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New MACI Knee Cartilage Surgery Shortens RTW Time

A new study published in the American Journal of Sports Medicine and summarized in a report by Reuters Health claims that patients receiving a graft of their own knee cartilage cells may be better off returning to full weight bearing after six weeks instead of the standard eight.

Knee surgery patients put on a six-week recovery track were able to get back to work and other activities like sports more quickly, and even reported slightly better results at 24 months than those who had followed an eight-week recovery plan after surgery, researchers report in the American Journal of Sports Medicine.

People with damaged cartilage in their knees can undergo so-called matrix-induced autologous chondrocyte implantation, or MACI, surgery to fix the defects that cause pain and swelling.

In the two-stage MACI surgery, healthy cartilage is collected from unaffected parts of the damaged knee and sent to a lab where it’s used to grow more cartilage on a scaffold-like material. The surgeon then implants this graft into the damaged parts of the knee where it’s expected to integrate with surrounding cartilage.

Standard practice has been to keep weight off the knee for at least eight weeks and up to three months for fear of damaging the delicate new tissue. But there’s evidence that the forces of weight and movement promote growth by the cartilage cells, the authors write, so putting some weight on the implant earlier might help speed recovery of the knee.

“The regimens employed internationally were very conservative in fear of overloading the early repair tissue and jeopardizing the final outcome,” lead author Jay Ebert told Reuters Health by email.

Besides the obvious lifestyle benefits of shorter recovery times, there are clinical benefits as well, said Ebert, of the University of Western Australia in Crawley. Returning to walking more quickly may reduce the amount of muscle lost and the level of joint stiffness after surgery, he said.

To explore whether people could heal as well from surgery if they only kept off of their feet for six weeks instead of eight, the study team recruited 37 MACI surgery patients between 2010 and 2014.

The participants were randomly assigned to an eight-week return to weight-bearing group or an accelerated six-week recovery group.

Overall, the results were good for both groups. There were two cases of graft failure, both in the eight-week recovery group.

The two groups had similar results on all tests of knee function, with the accelerated group performing slightly better. For instance their repaired knees, on average, had returned to 94 percent of the peak strength of the undamaged knee, compared to 88 percent in the eight-week recovery group.

The MRI scans showed the patients in the faster recovery group had significantly better healing on two out of eight visible measures, compared with the eight-week group.

Overall, 83 percent of patients in the eight-week group were satisfied with their surgery, while 88 percent of patients in the six-week group reported being satisfied.

Allstate Targets Fake LA Law Offices

Allstate went before a judge and jury to put an end to the illegal ownership, kickbacks and fraudulent operation of multiple law offices in the Los Angeles area that were owned, operated and controlled by unlicensed people posing as lawyers.

The verdict in a Los Angeles County Superior Court resulted in a judgment worth more than $11.5 million in favor of Allstate.

“Submitting even one false insurance claim is fraud and insurance fraud is a crime,” says Allstate’s Senior Field Vice President Phil Telgenhoff. “Fraud drives up the cost we all pay for insurance by stealing millions of dollars from insurers. This cannot and will not be tolerated in California or anywhere.”

Allstate alleged Christina Chang, Christine Suh and other unlicensed persons knowingly engaged in a fraud scheme in which they used the identity of practicing lawyers to create eight phony or “sham” law offices to make false, fraudulent or misleading claims against insurance companies so that settlement payments could be converted to their own use.

Evidence presented at trial showed that several California lawyers were paid $3,000 per month for the use of their names and law licenses. None of the licensed lawyers had significant direction or control over the operation of the fake law offices or the making and processing of claims.

Chang and Suh rented office space, hired staff, opened firm bank accounts, obtained clients, made demands to insurance companies for settlement and negotiated settlements, all in the name of licensed California attorneys, falsely making it appear as if a lawyer represented the client and claimant.

The evidence also showed Chang and Suh used remote check-cashing facilities including liquor stores and small local markets to convert the settlement proceeds into untraceable cash from deposits into client-trust accounts.

Allstate contended Chang and Suh knowingly concealed the fact that the law offices were owned, operated and controlled by unlicensed persons, all in violation of California’s Insurance Frauds Prevention Act.

“This is one of the first times I’ve seen this elaborate of an effort with setting up fake law offices and trying to defraud the industry,” says Telgenhoff. “We have seen this type of operation before with shady medical clinics across the country, but this takes the scam to a different level. Rest assured, we will fight fraud wherever it lives.”

Is Federal Comp a Lucrative “Luxury” Medical Fraud Target?

Forest Park Medical Center (FPMC) in Dallas and other Texas cities was touted as a “Luxury” hospital with a “spa-like atmosphere,” which did not accept lower-paying Medicare, Medicaid, or “in-network” managed-care insurance rates, but did allow for physician ownership, As such, it rapidly attracted the attention of physician investors and their referrals

The patients were primarily ones with high reimbursing out-of-network private insurance benefits or benefits under certain federally-funded programs. As such, it was free to set its own prices for services and was generally reimbursed at substantially higher rates than in-network providers. FPMC’s strategy was to maximize profit for physician investors by refusing to join the networks of insurance plans for a period of time after its formation, allowing its owners and managers to enrich themselves through out-of-network billing and reimbursement.

But, rather than leave money on the table, FPMC’s owners, managers, and employees also attempted to sell patients with lower reimbursing insurance coverage, namely unwitting Medicare and Medicaid beneficiaries, to other facilities in exchange for cash.

Yet worker’s compensation patients were included in the clientele accepted by this “Luxury” facility. According to the indictment, the hospital accepted the referral of patients with high reimbursing, out-of-network private insurance benefits, and benefits under certain non-Medicare and Medicaid federally-funded programs, such as the Federal Federal Employees’ Compensation Program also known as federal workers compensation.

Included in the 21 professionals indicted this December were Iris Kathleen Forrest, 56, of Dallas who was a worker’s compensation preauthorization specialist who allegedly received approximately $450,000 in bribe and kickback payments in exchange for referring patients, including those she was preauthorizing, to FPMC or to surgeons who performed medical procedures, including surgeries, at the hospital. And Royce Vaughn Bicklein, 44, of San Antonio, Texas was a worker’s compensation lawyer who received approximately $100,000 in bribe and kickback payments in exchange for referring patients, including his clients, to FPMC or to surgeons who performed medical procedures, including surgeries, at the hospital.

Although the typical arrangement in Texas would call for the carve-out of Medicare and Medicaid programs, the intent being to avoid the possibility of running afoul of the Department of Health and Human Services Office of Inspector General, (“HHS OIG”), what many fail to appreciate is the manifold number of federal healthcare programs which could be implicated. Each federal department has its own OIG. Federal worker’s compensation and federal employees health insurance benefits are guarded by the United States Department of Labor OIG. Military plans, or TRICARE, is protected by the Department of Defense OIG.

That’s what initially triggered federal jurisdiction at Forest Park, according to the indictment. The bribes and kickbacks included more than $10 million to TRICARE, more than $25 million to the Department of Labor FECA healthcare program, and more than $60 million to the federal employees’ and retirees’ FEHBP healthcare program. As a result of the bribes, kickbacks, and other inducements, from 2009 to 2013, FPMC allegedly billed such patients’ insurance plans and programs well over half of a billion dollars.

What would be illegal, if the prosecutors can make their case, is the alleged $40 million in bribes and kickbacks paid for referring certain patients to FPMC.

But what is interesting in this very ugly fraud case, is the inclusion of federal workers’ compensation claimants among those who were to be treated at a luxury hospital with a spa like atmosphere that bills at substantially higher rates than in-network providers. The question to be answered for taxpayers is how did this happen in the first place?

New Workplace Safety Laws for 2017

Several new laws affect workplace safety, including a package of bills that took effect June 9, 2016.

AB 1785 reaffirms the general ban on using wireless electronic devices while driving, but amends existing law to authorize drivers to use their hand to activate or deactivate a feature or function of the device with a single swipe or tap, as long as the device is mounted so as not to hinder the driver’s view of the road.

Despite the steady expansion of legislative prohibitions on the use of wireless telephones and electronic wireless communications devices while driving, and the clear dangers of distracted driving, in 2014, the California Court of Appeals for the 5th District ruled that the existing ban only prohibits a driver from holding a wireless telephone while conversing on it. In making its ruling, the court found that the legislative intent in enacting those prohibitions was merely focused on prohibiting a wireless telephone only while carrying on a conversation, not while using it for any other purpose. For that reason, law enforcement agencies find it difficult, if not practicably impossible to enforce the prohibition, as the scope of a mobile device’s functions and its contributions to distracted driving go far beyond simply making and receiving telephone calls.

The new law bans all handheld use of wireless electronic communication devices by the driver of a vehicle during its operation, without reference to the purpose of that use. An exception is provided for windshield-, dashboard-, and center console-mounted devices when the driver can activate or deactivate the feature or function he or she is using with a single swipe or tap and the placement of the mounted device does not hinder the driver’s view of the road. As such, drivers can still engage with their phones in the relatively simple ways that are most similar to other sources of distraction that society has long accepted, such as changing the channel on a car radio.

Four bills (SB-5, SB-7 and AB-5, AB-7) were signed earlier this year that extend the ban on workplace smoking. These rules took effect June 9, 2016.

Specifically AB 7 removes many (but not all) exemptions in existing law that allow tobacco smoking in certain indoor workplaces and expands the prohibition on smoking in a place of employment to include owner-operated businesses. It establishes “smoke-free laws,” which prohibit the smoking of tobacco products in various places, including, but not limited to, school campuses, public buildings, places of employment, apartment buildings, day care facilities, retail food facilities, health facilities, and vehicles when minors are present.

AB 7 prohibits employers from knowingly or intentionally permitting the smoking of tobacco products in an enclosed space at a place of employment. It defines “enclosed space” as including lobbies, lounges, waiting areas, elevators, stairwells, and restrooms that are a structural part of the building and not specifically exempt. It extends the workplace smoking prohibition to include owner-operated businesses in which the owner-operator is the only worker and there are no employees, independent contractors, or volunteers. There are no exemptions for employers of any size.

SB 1167 requires Cal/OSHA to propose a heat-illness and injury prevention standard for indoor workers by Jan. 1, 2019. SB 1167 does not specify what provisions will be included in the new rule or what types of workplaces will be covered – potentially, the new rule could include all indoor workplaces. The law is a result of litigation on this issue.

A recent Occupational Safety and Health Appeals Board (Appeals Board) decision affirms the responsibility of employers to ensure indoor heat illness is addressed through their IIPP. The case stemmed from a 2012 serious citation issued to Tri-State Staffing and warehouse operator National Distribution Center for the heat illness suffered by an employee who was working inside a metal freight container with a temperature of over 100 degrees. DOSH penalized both companies for failing to implement an effective IIPP and both companies appealed the citation winning their case before an administrative law judge (ALJ).

In March 2015, DOSH appealed that decision to the Appeals Board stating that the employers had failed to effectively correct the indoor hazard and had not trained employees on indoor heat exposure. In November 2015, the ALJ’s decision was overturned by the Appeals Board reinforcing the responsibility that employers have to protect the health and safety of their workers, including those working indoors.

Podiatrist Faces 10 Years in Kickback Case

United States Attorney Phillip A. Talbert announced that a federal grand jury returned an 11-count indictment against Anthony Lazzarino, 66, former Chief of Podiatry for the VA’s Northern California Health Care System, and Peter Wong, 58, founder and CEO of Sacramento based Sunrise Shoes and Pedorthic Service, charging them with health care fraud, conspiracy to pay and receive kickbacks on medical referrals, and conspiracy to commit wire fraud.

Lazzarino was a 1982 graduate of Kent State University, College of Podiatric Medicine. Lazzarino began working at the Veterans Health Administration in 2007 with a starting salary of $122,379. California records show his license status as “canceled.”

Sunrise Shoes claims on its website to provide services under most insurance plans, including workers’ compensation, and specifically the State Compensation Insurance Fund.

According to court documents, between March 2008 and February 2015, Lazzarino and Wong engaged in a scheme to defraud the VA by billing the Veterans Health Administration for custom work and services that were prescribed but not supplied in shoes delivered to veterans.

In addition, Lazzarino referred patients directly to Sunrise in violation of VA policy, and agreed with Wong to offer kickbacks in return for such referrals.

Finally, Lazzarino, Wong, and Jai Aing Chen, who separately pleaded guilty on December 6, 2016, agreed to make materially false statements and omissions to the VA regarding where the shoes were manufactured, in the course of applying for an estimated $59 million contract.

This case is the product of an investigation by the Department of Veterans Affairs, Office of Inspector General, the Department of Veterans Affairs Police Service, and the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). Assistant U.S. Attorney Matthew M. Yelovich is prosecuting the case.

If convicted, Lazzarino and Wong face a maximum statutory penalty of 10 years in prison and a $250,000 fine for each health care fraud count, and five years in prison and a $250,000 fine for each of the two conspiracy counts.

CWCI Finds So. Cal Leads State in CT Claims

A new California Workers’ Compensation Institute (CWCI) study takes a detailed look at cumulative trauma (CT) claims in the California workers’ compensation system, identifies characteristics that differentiate CT claims from non-CT claims, and finds a strong association between attorney involvement and regional variation in the Los Angeles Basin and the high cost of CT claims.

Cumulative traumas are physical or mental injuries that arise over time from repetitive stress, motion, or exposures, rather than from a specific event or accident. Earlier this year, the Workers’ Compensation Insurance Rating Bureau reported that CT claims as a percentage of California workers’ compensation lost time cases had more than doubled over the past decade, climbing to about 18 percent of all indemnity cases in 2015. Because CT claims have become a significant cost driver in the system, CWCI initiated a study to gain a better understanding of where these claims come from, identify characteristics and factors contributing to the rapid growth in CT claims, and to compare average medical and indemnity benefits for CT and non-CT claims.

Using data from its Industry Research Information System (IRIS) database on 41,000 CT claims and 608,000 non-CT claims that received California workers’ comp benefits between 2005 and 2013, the Institute compared the claim characteristics of CT claims to those of non-CT claims, including the workers’ average age, gender, earnings, and job tenure; the mix of claims by employer premium, industry and region; the type and nature of injury; notification lag times; level of attorney involvement; presence of indemnity payments; presence of a compensability dispute; and whether or not the injured worker had filed any additional claims.

Among the key results, the study found that CT cases were far more likely to have come from the Los Angeles Basin; were most prevalent in the manufacturing sector; had a higher proportion of claims involving multiple body parts and mental disorders; had twice the attorney involvement rate of non-CT claims and 53 percent higher average claim costs; and workers claiming CT injuries were 10 times more likely to have claimed other injuries against the same employer.

Overall, nearly 56 percent of all CT claims in the study population were filed in the Los Angeles County/Inland Empire/Orange County region compared to 36.5 percent of non-CT claims.

Limiting the analysis to lost-time cases, the study noted that 91 percent of the CT claims involved an attorney, which was twice the attorney involvement rate for non-CT claims; and while CT claims appeared to have higher medical costs than non-CT claims, that difference disappeared when attorney involvement and region were factored into the equation. This result confirms a strong association between the higher costs of CT claims in the study sample and the high levels of attorney involvement and the regional variation in the L.A. Basin.

CWCI’s analysis of cumulative trauma claims has been published in a Research Note which is available from the Institute’s online store and can be downloaded by CWCI members and subscribers who log in to the Research section of the website.

FDA Approves First Artificially Regenerated Knee Cartilage

The Food and Drug Administration approved Maci (autologous cultured chondrocytes on porcine collagen membrane) for the repair of symptomatic, full-thickness cartilage defects of the knee in adult patients. Maci is the first FDA-approved product that applies the process of tissue engineering to grow cells on scaffolds using healthy cartilage tissue from the patient’s own knee.

Knee problems are common, and occur in people of all ages. Cartilage defects in the knee can result from an injury, straining the knee beyond its normal motion, or can be caused by overuse, muscle weakness, and general wear and tear.  

“Different cartilage defects require different treatments, so therapy must be tailored to the patient,” said Celia Witten, Ph.D., M.D., deputy director of the FDA’s Center for Biologics Evaluation and Research. “The introduction of Maci provides surgeons with an additional option for treatment.”

Maci is composed of a patient’s own (autologous) cells that are expanded and placed onto a bio-resorbable (can be broken down by the body) porcine-derived collagen membrane that is implanted over the area where the defective or damaged tissue was removed. Administration should be performed by a surgeon specifically trained in the use of Maci.

Each Maci implant consists of a small cellular sheet containing 500,000 to 1,000,000 cells per cm2 (about 0.16 square inches). The amount of Maci administered depends on the size of the cartilage defect, and is trimmed to ensure that the damaged area is completely covered. Multiple implants may be used if there is more than one defect. During a mini-open technique, damaged and / or diseased cartilage tissue is debrided from the defect area and the MACI implant is cut and shaped to fit and adhered in place using an off-the-shelf sealant.

The safety and efficacy of Maci were shown in a two-year clinical trial designed to demonstrate reduced pain and improved function in comparison to microfracture, an alternative surgical procedure for cartilage repair. The trial included 144 patients (72 in each treatment group). A majority of the patients who completed the two-year clinical trial also participated in a three year follow-up study. Overall efficacy data support a long-term clinical benefit from the use of the Maci implant in patients with cartilage defects.  

The most common side effect reported by people who received Maci were: joint pain, common cold-like symptoms, headache and back pain.

Maci is manufactured by Vericel Corporation, headquartered in Cambridge, Massachusetts. Vericel focuses on autologous cell therapies, which its website calls “For Me, By Me” treatments. The company is currently developing a heart failure treatment called ixmyelocel-T that involves extracting bone marrow from a patient’s hip, expanding the population of cells and administering them through a catheter. The treatment recently met its primary goal in a Phase 2 study.

Nonetheless, it has been a down year for FDA approvals, with just 20 new drugs approved thus far. That’s compared to more than 40 in each of the past two years. Maci is only the fourth biotech treatment to get FDA approval this year developed by a Massachusetts-based company.

Labor Code Takes Bite of the Apple

A California-based state court granted the class certification to almost 21,000 Apple employees currently and formerly employed by the Cupertino-based company in July 2014. The lawsuit was first filed in 2011 by four Apple employees in San Diego. They alleged that the company failed to give them meal and rest breaks, and didn’t pay them in a timely manner, among other complaints.

In California, the law states that employers are required to provide lunch breaks and rest breaks to employees with the length of each break to be determined according to the employee’s number of work hours. It states that for the first five hours at work, an employee should get 30-minute lunch breaks. The next four hours at work should earn him around a 10-minute rest break. For those working on six to ten hour shifts, they should be provided with two rest breaks.

Now Apple has been ordered to cut a $2 million check for denying some of its retail workers meal breaks after the first half of the bifurcated trial.

The class action, officiated by Judge Eddie C. Sturgeon in San Diego Superior Court, is brought by plaintiffs Brandon Felcze, Ryan Goldman, Ramsey Hawkins, and Joseph Lane Carco, all former non-exempt employees of Apple. According to the suit (Fourth Amended Complaint) plaintiffs never waived their right to a meal period and every employee is required to clock-in and clock-out during each meal period – meaning that “Defendents’ meal period violations can be ascertained.”

The complaint also alleges that Apple “systematically failed to timely pay its employees upon separation of their employment.” One of the four plaintiffs says his employment was terminated January 11, 2011 but did not receive his final paycheck until February 7, 2011. Another plaintiff accuses Apple of paying an “inadequate amount of waiting time penalties.”

According to the California labor code, if you are fired, laid off, or otherwise involuntarily separated from your job, you are entitled to your final paycheck that day (i.e., you must be paid immediately on your last day of work.). Your employer must pay you within 72 hours if you quit your job and give less than 72 hours’ notice. If you give your employer at least 72 hours’ notice, you must be paid immediately on your last day of work. And your final paycheck must include all of your accrued, unused vacation time.

Jeffrey Hogue, one of the attorneys who represented the class action, said the $2 million verdict came down last Friday — but Apple could owe more money.The second half of the case is expected to conclude next week, Hogue told CNNMoney.

It’s unclear how much of the $2 million will go to the workers. If divided evenly, it would be just $95 per employee, but it’s likely some of the money will go toward attorney fees.

The complaint says Apple’s culture of secrecy keeps employees from talking about the company’s poor working conditions. “If [employees] so much as discuss the various labor policies, they run the risk of being fired, sued or disciplined,” the complaint reads.

Apple wins a few, loses a few…

Apple was sued in a similar lawsuit this year by two former Apple Store employees from New York and Los Angeles. In all suits, plaintiffs claimed they were owed pay for time spent in security checks having their bags searched but US District Judge William Alsup found that Apple only required employees who brought personal bags and devices to the store to undergo a check; employees could avoid the security screening by not bringing their own bags or personal devices. Amanda Frlekin, et al v. Apple, case number 3:2013cv03451.

Apple, along with other tech giants, settled an anti-poaching suit that wound up paying almost 65,000 workers affected by the poaching scheme an average $5,770 each. According to Fortune, the revised arrangement (September 2015) provides “$40,822,311.75 (or 9.8%) in attorney fees plus additional expenses to the law firms in the case.”

California Industrial Fatalities Remain Below Average in 2015

The Department of Industrial Relations reports that 388 Californians died on the job in 2015.

California experienced 13 multi-fatality incidents in 2015, accounting for a total of 48 workplace deaths. These events include the tragic shootings of public employees attending a holiday event in San Bernardino, four separate farm vehicle collisions, four different helicopter or small airplane crashes (including two separate military helicopter incidents), and 3 multi-victim workplace homicides.

This contrasts with six separate multi-fatality incidents that occurred in 2014 resulting in 17 fatalities.

“Our thoughts are with the families and coworkers of those that died,” said Christine Baker, Director of the Department of Industrial Relations (DIR). “In January, Cal/OSHA will convene an advisory committee to address workplace violence.”

A review of the past ten years indicates that workplace fatalities remain below the average rate of fatalities prior to 2008, when the last recession began. There were 388 fatal injuries on the job in California in 2015, compared to 344 in 2014, 396 in 2013 and 375 in 2012. Data comes from the Census of Fatal Occupational Injuries (CFOI) which is conducted annually in conjunction with the U.S. Bureau of Labor Statistics (BLS).

Key findings from the latest census in California include:

1) One in five (20%) of all California workplace deaths identified in 2015 were attributed to be due to violence and other injuries by persons or animals. The incidence of workplace homicides in 2015 accounts for 12% of all workplace deaths in the state.

2) Over one third (38%) of all California workplace deaths identified in 2015 occurred in transportation incidents.

3) One in five (19%) of all California workplace deaths identified in 2015 were attributed to trips, slips and falls; with more than two thirds of those deaths involving falls to a lower level.

4) Nearly half of the victims of workplace fatalities (46%) in 2015 were Latinos. This fatality rate has fluctuated over the past ten years between 37% and 49%.

The percentage of Latino deaths in the workplace continues to be an area the department is tracking closely. DIR over the past seven years has increased workplace safety outreach and education to Spanish-speaking workers, with a focus on high-hazard work.

The Census is conducted annually by DIR in conjunction with the U.S. Bureau of Labor Statistics. CFOI produces comprehensive, accurate and timely counts of fatal work injuries. This Federal-State cooperative program was implemented in all 50 states and the District of Columbia in 1992.

DWC Adjusts DMEPOS Fee Schedule

Pursuant to Labor Code section 5307.1(g)(2), the Administrative Director of the Division of Workers’ Compensation ordered that the Durable Medical Equipment, Prosthetics, Orthotics, Supplies portion of the Official Medical Fee Schedule contained in title 8, California Code of Regulations, section 9789.60, is adjusted to conform to changes to the Medicare payment system that were adopted by the Centers for Medicare & Medicaid Services for calendar year 2017.

The update includes changes identified in Center for Medicare and Medicaid Services Change Request (CR) number 9854.

Effective for services rendered on or after January 1, 2017, the maximum reasonable fees for Durable Medical Equipment, Prosthetics, Orthotics, Supplies shall not exceed 120% of the applicable California fees set forth in the Medicare calendar year 2017 “Durable Medical Equipment, Prosthetics/Orthotics, and Supplies (DMEPOS) Fee Schedule” revised for January 2017, contained in the electronic file “DME17-A (Updated 12/07/16) [ZIP, 2MB]

For the services on or after January 1, 2017 payment shall not exceed 120% of the fee set forth for the HCPCS code in the CA (NR) column, except the fee shall not exceed 120% of the fee set forth in the CA (R) column if the injured worker’s residence zip code appears on the DMERuralZip_Q12017_V11142017 file. Where column CA (NR) sets forth a fee for a code, but CA (R) for the code is listed as “0.00” the fee shall not exceed 120% of the CA (NR) fee, regardless of whether the injured worker’s address zip code is rural or non-rural.

The order adopting the adjustment can be found on the DWC website.