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Six NFL Players Charged in Superseding Healthcare Fraud Indictment

Six former National Football League (NFL) players have been charged in a superseding indictment in the Eastern District of Kentucky for their alleged roles in a nationwide fraud on a health care benefit program for retired NFL players.

Darrell Reid, 38, of Farmingdale New Jersey, Antwan Odom, 38, of Irvington, Alabama, Anthony Montgomery, 36, of Cleveland, Ohio, Clinton Portis, 38, of Fort Mill, South Carolina, Tamarick Vanover, 46, of Tallahassee, Florida, and Robert McCune, 41, of Riverdale, Georgia, were charged in the superseding indictment. Each of the defendants was charged with one count of conspiracy to commit health care fraud and wire fraud. Reid, Odom, Montgomery, and Portis were also each charged with one count of wire fraud and one count of health care fraud. Vanover was also charged with two counts of wire fraud and two counts of health care fraud. And McCune was also charged with 10 counts of wire fraud, 12 counts of health care fraud, and three counts of aggravated identity theft.

McCune and 11 other former NFL players, including Portis and Vanover, were previously charged in the Eastern District of Kentucky in December 2019 for their alleged roles in the fraud. The alleged fraud targeted the Gene Upshaw NFL Player Health Reimbursement Account Plan, which was established pursuant to the 2006 collective bargaining agreement and provided for tax-free reimbursement of out-of-pocket medical care expenses that were not covered by insurance and that were incurred by former players, their wives and their dependents – up to a maximum of $350,000 per player. According to the charging documents, over $3.9 million in false and fraudulent claims were submitted to the Plan, and the Plan paid out over $3.4 million on those claims between June 2017 and December 2018.

Since the initial charges were announced, seven of the defendants have entered guilty pleas. Correll Buckhalter, James Butler, Joseph Horn, Etric Pruitt, Ceandris Brown, John Eubanks and Donald “Reche” Caldwell, who passed away in June, each pleaded guilty to conspiracy to commit health care fraud.

On June 22, 2020, Brown was sentenced for his role in the scheme to a term of incarceration of 12 months and one day. Sentencing for the remaining defendants is pending.

The superseding indictment adds Reid, Odom, and Montgomery as defendants for their roles in the scheme, and it adds additional charges against McCune: three counts of aggravated identity theft for McCune’s unlawful use of the identity of other persons as part of this scheme; and two counts of health care fraud for a scheme whereby McCune allegedly submitted or caused the submission of false and fraudulent claims to the Plan on his own behalf.

The superseding indictment alleges that the scheme to defraud involved the submission of false and fraudulent claims to the Plan for expensive medical equipment – typically between $40,000 and $50,000 for each claim – that was never purchased or received. The expensive medical equipment described on the false and fraudulent claims included hyperbaric oxygen chambers, cryotherapy machines, ultrasound machines designed for use by a doctor’s office to conduct women’s health examinations and electromagnetic therapy devices designed for use on horses.

The superseding indictment further alleges that McCune, Vanover, and others recruited other players into the scheme by offering to submit or cause the submission of these false and fraudulent claims in exchange for kickbacks and bribes that ranged from a few thousand dollars to $10,000 or more per claim submitted. As part of the scheme, the defendants allegedly fabricated supporting documentation for the claims, including invoices, prescriptions and letters of medical necessity.

San Diego Laboratory Pays $49 Million For Fraud and Kickbacks

San Diego-based clinical laboratory Progenity, Inc. admitted that it submitted fraudulent bills to TRICARE, the Department of Defense health care benefit program that covers military service members and their dependents, and to the Federal Health Care Employee Benefits Program (FEHBP), for clinical tests that it knew were not covered or properly payable by either program.

In addition, Progenity, formerly known as Ascendant MDx, Inc., and previously headquartered in Carlsbad, California, admitted that it offered improper incentives to patients and doctors to use its laboratory services.

To account for its fraud, Progenity has agreed to pay a total of $49 million in civil settlements in federal courts in the Southern District of California (SDCA) and the Southern District of New York (SDNY), as well as to multiple states.

Progenity offered noninvasive prenatal testing (“NIPT”) to pregnant women. NIPT refers to a category of genetic tests that screen for fetal chromosomal abnormalities, through analysis of fetal DNA present in a pregnant woman’s blood.

This form of genetic testing, however, did not have FDA approval and was considered by TRICARE as a “laboratory-developed test.” As a result, TRICARE did not cover NIPT tests for its beneficiaries.

Therefore, in order to get reimbursed by TRICARE, Progenity falsely and fraudulently used a medical billing code that TRICARE covered, but that Progenity knew did not accurately reflect that the NIPT test.

The U.S. Attorney’s Office for SDCA launched both a criminal probe into Progenity’s fraudulent billing practices and a civil investigation of the false claims Progenity had submitted to TRICARE and the FEHBP. Separately, SDNY initiated its own investigation into misconduct by Progenity relating to the improper incentives provided to patients and doctors to use its laboratory services. SDNY also coordinated with multiple state Attorneys General to investigate Progenity’s miscoding of NIPT to Medicaid programs in New York and several other states.

Progenity’s settlement agreement requires the company to pay $16.4 million to settle the SDCA civil matter, $19,449,316 to settle the SDNY civil matter, and $13,150,684 to settle the state civil allegations.

The civil settlements were based on an ability-to-pay, payment-over-time basis, following an analysis of financial condition submissions made by Progenity. In light of Progenity’s remedial efforts, cooperation with the investigation, and payment of restitution to TRICARE and the FEHBP, the criminal investigation was resolved via a non-prosecution agreement, requiring that Progenity admit its misconduct and be subject to additional terms and conditions for up to a 24-month period.

Lawmakers Consider List of COVID-19 New Workplace Protections

With many of California’s workplaces facing significant changes fueled by the COVID-19 pandemic, state lawmakers are considering whether labor laws also need to evolve.

Legislators have proposed expanding workers’ compensation eligibility so that more employees will be covered if they are diagnosed with COVID-19, increasing the number of sick days for food service workers and requiring employers to pay a portion of utility and internet bills for teleworkers.

MSN reports that Gov. Gavin Newsom said that he plans to work “hand in glove” with the Legislature to expand workplace protections, including guaranteeing COVID-19-related sick leave, easing workers’ compensation claim requirements, enforcing labor laws and ensuring employers are reporting outbreaks.

Assemblywoman Lorena Gonzalez (D-San Diego) and state Sen. Jerry Hill (D-San Mateo) both have bills to ease restrictions on workers’ compensation so more employees have access to the benefit. Talks are underway to combine Gonzalez’s bill with Hill’s legislation, Senate Bill 1159, the lawmakers said.

SB 1159 would add coronavirus-related illness or death to the list of on-the-job injuries covered under the state’s workers’ compensation program while removing a requirement that workers prove they contracted the virus on the job. Instead, employers would have to prove that COVID-19 wasn’t contracted in the workplace.

Newsom included a similar measure for essential workers in a May 6 executive order – a big win for labor unions. However, that executive order only eased the burden of proof for workers with COVID-19 before July 5.

As currently written, Gonzalez’s bill, AB 196, would go a step further than Hill’s legislation by creating a presumption that essential workers who contract COVID-19 were infected while on the job, with no ability for the employer to contest that finding.

Among the other workplace bills the Legislature will consider in the coming weeks is AB 3216 by Assemblyman Ash Kalra (D-San Jose), which would make it an unlawful employment practice to refuse a request for up to 12 weeks of job-protected leave from a worker who needs to care for a child whose school or daycare has closed due to a state, local or federal public health emergency.

Assembly Bill 1492 by Assemblywoman Tasha Boerner Horvath (D-Encinitas) would ease workplace restrictions dictating when employees must take meal and rest breaks during the day – a proposal intended to provide more flexibility in working from home – while requiring employers to pay for an additional hour of work if the employer requires workers to skip those breaks. The bill also would require an employer to pay for equipment needed to work from home and a portion of the worker’s home internet and utility bills.

Senate Bill 729 by state Sen. Anthony Portantino (D-La Cañada Flintridge) would require employers to provide an additional 80 hours of paid COVID-19 sick leave to full-time food sector workers during a declared local or state emergency.

Lawmakers have until Aug. 31 to send bills to Gov. Newsom before adjourning for the year.

MSP Reimbursement Not Time Barred 6 Years Post Settlement

In an opinion out of the United States District Court for the District of New Jersey, Osterbye v. United States, 2020 U.S. Dist. LEXIS 116591 , the Court denied Defendant Selective Insurance’s Motion to Dismiss Plaintiff’s suit and allegations that Defendant failed to reimburse Medicare for Osterbye’s medical expenses under the Medicare Secondary Payer Act (MSP) private cause of action pursuant to 42 USC § 1395y(b)(3)(A).

Plaintiffs’ decedent, Anna May Osterbye, a Medicare beneficiary, was injured in a fire at her home allegedly caused by the negligence of a plumbing contractor, insured by the Defendant. Osterbye.

The claim resulted in a settlement in the amount of $740,000 including $13,562.90 that Medicare estimated for reimbursement of conditional payments. On April 29, 2013, the Plaintiffs executed a Release.

After Plaintiffs reimbursed $13,562.90 to Medicare, Medicare issued a final demand letter for an additional amount of $118,071.28 on June 4, 2013. The Plaintiffs then proceeded to exhaust administrative appeals with Medicare. On June 26, 2019, the Medicare Appeals council dismissed Plaintiffs’ request for review.

On August 28, 2019, Plaintiffs elevated the dispute to the United States District Court. Defendant’s Motion to Dismiss asserted two main arguments 1) The statute of limitations time-bars Plaintiff’s MSP claim and 2) Dismissal is appropriate based upon the settlement agreement and release.

With respect to the statute of limitations defense, administrative remedies were not exhausted until June 26, 2019- over 6 years after the settlement and release were executed. Plaintiffs were unable to seek judicial review on their MSP claim until all administrative remedies were exhausted. It was not apparent on the face of Plaintiffs’ Complaint that Plaintiffs’ MSP private cause of action is time-barred and denied the Motion to dismiss on the statute of limitations defense.

Defendant argued that the Court should dismiss Plaintiff’s claims by enforcing the Release Plaintiffs executed on April 29, 2013. The Court ultimately determined that whether the Plaintiffs’ Release should be nullified based on mutual mistake turns on a factual inquiry that was better left for a later time.

The ultimate outcome of this case is yet to be determined; however, there are several clear warning signals and reminders found within this case. Relying on an initial Conditional Payment Letter, and not a Final Demand amount can leave a primary payer open to significant exposure. Understanding the Conditional Payment Recovery process also includes understanding the inner workings of the Medicare Administrative Appeals process, and the associated delay.

Researchers Report on Effectiveness of COVID-19 Masks

The CDC has recommended wearing a mask to reduce spread of the SARS-CoV-2 virus, although surgical and N95 type masks should be reserved for healthcare settings due to limited supply. Studies and meta-analyses have backed reduced transmission of the virus with the lower-grade masks and supported multi-layer versions as more protective.

In a surrogate-marker study of protection against COVID-19 spread led by Raina MacIntyre, MBBS, PhD, of the Kirby Institute at UNSW Sydney in Australia, high-speed video capture of droplet dispersal and aerosolization showed the result when a healthy volunteer coughed, sneezed, and talked while wearing a range of masks.

MacIntyre’s study used the CDC’s directions for a single-layer, “quick cut T-shirt face covering (no-sew method)” and a two-layer mask following the agency’s method for sewing one. The cloth used was made of 175 g/m2 cotton fabric with a thread count of 170 TPI, close to what’s used in quality T-shirts.

“From the captured video it can be observed that, for speaking, a single-layer cloth face covering reduced the droplet spread but a double-layer covering performed better,” they reported in a case study in Thorax. “Even a single-layer face covering is better than no face covering.

For coughing and sneezing, though, a double-layer cloth face covering was significantly better at reducing the droplet spread. A three-ply surgical mask performed best of all for every type of respiratory emission, the group noted.

A recent study in JAMA showed a decline in healthcare workers testing positive for SARS-CoV-19 after implementing universal masking of patients. CDC leaders pointed to it as “practical, timely, and compelling evidence that community-wide face covering is another means to help control the national COVID-19 crisis,” which they suggested is “a civic duty, a small sacrifice reliant on a highly effective low-tech solution that can help turn the tide favorably in national and global efforts against COVID-19.”

Meanwhile, a group at Duke University in Durham, North Carolina, offered some suggestions for overcoming resistance to mask wearing.

“The way we communicate is going to be very critical here,” noted Gavan Fitzsimons, MBA, PhD, a consumer behavior expert there, and “using a term like ‘selfish,’ I think, is going to lead people who are already digging in to dig in even harder.”

Communicating benefits rather than threats may also help, said Lavanya Vasudevan, PhD, MPH, of Duke’s Center for Health Policy and Inequalities Research.

Mandated COVID-19 Vaccinations Clash With Employee Rights

Several legal experts say workplace safety rules may clash with federal protections for individual rights if employees resist potential employer efforts to require them to take a prospective COVID-19 vaccine, but safety considerations will likely carry more weight in court.

According to the report in Business Insurance, “When there is a vaccine, it will be a gamechanger, but it will raise issues,” said Dennis Brown, managing shareholder in the San Jose, California, office of Littler Mendelson P.C., which represents employers.

“Because COVID-19 is highly contagious and dangerous for some people – there will be a big rush by employers to require vaccinations, and part of that is driven by fear,” he said. “Employers will be under tremendous pressure to require the vaccine.”

Yet Mr. Brown and other employment law attorneys say they are bracing for challenges to vaccine requirements.

Employers may require vaccines to comply with regulations such as the U.S. Occupational Safety and Health Administration’s general duty clause, which calls for employers to provide safe work sites. But they also face requirements to comply with legal exemptions for individuals on the basis of health or religion.

Title VII of the Civil Rights Act, for example, bars employment discrimination on the basis of religion, among other things, and the Americans with Disabilities Act states that a disabled person can be exempt from receiving a mandatory vaccination under certain conditions.

“The Title VII and ADA disability accommodations are not new to employers, but this context is new,” said Casey Denson, a New Orleans-based employment law attorney for her own firm, Casey Denson Law LLC, which represents employees. She said there’s no legal precedence concerning vaccine exemptions for COVID-19, so it’s unclear how courts will rule.

Mr. Brown said courts are “less hospitable” to religious exemptions than to medical concerns “as a general rule” and that the pandemic could further tip the scales away from accepting personal religious exemptions in favor of protecting all workers and businesses. Overall, in health care settings, exemptions almost never stand as “the balancing test you go through between individual liberty and public health and safety tilts heavily to public safety,” he said.

How the EEOC guidance would pertain to a COVID-19 vaccine remains to be seen, Ms. Denson said.

“It’s going to depend on the type of business you have, whether you are interacting with coworkers, customers or older individuals” shown to be at risk for COVID-19 complications, she said. “Even though we have legal frameworks for decisions on vaccines it’s going to be a complicated decision.”

We will have to see how things play out,” said David Kurtz, Boston-based partner with Constangy, Brooks, Smith & Prophete LLP, which represents employers.

“When it came to influenza vaccines, the EEOC said employers should consider encouraging people to get vaccines but not force them. (COVID-19) will absolutely shake things up. One of the things that is so unusual with COVID-19 is when people have the flu they know it; when it comes to COVID-19 you hear that people are asymptomatic. That’s part of the problem employers are facing.”

Samuel Burgess, Syracuse, New York-based senior counsel with Bond, Schoeneck & King PLLC, said courts will likely side with employers seeking to protect their entire workforce through compulsory vaccinations.

“We’ve seen this in the schools context with the measles and the flu shot requirements in the health care setting, and how courts aim to look at protection for the public and the greater good,” he said.

Study Says Household Exposure Most Likely Source of COVID-19

Although California employers may face a presumption of compensability in COVID-19 claims, ongoing research may provide opportunities to dispute the presumption.

South Korean epidemiologists have found that people were more likely to contract the new coronavirus from members of their own households than from contacts outside the home.

A study published in the U.S. Centers for Disease Control and Prevention (CDC) on July 16, and summarized by Reuters, looked in detail at 5,706 “index patients” who had tested positive for the coronavirus and more than 59,000 people who came into contact with them.

The findings showed that less than 2% of patients’ non-household contacts had caught the virus, while nearly 12% of patients’ household contacts had contracted the disease.

By age group, the infection rate within the household was higher when the first confirmed cases were teenagers or people in their 60s and 70s.

“This is probably because these age groups are more likely to be in close contact with family members as the group is in more need of protection or support,” Jeong Eun-kyeong, director of the Korea Centers for Disease Control and Prevention (KCDC) and one of the authors of the study, told a briefing.

Children aged nine and under were least likely to be the index patient, said Dr. Choe Young-june, a Hallym University College of Medicine assistant professor who co-led the work, although he noted that the sample size of 29 was small compared to the 1,695 20-to-29-year-olds studied.

Children with COVID-19 were also more likely to be asymptomatic than adults, which made it harder to identify index cases within that group.

“The difference in age group has no huge significance when it comes to contracting COVID-19. Children could be less likely to transmit the virus, but our data is not enough to confirm this hypothesis,” said Choe.

Data for the study was collected between Jan. 20 and March 27, when the new coronavirus was spreading exponentially and as daily infections in South Korea reached their peak.

KCDC has reported 45 new infections as of Monday, bringing the country’s total cases to 13,816 with 296 deaths.

Independent Physicians Face Financial Pressure from COVID-19

According to an American Medical Association report, physician employment has grown 13 percent since 2012, with the percent of employed physicians surpassing their cohorts in physician-owned practices for the first time in 2018. A new report suggests that this phenomena will be accelerating.

More than half of independent physicians reported they are worried about their practices surviving the COVID-19 pandemic indicating there may be a sharp uptick in future partnerships and consolidation, the new report found.

Consulting firm McKinsey & Co. surveyed physicians nationally in both 2019 and, again, six weeks into the pandemic, to understand physician sentiment. Nearly half of the physicians surveyed in the six weeks after the pandemic was declared said they had less than four weeks cash on hand.

Nearly seven in ten (68%) of those who were looking for partners listed financial support as the primary driver, the report said.

“While autonomy has remained a priority for physicians, respondents indicated that they will consider partnerships or joining a health system as a result of financial uncertainty resulting from the COVID-19 pandemic,” authors Kyle Gibler, M.D., Omar Kattan, M.D., Rupal Malani, M.D., and Laura Medford-Davis, M.D., wrote in the report..

For example, more than half (54%) of large independent practice docs and 30% of small independent practice physicians said the pandemic “has shown me the benefits of working for a large practice outweigh the benefits of working in a smaller practice.”

Four in 10 physicians who responded said they are now more likely to pursue employment as a result of COVID-19.

Meanwhile, more than a quarter of independents are considering selling their practice or partnering with a larger entity due to COVID-19.

In 2019, 75% of responding physicians said they preferred to join an independent physician group while 41% said they preferred to join a hospital or health system. After COVID-19, nearly 90% of respondents said they preferred to join an independent group while 28% preferred to join a health system.

However, the report said, 26% of physicians who joined a practice or health system reported “buyer’s remorse,” stating that they were interested in returning to self-employment.

“As health systems explore the next chapter of physician acquisition, our research in the healthcare sectors suggests all parties should deepen their understanding of physicians’ needs,” the authors wrote. “Clear communication between health systems and physicians on the expectations and benefits of alignment, including the implications for physicians, their teams, and their patients, will be important considerations in building longer-term successful relationships.”

DWC Announces New Ethics Committee Appointments

Division of Workers’ Compensation (DWC) Administrative Director George Parisotto has appointed Jill A. Dulich to serve as a member of the Workers’ Compensation Ethics Advisory Committee. The appointment is effective July 1, 2020.

Jill A. Dulich will fill the position of a member of the public representing self-insured employers, previously held by Jim Zelko.

Dulich has been the Claims and Operations Manager for the California Self-Insurers’ Security Fund. In her role, she oversees the third party administrators that manage the claims that have been assigned to the Security Fund due to the default of a self-insured employer, as well as manages the daily administrative operations of the Fund. She also serves as the Executive Director for the National Council of Self-Insurers and for the California Self-Insurers Association.

Jim Zelko has been reappointed to the Committee, but in the position of a member of the public outside the workers’ compensation community in light of his recent retirement from Kaiser Foundation Health Plan.

The Ethics Advisory Committee, established in 1995 by Title 8, California Code of Regulations, section 9722, reviews all ethics complaints from the public against workers’ compensation administrative law judges.

The committee reviews all complaints without learning the names of complainants or judges, and then makes recommendations to the DWC Administrative Director and the Chief Judge. The members meet quarterly and serve without compensation.

The committee includes the following members: a member of the public representing organized labor; a member of the public representing insurers; a member of the public representing self-insured employers; an attorney who formerly practiced before the Workers’ Compensation Appeals Board and who usually represented insurers or employers; an attorney who formerly practiced before the Workers’ Compensation Appeals Board and who usually represented applicants; a presiding judge; a workers’ compensation administrative law judge (WCALJ) or retired WCALJ; and two members of the public outside the workers’ compensation community.

A judicial ethics complaint form and instructions can be found on the forms page of the DWC website.

July 20, 2020 – News Podcast

Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: WCAB En Banc Rescinds Some Suspension Orders in September. Mobile Wash New Target of AB-5 Misclassification Suit. San Diego Psychiatrist to Serve 21 Months for Fake Treatment. 27 So. Cal. Nursing Facilities Pay $16.7M for Inflated Medical Bills. Claim Volume Declines as Insurance Fraud Storm Arrives. Major Carriers Report Massive Q2 COVID-19 Losses. WCIRB Expects $1.2B in COVID Comp Claims. Complex Matrix of National Requirements for Job Re-Opening. Smoking or Vaping are COVID-19 Complications Risk Factors. FDA Approves Device Reducing Disc Reherniation Risk.