Author: WorkCompAcademy

A former employee of a Southern California ambulance company and a former employee of a Los Angeles dialysis treatment center both pleaded guilty today to fraud charges for their roles in a fraud scheme that resulted in more than $6.6 million in fraudulent claims to Medicare.  Three other individuals charged in the case previously pleaded guilty.

Aharon Aron Krkasharyan, 53, of Los Angeles, California, pleaded guilty in federal court in Los Angeles to one count of conspiracy to commit health care fraud.  Maria Espinoza, 47, also of Los Angeles, pleaded guilty to one count of conspiracy to pay and receive kickbacks for health care referrals.  U.S. District Judge George H. Wu of the Central District of California accepted the guilty pleas.  Krkasharyan is scheduled to be sentenced on March 29, 2018, and Espinoza is scheduled to be sentenced on April 2, 2018.

Krkasharyan was employed as the Quality Improvement Coordinator for Mauran Ambulance Inc., an ambulance transportation company operating in the greater Los Angeles area that provided non-emergency services to Medicare beneficiaries, many of whom were dialysis patients.  According to admissions made in connection with his plea, between June 2011 and April 2012, Krkasharyan conspired with other Mauran employees to submit claims to Medicare for ambulance transportation services for individuals who did not need such services.  Krkasharyan also admitted that he and his co-conspirators instructed Mauran emergency medical technicians to conceal the patients’ true medical conditions by altering paperwork and creating fraudulent reasons to justify the ambulance services.

Espinoza was an administrative assistant at DaVita Doctors Dialysis of East Los Angeles.  As part of her guilty plea, Espinoza admitted that she conspired with an employee of Mauran to receive cash kickbacks in return for referrals of dialysis patients to Mauran for whom Mauran submitted claims to Medicare for non-emergency ambulance transportation services.

Earlier this month, Toros Onik Yeranosian, 55, the former owner of Mauran, and Oxana Loutseiko 57, the former general manager of Mauran, each pleaded guilty before Judge Wu to one count of conspiracy to commit health care fraud for their roles in the fraud scheme.  The former Dispatch Supervisor at Mauran, Christian Hernandez, 36, pleaded guilty to one count of conspiracy to commit health care fraud in December 2015.

In connection with his guilty plea, Yeranosian admitted that during the course of the conspiracy, Mauran submitted to Medicare at least $6.6 million in false and fraudulent claims for medically unnecessary transportation services, of which Medicare paid at least $3.1 million.  As part of their plea agreements, all five defendants agreed to pay restitution to Medicare.

The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.  Trial Attorneys Alexis D. Gregorian and Jeremy R. Sanders of the Fraud Section are prosecuting the case.

The Fraud Section leads the Medicare Fraud Strike Force.  Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 3,500 defendants who have collectively billed the Medicare program for more than $12.5 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

The case of Saul Zuniga v. Interactive Trucking, Inc.; SCIF involves another challenge to the constitutionality of certain provisions of the IMR process, asserting that the anonymity of the IMR reviewers violates due process and the IMR statute violates the guarantee of right to appellate review.

After successfully appealing an IMR determination and obtaining an order remanding the matter back to IMR for review by a different physician reviewer, Zuniga filed a discovery motion seeking the disclosure of the IMR reviewers’ identities. While the discovery motion was pending, the second IMR decision was issued authorizing additional, but not all, of the prescribed medications. Thereafter, over defendant’s objections, a trial was set on the issue of the disclosure of the IMR physicians’ identities. The Workers’ Compensation Judge issued a decision finding that he could not release the names of the IMR physicians pursuant to Labor Code section 4610.6(f).

Zuniga filed a petition for reconsideration, which was denied. He then filed a petition for writ of review in October 2014 arguing that the anonymity of the IMR reviewers violates due process and that the IMR statutes violate the guaranteed right to appellate review.

SCIF filed its answer arguing: (1) The petitioner lacks standing since he did not exhaust his administrative remedies by filing an appeal of the second determination and therefore the petition for review was premature; (2) the petition failed to name the DWC, which is an indispensable party; (3) the WCJ was correct in finding that he lacked the authority to order the disclosure of the reviewing doctors; and (4) not revealing the reviewers’ identities did not deprive the petitioner of his due process rights.

The briefing in this case was completed in December 2014 and the case remained idle for over a year.

In February 2016, the petition for writ of review was granted in case Saul Zuniga v. Interactive Trucking, Inc.; SCIF California Court of Appeal, First Appellate District, Div. 2, Case No. A143290.

The threshold issue is whether the Board correctly concluded that Labor Code 4610.6(f), which provides in part that “the independent medical review organization shall keep the names of the reviewers confidential in all communications with entities or individuals outside the independent medical review organization,” does not deny due process to an injured employee who seeks to obtain medical treatment under Labor Code 4600.

The Court of Appeal has now set the case for oral argument on December 19, 2017 at 1:30 pm. The court made the following request of the parties:

“At oral argument, in addition to any other issues the parties wish to address, the parties should be prepared to address the following: 1. The extent to which the following two cases apply to the facts of this case: Stevens v. Workers’ Compensation Appeals Board (2015) 241 Cal.App.4th 1074 and Ramirez v. Workers’ Compensation Appeals Board (2017) 10 Cal.App.5th 205. 2. Whether the conflict-of-interest and reporting requirements in Labor Code section 139.5, especially subdivisions (c) through (e) affect the issues in this case.”

In effect the Zuniga case challenges the confidentiality provisions of the IMR process so that the identity of the medical reviewer is not known by the litigants. Zuniga claims that this provision limits his ability to investigate the reviewer for bias or other ethical misconduct in support of an IMR appeal. The outcome of this case is not expected to markedly change the IMR system as a whole. Nonetheless, it will no doubt be some time next year before there is a result.

Christine Mendiola worked with mentally ill residents in a locked facility at defendant Crestwood Behavioral Health, Inc. When hired, she understood she would be working with clients who were chronically mentally ill but stable. She alleged however that Crestwood concealed that a large portion of the residents had pending felony charges or significant criminal histories.

On July 11, 2011, Mendiola was working the night shift and monitoring three clients on the patio during a smoke break. One of the clients required “line of sight” observation and Mendiola was the only staff member on the patio (a line of sight observation requires a staff member to be assigned to that particular client and only that client in order to keep an eye on him at all times). Another client (Resident G) became agitated, pacing and yelling in Spanish. When she tried to calm him, he turned his agitation towards her. She tried to call for help on a walkie-talkie, but Resident G knocked it out of her hand. He assaulted her, bashing her head against the cinder blocks and throwing her to the ground. For seven minutes she yelled for help. Finally, she directed another client to call for help on her walkie-talkie. That client pulled Resident G off Mendiola before help came.

Resident G had been admitted to Crestwood under a Murphy conservatorship with pending assault and battery charges. He had been found incompetent to stand trial. Crestwood also knew that Resident G had a history of attacking women. Crestwood allegedly kept this information from staff. Mendiola has been unable to work since the attack.

She brought suit against Crestwood for assault, battery, fraudulent inducement and misrepresentation, unlawful business practices (Bus. & Prof. Code, § 17200), and other claims.

Crestwood moved for summary adjudication as to all claims. It asserted workers’ compensation was the exclusive remedy as to the assault and battery, and there was no triable issue of material fact as to the remaining claims. Crestwood provided documentation that Mendiola had acknowledged in writing that the job required the management of assaultive, disruptive, or suicidal clients.

The trial court found workers’ compensation was the exclusive remedy for the claims of assault and battery. The court denied the motion as to the fraud claim. Focusing on the allegations of Mendiola’s declaration concerning her move to the Dream House, the court found triable issues of fact as to fraudulent inducement. For the same reasons, the court denied summary adjudication of the unfair business practices claim. But later during a motion in limine, the fraud claims were dismissed for lack of subject matter jurisdiction, and Mendiola appealed. The court of appeal affirmed the dismissal in the unpublished case of Mendiola v. Crestwood Behavioral Health.

Whether the exclusive remedy of the workers’ compensation system in California applies to intentional torts, including fraud, is a “complicated” question. Mendiola’s fraud claims are nearly identical to those in Spratley v. Winchell Donut House, Inc. (1987) 188 Cal.App.3d 1408 and are similar to the first claim that was barred in Johns-Manville Products Corp. v. Superior Court (1980) 27 Cal.3d 465, 475-476.

These claims, whether misrepresentation or concealment, all relate to workplace safety, “an issue contemplated by the workers’ compensation statutory scheme” and “a risk reasonably encompassed within the compensation bargain.”

Businesses located in Washington, D.C., Nevada, Delaware, New Mexico and California face the highest risk of being sued by their employees when compared to the national average, according to a new study released by global insurer Hiscox. The study revealed that US-based companies have just over a 10 percent chance of having an employment charge filed against them.

The 2017 Hiscox Guide to Employee Lawsuits identifies the total impact of employee administrative charges and litigation, and exposes the markets where employee lawsuits are most prevalent. The report was compiled using the latest data on employment charge activity from the Equal Employment Opportunity Commission (EEOC) and its state counterparts across the US.

“Recent public accusations of discrimination and harassment are a stark reminder of the importance of creating an army of vigilant employees who can recognize the warning signs of unlawful behavior,” said Patrick Mitchell, Management Liability Product head at Hiscox USA. “It’s also critical to be acutely aware of your state’s laws. We found that many of the higher-risk states have laws in place that go beyond federal legislation. Varying state laws can impact the risk business owners face and play a role in the number of employee lawsuits in a given state. Business owners must stay aware as legislation evolves, and ensure that their businesses are compliant and that they have a plan in place should a lawsuit be filed.”

According to the study, businesses based in Washington, D.C., face the greatest risk of being sued by their employees, 81 percent higher than the national average. Other states where employers are at a high risk of facing employee charges when compared to the national average include Delaware and Nevada (+55%, respectively), New Mexico (+50%), California (+46%), Mississippi (+43%), Alabama (+39%), Illinois (+35%), and Connecticut and Georgia (+19%, respectively).

Claims against an employer can occur when an employee or job applicant feels they have been discriminated against in the workplace for reasons including, but not limited to, their age, disability, religion, race or color. Unlawful retaliation against job applicants or employees, who had alleged that they had been punished for asserting their rights to be free from employment discrimination, is the most common claim asserted in federal employment cases.

State laws can also have a significant impact on the risks businesses face from employee lawsuits and are drivers of increased employee charge activity. According to the study, this is because some state laws are more stringent than federal statutes. The following states, according to the report, allow employees the ability to go to court with filing a federal or state charge. These include: Alaska, Washington, D.C., Kentucky, Louisiana, Michigan, Maine, Nebraska, New Jersey, New York, Ohio, Oklahoma, Oregon, Vermont and Washington.

Discrimination can be perpetrated by management, another employee, or even someone outside the organization. Collectively, Hiscox claims data for small and mid-sized enterprises (under 500 employees) indicates that one in 10 businesses will face an employee charge. On average, it will take these businesses 318 days to resolve a claim. Without employment practices liability insurance, each of these companies would face an average $160,000 payment for defense and settlement charges. This payment can potentially be avoided by preventing the behavior that could cause a lawsuit through training or routine enforcement of employment policies, detecting discriminatory behavior even if it’s not reported, and mitigating the impact on your business in the event of a charge.

Workers’ Compensation Medicare Set-Aside (WCMSA) plans are required to set up reserves to cover Medicare beneficiaries’ future medical care for injured workers who are or will soon be Medicare eligible.

And now a new California Workers’ Compensation Institute (CWCI) study examines data from 7,926 California WCMSA plans completed, submitted and approved by the Centers for Medicare and Medicaid Services (CMS) in 2015 and 2016

The study reports that nearly 70% of federally mandated and approved Medicare settlements for injured workers require funding for decades of opioid use, often at dangerously high levels and in conjunction with other high-risk drugs. Such a requirement exceeds federal and state clinical guidelines and places patients at high levels of risk.

This of course raises the question – why are employers paying in advance for the costs of opiate medications that are inappropriate by today’s standards? And more importantly, how can employers contest a CMS demand for such opiate funding?

Authors Alex Swedlow and Dr. David Deitz found that on average, insurers allocated $103,393 at the time of the injured workers’ settlements to cover the future medical expenses associated with their work injuries, with $48,986 (47%) of that amount set aside to pay for prescription drugs.  

Opioids were the number one type of drug included in WCMSAs, found in 69.4% of the approved plans, and overall, opioids accounted for 27.7% of all WCMSA prescriptions – more than twice the proportion of any other drug category.  In terms of costs, the study found that with an average allocation of $33,113, opioids accounted for almost 1/3 of the total dollars reserved for prescription drugs.  

The opioid combination drug Hydrocodone-Acetaminophen (generally known as Vicodin® or Norco®) was the most common opioid found in the WCMSAs (44% of the opioid prescriptions in the plans, 20.7% of the dollars allocated for opioids), followed by Tramadol HCI and Oxycodone HCI, though even more powerful Fentanyl, linked to more than 20,000 deaths in 2016, accounted for 2.2% of the opioids and 6.6% of the total amount allocated for opioids in the approved plans.  

Comparing opioids found in WCMSAs to a case-matched control group of closed workers’ comp permanent disability claims for similar injuries, the authors found that the WCMSAs called for much stronger opioids, as average cumulative morphine milligram equivalents (MMEs) allocated to WCMSAs with opioids were 45 times the level used in the control group during the life of the claim.  

Likewise, approved WCMSAs with opioids required funding for an average daily dose of 54.7 morphine equivalents (MEDs) for a period of 20.9 years, while 1 in 10 had allocations for a daily dose of 90 MEDs, a marker for elevated risk to the patient.  In addition to requiring funds for long-term opioid use, many of the WCMSA plans also included reserves for simultaneous, long-term use of other potentially risky medications.  

For example, 14.5% of the WCMSAs with opioids also had reserves for sedative-hypnotics, and nearly 5% had allocations for sedative-hypnotics, muscle relaxants, and opioids.