Author: WorkCompAcademy

A Santa Clara  jury awarded Aetna, Inc. $37.4 million from Bay Area Surgical Management, LLC (“BASM”) six of its affiliated surgery centers and its three principals. Aetna had accused the surgery center company of a massive conspiracy to defraud Aetna and other carriers who offer out-of-network benefits by paying off doctors, lying to patients and lying to carriers and employers, the result of which was overpayment by Aetna for surgeries to the extent of tens of millions of dollars. Aetna asserted causes of action for fraud, intentional interference with contractual relations and unjust enrichment. The BASM defendants have announced that they will appeal.

According to the report on Lexology.com, Aetna’s specific complaints in the 2012 lawsuit were several: first, Aetna contended, BASM paid off doctors by selling them ownership interests at a price far below fair market value. Because physicians paid only a nominal price for their ownership interests, BASM was able to pay annual rates of return of several hundred percent. In return, Aetna claimed, the owner physicians shifted their cases to BASM centers, and especially their high-price procedures with good coverage. BASM also reallocated ownership to reward high producing physicians and punish those who were less profitable.

BASM also concealed from patients how much the surgery centers were charging for procedures by not collecting the patients’ co-payment or, Aetna, claimed, telling the patient that the charge was substantially lower than the amount the surgery centers billed to Aetna. Aetna presented testimony that the waiver of coinsurance skews the healthcare system by encouraging patients to get procedures at more costly facilities. Aetna also presented evidence that BASM’s charges were significantly higher than other area facilities, both in and out of network.

Aetna further presented evidence that the BASM surgery centers actively sought patients with good out-of-network benefits. BASM surgical schedulers were instructed not to schedule patients whose plans had a daily max for out-of-network benefits and emails and text messages from BASM principals to owner physicians emphasized the kinds of cases they were to bring in order to maximize profit.

The result of these practices, Aetna argued, was an insidious conspiracy to bilk the insurance company out of multiple millions of dollars.

BASM had argued that it was the insurance company’s responsibility to protect itself. Further, per BASM, everyone in the health care industry knows that billed charges are arbitrary. Only payers can determine what to pay for a particular procedure at a particular facility and “no one ever pays the sticker price.”

The jury unanimously sided with Aetna and awarded all of the damages Aetna claimed. Still pending in California state court is a similar case by United Healthcare Services, Inc. set for trial later this year and a case in California federal court by BASM against Aetna, United and some in-network surgery centers alleging an anti-competitive conspiracy to destroy BASM’s business.

The company continues to run six surgical care centers from Burlingame to San Jose to Los Gatos. Court documents show the FBI and the U.S. Attorney’s Office in San Jose are making inquiries in the case. The latter has already issued a subpoena seeking information from Aetna. Aetna has filed two similar lawsuits against physician-owned surgery centers in Texas and one in Pennsylvania.

It is critical that claims administrators and treating physicians obtain an accurate history of illegal substance use and abuse from an injured workers. This history is important when there is a physical injury for purposes of appropriately prescribing an opioid pain medication. This history is important when there is a psychiatric injury in order to determine causation and apportionment.

With regard to physical injuries, the DWC is currently in the process of developing the Medical Treatment Utilization Schedule with a new 137 page Opioid Treatment Guideline. Section 3.3.1.1 “Screening for Drug Misuse/ Abuse” mandates that physicians “use validated screening tools for predicting the risk of drug misuse … before beginning chronic opioid treatment.” These screening tools document the claimant’s “personal history of substance abuse” in order to determine risk of abuse of pain medication. This new proposed DWC guideline makes the importance of obtaining a drug history from a claimant not only quite clear but also a mandatory requirement.

Yet it is rare to see a claimant actually admit to illicit drug use in a workers’ compensation claim. What are the odds that illicit drug use is as rare as these common California workers’ compensation histories suggest?

The New York Times reports that all over the country, employers say they are struggling to find workers who can pass a pre-employment drug test. That hurdle partly stems from the growing ubiquity of drug testing, at corporations with big human resources departments, in industries like trucking where testing is mandated by federal law for safety reasons, and increasingly at smaller companies.

But data suggest employers’ difficulties also reflect an increase in the use of drugs, especially marijuana – employers’ main gripe – and also heroin and other opioid drugs much in the news.

Drug use in the work force “is not a new problem. Back in the ’80s, it was pretty bad, and we brought it down,” said Calvina L. Fay, executive director of the Drug Free America Foundation. But, she added, “we’ve seen it edging back up some,” and increasingly, both employers and industry associations “have expressed exasperation.”

Data on the scope of the problem is sketchy because figures on job applicants who test positive for drugs miss the many people who simply skip tests they cannot pass. Nonetheless, in its most recent report, Quest Diagnostics, which has compiled employer-testing data since 1988, documented an increase for a second consecutive year in the percentage of American workers who tested positive for illicit drugs – to 4.7 percent in 2014 from 4.3 percent in 2013. And 2013 was the first year in a decade to show an increase.

In Colorado, “to find a roofer or a painter that can pass a drug test is unheard-of,” said Jesse Russow, owner of Avalanche Roofing & Exteriors, in Colorado Springs. That was true even before Colorado, like a few other states, legalized recreational use of marijuana. In a sector where employers like himself tend to rely on Latino workers, Mr. Russow tried to diversify three years ago by recruiting white workers, vetting about 80 people. But, he said, “As soon as I say ‘criminal background check,’ ‘drug test,’ they’re out the door.”

A much broader data trove, the federal government’s annual National Survey on Drug Use and Health, reported in September that one in 10 Americans ages 12 and older reported in 2014 that they had used illicit drugs within the last month – the largest share since 2001

If this data is correct, a random sample of 100 open workers’ compensation claims in a typical inventory should have 10 cases with an admission of use of illicit drugs within the prior month. Should any inventory of claims show a lower percentage, or worse yet, not a single case of an admission of illegal drug use, the odds are high that several of the claimants are lying. Then the question of course is “which ones?”

Salinas pain physician Steven Mangar was arrested in his Romie Lane office known as Pacific Pain Care, on 37 felony charges of fraud and writing illegal prescriptions. Mangar was booked in Monterey County Jail, where he’s currently being held on $1 million bail. The charges include submitting fraudulent health insurance claims and billings, furnishing drugs to an addict, unlawful prescription of medicine to patients who didn’t have the condition for which it was intended, and enhancements alleging Mangar’s conduct resulted in him fraudulently taking more than $500,000. The unlawful prescribing charges involve prescriptions Mangar wrote at Pacific Pain Care and include oxycodone, hydrocodone, morphine, Dilaudid, and other highly addictive and dangerous medications.

The DA’s complaint identifies 25 victims of these alleged crimes, identified as John Doe and Jane Doe to protect their privacy. The Californian reports that he was the third leading prescriber of hydrocodone, or Vicodin, in the state. If convicted, he faces a maximum sentence of 44 years and eight months in prison.

The California Medical Board, which has the power to revoke physicians’ licenses, has been notified of Mangar’s arrest and the charges against him. The medical board has been examining Mangar for years, and the DA’s office and California Department of Insurance later joined in the investigation.

The medical board issued its first disciplinary order against Mangar in 2012, when he was placed on probation. As part of a settlement agreement, he acknowledged he had failed to keep adequate records.  In 2013 he was cited for violation of probation, and then an amended complaint followed on Jan. 7 of this year based on complaints numerous patients lodged against him.

On Valentines day In February 2014, Mangar was arrested on suspicion of driving under the influence of methamphetamine after a California Highway Patrol officer stopped him near Highway 101 and Sanborn Road. Due to a Department of Justice crime lab backup, he was not arraigned on that charge until nearly a year after his arrest. The case for that misdemeanor charge is set for trial in June.

After the DUI charges were filed, in February 2015, agents with the Monterey County District Attorney’s Office’s Health Care and Workers’ Compensation fraud units served search warrants on his West Alisal Street office and his home on Madeira Avenue in Salinas with help from the State Medical Board, the Department of Insurance, the Drug Enforcement Agency and the DOJ Office of the Inspector General.

“Multi-faceted insurance fraud schemes are exceedingly sophisticated,” District Attorney Dean Flippo wrote in a press statement. “This complex investigation required review of tens of thousands of pieces of evidence. The review was painstaking and took approximately two years to complete. The investigators on this case have worked countless hours conducting numerous interviews of affected patients and witnesses, and maintained diligent investigative efforts, which resulted in the meticulous collection of evidence.”

Each year the California Chamber of Commerce releases a list of job killer bills to identify legislation that it claims will decimate economic and job growth in California. The CalChamber tracks the bills throughout the rest of the legislative session and works to educate legislators about the serious consequences it says these bills will have on the state. The program tracks more than 3,000 legislative proposals every year, sounding the alarm when a bill will hurt employers and the economy.

The organization released its preliminary list of job killer bills on March 29 to call attention to the negative impact that 18 proposed measures would have on California’s job climate and economic recovery if they were to become law. Another job killer has since been identified, bringing the total to 19.

Several of the pending bills characterized as job killers limit the use of arbitration in certain cases. The Chamber says that AB 2667 (Thurmond; D-Richmond) unfairly discriminates against arbitration agreements and therefore is likely preempted by the Federal Arbitration Act, which will lead to confusion and litigation, by prohibiting arbitration of Unruh Civil Rights violations made as a condition of a contract for goods or services.

And AB 2879 (M. Stone; D-Scotts Valley) unfairly discriminates against arbitration agreements and is likely preempted by the Federal Arbitration Act, which will lead to confusion and litigation, by prohibiting an employer from requiring an individual who is a member of the military to sign a mandatory arbitration agreement as a condition of employment.

Job Killer No. 20 stalled on Assembly Floor A day after being added to the California Chamber of Commerce job killer list, a bill dealing with release clauses fell short of votes needed to pass the Assembly. AB 2748 (Gatto; D-Glendale) is deemed a job killer because it would eliminate incentives to settle lawsuits and would instead expose businesses to multiple rounds of litigation by creating statutory prohibitions on “release” clauses in settlements pertaining to “environmental disasters.”

Thus far there are no worker’ compensation bills pending that have been identified by the CalChamber as a job killer.

“These job killer bills represent the worst of the worst legislative proposals currently under consideration by lawmakers,” said CalChamber President and CEO Allan Zaremberg. “As everyone knows, California has areas that are booming economically and other areas that are stagnating. Each part of California has unique problems and these job killers will negatively impact future economic growth. Whether they create barriers to providing affordable housing for workers, or increase costs for companies trying to grow or stay in business, these job killer bills should not become law.”

The CalChamber 2015 job killer list grew to 19 bills during the legislative session. By the end of the year, 18 of the 19 proposed laws were defeated.

An Orange County Social Services Agency (SSA) group counselor was sentenced for defrauding over $30,000 from the County of Orange by making fraudulent statements relating to his workers’ compensation claim.

Maluelue Tafua, 41, Orange, pleaded guilty to a court offer of two misdemeanor counts of insurance fraud and two misdemeanor counts of making fraudulent statements.

The defendant paid over $30,000 in restitution and was sentenced to three years informal probation, ordered to complete 100 hours of community service, and pay $100 to the Worker’s Compensation Fraud Assessment Fund as well as statutory fees.

On January. 8, 2014, Tafua claimed that he injured his right shoulder and elbow restraining someone while working at Orangewood Children’s Home. SSA attempted to accommodate his injury by assigning him to modified duties within the work restrictions prescribed by the treating physician. Tafua subsequently went to his doctor and claimed to be unable to use his right arm. SSA could not accommodate that restriction and placed Tafua on temporary total disability.

On June 3, 2014, Tafua bench pressed 315 pounds in a gym. During a medical appointment with his doctor the following day, Tafua claimed that his pain had not improved and that he had been complying with his treatment. The defendant failed to report that he exercised using weights at the gym.

On July 14, 2014, the County began investigating this case after observing inconsistencies in the defendant’s statements, what was observed at the gym, and what activities he told the doctor he was capable of performing.

Deputy District Attorney Pam Leitao of the Insurance Fraud Unit prosecuted this case.