Author: WorkCompAcademy

The Department of Industrial Relations and its Division of Workers’ Compensation released their 2016 report on the progress in implementing Governor Brown’s 2012 workers’ compensation reforms. The report updates the efforts to improve benefits for injured workers while moderating rapidly increasing costs for employers.

“The primary goals of the 2012 workers’ compensation reforms were to increase benefits and improve medical care for injured workers, and to control costs for employers,” said Labor and Workforce Development Secretary David M. Lanier. “While significant progress toward meeting the goals sought by the Governor and the Legislature has been achieved, the department is pushing ahead to further reduce costs in the system by developing an evidence-based drug formulary and improved anti-fraud efforts.”

SB 863: Assessment of Workers’ Compensation Reforms is DIR’s third annual report since the law took effect on January 1, 2013. The changes in SB 863 (De León) include the use of evidence-based medicine to guide treatment decisions, treatment dispute settlements by independent medical reviewers, and improved workers’ access to network physicians. This year’s update includes:

1) Savings continue to be realized. Updated annual estimates of savings from reforms by the Workers’ Compensation Insurance Rating Bureau (WCIRB) are about $600 million greater than initially estimated. In May, the California Insurance Commissioner approved the advisory pure premium rates proposed by the WCIRB, rates that average $2.30 per $100 of payroll, effective July 1. These rates are, on average, 5 percent less than the industry average for filed pure premium rates as of January 1, 2016, and 10.4 percent less than the average of the approved January 1, 2016, advisory pure premium rates of $2.57.
2) Projected average medical costs per claim (excluding medical cost containment expenses) decreased by about 8 percent between 2011 and 2015.
3) Benefits for workers also improved. Permanent disability benefits to injured workers increased approximately 30 percent, and more than $41 million in Return to Work supplemental payments has been disbursed to eligible workers whose benefits are disproportionately low in comparison to their earnings losses.
4) A focus on evidence-based medicine has had wide-ranging impact, reducing costs and unnecessary treatment and creating an efficient Independent Medical Review (IMR) to resolve disputes. Further refinements are planned in this area.

Among SB 863’s goals was the implementation of evidence-based medicine guidelines for treatment decisions. Evidence of opioid abuse prompted legislation mandating the adoption of an evidence-based workers’ compensation drug formulary by July 1, 2017. DWC is engaged in efforts to promulgate regulations for a formulary, consistent with California’s Medical Treatment Utilization Schedule (MTUS), for medications prescribed in the workers’ compensation system. Other rulemaking is under way for home healthcare and interpreter services, and to extend the deadline for Return to Work supplement payments.

“Stakeholders have had valuable input at every stage in this process,” said DIR Director Christine Baker. “DIR looks forward to continuing our work with the stakeholders on these important reforms.”

DIR and DWC are also working to streamline the utilization review process, improve the MTUS to ensure it reflects current science and best practices, and exploring options for electronic submission of medical records to increase efficiency.

Starting this fall, DWC will launch an educational project to teach healthcare providers on the MTUS and the use of evidence-based medicine. This program will be available at no cost and will provide continuing medical educational credits for those who complete the course. Additional educational courses are planned beginning in the 4th quarter.

At the direction of Secretary Lanier, DIR is leading an effort to identify and address strategies for improved anti-fraud efforts in the workers’ compensation system. DIR and the Department of Insurance convened working groups in June to gather stakeholder input and evidence of fraudulent activity in the system, and the Department will be preparing a report on its policy recommendations to the Governor and the Legislature by no later than spring of 2017.

Way back in August 2013, a jury convicted a Buena Park physician of six counts of health care fraud for nearly $3 million in fraudulent claims to the Medicare system.

Dr. Augustus Ohemeng, 62, was convicted in federal court in Los Angeles after a five-day trial. He was among 10 defendants charged with operating a Medicare fraud ring. All 10 – including two doctors and a nurse – have been convicted, either by a jury or through guilty pleas.

The ring involved Pacific Clinic in Long Beach, where Ohemeng was medical director, as well as Ivy Medical Supply in Anaheim and Santos Medical Supply in south Los Angeles, prosecutors said. As medical director of Pacific Clinic, Ohemeng and others recruited patients and billed Medicare for unnecessary tests and procedures. According to prosecutors he generated fraudulent prescriptions for medical equipment, power wheelchairs and nutritional supplies. These prescriptions were then sold to medical supply companies that billed Medicare for millions of dollars of unnecessary and undelivered medical supplies.

He was sentenced to 3 1/2 years in prison. That is about the amount of time it took the California Medical Board to revoke his license.

On February 25, 2014, an Automatic Suspension Order – No Practice was issued. Then his certificate expired on April 30, 2014, and was in delinquent status while he was in prison.

On April 7, 2014, officials filed an Accusation seeking to discipline his license under Business and Professions Code sections 490, 2236 and 2236.1, based upon his felony conviction for health care fraud, and under section 2234 for unprofessional conduct, based upon the facts and circumstances resulting in this conviction.

On September 17, 2014, Ohemeng filed his Notice of Defense and request for hearing. He asked that any hearing not be conducted until at least 9 months after his release from the Half Way House custody of the Bureau of Prisons (‘BOP’).” Based on his anticipated release date, he requested that the hearing be scheduled “no earlier than June 1,2018.”

Despite his request, a hearing in his license revocation action convened before Administrative Law Judge Marilyn A. Woollard, Office of Administrative Hearings, State of California, in Sacramento, California, on February 1, 2016. Dr. Ohemeng, represented himself by telephone from Federal Prison South Camp, in Lompoc, California. In essence he argued that his health care fraud conviction is not substantially related to the qualifications, functions and duties of a physician.

In a written response he also stated that he “apologized to the courts and accepted “full responsibility for [his] actions” that resulted in his conviction. Respondent explained that he was brought up in a Christian home in Ghana, West Africa, where his father was a respected ordained Presbyterian Minister. Respondent was taught to “help those in need, especially underprivileged ones, and not to cheat or take advantage of these people. This kind of training in my childhood motivated me to go into medicine where I am able to help heal the sick and save lives which has been demonstrated throughout my years of practicing medicine since 1986 when I finished my training in Internal Medicine and Geriatric Medicine.”

In response to these arguments the ALJ ruled “Based on a review of the record as a whole and a review of the Manual of Model Disciplinary Orders and Disciplinary Guidelines, 11th Edition (2011) (Guidelines), revocation is the appropriate remedy.”

After many years of underwriting losses, underwriting performance for the U.S. property/casualty (P/C) industry’s workers’ compensation line generated a significant profit in 2015, according to a new report from Fitch Ratings. Competition is heating up however and Fitch expects a return to an underwriting loss by 2017 in the workers’ compensation (P/C) line.

“The workers comp insurance market saw a sharp turnaround in the last few years due to past premium rate increases, stable loss cost trends and improved loss reserve experience, however, this performance will likely be unsustainable as price competition intensifies due in part to abundant market capacity,” said Jim Auden, Managing Director, Fitch.

The segment underwriting combined ratio dropped from a recent cyclical high of 117% in 2011 to 95% in 2015. Premium revenue growth tapered more recently, but averaged more than 5% for the last three years and was 3.5% in 2015. In the recent economic recession, workers’ compensation business suffered from weak pricing and significant declines in segment premium volume. The underwriting response to 2010 and 2011 losses, combined with improving economic conditions, led to a sharp increase in written premium volume for the segment.

Workers’ compensation is the largest individual product segment by premium volume in the commercial lines market and an important business line for a wide number of underwriters. Market share shifted significantly in workers’ compensation over the last five years. Prior industry leaders, American International Group, Inc. (AIG) and Liberty Mutual Insurance Group (Liberty Mutual) reduced premiums in the segment in response to past underwriting losses, while rapid growth was reported by several underwriters, particularly, Berkshire Hathaway Inc. and AmTrust Financial Services, Inc..

“As the market landscape shifts, there have been a number of companies that have demonstrated extraordinary growth, however, Fitch considers rapid growth that is well in excess of the market’s growth rate to add considerable risk to an insurer’s underwriting profile,” added Auden.

The full report ‘U.S. Workers’ Compensation Insurance Market Update’ is available at ‘www.fitchratings.com’.

Midnight Rider is an uncompleted American biographical drama film. Director Randall Miller co-wrote the screenplay with Jody Savin, based on the autobiography My Cross to Bear by the singer Gregg Allman. Miller and Savin were the producers.The film was to star William Hurt, Tyson Ritter, Zoey Deutch, Eliza Dushku, and Wyatt Russell.

On February 20, 2014, the first day of filming, the crew was on an active railroad trestle bridge, high over the Altamaha River in Wayne County, Georgia. Due to criminal negligence by the producers of the film, second camera assistant Sarah Jones was killed when she was struck by a CSX freight train that arrived on the trestle. Seven other crew members were also hurt, one seriously. Production was suspended the following week, and multiple investigations into the incident were undertaken. Miller, Savin, executive producer Jay Sedrish, and first assistant director Hillary Schwartz were charged with involuntary manslaughter and criminal trespass, as well as being cited by OSHA for “serious” and “willful” safety violations.

Miller and Sedrish entered guilty pleas to felony involuntary manslaughter and criminal trespassing, while charges were dropped against Savin as part of Miller’s plea. Miller received a sentence of ten years, of which he was expected to serve two years in jail followed by probation  On March 10, 2015 Schwartz pleaded guilty to felony involuntary manslaughter and criminal trespass, and was also sentenced to 10 years probation.

Hillary Schwartz also filed a workers’ compensation claim and alleged a psychiatric industrial injury as a result of this incident. Last December a Finding and Award found that she sustained an industrial injury to her psyche on February 20, 2014, while employed as a first assistant director, finding against defendant’s affirmative defense under Labor Code section 3600(a)(8) which precludes awarding benefits where injuries were caused by the commission of a felony. Schwartz was awarded temporary disability and further medical treatment, and all other issues were deferred.

The Defendant’s petition for reconsideration was denied in the split panel decision of Schwartz v Ease Entertainment. A Petition for Writ of Review has been filed with the Court of Appeal case number B271708. The Court has not yet acted on the Petition filed last April.

Evidence at the workers’ compensation trial showed that Schwartz accepted a plea agreement under the Georgia First Offender Act whereby she would be found guilty of the charges and would be placed on probation for ten years. Upon the successful completion of her probation, there would be no entry of judgment and no adjudication of guilt.

Pursuant to this agreement, a Bench Trial in the criminal case was held on March 10, 2015, in the Superior Court of Wayne County, State of Georgia. After reviewing the evidence the trial Judge said I “find you guilty in Count of criminal trespass and guilty in Count 5 of involuntary manslaughter.” The Judge approved applicant’s “First Offender Petition,” which states that the Court entered a verdict of guilty to the offenses and that “no judgment has been entered and no adjudication of guilt has been made.” The Petition further states: “Defendant hereby consents to the Court’s withholding the entry of a judgment of guilt, deferring adjudication, and deferring further proceedings, placing her on probation as provided by O.C.G.A. §42-8-60.”

As a result the WCJ concluded that under a strict interpretation of the language of section 3600(a)(8), a conviction is required to bar a claim for workers’ compensation benefits. In view of the deferral of applicant’s prosecution after a finding of guilt by the Court, the WCJ concluded that the requirement that applicant’s injury be caused by the commission of a felony for which she was “convicted” has not been met. The WCAB agreed with this reasoning and denied reconsideration of the Award. Essentially both reasoned that technically there was no “judgment” of a felony as required by the Labor Code should she successfully complete the terms of her probation under the First Offender Law.

Commissioner Razo dissented. He reasoned that “as a consequence of applicant’s conduct, she was determined by a Superior Court Judge to have committed acts which constitute a felony. The Judge found applicant guilty of criminal trespass and involuntary manslaughter in the death of Sarah Jones. This finding constitutes applicant’s conviction of a felony, which under Labor Code section 3600(a)(8), bars her claim for workers’ compensation benefits for an injury to her psyche arising out of her felonious conduct. That applicant was subsequently accorded leniency in her sentencing does not obviate the fact that she was found guilty of involuntary manslaughter. I would therefore grant defendant’s Petition for Reconsideration and find applicant’s claim is barred.”

The Los Angeles Times reported on its stunning investigation of L.A. Oxycontin rings that distributed millions of dollars of opiates, all with the knowledge and apparent silent approval of drugmakers such as Purdue Pharma.

In 2008, a convicted felon and his business partner leased office space on a seedy block near MacArthur Park. They set up a waiting room, hired an elderly physician, Eleanor Santiago M.D., and gave the place a name that sounded like an ordinary clinic: Lake Medical. The doctor began prescribing the opioid painkiller OxyContin – in extraordinary quantities. In a single week in September 2008, Santiago issued orders for 1,500 pills, more than entire pharmacies sold in a month. In October, it was 11,000 pills. By December, she had prescribed more than 73,000, with a street value of nearly $6 million.

To keep the OxyContin flowing, Lake Medical needed people whose time was cheap. For that, there was no place better than skid row. For as little as $25, homeless people served as straw patients and collected prescriptions for “80s”, 80-milligram pills with the strength of 16 Vicodin tablets and very popular on the streets. It required just a few hours at the clinic, then they were driven, often in groups, to a pharmacy, where a capper acting as a chaperone paid the bill in cash. He then took the pills back to the Lake Medical ring leaders who packaged them in bulk for sale to drug dealers.

A physician writing a high volume of “80s” was a red flag for anyone trying to detect how OxyContin was getting into the black market. The number of prescriptions Santiago was writing wasn’t merely high. It was jaw-dropping. Many doctors would go their entire careers without writing a single “80s” prescription. Santiago doled out 26 in a day.

Purdue Pharma, the maker of OxyContin, tracked the surge in prescriptions. A sales manager went to check out the clinic and the company launched an investigation. It eventually concluded that Lake Medical was working with a corrupt pharmacy in Huntington Park to obtain large quantities of OxyContin. Yet Purdue did not shut off the supply of highly addictive OxyContin and did not tell authorities what it knew about Lake Medical until several years later when the clinic was out of business and its leaders indicted. By that time, 1.1 million pills had spilled into the hands of mobsters, the Crips gang and other criminals. The pills from Lake Medical coursed out of L.A. An informant would later tell an FBI agent that East Hollywood’s White Fence gang trafficked pills to Chicago.

Legitimate pharmacists from La Canada-Flintridge, Glendale, Moreno Valley and elsewhere complained to Purdue. Company executives and lawyers received at least 11 reports about Santiago in the four months after they first suspected her. For example, on June 10, an Encino pharmacist sent an email to her Purdue sales rep with the subject line “urgent question.” The pharmacist said she was being asked to fill prescriptions written by Santiago and other Lake Medical doctors for “lots of Oxy patients.” “I want to make sure Dr office is legit,” Tihana Skaricic wrote. “So wondering….if you know ‘behind the scenes.” No one at Purdue ever got back to Skaricic. Eventually she and some other pharmacists decided on their own to turn away business from Lake Medical.

And the Los Angeles Times investigation found that, for more than a decade, Purdue collected extensive evidence suggesting illegal trafficking of OxyContin and, in many cases, did not share it with law enforcement or cut off the flow of pills. A former Purdue executive, who monitored pharmacies for criminal activity, acknowledged that even when the company had evidence pharmacies were colluding with drug dealers, it did not stop supplying distributors selling to those stores. Purdue knew about many suspicious doctors and pharmacies from prescribing records, pharmacy orders, field reports from sales representatives and, in some instances, its own surveillance operations.

Purdue had access to a stream of data showing how individual doctors across the nation were prescribing OxyContin. The information came from IMS Health, a company that buys prescription data from pharmacies and resells it to drugmakers for marketing purposes. That information was vital to Purdue’s sales department. Representatives working on commission used it to identify doctors writing a small number of OxyContin prescriptions who might be persuaded to write more. By combing through the data, Purdue also could identify physicians writing large numbers of prescriptions – a potential sign of drug dealing.

And the data at its fingertips was astounding. At one San Marino store, Huntington Pharmacy, monthly orders for “80s” were up nearly 20-fold over the previous year. At another in East L.A., orders jumped 400% in two months. A small shop in Panorama City, Mission Pharmacy, became the top seller of OxyContin in the entire state of California. Mission was a top supplier to the Lake Medical ring In Southern California there was a troubling spike in sales at St. Paul’s Pharmacy in Huntington Park from filling prescriptions for Lake Medical. Purdue added those store names to a long list of problematic pharmacies across the country.

A private, family-owned corporation, Purdue has earned more than $31 billion from OxyContin, the nation’s bestselling painkiller. A year before Lake Medical opened, Purdue and three of its executives pleaded guilty to federal charges of misbranding OxyContin in what the company acknowledged was an attempt to mislead doctors about the risk of addiction. It was ordered to pay $635 million in fines and fees.

In the end, the Lake Medical ring was brought down by a team of state, federal and local investigators who collected tips from citizens and spent hours staking out the clinic, interviewing witnesses and turning junior ring members into informants. When Lake Medical closed in 2010, after a year and a half in business, Purdue had still not shared its wealth of information on the clinic with the authorities, according to law enforcement sources.