow tens of millions of dollars to avoid dipping into its emergency reserve fund after several high-profile lawsuit payouts.

The City Administrative Office recommended that the city borrow $50 million to $70 million to address cases that are part of a “new trend of increased liability payouts.”

The City typically budgets $60 million a year for its legal liability fund, but has already paid out $135 million since July 1, when the current fiscal year began.

Recent significant payouts include a $200-million settlement by the Los Angeles City Council over a housing-related lawsuit brought by disabled groups and an $8-million settlement to end lawsuits related to the fatal Los Angeles Police Department shootings of three unarmed men in separate incidents. The $200 million will be paid out over 10 years.

The report recommends issuing Judgment Obligation Bonds to fund these settlements, and warns against dipping into the city’s reserve fund, which is for financial emergencies.

As of November, the reserve fund stood at about $295 million, which the report said is “only precariously above” the minimum amount required under city policy – 5% of the General Fund budget. The recommendation comes after the city paid out $100 million in legal cases last fiscal year, said Assistant City Administrative Officer Ben Ceja. He said the rising expenditures “could be the new normal in terms of paying out cases.”

After calling the financial crisis to the attention of City officials, a Second Financial Status Report reported “a potential $52 million expenditure deficit and highlighted risks to revenues totaling $138 million. Since that report, additional information has increased the reported expenditure deficit to up to $80 million, while a new identified shortfall increases the combined revenue risk to $165 million. Therefore, the combined potential deficit currently stands at $245 million.”

The Report goes on to state that the “options to resolve this deficit are extremely limited.” The deficit is “mostly driven by the liability claims account, human resource benefits account, and recent labor agreements reached with firefighters.”

“One significant source of expenditures includes pending resolutions to additional cases being handled by the City Attorney and Conflict Counsel. These payouts are above the $135.5 million identified in the FSR, which already exceeded the Adopted Budget by $67 million. As this Office stated at the time of the adoption of the 2016-17 Budget, potential liabilities above budgeted amounts posed a major risk in 2016-17 that had the potential to exceed the available reserves set aside in the Unappropriated Balance. The City must strive to increase the funding available for liabilities in the upcoming budget process.”

In order to borrow the money, the report requests that “the City Attorney to present an amendment to the Los Angeles Administrative Code (Section 11.27) to clarify and expand on the types of settlements that are eligible to be paid with Judgment Obligation Bonds in a manner more consistent with current legal practice, and to provide more procedural flexibility with respect to the timing of certain portions of the issuance process.”

CDI Says “Foreign Government” Hacked Insurance Company

The California Department of Insurance released the examination findings and regulatory settlement agreement concerning the cyber security breach of health insurance giant Anthem Inc., which compromised 78.8 million consumers’ records. CDI says this “was one of the largest cyber hacks of an insurance company’s customer data,”

Anthem agreed to make a number of enhancements to its information security systems, and also agreed to provide credit protection to all consumers whose information was compromised. Anthem is paying more than $260 million dollars for security improvements and remedial actions in response to this breach.

The CDI also said “In this case, our examination team concluded with a significant degree of confidence that the cyber attacker was acting on behalf of a foreign government.”

The cyber breach was first discovered by Anthem on January 27, 2015. In early February 2015, Anthem and its affiliates announced the company had suffered a major breach, which compromised 78.8 million consumer records, including records of at least 12 million minors.

An investigation by the insurance commissioners’ examination team and a separate internal investigation by Mandiant, an information security firm hired by Anthem, revealed the data breach began on February 18, 2014, when a user within one of Anthem’s subsidiaries opened a phishing email containing malicious content. Opening the email permitted the download of malicious files to the user’s computer and allowed hackers to gain remote access to that computer and at least 90 other systems within the Anthem enterprise, including Anthem’s data warehouse.

The lead insurance commissioners employed an examination team composed of the cybersecurity firm CrowdStrike and Alvarez & Marsal Insurance and Risk Advisory Services, LLC. The team focused its investigation on Anthem’s pre-breach response preparedness, the company’s response adequacy at the time of the breach, and their post-breach response and corrective actions.

The team found Anthem had taken reasonable measures prior to the data breach to protect its data and employed a remediation plan resulting in a rapid and effective response to the breach once it was discovered. The team noted Anthem’s exploitable vulnerabilities, worked with Anthem to develop a plan to address those vulnerabilities, and conducted a penetration test exercise to validate the strength of Anthem’s corrective measures. As a result, the team found Anthem’s improvements to its cybersecurity protocols and planned improvements were reasonable.

The team determined with a high degree of confidence the identity of the attacker and concluded with a medium degree of confidence that the attacker was acting on behalf of a foreign government. Notably, the exam team also advised that previous attacks associated with this foreign government have not resulted in personal information being transferred to non-state actors.

Within two weeks of discovering the breach and following discussions with the lead states, Anthem hired AllClear ID, a consumer credit protection company, to offer credit protection services to all breach-affected consumers for a two-year period. Additionally, as a result of this multi-state settlement, Anthem has agreed to offer a credit protection solution to all minors who were under age 18 when the security breach occurred. Consumers affected by the breach, including parents of affected minors, are encouraged to visit www.AnthemFacts.com to learn more about the credit monitoring and identity theft services that Anthem agreed to offer to individuals.

CIGA Defeats CMS “Excessive Demands” – So Far

Last March, a federal judge in California granted the United States’ motion to dismiss portions of CIGA’s complaint regarding Medicare payments, holding that California’s insurance codes are preempted by federal law in the case of California Insurance Guarantee Association v. Sylvia Mathews Burwell, et al., No. 15-cv-1113, C.D. Calif..

CIGA is currently paying several claims in the Burwill case under various workers’ compensation policies issued by now-insolvent insurers. Some of these claimants also received payments from Medicare for items and services that were otherwise covered by these policies. Where Medicare pays benefits for a loss that is also covered by another insurer, the Medicare Secondary Payer statute, 42 U.S.C. § 1395y, designates Medicare as the “secondary payer” and generally requires those other insurance plans (called “primary plans”) to reimburse Medicare for all benefits it paid. Concluding that the workers’ compensation policies were “primary plans” within the meaning of the statute, the United States demanded that CIGA reimburse it for the Medicare benefits paid to these claimants. CIGA refused, prompting the United States to commence collection proceedings.

CIGA filed a declaratory and injunctive relief action against Defendants Sylvia Mathews Burwell, United States Department of Health and Human Services, and the Centers for Medicare and Medicaid Services contending that it was not required to reimburse the United States for Medicare benefits paid to individuals whose losses may also be covered by CIGA.

Ultimately, the California District Court for the Central District of California held last March that the McCarran-Ferguson Act did not subject the United States to California’s claims filing deadline because the Act was never intended to waive the federal government’s sovereign immunity. CIGA’s claims against the United States were dismissed to the extent that they were based on the United States’ failure to file timely proofs of claim under California’s Guarantee Act.

But the CIGA litigation in the case continued, and things change.

In the same case, CIGA alleged that CMS calculated its reimbursement liability in a manner that is contrary to the MSP and the implementing regulations, resulting in over-inclusive reimbursement demands. It sought a judicial declaration to that effect, as well as a permanent injunction barring CMS from reapplying the offending practice to future demands against CIGA.

Curiously, CIGA and CMS were ordered into mediation to resolve the dollar value of the CMS obligation and were unsuccessful. At the conclusion, CMS gave up and withdrew its demands in court altogether, hoping to just walk away from CIGA.  Ultimately CMS claimed that this rendered CIGA’s litigation “moot” and asked that the case be dismissed. CIGA responded that Defendants’ conduct does not make it “absolutely clear” that CMS will never again reopen these claims or reapply the offending practice, which means the case is not moot.

The federal judge agreed that the issue was not moot, and held CMS in the lawsuit to consider CIGA’s allegations. It said “Here, the government clearly has not met that burden. Defendants have not changed their practice with respect to reimbursement calculations; rather, they have simply withdrawn their reimbursement demands for the three particular claims at issue in this lawsuit.”

CIGA did not dispute that each charge for which CMS sought reimbursement contained at least one diagnosis code that is covered by CIGA’s policies, and CMS did not dispute that each charge also contained codes that were not covered by those policies. Thus, the parties’ arguments center on two main issues: (1) whether CIGA made a prima facie case to CMS that the reimbursement requests were erroneous; and (2) whether the MSP and the implementing regulations support Defendants’ position that CIGA must always fully reimburse CMS for a charge containing one covered code regardless of whatever uncovered codes are also present.

The Court concluded in a January 5 ruling “that if a single charge contains multiple diagnosis codes – some of which relate to a medical condition covered by CIGA’s policy and some of which do not – the presence of one covered code does not ipso facto make CIGA responsible for reimbursing the full amount of the charge. Instead, CMS must consider whether the charge can reasonably be apportioned between covered and uncovered codes or treatments. Upon such consideration, CMS might still conclude that apportioning the charge is unreasonable. In addition, even if the charge should be apportioned, the Court takes no position on how CMS should do so (e.g., pro-rata by covered codes versus uncovered codes, or some other method)”

This is a ruling at the federal district court trial level, and it may very well and likely will be appealed even to the U.S. Supreme Court.  However at this point in time, there is a well reasoned opinion in CIGA’s favor, and also inures to the benefit of all other California workers’ compensation carriers and self insureds.

New Jersey Comp Jumps off Medical Marijuana Cliff

A south Jersey man injured on the job at a lumber company will have his medical marijuana tab paid by his employer’s workers compensation insurance, according to a state administrative law judge ruling in what appears to be the first decision of its kind in the state.

Andrew Watson qualified for the state’s medicinal marijuana program in 2014 because of a hand injury he suffered while working. Watson bought 2-1/4 ounces of state-sanctioned marijuana in the spring of 2014 but when his employer refused to pay, he stopped using it.

The price of one ounce of cannabis ranges from $425 to $520 for an average of $489 in the Garden State, not counting the 7 percent state sales tax, according to a state Health Department analysis. At those prices, New Jersey’s medical pot is the most expensive in the nation. The law does not require insurance to cover the expense.

Administrative Law Judge Ingrid L. French said based on Watson’s testimony, “the effects of the marijuana, in many ways, is not as debilitating as the effects of the Percocet. The pharmacy records show that, ultimately (Watson) was able to reduce his use of oral narcotic medication.”

“As a result of his improved pain management, he has achieved a greater level of functionality,” according to the judge, calling “his approach to his pain management needs (is) cautious, mature and overall he is exceptionally conscientious in managing his pain.”

“The evidence presented in these proceedings show that the petitioner’s ‘trial’ use of medicinal marijuana has been successful,” French wrote. “While the court is sensitive to the controversy surrounding the medicinal use of marijuana, whether or not it should be prescribed for a patient in a state where it is legal to prescribe it is a medical decision that is within the boundaries of the laws in the state.”

Attorney John Carvelli of Mount Laurel who represents the insurance carrier, Gallagher Bassett Services, said his client “respects the court decision.” He declined to comment further.

Watson’s lawyer, Philip Faccenda said he was “very pleased” with the ruling. He said he didn’t know if Watson had resumed participating in the medicinal marijuana program. Watson could not be reached for comment.

Faccenda said was aware of only one other case in New Mexico in which a medical marijuana patient had prevailed in workers compensation dispute.

He stressed the ruling “has not broadened” New Jersey’s medical marijuana law, which benefits patients with “a very limited number of conditions and injuries.”

John Sarno, who as president and general counsel for the Employers Association of New Jersey often holds seminars on marijuana and the workplace, called the ruling “a straight-forward reading of the law.”

Sarno predicted the ruling would have “minimal impact” on employers, given how few employees would be debilitated enough to qualify for both workers’ compensation and the state’s restrictive medical marijuana program.

“An appeal would raise complex, conflict of law issues between state and federal government, which would be extraordinarily expensive to litigate,” he said.

Feds 2016 Fraud Recoveries Hit $4.7 Billion

The U.S. Department of Justice reports $4.7 billion in settlements and judgments from civil cases involving fraud and false claims during the budget year that ended Sept. 30, an amount much higher than the $3.5 billion reported the prior year. And more than half came from the health care industry, including drug companies, medical device companies, hospitals, nursing homes, laboratories and physicians.

The False Claims Act gives authorities the power to fight alleged fraud in a wide variety of industries receiving federal funds. It also includes financial incentives for whistleblowers to file fraud lawsuits on behalf of the government.

The largest recoveries this past year – $1.2 billion – came from the drug and medical device industry.

Drug manufacturers Wyeth and Pfizer Inc. paid $784.6 million to resolve federal and state claims that Wyeth knowingly reported false and fraudulent prices on two drugs used to treat acid reflux, Protonix Oral and Protonix IV. The government alleged that Wyeth (before it was acquired by Pfizer) failed to report deep discounts available to hospitals, as required by the government to ensure that the Medicaid program enjoyed the same pricing benefits available to the company’s commercial customers. Wyeth paid $413.2 million to the federal government and $371.4 million to state Medicaid programs.

In another settlement against a drug company, Novartis Pharmaceuticals Corp. paid $390 million based on claims that the company gave kickbacks to specialty pharmacies in return for recommending Exjade, an iron chelation drug, and Myfortic, an anti-rejection drug for kidney transplant recipients. The settlement includes $306.9 million for the federal government and $83.1 million for state Medicaid programs.

Hospitals and outpatient clinics accounted for $360 million in recoveries.

Tenet Healthcare Corp., a major hospital chain in the United States, paid $244.2 million to resolve civil allegations that four of its hospitals engaged in a scheme to defraud the United States by paying kickbacks in return for patient referrals. Tenet paid an additional $123.7 million to state Medicaid programs, and two of its subsidiaries pleaded guilty to related charges and forfeited $145 million, bringing the total resolution to $513 million.

In the medical lab arena, Millennium Health (formerly Millennium Laboratories) paid $260 million to settle allegations that it billed Medicare, Medicaid, and other federal health care programs for excessive and unnecessary urine drug and genetic testing and also that it gave free items to induce physicians to refer expensive and profitable lab tests to Millennium, in violation of the Anti-Kickback Statute and Stark Law. The settlement included $214.8 million in alleged false claims against federal programs, $26 million in alleged false claims against state Medicaid programs, and $19.2 million in related administrative claims.

The nation’s largest contract therapy provider paid $125 million to resolve claims that it had induced skilled nursing homes to submit false claims to Medicare for rehabilitation services that were not reasonable, necessary, and skilled, or that weren’t provided at all. The settlement was with RehabCare Group Inc., RehabCare Group East Inc., and their parent, Kindred Healthcare Inc. Cases involving nursing homes and skilled nursing facilities accounted for more than $160 million in settlements and judgments this past fiscal year.

The number of lawsuits filed under the qui tam provisions of the Act has grown significantly since 1986, with 702 qui tam suits filed this past year – an average of 13.5 new cases every week. The growing number of qui tam lawsuits, particularly since 2009, has led to increased recoveries. From January 2009 to the end of fiscal year 2016, the government recovered nearly $24 billion in settlements and judgments related to qui tam suits and paid more than $4 billion in whistleblower awards during the same period.

California Loss Adjustment Costs Highest in Nation

The WCIRB has completed an analysis of allocated loss adjustment expense (ALAE) cost trends in California workers’ compensation. Allocated loss adjustment expense (ALAE) costs are the costs of handling claims that can be attributed to an individual claim.

Loss adjustment expenses (LAE), which represent the cost of administering and settling workers’ compensation claims, are a significant component of advisory pure premium rates developed by the WCIRB. Allocated loss adjustment expenses (ALAE) are the portion of LAE that can be attributed to a particular claim and include the costs related to defending claims when there are disputes over workers’ compensation benefits as well as medical cost containment program costs (MCCP) and other costs such as investigating the compensability of workers’ compensation claims.ALAE levels have historically been much higher in California than in other states.

ALAE costs have increased sharply over the last several years despite implementation of many of the components of Senate Bill No. 863 (SB 863) intended to reduce total loss adjustment expense (or “frictional cost”) levels which include ALAE costs. The WCIRB regularly studies the costs underlying the high ALAE in California as well as the factors driving the recent increases in ALAE levels.

The major findings of the report are:

1) Average ALAE cost per claim have increased by more than five-fold in the last 25 years. In addition, despite the implementation of SB 863 in 2013, average ALAE costs have increased by 20% since 2012.

2) California ALAE costs as a percentage of losses are by far the highest of any state and more than twice the countrywide median. Other interstate comparisons suggest that the differences in California ALAE costs are largely related to activities that occur later in the life of a claim.

3) Recent increases in ALAE levels are related to both increases in the frequency of claims involving significant ALAE costs in addition to the average ALAE cost on those claims. Although the majority of claims with significant ALAE costs occur in the Los Angeles Basin area, recent increases in ALAE costs have occurred broadly throughout California.

4) Cumulative injury claims are much more likely to involve significant ALAE costs than non-cumulative injury claims and these types of claims have been growing faster than other types of claims, indicating that the recent growth in cumulative injury claims is likely a key driver of recent increases in ALAE levels.

5) The proportion of claims with significant ALAE costs that have been settled by compromise and release has more than doubled since 2010. Claims settled by compromise and release incur significantly higher ALAE costs than claims closed by other means, suggesting that the recent increases in these types of claims is a factor driving recent increases in ALAE levels.

6) Based on a recent WCIRB claim survey on ALAE costs, a majority of permanent disability claims involve an applicant’s attorney and Workers’ Compensation Appeals Board appearances. In addition, significant portions of permanent disability claims involved depositions, liens, disputes for which no lien had yet been filed (i.e., “pre-liens”), surveillance or investigation costs, or costs of preparing subpoenaed records.

The full report is available in the Research and Analysis section of the WCIRB website.

DWC and WCAB Amend, Add Forms for Lien Filings

The Division of Workers Compensation (DWC) and the Workers’ Compensation Appeals Board (WCAB) have made changes to lien and attorney fee disclosure statement requirements which went into effect on January 1, 2017. The changes were made to implement provisions of Senate Bill 1160 and Assembly Bill 1244. The changes are as follows:

1) In compliance with SB 1160, DWC has made available an amended lien form which includes the required declaration affirming eligibility under penalty of perjury per newly enacted Labor Code Section 4903.05(c) effective January 1, 2017.

All liens filed after January 1, 2017 must use this new form. The new lien form and the required declaration are now available for all e-filers and JET Filers. All filers that must pay the filing fee are required to fill out the declaration. Liens filed without the declaration will be dismissed.

2) Also available for e-filers and JET Filers is a declaration for all liens filed prior to January 1, 2017 that require a filing fee under Labor Code Section 4903.05, as mandated by SB 1160. The declaration, which must include information on the type of services provided by the lien claimant, must be filed by July 1, 2017.

The Workers’ Compensation Appeals Board (WCAB) has posted new rules on this requirement, and has scheduled a public hearing January 4 on the proposed regulations.

3) SB 1160 also requires that all lien claimants file an original bill with their lien. This is a new requirement that is mandatory for all lien filings as of January 1, 2017.

4) To comply with the new requirements for the attorney fee disclosure statement introduced by AB 1244, DWC has made available a revised attorney fee disclosure statement form in compliance with recently amended Labor Code Section 4906. An amended form with the required information is now posted on DWC’s website.