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Stem Cell Treatment for Spine Injury Approved for Human Trials

StemCells, Inc. announced that Health Canada has authorized the Company to expand its Phase I/II clinical trial for chronic spinal cord injury into Canada. The Phase I/II trial, currently underway in Zurich, Switzerland, is designed to evaluate the safety and preliminary efficacy of the Company’s proprietary HuCNS-SC® product candidate (purified human neural stem cells) as a treatment for chronic spinal cord injury. With this authorization from Health Canada, the Company is actively working to open one or more trial sites in Canada and begin screening patients.

“This should be very welcome news for spinal cord injury patients in North America,” said Stephen Huhn, MD, FACS, FAAP, Vice President and Head of the CNS Program at StemCells, Inc. “One of the patients in our trial is a Canadian and he endured some challenging logistics to get to and from Switzerland. The addition of sites located in North America will significantly ease the burden on Canada- and US-based patients and their families who may wish to participate in our trial.

“In addition, given the excellent safety profile and encouraging results seen to date in the three patients with complete injury, we have amended the clinical protocol to allow continued enrollment of patients with complete injury in addition to patients with the less severe, or incomplete injury. We are confident that the amended protocol combined with the addition of North American trial sites will accelerate enrollment of patients with varying degrees of spinal cord injury.”

To date, four patients have been enrolled in the Company’s Phase I/II trial and transplanted with HuCNS-SC cells. The first three patients had all suffered a complete injury to the thoracic (chest-level) spinal cord, classified as AIS A according to the American Spinal Injury Association Impairment Scale (AIS). In a complete injury, there is no neurological function below the level of injury, and sensory function of all three patients was stable before transplantation of the HuCNS-SC cells. The first three patients completed the trial in December 2012 and data from these patients showed multi-segment gains in sensory function in two patients twelve months post-transplantation of the HuCNS-SC cells. One of these two patients converted from a complete injury classification to an incomplete injury, while the third patient remained stable. Unlike the first three patients, the fourth patient in the study had suffered an incomplete injury, classified as AIS B, because of preserved sensory function below the level of injury.

The Phase I/II clinical trial of the Company’s HuCNS-SC cells is designed to assess both safety and preliminary efficacy. The Company anticipates twelve patients with thoracic (chest-level) neurological injuries at the T2-T11 level will be enrolled. The trial is open to patients in Europe and North America with a complete or incomplete injury classified according to the American Spinal Injury Association Impairment Scale. In a complete injury, there is no neurological function below the level of injury, while in an incomplete injury, there is some preservation of function below the level of injury.

Jurisdiction May Be Raised More Than 90 Days After an Injury

Sergio Perez, an Arizona resident, was hired by Hilltown Packing, a California based company to work at their facility in Arizona. The job offer and the acceptance of that offer were both made in Arizona. While working in Arizona, Perez had an industrial injury. He received medical treatment in Arizona.

He then moved on his own back to his primary residence in California where he continued to receive treatment and ultimately filed a California Workers’ Compensation claim. When he was released for light duty work, he returned to Arizona.

More than 90 days after the injury, the employer denied the California claim based upon the argument that there was no jurisdiction to proceed before the California WCAB. The WCJ agreed with the employer and found that there was no California jurisdiction over the Arizona injury and dismissed the application. Sergio Perez filed a petition for reconsideration.

The WCAB panel agreed with the WCJ, finding that there was no jurisdiction to proceed in California in the case of Perez v. Workers’ Comp. Appeals Bd., 2013 Cal. Wrk. Comp. LEXIS 91.

The ruling on jurisdiction was consistent with well established law. Support for the finding exists in a number of published opinions such as Ledbetter Direction Corp. v. W.C.A.B. (Salvaggio) (1984) 156 Cal. App. 3d 1097, 203 Cal. Rptr. 396, 49 Cal. Comp. Cases 447.which was cited by the WCAB panel.

Another one of the issues raised by Perez in his Petition for Reconsideration was that the employer was “estopped” from raising jurisdiction as an issue since that issue was raised for the first time more than 90 days following the injury. The WCAB disagreed holding that Labor Code § 5402 “merely creates a presumption that a compensable industrial injury was sustained if not denied within 90 days. It does not establish that the WCAB has jurisdiction to award benefits for that compensable injury.” The WCAB also pointed out, as did the WCJ, that objections to subject matter jurisdiction may be raised at any time and that jurisdiction cannot be conferred by consent, waiver, or estoppel.

Visalia Physician Indicted for Drug Trafficing

A federal grand jury returned a 27-count indictment against Terrill Eugene Brown, 61, of Visalia, charging him with conspiracy to dispense oxycodone, dispensing of oxycodone and hydrocodone, and structuring currency transactions to avoid bank reporting requirements, United States Attorney Benjamin B. Wagner and Fresno County District Attorney Elizabeth Egan announced.

According to the indictment, Brown, a medical doctor, sold prescriptions for large quantities of highly addictive, frequently diverted prescription drugs, including oxycodone and hydrocodone, without medical necessity. Brown sold prescriptions to customers that did not have a legitimate medical purpose and were not in the usual course of his professional practice. Brown deposited the cash earned from this into different personal bank accounts in a manner designed to avoid currency transaction reporting requirements.

Oxycodone, also known as “oxy,” is a narcotic analgesic or painkiller and is classified as a Schedule II controlled substance. Demand for oxycodone-based prescription pain medication has grown to epidemic proportions in the United States, and dealers profit by selling such medication on the street. Oxycodone-based Schedule II drugs have a high potential for abuse, and users will often crush and snort the pills or dissolve and inject them to get an immediate high. This abuse can lead to addiction and overdose, and, sometimes death. Hydrocodone is an addictive prescription painkiller, the abuse of which may lead to severe psychological or physical dependence. Hydrocodone is sold generically or under a variety of brand names, including Vicodin, Vicoprofen, Lortab, Lorcet, and Norco.

“Addiction to prescription painkillers is a very serious problem. Diversion of such drugs to the black market is a danger to public health,” stated U.S. Attorney Wagner. “The indictment alleges that the defendant prescribed thousands of highly addictive pills for his own personal profit and with complete disregard for where they would end up or who would take them.”

If convicted of the controlled substances crimes, Brown faces a maximum statutory penalty of 20 years in prison and a $1 million fine, and if convicted for the structuring, he faces 10 years in prison and a $500,000 fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory sentencing factors and the Federal Sentencing Guidelines, which take into account a number of variables.

This case is the product of an investigation by the Drug Enforcement Administration, the Internal Revenue Service-Criminal Investigation, and the Medical Board of California, California Bureau of Investigation. The case is being prosecuted by Nathan Lambert, a Fresno County Deputy District Attorney sworn in as a Special Assistant U.S. Attorney for the case, and Assistant U.S. Attorney Kathleen A. Servatius. This case is being brought as part of Operation Footprint, a nationwide law enforcement initiative that targets large drug trafficking organizations by identifying the transfer of drug proceeds through financial institutions, bulk cash smuggling and other forms of money transfers. Operation Footprint is focused on bringing criminal charges based on Bank Secrecy Act violations in addition to violations of the Controlled Substances Act and the Money Laundering Control Act. This case is also the product of the Organized Crime Drug Enforcement Task Force (OCDETF), a focused multi-agency, multijurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.

DWC Again Proposes Modifications to SJDB Regulations

A second 15-day notice of modification to the supplemental job displacement benefit regulations has been distributed to interested parties and posted to the DWC website. Members of the public are invited to present written comments regarding the proposed modifications to dwcrules@dir.ca.gov until 5 p.m., June 21.

The proposed modifications include:

  • The Physician’s Return to Work and Voucher Report (DWC-AD Form 10133.36) is modified to clarify the descriptors for the activity restrictions and to reflect that any job descriptions provided to the physician would discuss physical requirements rather than activity restrictions.
  • Section 10117 is modified to delete “employer has knowledge that the” from subdivision (b).
  • Section 10133.31 is modified to include the 60 day time frame for making an offer of work.
  • Section 10133.34 is modified to include subdivision (b) which discusses the 60 day time frame for making an offer of work.

The notice, text of the regulations, and forms can be found on the proposed regulations page.

Medicare Database Flaws Invite Medical Fraud and Abuse

A government review released on May 29 finds Medicare overwhelmed by new-medical provider information and unable to police its existing databases against the fraudulent use of taxpayer money. Government investigators found that the data systems used to catalog the records of Medicare providers were riddled with inaccurate or incomplete information. When compared, 97 percent of files studied were inconsistent.

The report, released by the Department of Health and Human Services’ Inspector General, focused on two Medicare databases that manage important provider information, the National Plan and Provider Enumeration System (NPPES) and the Provider Enrollment, Chain and Ownership System (PECOS). The HHS IG found Medicare’s databases for processing medical providers “inaccurate,” opening the door for potential waste, fraud and abuse.

The systems contain the information and identifiers of healthcare providers enrolled in Medicare and assist the government healthcare system in processing payments to those providers. The IG report found data in both systems was “often inaccurate and occasionally incomplete, and were generally inconsistent between the two databases.”

Nearly half–48 percent–of the files containing identifiers assigned to providers by the Centers for Medicare &Medicaid Services were inaccurate. PECOS, which is used to process provider information, had inaccuracies in 58 percent of its files. When provider information from both databases was compared, 97 percent of the files had conflicting information, including the addresses of providers that were billing Medicare.

The IG report also found that CMS did not verify most of the information in either database, raising the possibility that fraudulent information had been used to scam the system.

But the IG report found that, while CMS had processes in place to verify provider data, “the manner in which CMS implemented these processes impeded efforts to ensure that the databases contained accurate information.”

Faced with surging provider applications to fill the increased role of Medicare, CMS allowed for the suspension of other verification processes that may have caught inaccurate data. “The suspension of provider enrollment verification activities at a time of increased application volume could have compromised the accuracy and completeness of PECOS data, increasing the vulnerability of the Medicare program to fraud and abuse,” the IG report said.

The report also noted that CMS oversight allowed for ineffective safeguards in the verification process and suspended others to expedite the processing of provider information.

The IG report recommended stronger oversight and safeguards after noting that three out of four providers identified inaccurate data in either system.

WCJ Cris Gondak to Become WCAB Deputy Commissioner

Chairwoman Ronnie G. Caplane of the California Workers’ Compensation Appeals Board: announced that WCJ Cris Gondak has been appointed to the position of Deputy Commissioner at the Workers’ Compensation Appeals Board.

As a Deputy Commissioner, Judge Gondak will supervise the Appeals Board’s staff attorneys, train and mentor new attorneys and act as counsel to the Commissioners when necessary. She will also participate in drafting regulation, en banc and significant panel decisions as well as participate as a panelist on cases as necessary.

Judge Gondak has been a Workers’ Compensation Administrative Law Judge in Santa Rosa and Oakland since 1998. Prior to that, she was a partner at Hanna, Brophy, MacLean, McAleer and Jensen in Oakland where she began her career in workers’ compensation law in 1981. Judge Gondak received her JD from U.C. Hastings College of the Law in 1975 and her BA from Stanford University in 1971.

Chairwoman Caplan said that “Judge. Gondak is a highly respected Workers’ Compensation Administrative Law Judge for her legal acumen, knowledge, evenhandedness and well-reasoned decisions. She brings a wealth of experience and a good sense of humor to the Appeals Board. We look forward to having Judge Gondak join us on July 1, 2013.”

San Bernardino Claimant Faces Identity Theft and Perjury Charges

Roberto Carlos Mendoza-Lazo, 45, of San Bernardino, has been charged with Identity Theft and Attempted Perjury.

In Jan. 2013, the San Bernardino County District Attorney’s Office, Workers’ Compensation Fraud Unit began a criminal investigation into alleged workers’ compensation fraud committed by Mendoza-Lazo. During the course of the investigation, it was revealed that Mendoza-Lazo used the social security numbers of two individuals to obtain employment.

According to Senior Investigator Jose Guzman, who is assigned to the case, the defendant also attempted to obtain workers’ compensation benefits using the same social security numbers.

“After confirming with the Inspector General of the United States Social Security Administration that the numbers were valid and not issued to the defendant, we contacted the victims and they wanted prosecution,” Guzman said.

Investigators located Mendoza-Lazo at his place of employment in San Bernardino County where he was arrested and transported and booked into the San Bernardino County Sheriff’s Department, Central Detention Center jail.

Mendoza-Lazo was arraigned on May 31st, and pleaded not guilty to all counts. Deputy District Attorney Scott Byrd will prosecute this case. If convicted as charged, Mendoza-Lazo faces four years, two months in county prison.

DWC Says Most Injured Workers Satisfied With Medical Care

The California Division of Workers’ Compensation (DWC) released its 2013 study on access to medical care for injured workers, which finds that most workers have nearby access to providers and are satisfied with the medical care they receive.

The Labor Code requires that DWC complete annual studies to ensure workers have access to medical care. New to this year’s report are data from medical claims submitted to the Workers’ Compensation Information System (WCIS). The other source for the report, completed by the Berkeley Research Group, was a survey of workers injured in 2011 and 2012.

“We’re pleased to see that the majority of injured workers have access to needed care without barriers,” said DWC acting Administrative Director Destie Overpeck. “At the same time, this study does show that improvements are needed to increase rates of recovery and job modifications.”

This study marks DWC’s first effort to review medical claims data in order to gauge injured workers’ access issues. Previous studies conducted in 2006 and 2008 focused solely on survey data. All three studies included a survey of injured workers to measure their satisfaction with the care they received. Although survey methods differed, the findings for each survey were similar: 85 percent of the injured workers noted they were satisfied or very satisfied with their care.

WCIS uses electronic data to collect comprehensive information from claims administrators. The WCIS medical claims data indicated that the number of injured workers who obtain care from specialists rather than general practitioners is increasing, while the overall number of providers treating injured workers has not changed. Among the 500 randomly selected workers 84 percent expressed satisfaction with their main health care provider and 85 percent of those whose saw specialists were satisfied with the care they received. 7 percent of workers reported that they were denied care. 85 percent of injured workers saw a health care provider, most frequently a general practitioner, within three days of their injury. The distance traveled to the first provider visit was most frequently less than six miles (55 percent) and took less than 16 minutes (59 percent). Injured workers reported receiving care through a Medical Provider Network 85 percent of the time.

CWCI Appoints New COO and CFO

Rena B. David has been named the Chief Operations and Chief Financial Officer of the California Workers’ Compensation Institute (CWCI), the Oakland-based nonprofit organization that serves as the research and educational arm of the California workers’ compensation industry.

Ms. David joins CWCI after having served as a consultant and manager with more than 25 years of experience in finance, data systems development, product development, workers’ compensation and group health pricing, health services research and hospital operations. The majority of her experience has been at Kaiser Permanente where she managed high-level consultants and programmers supporting a variety of data coordination/development, budgeting, pricing model development and medical risk assessment projects. In the mid-1990s, she was project lead for the implementation of Kaiser’s 24-hour care product combining group health and workers’ compensation medical care in Sacramento and San Diego. She also played a key role in developing and evaluating the performance of the Kaiser Permanente/State Fund Alliance Initiative. From 2006 to 2008, she managed the California Healthcare Foundation’s “In Search of Affordability Initiative,” which included consulting on the development of a 24-hour coverage carve-out model.

A graduate of Stanford University, where she earned a bachelor’s degree in human biology, Ms. David also holds master’s degrees in business administration and public health from U.C. Berkeley. In her new position, she will be responsible for CWCI’s accounting and budgeting functions, oversee the Institute’s general administration, human resources, facilities and systems, and provide support and expertise to the Research Department on designated research projects. Commenting on Ms. David’s appointment, CWCI president Alex Swedlow said “We’re very pleased to have Rena join the Institute staff. She is a great addition to our professional team, and her technical qualifications and familiarity with key industry issues will provide CWCI with thoughtful leadership and expertise.”

Researchers Review Medical Necessity for Air Ambulance Services

Air ambulance vendors have prevailed in workers’ compensation litigation allowing them to be exempt from state adopted maximum fee schedules. Courts have found that federal law regulating air carriers preempts state law. The cost of an air ambulance transport is therefore uncontrolled, and unfettered. However, their may remain legal challenges to these fees based upon medical necessity.

Researchers at the Stanford University School of Medicine have for the first time determined how often emergency medical helicopters need to help save the lives of seriously injured people to be considered cost-effective compared with ground ambulances. The researchers found that if an additional 1.6 percent of seriously injured patients survive after being transported by helicopter from the scene of injury to a level-1 or level-2 trauma center, then such transport should be considered cost-effective. In other words, if 90 percent of seriously injured trauma victims survive with the help of ground transport, 91.6 need to survive with the help of helicopter transport for it to be considered cost-effective. The study, published online in the Annals of Emergency Medicine, does not address whether most helicopter transport actually meets the additional 1.6 percent survivorship threshold.

The study summarized in an article in Science Daily, comes at a time when finding ways to cut medical costs has become a national priority, and the overuse of helicopter transport has come under scrutiny. Previous studies have shown that, on average, over half of patients transported by helicopter have only minor, non-life threatening injuries. For these patients, transport by helicopter instead of ground ambulance is not likely to make a difference in outcomes, and the additional risk and cost of helicopter transport outweighs the benefit, the study’s lead author, M. Kit Delgado, MD, MS,said.

In 2010, there were an estimated 44,700 U.S. helicopter transports from injury scenes to level-1 and level-2 trauma centers, with an average cost of about $6,500 per transport. The total annual cost is around $290 million. (Level-1 and -2 trauma centers are hospitals equipped and staffed to provide the highest levels of surgical care to trauma patients; level-1 centers offer a broader array of readily available specialty care, and also are committed to research and teaching efforts.)

Yet emergency helicopter transport sits in a cost-efficiency conundrum: It is most needed in remote, rural areas where transport by ground can take far longer than by air. These areas also tend to have sparser populations and therefore fewer calls for aid, making it difficult to recoup the overhead costs of maintaining helicopter services, Delgado said. In some areas of the country, however, helicopters are automatically launched based on the 911 call. “Once ground responders and the helicopter arrive, sometimes they may find patients who are awake, talking and have stable vital signs,” Delgado said. “The challenge is getting helicopters to patients who need them in a rapid fashion so the flight team can intervene and make a difference, but also know based on certain criteria who isn’t sick enough to require air transport.”

There is mixed evidence in the literature about the degree to which helicopter transport reduces mortality. It is therefore uncertain whether the routine use of helicopter transport is cost-effective for most patients in the United States when ground transport is also feasible. The study found that the cost-effectiveness also depends on regional variation in the costs of air and ground transport and the percentage of patients who are flown that have minor injuries.