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Liberty Mutual Reports 31% Income Decline

Liberty Mutual reports first-quarter net income fell 31 percent, impacted by the devaluation of Venezuela’s currency and premium declines primarily in Workers’ Compensation.The Boston-based company reports a $141 million drop in net income to $318 million. The combined ratio improved 2.6 points to 98.3 thanks to overall premium increases and light catastrophe losses.

Speaking during a conference call CEO David H. Long notes the company is shedding poorly-performing accounts on rate increases while keeping retentions in the mid-80s and growing new business. He says premium growth came in the personal and global specialty lines where rates rose more than 6 percent.
The devaluation of the Venezuela bolivar in February resulted in $223 million in realized losses, he says. However, he expects much of that loss to reverse itself over the year with the addition of premium.

On Workers’ Comp, net written premium decreased $238 million resulting from a decline in new business and a reduction of 29 percent in exposures resulting from disciplined underwriting. Rate increases of 10 percent partially offset the drop.

Long says the increases were significantly higher in the middle market. Commercial insurance Property and Casualty premium declined 11.6 percent in the quarter because of workers’ comp, and excluding rate increases, exposures declined 18 percent. With the actions the company has taken, he says commercial is becoming more profitable each month. The first-quarter combined ratio for commercial improved 8 points over last year to 101.6.

Long says prices escalated across all lines of business, led by workers’ comp and property, amounting to more than 9.3 points of rate increase compared to 6.6 points of increase during 2012’s first quarter. “We think we are on the right track and we will stick with our plan,” says Long. “We will continue to grow where we can do so profitability and walk-away from underpriced risk.”

Study Says Antibiotics Could Cure 40% of Chronic Back Pain

Surgeons in the UK and elsewhere are reviewing how they treat patients with chronic back pain after scientists discovered that many of the worst cases were due to bacterial infections. The finding means that some patients with unrelenting lower back pain mayl no longer face major operations but can instead be cured with courses of antibiotics. One of the UK’s most eminent spinal surgeons said the discovery was the greatest he had witnessed in his professional life, and that its impact on medicine was worthy of a Nobel prize. “This is vast. We are talking about probably half of all spinal surgery for back pain being replaced by taking antibiotics,” said Peter Hamlyn, a consultant neurological and spinal surgeon at University College London hospital.

Specialists who deal with back pain have long known that infections are sometimes to blame, but these cases were thought to be exceptional. That thinking has been overturned by scientists at the University of Southern Denmark who found that 20% to 40% of chronic lower back pain was caused by bacterial infections.

“This will not help people with normal back pain, those with acute, or sub-acute pain – only those with chronic lower back pain,” Dr Hanne Albert, of the Danish research team, told the Guardian. “These are people who live a life on the edge because they are so handicapped with pain. We are returning them to a form of normality they would never have expected.”

The Danish team describe their work in two papers published in the European Spine Journal. In the first report, they explain how bacterial infections inside slipped discs can cause painful inflammation and tiny fractures in the surrounding vertebrae. Working with doctors in Birmingham, the Danish team examined tissue removed from patients for signs of infection. Nearly half tested positive, and of these, more than 80% carried bugs called Propionibacterium acnes. The microbes are better known for causing acne. They lurk around hair roots and in the crevices in our teeth, but can get into the bloodstream during tooth brushing. Normally they cause no harm, but the situation may change when a person suffers a slipped disc. To heal the damage, the body grows small blood vessels into the disc. Rather than helping, though, they ferry bacteria inside, where they grow and cause serious inflammation and damage to neighboring vertebrae that shows up on an MRI scan.

In the second paper, the scientists proved they could cure chronic back pain with a 100-day course of antibiotics. In a randomized trial, the drugs reduced pain in 80% of patients who had suffered for more than six months and had signs of damaged vertebra under MRI scans.

Albert stressed that antibiotics would not work for all back pain. Over-use of the drugs could lead to more antibiotic-resistant bacteria, which are already a major problem in hospitals. But she also warned that many patients will be having ineffective surgery instead of antibiotics that could alleviate their pain.”We have to spread the word to the public, and to educate the clinicians, so the right people get the right treatment, and in five years’ time are not having unnecessary surgery,” she said.

Hamlyn said future research should aim to increase the number of patients that respond to antibiotics, and speed up the time it takes them to feel an improvement, perhaps by using more targeted drugs.

Many medical guidelines don’t consider costs

Medical treatment under the California workers’ compensation system must be based upon evidence based medicine, that is, treatment that is recommended in published peer reviewed treatment guidelines. But, a new study shows how those guidelines may not consider costs as part of the equation.

According to the article in Reuters Health, researchers found that just over half of the top medical societies with at least 10,000 members considered costs when developing best practices. The other half either implicitly considered costs or didn’t address them at all.

“Even when they said they looked at costs, they didn’t seem to have a clear, consistent or rigorous way to do so,” said Dr. Steven Pearson, the study’s senior author and a visiting scientist in the Department of Bioethics at the National Institutes of Health in Bethesda, Maryland. Pearson and his colleague Dr. Jennifer Schwartz write in JAMA Internal Medicine that while a lot of debate has focused on the cost of healthcare in the U.S., few researchers have looked at whether professional societies develop their treatment recommendations with costs in mind.

Clinical guidelines are often crafted by professional medical societies to help doctors decide which therapies are best for certain conditions. But saying a treatment is not worth the cost may spark fears of care rationing. “It’s obviously very controversial about when costs should be included in the discussion of healthcare,” Pearson said.

But the professional practice recommendations may factor into reimbursement policies among organizations that pay for treatment, like the Centers for Medicare and Medicaid Services.

For the new study, the researchers examined the publicly available clinical guidelines issued by the 30 largest U.S. medical societies between 2008 and 2012 to see which ones discussed costs. More than half – 17 of the 30 societies – explicitly included costs in their discussion of clinical guidelines, four at least implicitly considered costs, three purposely excluded costs and six did not mention prices. The researchers then examined the 279 guidelines published by the 17 societies that included costs in their decisions. Based on that review, they found nine had a formal evaluation system for costs. The other eight societies had several methods to evaluate costs or didn’t mention their process. “I think it’s encouraging the societies are now starting to include costs into their guidelines. And when they decide not to, I think it’s important to be transparent about that,” said Schwartz, a research fellow in the NIH Department of Bioethics.

Dr. Joseph Drozda, from the Center for Innovative Care at Mercy in Chesterfield, Missouri, said he believes more and more societies will be including cost analyses in their guidelines. “(The researchers) caught it on the upslope so I think we’re going to see more attention to cost in guidelines,” said Drozda, the chair of the American College of Cardiology Foundation’s Clinical Quality Committee who wrote a commentary accompanying the new study. “I think clearly there is – over time – more of an interest in incorporating cost issues into guidelines,” said Dr. Steven Weinberger, executive vice president and CEO of the American College of Physicians in Philadelphia. “What a lot of organizations are doing – and certainly what we’re doing – is recognizing that there are so many areas of overuse and misuse of care,” said Weinberger, who has written about cost-conscious care but was not involved in the new research. He added that the discussion of costs in healthcare is not about rationing, but finding which treatments offer the best value. “I would really like to see a much more open dialogue between physicians and patients about costs,” Weinberger said.

Medical-Legal Lien Claimants Cannot Avoid Activation Fees

A new WCAB en banc decision in the case of Luis Martinez vs Ana Terrazas held that a medical-legal lien claimant cannot avoid the lien activation fee by pursuing their fees as “costs” under Labor Code 5811.

On April 18, 2011, applicant Luis Martinez resolved his claim against Ana Terrazas and Allstate Insurance Company by compromise and release. On August 8, 2011, New Age filed a lien for copying and related expenses. The billings submitted with the lien show that the expenses claimed were for subpoenaing and copying various records at the request of applicant’s attorney, namely: (1) the records of applicant’s employer on September 28, 2009, (2) the records of Dr. Zaragaff on October 12, 2009, (3) the records of the U.S.C. Medical Center on September 21, 2009, (4) the records of the Law Office of Lionel Quiroz on September 16, 2009, (5) the records of the WCIRB on July 26, 2010,3 and (6) the records of Specialty Risk Services (defendant’s claims administrator) on June 16, 2011.

After January 1, 2013, the effective date of Senate Bill 863 but prior to any lien proceedings, New Age withdrew its lien and in lieu of it filed a petition for costs under Labor Code section 5811 for the same expenses it previously sought to recover by its lien, apparently in an attempt to avoid payment of a lien activation fee under section 4903.06. The WCJ denied the petition for costs, determining that New Age could not “abrogate” its obligation to pay the lien activation fee. New Age appealed.

The WCAB in the en banc decision held that section 5811 “costs” do not include costs and expenses that are governed by other specific statutory schemes. The Legislature has established an extensive statutory scheme for claimed medical-legal expenses. In light of the specific statutory framework established by the Legislature for pursuing claims of medical-legal expenses, the WCAB concluded that medical-legal expenses cannot be sought through the filing of a petition for costs under section 5811. “[I]t would be an abuse of discretion to permit medical-legal expenses to be claimed under section 5811.”

“However, given the uncertainty in the law when New Age withdrew its lien and given that its lien was never formally dismissed, we will deem its lien reinstated. This reinstatement principle shall be applied to lien claimants in other cases who withdrew their liens and filed petitions for costs on or before the issuance date of this decision, if their liens have not been dismissed.”

The WCAB went on to note that although “the case presently before us relates to copy service expenses claimed through a medical-legal lien filed before January 1, 2013 under former section 4903(b), we emphasize that this holding applies to all medical-legal expense claims, regardless of: (1) whether a pre-January 1, 2013 lien was filed; (2) when the claimed medical-legal expenses might have been incurred; or (3) the nature of the medical-legal expenses claimed.”

Employers Names Bradley Hatfield as Vice President of Underwriting

EMPLOYERS® has named Bradley N. Hatfield vice president of underwriting for Strategic Partnerships and Alliances. With more than 25 years of experience in the insurance industry, he brings to EMPLOYERS underwriting and risk management experience from various regional and corporate roles throughout his career. Hatfield’s experience in insurance management, workers’ compensation, strategic planning and implementation, and a diverse background in underwriting, marketing, loss control, product development and project management are just some of the assets that he will bring to EMPLOYERS. He will be based out of EMPLOYERS’ office in Glendale, California.

Hatfield joins EMPLOYERS from National Specialty Underwriters of Bellevue, Wash. where he was responsible for the creation and growth of medical professional liability underwriting programs at NSU, and helped develop three programs: small medical facility and allied healthcare binding authority; diagnostic imaging; and correctional medicine.

Employers Holdings, Inc. is headquartered in Reno, Nevada and listed on the New York Stock Exchange. EMPLOYERS is a holding company with subsidiaries that are specialty providers of workers’ compensation insurance and services focused on select small businesses engaged in low-to-medium hazard industries. The company, through its subsidiaries, operates coast to coast. Insurance is offered by Employers Insurance Company of Nevada, Employers Compensation Insurance Company, Employers Preferred Insurance Company, and Employers Assurance Company, all rated A- (Excellent) by A.M. Best Company.

Fraud in CalPERS Medical Program Costs Millions Annually

The Sacramento Bee reports that CalPERS is moving to strike from government health care rolls tens of thousands of people it believes are mistakenly or fraudulently receiving benefits. The fund, which is the second-largest health care purchaser in the nation after the federal government, figured last year that removing an estimated 29,000 wrongly listed children, spouses and domestic partners of government employees would save approximately $40 million annually. And one industry expert said CalPERS may have underestimated that 4 percent of the 739,000 dependents now on CalPERS’ medical plans don’t qualify for coverage.”Based on our experience, that 29,000 is a very conservative number,” said Karen Frost, a benefits administration expert at human resources firm Aon Hewitt. The global company has audited insurance eligibilities of nearly 10 million people in both public- and private-sector medical plans. CalPERS spends $7 billion annually on health care for 1.4 million state and local government employees, retirees and their families.

Most ineligible dependents wind up on insurance rolls because of honest mistakes, experts say. In many of those cases, children aren’t dropped when they should be, currently at age 26. Employees sometimes mistakenly continue covering spouses and ex-domestic partners who don’t qualify as dependents even if a court orders they must receive continued medical coverage. Ex-stepchildren aren’t eligible, either.

The new process will require verification of every dependent on CalPERS’ rolls. The agency expects the state’s human resources department and local governments “will take steps to ensure dependents enrolled in our health plans are eligible,” Madison said, “as will CalPERS.” The law allows the system and government employers who purchase medical coverage through it to drop anyone who shouldn’t be receiving medical benefits and retroactively recover costs.
CalPERS last month sent 390,000 letters to health subscribers carrying dependents on their plans, asking them to voluntarily drop ineligible beneficiaries by June 30. After that, members will have to send documents proving their dependents’ eligibility and could face penalties if they can’t.

And while the law allows insurers to go after subscribers who fraudulently add ineligible dependents to their health insurance, they rarely do.The University of California last summer found that 5 percent of dependents shouldn’t be on their employees’ plans. Removing them saved the system $35 million. The UC system didn’t offer amnesty, said spokeswoman Shelly Meron, and it didn’t impose penalties on any employees with ineligible dependents on the rolls. Recouping months or years of premiums paid by employers for ineligible dependents can be a difficult exercise, said Frost, the Aon Hewitt’s eligibility expert. “We see very few employers do that, less than 5 percent,” Frost said. “It’s just a very messy process to look retroactively and figure out the point at which someone should never have been covered.”

And proving fraud can be a high bar to clear, said Dennis Jay, executive director of the Washington, D.C.-based Coalition Against Insurance Fraud. “Most systems give the benefit of the doubt,” Jay said. “For example, if someone gets divorced and keeps the ex-spouse on the plan when they shouldn’t have, that’s pretty innocent stuff.”

CalPERS spokeswoman Rosanna Westmoreland cited a law that makes it a crime to improperly obtain a benefit – including health insurance – by making a false statement. Anyone convicted of that misdemeanor may be liable for paying reparations.

CalOSHA Investigates Contra Costa Fatality

State officials are investigating the death of a 26-year-old worker who was crushed in an industrial mixer Monday at a Contra Costa County manufacturing company, a Cal-OSHA spokeswoman said.

The Contra Costa Times reports that David Eleidjian, 26, of Antioch, a temporary employee working for an out-of-state company at Henkel Corporation in Bay Point, was fatally injured in the incident, according to the Contra Costa County Coroner’s Office and Cal-OSHA spokeswoman Erika Monterroza.

Rescue workers from the Contra Costa Fire Protection District were called to the Henkel facility, at 2850 Willow Pass Road, for a report of someone injured by machinery about 11:19 a.m. Monday, according to fire spokesman Steve Aubert. Emergency crews found a man suffering from major injuries and took him to John Muir Medical Center in Walnut Creek, where he later died. About 11:30 a.m., Cal-OSHA representatives were informed of the incident at Henkel, visited the site and opened an investigation, Monterroza said.

Eleidjian, who worked for Tennessee-based HR Comp LLC, was operating an industrial mixing machine when he was caught and crushed. His legs were amputated, but he died from his injuries late Monday afternoon, she said.

Cal-OSHA began a site analysis and will next interview the employers and anyone who witnessed the incident. If a serious violation is found to have taken place, the employers face a maximum $25,000 fine. If a willful violation is found to have occurred, the employers face up to a $75,000 fine. The state agency has up to six months to complete its investigation.

California Lien Collection Company Sued in Washington Fraud Case

A Washington state law firm has accused one of the region’s largest health care providers and a California collections agency of conspiring to defraud Pierce County accident victims by using liens to increase money recouped for providing medical treatment. The firm of Pfau Cochran Vertetis Amala last week sued Tacoma-based MultiCare Health System and Hunter Donaldson of Brea, Calif. Hunter Donaldson employees Rebecca Rohlke and Ralph Wadsworth also are named as defendants. The News Tribune story says that the suit was filed on behalf of five Pierce County residents who contend they suffered monetary losses as a result of the alleged fraud. The five, Velma Walker, James Stutz, Karl Walthall, Gina Cichon and Melanie Smallwood, seek unspecified damages.

The law firm, which has offices in Seattle and Tacoma, said in a statement that there potentially are thousands of other victims and that it will seek to have the lawsuit certified as a class action.”MultiCare has a lot of explaining to do,” plaintiff’s attorney Darrell Cochran said this week. “This hospital group touts itself as a consumer award winner, all the while they are violating the most basic consumer rights we have.”

MultiCare, which operates Tacoma General Hospital and Mary Bridge Children’s Hospital and Health Center, among other facilities, issued a statement Wednesday through spokeswoman Marce Edwards. “MultiCare Health System takes these allegations very seriously,” the statement reads. “We have commenced an investigation into the specific allegations that are listed in this complaint. Until we know all of the facts and have fully investigated the concerns raised, MultiCare has temporarily suspended the enforcement of all medical liens issued on its behalf by Hunter Donaldson. We will meet with representatives from Hunter Donaldson as soon as possible.”

The dispute is over a section of Washington law that allows some medical providers, including doctors and hospitals, to place a lien against money an accident victim might get from successfully suing or settling with the person responsible for his or her injuries. The purpose of the lien is to ensure that the medical providers would be paid for services rendered. The plaintiffs allege that MultiCare and Hunter Donaldson, which MultiCare hired to manage its third-party collections, conspired to use the law to unfairly enrich themselves.

MultiCare stands to gain more money by using liens to recoup its costs from money its patients obtain through a lawsuit or settlement than it does from billing insurance, Cochran said. Such practices often leave accident victims with no money once they pay their medical bills, even if they gained cash for pain and suffering and other costs, he said. “Injured accident victims who go to MultiCare’s hospitals and clinics are being kept in the dark about MultiCare’s intentions to never bill their insurance but instead to try to get more money from the injured victims’ later recovery,” said plaintiffs’ attorney Tom Gallagher.

Nanomedicine Now Supported by Top Drug Companies

Is nanomedicine the next big thing? A growing number of top drug companies seem to think so. Reuters Health reports that the ability to encapsulate potent drugs in tiny particles measuring billionths of a meter in diameter is opening up new options for super-accurate drug delivery, increasing precision hits at the site of disease with, hopefully, fewer side effects.

Three deals struck this year by privately held Bind Therapeutics, together worth nearly $1 billion if experiments are successful, highlight a new interest in using such tiny carriers to deliver drug payloads to specific locations in the body. U.S.-based Bind is one of several biotechnology firms that are luring large pharmaceutical makers with a range of smart drug nanotechnologies, notably against cancer.

And nanomedicine is also being put to work in diagnosis, with tiny particles used to improve imaging in scanners, as well as rapidly detecting some serious infections. In the future, researchers hope to combine both treatment and diagnostics in a new approach dubbed “theranostics” that would allow doctors to monitor patients via their medicines.

After much hype but limited clinical success, scientists in the nanotechnology field finally see a turning point. “We have been hearing about the promise of nanomedicine for a long time, but it is now really starting to move,” said Dan Peer, who runs a nanomedicine laboratory at Tel Aviv University. “There is a new level of confidence in this approach among the big pharmaceutical companies … We will see more and more products in clinical testing over the next few years and I think that is very exciting.”

Nanoparticles made of polymers, gold and even graphene – a newly-discovered form of carbon – are now in various stages of development. In cancer alone, 117 drugs are being assessed using nanoparticle formulations, though most have yet to be tried on patients, according to Thomson Reuters Pharma data.Other potential applications include treatments for inflammatory disorders, heart and brain diseases, and pain.

Companies are increasingly focused on better drug targeting to increase efficacy and lessen the collateral damage caused by medicinal “carpet bombing” – a particular problem in cancer, where toxic compounds are needed to kill tumors. The work on drug-carrying nanoparticles parallels advances in using so-called “armed antibodies” to deliver drugs direct to cancer cells – an approach championed by Roche. The Swiss group won U.S. approval in February for Kadcyla, its first such antibody-drug conjugate, which treats breast cancer with fewer side effects like hair loss. “All these developments have prompted companies to look at new avenues because the older ways of using drugs haven’t worked so well,” said Robert Langer, a pioneer of nanomedicine who runs the world’s largest biomedical engineering laboratory at the Massachusetts Institute of Technology.

California Assembly Overwhelmingly Passes Out-Of-State Athlete Bill

Controversial legislation that would restrict most professional athletes from out-of-state teams from filing claims in California workers’ compensation courts won overwhelming approval Thursday in the state Assembly. The Los Angeles Times reports that despite aggressive lobbying by professional football players and other athletes, the bill, AB 1309, passed 61 to 4. The measure now goes to the state Senate.

“Our workers’ compensation system has been increasingly exploited by out-of-state professional players at the expense of California teams and all California businesses,” said the bill’s author, Assemblyman Henry T. Perea (D-Fresno). “The flood of claims are raising insurance costs for all employers.”

The story in the Los Angeles Times says that player unions and their labor backers said they were disappointed with the lopsided vote and vowed to continue fighting the bill as it moves through the Legislature.

Perea and supporters of his bill – the five major professional sports leagues and individual franchise owners – contended that some California workers’ compensation courts have been swamped by claims from retired football players and, more recently, retirees from basketball, hockey and baseball teams.

California’s century-old workers’ compensation system has turned into a magnet for out-of-state claims because it has the power to approve financial payouts and lifetime medical care for long-term injuries that are not available in other states. California’s liberal statute-of-limitation interpretation makes it relatively easy for older athletes to make claims, sometimes years after they stopped playing. The athletes typically have been seeking compensation for so-called cumulative trauma. These injuries don’t stem from a specific incident, such as a broken bone or ripped tendon. Trauma, rather, is caused by the accumulated wear and tear on the body after years of rough play.

Opponents of the bill say it would give billionaire team owners an opportunity to sidestep their responsibility for caring for their injured former players. “The truth is AB 1309 makes it impossible for professional athletes to receive workers’ compensation they collectively bargained,” said a statement released by the labor coalition trying to defeat the bill. “There is no loophole. Those players paid taxes in California, and California provides a forum for workers’ comp cases to be heard.” The bill, opponents added, unfairly singles out pro athletes but also sets a precedent that could later restrict coverage for people in other professions whose traveling to California contributed to an eventual cumulative trauma.

A.B. 1309 specifies that the “amendments made to this section by the act adding this paragraph apply to all pending claims for benefits pursuant to this division that have not yet been adjudicated.”

AB 1309 will now be considered by the state Senate and if passed it will move to the governor for signature before it becomes law..