Author: WorkCompAcademy

Roza Lopez sustained a cumulative injury while employed as a grocery clerk by Superior Center Concepts. Two insurers, Care West Pegasus Modesto (Care West) and Ullico Casualty Company (Ullico), were jointly and severally liable for claims arising from this injury. In a compromise and release agreement, they settled the employee’s claims and the insurers stipulated they would “pay, adjust, or litigate all liens of record,” and would “share equally for liability for med-legal charges,” and would allocate 52 percent of liability for the treatment charges to Care West and 48 percent to Ullico.

When Ullico became insolvent and was liquidated, responsibility for third party claims against it was assumed by the California Insurance Guarantee Association (CIGA), which the Legislature established in 1969 to protect against loss to insureds “arising from the failure of an insolvent insurer to discharge its obligations under its insurance policies.” CIGA moved to be dismissed from the instant workers’ compensation cases on the ground that it was authorized to pay only “covered claims,” from which the Legislature expressly excluded any “claim to the extent it is covered by any other insurance.” CIGA argued Care West’s policy constituted “other insurance” that covered third party claims. The Workers’ Compensation Appeals Board denied CIGA’s motion on the ground that the Care West/Ullico agreement limited Care West’s liability to roughly half of any third party claims, thereby rendering Care West’s insurance unavailable as to the remaining half.

The Court of Appeal summarily denied the petition for review filed by CIGA, but the Supreme Court granted review and remanded the case with directions to hear the matter on the merits. After review of the record, the Court of Appeal ruled that the order denying CIGA’s petition for reconsideration be annulled and the matter is remanded to the Appeals Board with directions to enter an order dismissing CIGA from these proceedings in the published case of CIGA v Workers’ Compensation Appeals Board.

The Appeals Board argued that the approved compromise and release was a final judgment that may not be relitigated, and after entry of that judgment Care West’s and Ullico’s liability was no longer joint and several. The Court of Appeal disagreed. “The argument reflects a basic misunderstanding of the nature of “several” liability, which is not, strictly speaking, a rule of liability at all – it is a rule of joinder.” Several liability has nothing to do with, and cannot be changed by, apportionment of an obligation between promissors.”

The Court concluded that the Care West/Ullico compromise and release agreement did not relieve Care West of its several liability for third party claims.The judgment merely apportioned liability; it did not change the joint and several nature of the now-apportioned liability.

A Rancho Mirage cosmetic surgeon pleaded guilty to a scheme to defraud health insurance companies by submitting bills for more than $3.4 million for procedures that he claimed were “medically necessary” but in fact were cosmetic procedures such as “tummy tucks”, “nose jobs” and breast augmentations.

In a plea agreement filed in United States District Court, Dr. David M. Morrow, 71, of Rancho Mirage, a cosmetic surgeon and dermatologist who was the owner of the Morrow Institute (TMI) in Rancho Mirage, admitted that he participated in a scheme to obtain money from insurance companies by false or fraudulent pretences, which included submitting altered documents to the insurance companies. Morrow admitted that cosmetic surgeries were billed to insurance companies under the pretence that the procedures were “medically necessary” so that insurers would pay for them.

Morrow also pleaded guilty to one count of filing a false tax return for 2008. Morrow admitted that he failed to report to more than $100,000 of income on his 2008 tax return and more than $1.5 million on his 2009 tax return.

Morrow, his wife, and TMI were charged in this case last fall when a federal grand jury returned a 27-count indictment that outlined a scheme in which patients were lured to the Coachella Valley surgery center with promises that cosmetic procedures would be paid for by their union or PPO health insurance plans. The victim health insurance companies included Anthem Blue Cross, Blue Cross/Blue Shield of California, Blue Cross/Blue Shield of Massachusetts, Regional Employer/Employee Partnership for Benefits, formerly known as Riverside Employer/Employee Partnership (REEP), and Cigna.

To trick insurance companies into paying for the cosmetic procedures, Morrow and others at TMI completely fabricated diagnoses such as a “hernia” in the patients’ official medical records. According to the indictment, they also fabricated test results and symptoms on medical records to cover up the actual medical procedures being performed – tummy tucks were fraudulently billed as hernia repair or abdominal reconstruction surgeries, rhinoplasties (“nose jobs”) were fraudulently billed as deviated septum repair surgeries, and breast lifts and augmentations were fraudulently billed as “tuberous breast deformity.” A document filed as part of Morrow’s plea agreement shows that TMI billed insurance as much as $150,750 for a single cosmetic procedure.

Morrow faces a statutory maximum sentence of 20 years of in federal prison for the conspiracy count and three years of imprisonment for filing the false tax return. Morrow is scheduled to be sentenced by United States District Judge Josephine L. Staton on September 23. Morrow has also agreed to pay full restitution to the victims. Charges against Morrow’s wife, Linda Morrow, 63, are currently pending.

Joint replacements and surgical implants are an integral part of medical care for injured workers. Many devices cost tens of thousands of dollars. While consumers spend hours agonizing over product features and benefits for home appliances or automobiles, often little or no time is spent deciding what surgical product will be selected by a physician to be placed in the patient, and more importantly why was that product selected over any other. Indeed, looking back at the data in a claim file for these cases, can we even identify the manufacturer of a product that was used in a surgery after the fact? Perhaps this jury verdict last week will illustrate why shopping for medical implants might be worth the time and effort.

Reuters Health reports that Johnson & Johnson and its DePuy unit were ordered by a Texas federal jury on Thursday to pay about $500 million to five plaintiffs who said they were injured by Pinnacle metal-on-metal hip implants. Following a two-month trial, jurors deliberated for a week before finding that the Pinnacle hips were defectively designed, and that the companies failed to warn the public about their risks. Jurors awarded about $140 million in total compensatory damages and about $360 million in punitive damages.

A J&J spokeswoman said the company will appeal. John Beisner, a lawyer for the company, said he expected the verdict to be a “pyrrhic victory for plaintiffs’ counsel” that could be slashed significantly. Appeals courts often reduce massive personal-injury verdicts, and Texas law limits the amount of punitive damages that can be awarded to plaintiffs. Beisner estimated that punitive damages could be reduced to as little as $10 million. Lanier said plaintiffs would address the issue in post-trial proceedings.

The verdict came in the second federal trial involving the Pinnacle device. J&J was cleared of liability in the first trial, which ended in 2014.Verdicts in these early trials are not binding on the rest of the litigation, but are used to help gauge the value of the remaining claims. More than 8,000 Pinnacle lawsuits have been consolidated in Texas federal court.

All five plaintiffs are Texas residents who were implanted with metal-on-metal Pinnacle hip devices. They said design flaws caused the devices to fail more frequently and quickly than expected, leading to injuries including tissue death, bone erosion and high levels of metal in their blood. Plaintiffs said J&J and DePuy described the metal-on-metal hips as long-lasting, durable and safe despite being aware of the risks, and aggressively promoted them for use in younger, more active patients. J&J has said that it researched and marketed the devices responsibly.

DePuy stopped selling the metal-on-metal version of the Pinnacle devices in 2013. That year, it paid $2.5 billion to settle more than 7,000 lawsuits over a separate metal-on-metal hip device, the ASR, which was recalled in 2010.

“Americans should never believe, even incorrectly, that one’s criminal activity will go unpunished simply because it was committed on behalf of a corporation.” This was the pronouncement made by Deputy Attorney General Sally Yates a day after she issued new guidance to Department of Justice attorneys outlining the importance of individual accountability in DOJ prosecutions. The Department of Justice has thus increased the risk in medical fraud cases. The Yates Memo announced an official DOJ initiative to hold individuals responsible for corporate misdeeds, both criminal and civil. By having the Justice Department’s number two official instruct prosecutors to target individual business people for criminal prosecution and civil sanctions, DOJ is upping the ante in white collar enforcement.

The Yates Memo is the latest in a line of similar pronouncements that began in 1999 when then-Deputy Attorney General Eric Holder penned a similar memo titled “Bringing Criminal Charges Against Corporations.” The principles stated in the Holder Memo continued to evolve through several subsequent memos from later Deputy Attorneys General (Thompson Memo (2003), McNulty Memo (2006), Filip Memo (2008)), and were eventually “codified” in the U.S. Attorney’s Manual (“USAM”) as the Principles of Federal Prosecution of Business Organizations (USAM § 9-28.000).

The “Principles” are a detailed framework that federal prosecutors are supposed to rely on in assessing whether and what charges to bring against a corporation in a criminal case. They also provide corporations and their counsel tools for considering important issues such as cooperation and remediation. The “Principles” and other sections of the USAM are being revised to incorporate the Yates Memo’s dictates on individual accountability for corporate wrongdoing.

The notion of targeting individuals for prosecution has been a stated goal expressed by numerous DOJ officials in recent years. It should not be news to anyone inside or outside a corporation that federal prosecutors are being asked to identify and prosecute individual executives and managers for their roles in corporate misconduct. However, the Yates Memo provides a telling insight into DOJ’s current policy objective: reach the highest-level business leaders through cooperation deals with lower-ranking executives.

While this shift in policy appears to be a response to repeated criticism that too many individuals evaded punishment for wrongdoing related to the financial crisis and a related push to improve integrity within the banking sector, it will have significant implications for healthcare providers and their employees. Recognizing the challenges required to go back and pursue individuals after the conclusion of a case originally aimed at corporate liability, DOJ attorneys have now been instructed to focus on individuals from the start of an investigation. Once a case is underway, the inquiry into individual misconduct will proceed in tandem with the broader corporate investigation.

Only in the rarest of circumstances will the DOJ now release individuals from civil or criminal liability when resolving a matter with a corporation. Any decision to conclude a corporate case, without simultaneously settling individual liability, will require the DOJ attorney to demonstrate, to his/her supervisor, a clear plan for resolving any related individual cases promptly and before the statute of limitations expires. Further, if the decision is made not to proceed against individuals, the justification for such a decision must be memorialized and approved by the relevant U.S. Attorney or Assistant Attorney General overseeing the investigation.

Orthopaedic care for patients living in remote areas may be managed through phone or email, allowing patients to receive treatment without traveling to a larger, urban hospital for care, according to a study presented at the 2016 Annual Meeting of the American Academy of Orthopaedic Surgeons (AAOS). The study also found that remote care may provide significant savings in time, missed work, and health care and transportation costs for residents living in rural areas.

Orthopaedic surgeons at a McGill University Health Centre in Montreal used commercial, encrypted email and phone calls to communicate with primary care physicians in six towns in the northern area of Quebec about their patients, who primarily suffered from bone fractures, injuries which typically require travel to a larger hospital for care. The towns are part of a geographic area surrounding the hospital which spans 375,291 square miles (972,000 square kilometers), including areas where medical services are extremely limited.

The retrospective study, using data from January 2008 to June 2013, found that out of 921 email consults, 731 patients were able to receive treatment from their local doctor with the guidance of an orthopaedic surgeon at McGill.

“These results show that you don’t need an expensive, elaborate system to clinically manage patients with more common conditions,” said Adam Cota, MD, lead study author and now an orthopaedic trauma fellow at OrthoIndy at St. Vincent Indianapolis.

Researchers used a basic email system, requiring virtually no start-up costs or dedicated personnel. In contrast, sophisticated telehealth communication systems have higher operating costs. Dr. Cota noted that the email application meets Canada’s requirements for protecting patient information.

For patients, receiving proper orthopaedic treatment and care near their home eliminates the need to travel, take time off from work, or pay for child care and other related expenses. In addition, the study estimated a savings of nearly $3.7 million ($5.5 million in Canadian dollars) over the study timeframe in medical transportation, which in Canada, is provided free of charge from rural areas.

“We feel that these results will be important for planning and enhancing delivery of orthopaedic care in remote communities,” said Dr. Cota, “and a low-cost referral system like this can result in significant savings by the patient and/or insurance or government provider.”