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Drugmaker Pays $625M to Resolve Federal Probe

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Reuters reports that a unit of AmerisourceBergen Corp, one of the largest U.S. drug wholesalers, has agreed to pay $625 million to resolve a U.S. government probe involving pre-filled syringes, the company said in a filing with U.S. securities regulators on Tuesday.

The agreement, whose final terms are still being negotiated and which must be approved by a court, comes on top of a $260 million criminal penalty that the subsidiary, AmerisourceBergen Specialty Group, agreed to pay in September as part of a criminal guilty plea.

The company previously disclosed a $575 million reserve for a possible civil settlement in the case.

Keri Mattox, a spokeswoman for AmerisourceBergen, declined to comment beyond Tuesday’s public filing with the U.S. Securities and Exchange Commission.

The federal probe involved the pre-filled syringe program of AmerisourceBergen Specialty Group’s now-defunct Medical Initiatives Inc subsidiary, as well as certain oncology products, according to the company’s filing.

In a court document filed in September, AmerisourceBergen admitted that Medical Initiatives packaged syringes of cancer drugs at an Alabama facility that was not registered with the U.S. Food and Drug Administration, as required by federal law, pleading guilty to a misdemeanor charge.

The company also admitted in the September filing that Medical Initiatives illegally dispensed syringes based on order forms that were not prescriptions signed by medical practitioners. It added that it submitted syringes on behalf of single patients in excess of safe doses.

AmerisourceBergen said the violations occurred from 2005 until 2014.

In a criminal information unsealed in September, U.S. prosecutors also charged that Medical Initiatives prepared syringes by pooling drugs sold in glass vials that were meant for a single use, and did not maintain a sterile environment in its facility, resulting in contamination in some syringes.

AmerisourceBergen did not plead guilty to those charges or admit any wrongdoing related to them.

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Father, Son Farm Labor Contractors to Serve 250 Days

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Jaime Rosario Del Real, 61, and son Israel Del Real, 37,both pleaded guilty to four felony counts for their role in a $400,000 insurance fraud scheme denying workers’ compensation insurance and medical care for injured workers.

The father and son duo were sentenced to 250 days in jail, 10 years felony probation, and ordered to pay $382,951 in restitution. This case was prosecuted by the Monterey County District Attorney’s Office.

Doing business as Del Real Produce and Packing and Del Real Packing, LLC, the Del Reals worked as farm labor contractors providing laborers for picking and packing lettuce for growers in Monterey County and Yuma Arizona. After receiving information from an insurer, Department of Insurance detectives found the Del Reals had concealed injuries their workers sustained and refused to pay for medical treatment or provide other benefits the injured workers were entitled to.

The investigation also revealed that over a five year period, the Del Reals lied more than 20 times in order to obtain reduced insurance premiums. As part of their premium theft the Del Reals kept two sets of Employment Development Division (EDD) forms, with different employees and a different number of employees listed, which allowed the Del Reals to evade paying payroll taxes.

“Business owners are responsible for the safety and care of their employees,” said Insurance Commissioner Dave Jones. “Employers who fail to carry workers’ compensation insurance or pay for the medical care for injured workers violate the law and put their employees at risk. Our detectives and the Monterey County District Attorney’s team succeeded in taking another dishonest employer out of the underground marketplace.”

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Federal Judge Rejects Drugmaker Plea Deal

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A judge on Monday rejected a plea deal that was part of Aegerion Pharmaceuticals Inc’s recent agreement to pay $40.1 million to resolve U.S. probes of its marketing of a cholesterol drug, saying it was “not in the public interest.”

Reuters reports that U.S. District Judge William Young in Boston ruled the U.S. Justice Department’s deal with the Novelion Therapeutics Inc unit “unduly hobbles” his duties as a judge by restricting his ability to impose a sentence.

Young said the agreement showed “the shocking disparity between the treatment of corporations and individuals in our criminal justice system.”

While people who plead guilty face judges with discretion on sentencing, corporations like Aegerion can obtain deals that restrict what punishment the judge can impose, giving them the “most effective damage control,” Young wrote.

He commended Aegerion’s new management for cooperating in the probe. But Young criticized the plea deal’s lack of any payment to victims and said the agreement failed to justify fully why its financial terms were acceptable.

“What is left unexplained is why the government does not simply let Aegerion collapse in disgrace,” Young wrote. “Surely Aegerion is not too big to fail.”

The judge, who at least twice before rejected similar corporate plea deals, ordered the case ready for trial.

A spokeswoman for Cambridge, Massachusetts-based Aegerion had no immediate comment. Representatives for Acting U.S. Attorney William Weinreb, whose office was pursuing the case, did not immediately respond to requests for comment.

The plea deal came as part of a set of settlements with the Justice Department and the U.S. Securities and Exchange Commission announced on Sept. 22 aimed at resolving a long-running probe centered on its Juxtapid cholesterol drug.

Prosecutors said that after the U.S. Food and Drug Administration in 2012 approved Juxtapid for treating high cholesterol in people with a rare genetic disease, Aegerion promoted it for patients who did not have the condition.

As part of a deal with the Justice Department, Aegerion agreed to plead guilty to two misdemeanor drug misbranding violations of the Food, Drug and Cosmetic Act and pay $36 million to resolve criminal and civil claims.

Aegerion, which in 2016 merged with QLT Inc and became a subsidiary of the newly named Novelion, also entered a deferred prosecution agreement to resolve a charge that it conspired to violate the Health Insurance Portability and Accountability Act.

The case is U.S. v. Aegerion Pharmaceuticals Inc, U.S. District Court, District of Massachusetts, No. 17-cr-10288.

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Comp Attorney Suspended – Union Official Sentenced

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Daniel Rush was sentenced to 37 months in prison for breaching his fiduciary duties to the United Food and Commercial Workers Union (UFCW) and participating in a money laundering scheme. The sentence was handed down by the Honorable Haywood S. Gilliam, Jr., U.S. District Judge, following Rush’s guilty pleas on June 22, 2017.

Rush pleaded guilty to one count of receiving an illegal payment as a union employee, in violation of 29 U.S.C. § 186(b)(1); one count of honest services wire fraud, in violation of 18 U.S.C. §§ 1343, 1346; and one count of conspiracy to commit structuring and money laundering, in violation of 18 U.S.C. § 371.

According to his plea agreement, between 2010 and 2015, Rush engaged in a series of schemes to enrich himself in violation of federal law and his fiduciary duties:

In 2010, he conspired with attorney Marc L. TerBeek and others to structure approximately $420,000 in illegal drug proceeds into the banking system. Although the money was a loan from someone in the cannabis industry, Rush deliberately mischaracterized monthly interest payments as consulting fees.

While serving as the Organizing Coordinator for the unofficial cannabis division at UFCW, Rush gave an employer a corrupted neutrality agreement in exchange for personal loan forgiveness. He also accepted kickbacks from TerBeek in exchange for referring cannabis businesses he encountered in his union role to TerBeek’s law practice.

Rush abused his position as Executive Treasurer and Board Member at the Instituto de la Raza Laboral (Instituto) in similar fashion by demanding and accepting remuneration from TerBeek in exchange for establishing TerBeek as an approved legal provider for workers’ compensation cases at the Insituto.

Finally, Rush engaged in corrupt conduct as a Commissioner on the Berkeley Medical Cannabis Commission when he attempted to extort a business that had applied for a dispensary permit. Using TerBeek as an intermediary, Rush communicated that if the applicant did not offer him a salaried job, with benefits, he would take adverse action against its application.

In addition to the prison term, the Court also sentenced the Rush to a three-year term of supervised release and ordered him to pay a fine of $7500.

Rush’s coconspirator, East Bay attorney Marc L. TerBeek pleaded guilty on February 16, 2017, to one count of making an illegal payment to a union employee, in violation of 29 U.S.C. § 186(a) and one count of willfully violating an anti-structuring regulation, in violation of 12 U.S.C. § 1956. Judge Gilliam scheduled TerBeek’s sentencing hearing for November 27, 2017.

Last August, the California State Bar issued the following Order regarding attorney Marc TerBeek. “Since respondent Marc Lawrence Terbeek, State Bar Number 166098, has been convicted of violating title 29 United States Code section 186(a) (making payment to an employee of union organization), a felony which may or may not involve moral turpitude, and title 12 United States Code section 1956 (willful Violation of anti-structuring regulation), a misdemeanor which may or may not involve moral turpitude, it is ordered pursuant to Business and Professions Code section 6102 that respondent be suspended from the practice of law effective September 5, 2017, pending final disposition of this proceeding.”

The prosecution is the result of an investigation by the FBI and the Internal Revenue Service-Criminal Investigation Division.

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Is Artificial Intelligence Better than a Radiologist?

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Add diagnosing dangerous lung diseases to the growing list of things artificial intelligence can do better than humans. A new arXiv paper by researchers from Stanford explains how CheXNet, the convolutional neural network they developed, achieved the feat.

CheXNet was trained on a publicly available data set of more than 100,000 chest x-rays that were annotated with information on 14 different diseases that turn up in the images.

The researchers had four radiologists go through a test set of x-rays and make diagnoses, which were compared with diagnoses performed by CheXNet.

Not only did CheXNet beat radiologists at spotting pneumonia, but once the algorithm was expanded, it proved better at identifying the other 13 diseases as well.

Early detection of pneumonia could help prevent some of the 50,000 deaths the disease causes in the U.S. each year. Pneumonia is also the single largest infectious cause of death for children worldwide, killing almost a million children under the age of five in 2015.

Andrew Ng, a coauthor of the paper and the former head of AI research at Baidu, thinks AI is going to be relied upon in medicine more and more. He previously worked on an algorithm that can, after being trained on electrocardiogram (ECG) data, identify heart arrhythmias better than a human expert.

Another deep-learning algorithm recently published in Nature was able to spot cancerous skin lesions just as well as a board-certified dermatologist.

Radiologists in particular have been on notice for a while. Previous research has shown that AI is as good as or better than doctors at spotting problems in CT scans.

Geoffrey Hinton, one of the pioneers of deep learning, told the New Yorker that because of the advances in AI, medical schools “should stop training radiologists now.” Analyzing image-based data sets like x-rays, CT scans, and medical photos is what deep-learning algorithms excel at. And they could very well save lives.

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Subrogation Includes “All Benefits” Paid by Employer

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In August 2012, Denise Michelle Duncan was acting within the course and scope of her employment with Acosta Inc. when she fell and injured herself on a Wal-Mart Stores, Inc. premises.

Hartford Accident & Indemnity Company was Acosta’s workers’ compensation insurer and paid Duncan more than $152,000 in benefits, including more than $115,000 in medical expenses and roughly $37,000 in temporary disability indemnity for Duncan’s lost wages.

Duncan sued Wal-Mart Stores, Inc. for personal injuries. The trial court entered judgment finding Wal-Mart liable for Duncan’s injuries.

Under Labor Code sections 3852 and 3856, appellant Hartford Accident & Indemnity Company applied for a lien on Duncan’s judgment to obtain reimbursement for the workers’ compensation benefits it paid Duncan, including medical expenses and temporary disability payments for lost wages.

Since the judgment she received did not include compensation for Duncan’s lost wages (because she did not seek those damages at trial), the trial court granted Hartford a lien on Duncan’s judgment, but reduced the lien amount to exclude the indemnity payments for lost wages.

Hartford appealed the trial court’s postjudgment order, arguing the court exceeded its authority by reducing the lien amount for any item other than reasonable attorney fees and costs. The court of appeal agreed in the unpublished case of Duncan v. Wal-Mart Stores.

The Labor Code permits an employer to recover workers’ compensation benefits it has become obligated to pay in three ways: (1) bringing an action directly against the tortfeasor (§ 3852), (2) joining as a party plaintiff or intervening in an action brought by the employee (§ 3853), or (3) allowing the employee to prosecute the action and then applying for a first lien against the resulting judgment or settlement. (§ 3856(b).)

“All benefits required to be paid by the employer, even though . . . in excess of those ordinarily enjoined by the Workmen’s Compensation Act, are deemed the ‘compensation’ and ‘special damages’ of section 3856[(b)] and are subject to the employer’s lien. Thus, continued salary paid the workman during disability as required by ordinance [citations], or municipal charter [citation], or statute [citations], is subject to the employer’s lien. Such salary, for which the employee renders no services, is deemed to be ‘compensation’ for which, under sections 3852 and 3856[(b)] the employer is given the right of reimbursement.” (Harvey v. Boysen (1975) 50 Cal.App.3d 756, 761 (Harvey).)”

The Labor Codes plain language and the case law applying it grant Hartford a first lien on the judgment in the amount it paid Duncan for worker’s compensation benefits. Duncan’s choice not to seek lost wages at trial does not diminish Hartford’s lien rights under the workers’ compensation statutory scheme.

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Francis Stevens Case Headed Back to Court of Appeal

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The Francis Stevens case is headed back to the Court of Appeal, after the WCAB ruled that a portion of the medical treatment guideline relied upon by the IMR process was “unlawful” and that the WCAB now has wide discretion to be involved in the IMR process.

In 2015 the Court of Appeal upheld the constitutionality of the IMR process in one of the most closely watched cases in California workers’ compensation. The published case of Stevens v WCAB involved Frances Stevens who tripped and broke her foot as she carried boxes of magazines. She was diagnosed with chronic or complex regional pain syndrome and claims to be mostly confined to a wheelchair and was awarded total permanent disability.

For several years she had the assistance of a home health aide. In late 2012, the aide was injured. This led the PTP to submit an RFA to SCIF for a replacement aide which was submitted to UR and denied. The request was also denied after the IMR process. Stevens appealed the IMR decision, but the WCJ found there was no provision for a reversal since the labor code provides only limited circumstances upon which IMR can be reversed.

Stevens challenged constitutionality of the IMR process. In response the WCJ said “section 3.5 of article III of the Constitution withholds from administrative agencies the power to determine the constitutional validity of any statute.” The WCAB denied reconsideration and agreed that it could not rule on the constitutional issue saying “In sum, for purposes of appeal to the WCAB it does not matter whether the reasons given for an IMR determination support the determination unless the appealing party proves one or more of five grounds for appeal listed by the Legislature in section 4610(h) by clear and convincing evidence. Applicant did not do that in this case.

The First District Court of appeal concluded “that her state constitutional challenges fail because the Legislature has plenary powers over the workers’ compensation system under article XIV, section 4 of the state Constitution (Section 4). And we conclude that her federal due process challenge fails because California’s scheme for evaluating workers’ treatment requests is fundamentally fair and affords workers sufficient opportunities to present evidence and be heard.”

Although Stevens may have lost the battle, she may not have lost the war since she was given a second chance to prove her case on the merits. The Court of Appeal stated “we also conclude that the Workers’ Compensation Appeals Board (the Board) misunderstood its statutory authority in one respect when it reviewed Stevens’s appeal. The Board concluded that it was unable to review the portion of the IMR determination that found, “Medical treatment does not include . . . personal care given by home health aides . . . when this is the only care needed.” Under the 2013 reforms, however, the Board is empowered to review an IMR decision to consider whether care was denied without authority because the care is authorized under the MTUS. (§ 4610.6, subd. (h)(1) & (5).) We therefore remand this matter to the Board to consider whether Stevens’s request for a home health aide was denied without authority.”

And indeed the WCAB recently ruled in its Opinion and Decision After Remittitur “that the 2009 Guideline is unlawful and invalid since it fails to address the medical treatment in the form of personal home care services sought by Ms. Stevens.”

In arriving at this conclusion the WCAB interpreted the language of the Court of Appeal in the published decision as authorizing the WCAB to have “considerable” authority over IMR. “Thus, the Court held that the Appeals Board has considerable authority to review both factual and legal questions in its determination of whether an IMR determination was adopted without authority or based on a plainly erroneous fact not subject to expert opinions. We conclude that the 2009 Guideline is contrary to California law and the IMR determination that relied on it was therefore adopted without authority.”

The State Fund responded by filing a petition for writ of review with the Court of Appeal in August. By September a number of stakeholders were involved as amicus parties. And on October 25 the Court of Appeal issued a writ of review, which means that the entire dispute will now be heard, again, in that tribunal. However the outcome is many months, if not years away.

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DWC Suspends 12 More Providers

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The Division of Workers’ Compensation (DWC) has suspended 12 more medical providers from participating in California’s workers’ compensation system, bringing the total number of providers suspended this year to 85. Nine providers were suspended for fraud or criminal actions and three for administrative reasons.

DWC Administrative Director George Parisotto issued suspension orders against the following providers:

– Paul Richard Randall of Orange, health care marketer and owner of Summit Medical Group, pled guilty in federal court on April 16, 2012 for his role in a spinal surgery kickback scheme. The scheme involved recruiting chiropractors and doctors to refer patients in exchange for illegal kickbacks involving nearly $600 million in fraudulent claims.

– Harold “Harry” Persaud, Westlake, Ohio physician, was found guilty on October 2, 2015 in federal court for health care fraud and money laundering. The charges stem from Persaud’s practice of performing unnecessary catheterizations, tests, and stent insertions and causing unnecessary coronary artery bypass surgeries as part of a scheme to overbill Medicare and private insurers approximately $7.2 million. Persaud was sentenced to 20 years in federal prison. His certificate was also revoked by the Medical Board of California on September 1.

– Jeremy Goodwin, Mt. Shasta physician, had his license revoked on September 8 following violation of the terms of his 2014 probation from a prior disciplinary action by the Medical Board of California. Goodwin was charged with gross negligence for his treatment of a patient who died one day after receiving an excessive dosage of the opiate drug fentanyl.

– Christopher Dean Owens, San Francisco physician, had his license revoked on July 21 on findings that include self-administering illicit drugs.

– Guven Uzun, Marina Del Rey physician, had his certificate revoked by the Medical Board of California on July 19 after violating the terms of his 2011 probation due to charges of negligence and falsifying medical records

– Farhad Hafezi, Covina physician, was found guilty of felony charges of sexual assault involving a minor. He is a registered sex offender. His medical license was revoked by the Medical Board of California in 2014.

– Troy Ericsen Palmer, Chino physician, surrendered his license to the Osteopathic Medical Board of California on April 4 after pleading guilty to possessing child pornography.

– Keith Robert Deorio, Santa Monica physician, had his license revoked by the Medical Board of California on July 21 after repeated violations of the Medical Practice Act.

– Christopher Allen Scott, Palm Springs vocational nurse, had his license revoked by the California Board of Vocational Nursing and Psychiatric Technicians in January following findings that include the alleged use of controlled substances.

– John Thomas Moranville, Lafayette physician, had his license revoked by the Medical Board of California on August 18 following an evaluation finding that he suffers from an illness that impairs his ability to practice medicine safely.

– Joseph Struzzo, Cathedral City physician, had his certificate revoked by the Medical Board of California on August 4 following an evaluation finding that he suffers from an illness that impairs his ability to practice medicine safely.

– Adly Ayad Azab, West Covina physician, had his license revoked by the Medical Board of California on August 23 following an evaluation finding that he suffers from an illness that impairs his ability to practice medicine safely.

AB 1244 (Gray and Daly), which went into effect January 1, introduced new changes to the workers’ compensation system and requires the division’s Administrative Director to suspend any medical provider, physician or practitioner from participating in the workers’ compensation system in cases such as noted above.

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Helping a New PTP Understand Workers’ Compensation

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All to often a claims administrator may encounter a new PTP who has happened upon an injured worker for treatment, despite the fact that they may not know much if anything about workers’ compensation concepts, rating, or reporting. This imposes a burden upon the administrator to hand hold the PTP every step of the way, a tedious, and time consuming task.

Now there are online resources that can get the job of teaching the PTP claim fundamentals to help with the task of bringing a new PTP up to speed.

The Division of Workers’ Compensation launched its second free online physician education course. This course is highly recommended for California’s Qualified Medical Evaluators (QMEs). It is also available to the public and may be useful for attorneys, claims administrators and medical providers participating in the California workers’ compensation system.

“Evaluating California’s Injured Workers: Qualified Medical Evaluators (QME)” is the second in a planned series of educational modules developed for medical doctors, chiropractors and nurses. QMEs play a critical role in resolving disputes within the workers’ compensation system.

The online education will cover:

– How to prepare for an evaluation and outline the components of a quality report
– How to properly identify and apply the complexity factors in the medical-legal fee schedule to ensure accurate billing
– Administrative regulations to stay in compliance as a QME
This activity has been approved for AMA PRA Category 1 Credit – as well as 1 hour of QME continuing education credit.

Access to the physician education module can be found on the DWC website and will be available by mobile app soon. The first education module, “Caring for California’s Injured Workers: Using California’s Medical Treatment Utilization Schedule (MTUS),” is also available on the website.

This activity has been planned and implemented in accordance with the accreditation requirements and policies of the Institute for Medical Quality/California Medical Association (IMQ/CMA) through the joint providership of the Center for Occupational and Environmental Health (COEH) and State of California Department of Industrial Relations, Division of Workers’ Compensation.

The Center for Occupational and Environmental Health is accredited by the IMQ/CMA to provide continuing medical education for physicians.

The Center for Occupational and Environmental Health designates this enduring material for a maximum of 1 AMA PRA Category 1 Credit(s)™. Physicians should claim only the credit commensurate with the extent of their participation in the activity.

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Post Injury Accommodations Must Relate to a Disability

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Anthony White worked as a custodian for Los Angeles World Airports, a department of the City of Los Angeles. In November 2005, while off duty, he sustained several gunshot wounds to his left leg. He was briefly hospitalized and took several medical leaves of absence to recover from his injury. He returned to work in May 2006 and was assigned to perform light duty tasks in a warehouse.

At the end of August 2006, White took another medical leave of absence which lasted for approximately two years. According to one of White’s physicians, White was suffering from “Post Traumatic Stress Disorder and Intractable Pain secondary to gunshot wound in 2005.”

In May 2008, during his leave, White was arrested in Arizona and was apparently charged with nine felony counts relating to identity theft and fraud. When White returned to work in 2008, his prior position (day shift custodial supervisor) was not available and the airport placed him in an available position at the same level on the graveyard shift.

White did not like working the night shift and requested a transfer to the day shift as a reasonable accommodation for disabilities related to his 2005 injury. However, because White failed to provide the airport with any viable explanation why working the day shift rather than the night shift would impact his disability, the airport denied his reasonable accommodation request.

White resigned from his position in 2010 on the same day he began serving a sentence on two felony charges in Arizona. He subsequently filed the present lawsuit against the airport, the City, and others, in which he alleges a variety of disability related employment claims under the Fair Employment and Housing Act (FEHA).

The case was tried to a jury. The court granted the airport’s nonsuit motion on several claims; the jury found in favor of the airport on White’s remaining claims. The outcome was affirmed in the unpublished case of White v City of Los Angeles.

White’s primary contention on appeal is that the trial court erred in denying his motion for new trial. He argues the evidence does not support either the jury’s verdict or the court’s nonsuit.

The court of appeal held that the “evidence – when properly viewed in the light most favorable to the judgment – does not support White’s assertion that the airport refused to consider any accommodation absent a showing of a “permanent restriction.” During the discussions with White about his request for an accommodation, the airport focused mainly on whether White had any limitations due to his disability and, if so, how working during the day rather than at night might impact those limitations. Given that White said he could perform his job without any accommodation and the City’s medical office cleared White to return to work without any restrictions, the airport’s request for some additional information regarding his request for accommodation was not unreasonable.”

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