Author: WorkCompAcademy

The thorny issue of what defines an employee became a focus of a session on workers’ compensation at the California Hispanic Chambers of Commerce convention Friday in Riverside according to the report in the Press Enterprise.

The issue matters because there is a high percentage of small businesses owned by Latinos in the state and an increasing number of independent contractors.

The status of drivers for transportation provider Uber and some trucking companies has been questioned.

“I’ve done five or six trials this year alone, all trucking companies with the truck drivers as independent contractors, and in each case they turned out to be employees,” said Dora Padilla, workers’ compensation judge at the San Jose Workers’ Compensation Appeals Board and a panelist in the session.

A lot of business owners aren’t sure what their obligations are to their workers, she said.

“I find a lot of problems where employers come in, and I believe them when they say, ‘My attorney or my insurance person or my next door neighbor or my tio, they told me I can do this and have this person be an independent contractor and, no, I don’t have workers’ comp insurance.'” And a person has gotten hurt. “It never fails it’s some catastrophic injury.”

Employers are required to carry workers’ compensation insurance to pay for treatment for employees who sustain physical or psychological injuries on the job.

According to Padilla’s presentation, a hirer is working with an independent contractor when the hirer:

1) Lacks control over detail.

2) Has no right to terminate the relationship.

3) Makes payments by contract price.

4) Does not furnish tools or materials.

5) Does not have control over working hours.

Calling employees independent contractors can have consequences, said Yvonne E. Lang, a partner with Pearlman, Borska & Wax.

“Payroll fraud ” don’t do it! … And if it is an independent contractor, you’d better have a contract.”

The California Attorney General Kamala D. Harris announced that California, along with 34 other states and the District of Columbia, has filed a lawsuit against Indivior, a British pharmaceutical company, and MonoSol, an Indiana film technology company, for antitrust violations.

The complaint, filed in U.S. District Court for the Eastern District of Pennsylvania, alleges that Indivior and MonoSol engaged in a multi-pronged “product-hopping” scheme to block competition to Suboxone, an opioid addiction treatment, ultimately generating almost one billion dollars in undeserved profits. In this kind of scheme, pharmaceutical companies try to maintain profits generated via a monopoly by slightly reformulating their product in a way that blocks generic competitors without offering any significant medical or therapeutic advantages to patients.

“When prescription drug companies unlawfully manipulate the marketplace to maximize profits, they put lives at risk and drive up the cost of healthcare for everyone. Indivior and Monosol flagrantly violated the law, deceiving doctors and patients and shutting down generic competition in order to rake in profits,” said Attorney General Harris. “These companies must be held accountable for this unlawful scheme that cost the public nearly a billion dollars and hampered fair competition in the marketplace.”

Indivior, then known as Reckitt Benckiser, was granted FDA approval in 2002 for Suboxone tablets, along with exclusive rights to sell the drug for seven years based on representations that it was unlikely to recover its investment in the drug. During this time, Indivior generated over a billion dollars in sales of the Suboxone tablets.

When its exclusive rights expired in 2009, the company was faced with potential competition expected to eliminate 80% of its profits from Suboxone tablets within a year. Indivior, with MonoSol’s assistance, thwarted that competition by switching the form of Suboxone from tablet to film. It falsely claimed the tablets presented pediatric safety issues, made unfounded claims to physicians that tablets were dangerous, and raised the price of its tablet while lowering the price of the film. Through these actions, Individior was able to maintain artificially high prices for Suboxone, depriving the state and consumers of the benefits of lower prices that come with competition.

The complaint alleges that the conduct and agreement between Indivior and Monosol constitutes monopolization, conspiracy to monopolize, and illegal restraint of trade in violation of federal antitrust laws as well as of California’s Cartwright Act and Unfair Competition Law. The complaint seeks to require Indivior to pay back any profits that resulted from the illegal conduct – disgorgement – and includes injunctive relief to ensure the conduct is not continued or repeated.

Indivior said in a statement that it would continue to “vigorously defend” its position.

Members on both sides of the aisle were not buying Mylan Pharmaceuticals CEO Heather Bresch’s defense during a House Committee on Oversight and Government Reform hearing Wednesday according to the story published in the Daily Caller.

Her company’s move to increase the cost of EpiPens by more than 400 percent since 2007 has raised the ire of the entire country.

“I know there is considerable concern and skepticism about the pricing,” she told the panel. “I think many people incorrectly assume we make $600 off each EpiPen. This is simply not true.”

Bresch, the daughter of Democratic West Virginia Sen. Joe Manchin, said the company makes roughly $50 off each of the life-saving allergy shots and adamantly denied her mother, Gayle Manchin’s position on the National Association of State Boards of Education was used to boost sales.

Ranking Member Elijah Cumming, a Maryland Democrat, blasted Bresch’s prepared testimony, saying he was “not impressed” and believes it’s wrong to get “filthy rich” by exploiting the company’s monopoly on the market.

“They use the simple, but corrupt business model that other drug companies have repeatedly used: find an older, cheap drug that has virtually no competition, and then raise the price over and over and over again,” he said.

The embattled CEO argued she didn’t anticipate the financial burdens patients would face due the the sharp rise in costs, adding the company plans to put out a generic version at half the cost.

“You never anticipated this? You raised the price, what did you think was going to happen?” Questioned Chairman Jason Chaffetz, a Utah Republican.

While Bresch maintained the drug is not as profitable as members might believe, she increased her salary by a whopping 671 percent over the course of eight years – racking in a whopping $18,931,068 in 2015.

“I’m a very conservative pro-business Republican, but I am sickened by what I have heard today,” Tennessee Republican Rep. John Duncan said, adding he is disgusted she was profiting “on the backs of sick children.”

Democratic Rep. Bonnie Coleman of New Jersey slammed Bresch for flying to the hearing on a private jet and the company’s decision to move its headquarters overseas to lower its tax rates. “This is a sham and a shell, and it’s really sad to hear this,” Coleman told the CEO.

The EpiPen, an auto-injector used to reverse life-threatening allergic reactions, is inextricably tied to Bresch, whose ascension at the company tracks with the product’s rapid growth. Bresch first adopted EpiPen in 2007, when Mylan purchased the generic drugs division of Germany’s Merck KGaA for $6.7 billion. It was a milestone for the growing company, and then-CEO Robert Coury appointed Bresch to sort out the integration.

It was unremarkable in business terms: a plastic device that, with the push of a button, injected what Bloomberg has estimated to be about a dollar’s worth of the generic hormone epinephrine to treat deadly anaphylactic shock.

It sold for about $57 back then and made just $200 million a year for Merck KGaA, accounting for less than 5 percent of the company’s generics revenue at the time. The price was increased about 400% to about $600 after the acquisition.

A U.S. congressional committee has launched an examination of the Food and Drug Administration’s criminal office, raising questions about the unit’s management and handling of cases involving food, drugs and devices.

According to the story reported by Reuters Health, the House Energy and Commerce Committee told FDA Commissioner Robert Califf it is “examining management concerns” and “possible morale concerns with the field offices” of the Office of Criminal Investigations. The September 20 letter, signed by committee chairman Fred Upton and Tim Murphy, chairman of the Subcommittee on Oversight and Investigations, seeks answers to a detailed list of questions by October 12.

An FDA spokeswoman said the agency received the letter and will respond to the committee directly.

The House questions come two weeks after Reuters reported how some FDA agents complain criminal office managers have forced them to pursue cases involving mislabeled foreign-imported injectable drugs, at the expense of cases with more potential to protect the public health.

Current and former agents complain they have turned into the “Botox Police,” spending thousands of hours chasing doctors who purchased authentic versions of Allergan’s anti-wrinkle drug that were labeled for use in other countries.

Some agents say their efforts have done little more than protect the pharmaceutical industry’s high drug prices in the United States.

Those concerns come as the criminal office has had mixed success in bringing cases. From fiscal year 2008-2015, Reuters found, more than half of all opened OCI cases were closed without action.

The House committee asked Califf to explain the process for how criminal cases get opened, and to provide statistics on OCI’s arrests, convictions, case initiations and amount of money recovered.

The House committee letter also questions how the FDA responded to two prior reports, from the Government Accountability Office and the Health and Human Services Office of the Inspector General, that were critical of the criminal office.

The 2012 OIG report cited problems with how the Rockville-based office is run and concluded that field offices “lack the discretion” to open cases to address “food and drug concerns prevalent in their locales.”

The report cited a lack of independence within the FDA’s criminal office. OCI is housed within the Office of Regulatory Affairs, which is responsible for compliance inspections and helps determine the criminal office’s budget. The inspector general recommended structural changes to “ensure the independence of investigations.”

FDA leadership at that time rejected those suggestions.

The criminal office headquarters controls the opening of investigations. Some agents have questioned the office’s priorities and say they have, on occasion, been told not to open cases involving other federal agencies.

A September 2015 email from Robert West, the recently retired Special Agent in Charge of the Miami field office, is one example. West, in the email, contended agencies including the FBI, the HHS OIG and Homeland Security investigators “were riding our coattails and were not bringing anything to the table.” Involving those agencies in an investigation from day one, he wrote, “is unacceptable.”

Former San Diego Chargers great Ron Mix, a member of the Pro Football Hall of Fame, pleaded guilty in federal court in Missouri to a tax fraud charge stemming from his post-football career as a California workers compensation lawyer.

Mix has been a successful workers compensation lawyers since his retirement from the game. Many of his clients are former professional athletes who made claims for injuries suffered during their playing days, usually years after their careers ended. Mix filed about 300 such cases in the final month before the law changed in late 2013, according to news reports at the time. But this federal criminal case was prosecuted in Kansas City because some of the clients referred to Mix lived in the Western District of Missouri. None of their names was released.

According to the plea agreement filed in federal court attorney Mix admitted the following, “Between October 18, 2010 and December 16, 2013 in the Western District of Missouri and elsewhere, the defendant, RONALD JACK MIX (“MIX”), doing business as the LAW OFFICES OF RON MIX, entered into an arrangement whereby INDIVIDUAL F, who is not an attorney, would refer professional athletes to MIX and the LAW OFFICES OF RON MIX, so that defendant, MIX, could file workers’ compensation claims in the state of California on behalf of these former professional athletes. MIX then agreed to make donations to a charity as directed by INDIVIDUAL F. The charity was THE SIXTH MAN FOUNDATION d/b/a PROJECT CONTACT AFRICA (“PCA”), a federally-registered tax exempt 501(c)(3) charity. The individuals referred were in need of the services provided by MIX, he was well-qualified to perform these services, and he properly performed the services to the individuals who were referred.”

“MIX admits that he wrote checks out of his personal bank account and his law firm’s bank account to the charity as directed by INDIVIDUAL F while the latter made referrals of potential workman’s compensation cases. These donative payments ranged anywhere from $5,000 to $25,000. Mix admits that some of the professional athletes referred to him by INDIVIDUAL F, resided in the Western District of Missouri, so that he could file workers’ compensation claims in the state of California on their behalf, which was a proper venue under California law.”

“MIX admits that from 2010 through 2013, he made approximately $155,000 in donations for client referrals.”

“MIX also admits that the payments to PCA were listed as “charitable contributions” on his Form 1040s, U.S. Individual Income Tax Returns, for calendar years 2010, 2011, 2012, and 2013.” However you cannot make a charitable contribution that is deductible when you get something back in return.

Jean Paul Bradshaw, Mix’s lawyer in Kansas City said Mix was told that the referrals would stop unless he donated more and more money to the charity. Prosecutors said that Mix’s donations ranged between $5,000 and $25,000.

The practice of paying a non-lawyer a fee for a referral is known as “capping,” and is illegal in California.

Mix’s guilty plea was reported to the State Bar Court on August 3, 2016.

This September the State Bar Court issued an interim suspension order that reads “Since respondent Ronald Jack Mix, State Bar Number 49663, has been convicted of violating title 26 United States Code section 7206(1) (filing a false income tax return), a felony that involves moral turpitude, it is ordered pursuant to Business and Professions Code section 6102 that respondent be suspended from the practice of law effective September 26, 2016, pending final disposition of this proceeding.”

He has not yet been sentenced in his federal criminal case.