Menu Close

Author: WorkCompAcademy

HHS Fraud Prevention Focus May Change

WorkCompAcademy

On Feb. 5, 2017 President Trump’s nominee to be secretary of Health and Human Services (HHS), Representative Tom Price (R-GA), was confirmed by the Senate. What will his appointment mean in the government’s battle to thwart healthcare fraud and abuse?

A report by the Journal of Emergency Medical Services reports “We do not expect the federal government’s scrutiny of healthcare reimbursement to diminish under the Trump administration and Secretary Price, but the focus on how to accomplish that scrutiny may shift.”

When asked by Senator Orrin Hatch (R-UT) what he believed HHS [which includes the Centers for Medicare and Medicaid Services (CMS)] should be doing in the fight against fraud and abuse, Price said he felt that the focus should be more on going after the truly “bad actors” and that it should be done “in real time.”

This was direct reference to CMS’ data analytics approach and data mining that is now beginning to be used to identify outliers and those providers who stick out among their peers as potentially billing particular payment codes improperly or excessively.

This effectively moves away from the “pay and chase” model that has been the hallmark of Medicare audits – pay the claims and then do a post-payment audit. The more recent data-driven approach to identify improper billing makes good sense when comparing similar health providers with similar lines of service.

Price then went on to say this data analytics approach should be used “instead of trying to determine if every single instance of care was necessary,” – a direct reference to the current practice of CMS contractors that finds fault in claims for failure to meet medical necessity requirements.

That is why, in great part, there is such a backlog of Medicare appeals stuck at the administrative law judge level – improper medical necessity determinations made at the lower levels of appeal by the very Medicare contractors that pay the claims.

View More

DWC Suspends Collections for Seven Lien Providers

WorkCompAcademy

The Department of Industrial Relations and its Division of Workers’ Compensation has suspended seven medical providers from participating in California’s workers’ compensation system.

The providers have been convicted of workers’ comp fraud or have been suspended from the Medicare or Medicaid programs for medical fraud. The suspended providers have filed more than 8,500 liens in California’s workers’ compensation system, with a total of claim value of at least $59 million.

“We are moving quickly to use new anti-fraud tools at our disposal to suspend those proven to game the workers’ comp system at the expense of injured workers and employers,” said Division of Workers’ Compensation Acting Administrative Director George Parisotto.

“Workers’ compensation fraud undermines the state’s efforts to increase payments and improve services to injured workers, and to reduce costs for employers,” said DIR Director Christine Baker. “Removing fraudulent providers and staying lien claims of those criminally-charged with fraud will further reduce costs in the system.”

The suspended providers include:

1) Philip Sobol, an orthopedic surgeon in Los Angeles convicted in Santa Ana’s federal District Court for insurance mail fraud and other charges connected to receiving workers’ comp kickbacks. Dr. Sobol has nearly 6,000 active workers’ compensation liens with an estimated total claim value of more than $42.7 million.

2) Jason Hui-Tek Yang, a psychiatrist in Pasadena convicted in Riverside County Superior Court for his involvement in an insurance fraud conspiracy, including the referral of patients for unnecessary care to justify workers’ compensation billing. Dr. Yang has over 2,000 active workers’ compensation liens with an estimated total claim value of more than $13.7 million.

3} Alan Ivar, a chiropractor in Costa Mesa convicted in Santa Ana’s federal District Court for referring patients to a Long Beach hospital in a kickback scheme for well over a decade. Dr. Ivar still has over 400 active workers’ compensation liens with an estimated total claim value of more than $2.5 million.

4} Thomas M. Heric, a physician in Los Angeles convicted in Sacramento’s federal District Court for health care fraud related to the Medicare and Medicaid programs who was suspended from those programs.

5) Carlos Arguello, a Chula Vista businessman convicted in San Diego’s federal District Court for his role in a kickback scheme that involved referring injured workers to specific chiropractors for medical care regardless of their injuries.

6} Daniel Dahan, a former chiropractor in Long Beach suspended from the Medicare and Medicaid programs who surrendered his license to practice.

7} Boniface Okwudili Onubah, a former neurologist in Marina Del Rey suspended from the Medicare and Medicaid programs whose medical license was revoked.

Suspension notices were issued to the providers on January 17, 2017, by the Division of Workers’ Compensation’s Acting Administrative Director George Parisotto. The suspension becomes effective 30 days later if the provider does not appeal the action.

An additional three providers who were notified of the pending suspension have filed appeals of the action. Those appeals are in process.

AB 1244 (Gray and Daly) requires the Division of Workers’ Compensation (DWC) Administrative Director to suspend any medical provider, physician or practitioner from participating in the workers’ compensation system when convicted of fraud. DWC has adopted provider suspension regulations on the new law, which requires providers to be suspended from the system for one or more of the following grounds:

— The provider has been convicted of a crime involving fraud or abuse of the Medi-Cal or Medicare programs or the workers’ compensation system, fraud or abuse of a patient, or related types of misconduct;

— The provider has been suspended due to fraud or abuse from the Medicare or Medicaid (including Medi-Cal) programs; or

— The provider’s license or certificate to provide health care has been surrendered or revoked. DIR has posted information on its fraud prevention efforts online, including a report on its anti-fraud efforts in the California workers’ compensation system.

View More

North Hollywood Cab Driver was Employee

WorkCompAcademy

Emanuele Secci was driving his motorcycle through an intersection in the City of West Hollywood when a taxi driven by Aram Tonakanian coming from the opposite direction, turned left directly in front of him causing injury.

At the time Tonakanian was driving a green and white taxi marked with a United Independent Taxi Drivers, Inc. insignia.

The jury found Tonakanian to be United’s agent, but not an employee. The court granted United’s motion for judgment, and Secci appealed. The Court of Appeal reversed in the published opinion of Secci v United Independent Taxi Drivers Inc.  The case involves the application of the rules for establishing an independent contractor status

Like other owner-drivers, Tonakanian owned his taxi and set his own hours. Tonakanian’s contract with United stated he was an independent contractor. Drivers paid monthly dues and other fees to cover United’s expenses.

United provided marketing and advertising. Each United taxi had the company’s phone number painted on it. If a customer called the number, a dispatcher would enter the location information into a computer, and the computer would send out a dispatch request. In order to receive dispatch requests, a driver would check into the zone where he or she was located. Drivers were free to accept or reject dispatch requests, and could pick up passengers on the street, so long as they were licensed to accept fares within that city.

Drivers were required to use uniform credit card and dispatch equipment chosen by United. Credit card charges were initially paid to United, which would deduct credit card processing fees, monthly dues, and a small fee for accounting. Taxi rates were set by meter. Drivers were not free to charge flat or discounted rates. United required its drivers to accept vouchers and coupons that drivers could later submit to United for payment. If a driver transferred ownership of a United taxi, the buyer and seller had to notify United and pay a $500 transfer fee.

United provided a training manual to each of its drivers. It required drivers to keep a copy of the manual in the taxi and to complete a training course before taking the city’s licensing test. The training manual provided specific information about the drivers’ appearance, including a dress code, as well as specifics about driving safely, conducting themselves while waiting in taxi lines, and interacting with passengers politely.

United drivers were expected to abide by the company’s rules and regulations, and drivers acknowledged their relationship with United could be terminated for violations of those rules.

A corporation may be held vicariously liable as a principal for the torts of its agents. (Meyer v. Holley (2003) 537 U.S. 280, 285 – 286.) “Whether a person performing work for another is an agent or an independent contractor depends primarily upon whether the one for whom the work is done has the legal right to control the activities of the alleged agent.”

In Yellow Cab Cooperative, Inc. v. Workers’ Comp. Appeals Bd. (1991) 226 Cal.App.3d 1288 (Yellow Cab), the court held a taxi driver who leased his taxi from the lessor taxi company was an employee, not an independent contractor, for the purpose of workers’ compensation law. (Discussing S. G. Borello & Sons, Inc. v. Department of Industrial Relations, supra, 48 Cal.3d 341}

Viewed in the light most favorable to Secci, the evidence presented at trial was sufficient to support a jury finding that Tonakanian was United’s agent and United was vicariously liable for Tonakanian’s acts.

View More

CWCI Reviews Central Coast Claims

WorkCompAcademy

The California Workers’ Compensation Institute (CWCI) has issued a new “Regional Score Card,” the sixth in its research series that looks at workers’ comp claims experience in 8 different regions of California.

The new Score Card provides detailed data from more than 127,000 claims for 2005-2015 injuries filed by residents of the Central Coast — a 300-mile long region encompassing Ventura, Santa Barbara, San Luis Obispo, Monterey, and Santa Cruz Counties — and compares the results to those from 1.7 million claims from the rest of the state.

For the entire 11-year span covered by the Score Card, claims by Central Coast workers represented 6.7% of all California workers’ compensation claims and 6.3% of all claim payments, though with a shift in the state’s population and job market in recent years, the proportion of claims from the region has increased, with Central Coast workers accounting for 7.7% of all California job injury claims in accident year (AY) 2015.

Average payments on these claims – almost a quarter of which involved agricultural workers — have shown recent increases as well. For example, average 36-month paid losses on Central Coast claims rose from $26,194 for AY 2005-2007 claims to $35,874 for AY 2011-2012 claims. Other Score Card findings show:

1) Time lags from the date of injury to employer notification, claims administrator notification and initial treatment are significantly less on the Central Coast than in other regions, and claim durations are shorter;

2) At 24 months post injury Central Coast claims average more medical visits for evaluation/management, physical therapy, and chiropractic care, while the biggest difference in medical payments is in surgery, where Central Coast claims at the 2-year benchmark average 11.2% more than in the rest of the state;

3) 4 of the top 10 drugs (based on 2014 payments) prescribed to Central Coast injured workers are opioids. Vicodin, Oxycodone, Tramadol, and Fentanyl together account for 20% of the region’s total drug spend.

In addition to providing a profile of Central Coast claimants, the Score Card shows claim distributions for the region broken out by industry, nature and cause of injury, primary diagnostic category, and by employer premium. Claim closure rates at 24 months and average claim durations are provided for med-only claims, lost-time claims, and all claims.

The Score Card also notes claim and payment distributions by claim type (med-only, temporary disability, permanent disability, and death), and attorney involvement rates for all indemnity claims and permanent disability claims that are at least 36 months old, with comparative results shown for the rest of the state.

Recent CWCI Score Cards examined claims from Los Angeles County; the Inland Empire/Orange County; the Central Valley; the Bay Area; and San Diego County. All of the Score Cards and summary Bulletins are available to CWCI members and research subscribers who log on to http://www.cwci.org/, while others may purchase them from www.cwci.org/store.html. The next Score Card in the series will focus on claims from the Northern Counties.

View More

CDI Disallows Advertising Costs for Rate Calculation

WorkCompAcademy

At the November 8, 1988, General Election, the voters approved an initiative statute that was designated on the ballot as Proposition 103. The measure made numerous fundamental changes in the regulation of automobile and other forms of insurance in California.

Formerly, the so-called “open competition” system of regulation, rates were set by insurers without prior or subsequent approval by the Insurance Commissioner . Under that system, California had less regulation of insurance than any other state, and in California automobile liability insurance was less regulated than most other forms of insurance.

Proposition 103 instituted a permanent regulatory regime comprising the “prior approval” system, under which the Insurance Commissioner must approve a rate applied for by an insurer before its use, looking to whether the rate in question is excessive, inadequate, unfairly discriminatory or otherwise in violation of’ specified law — considering the investment income of the individual insurer and not considering the degree of competition in the insurance industry generally.

The California Supreme court reviewed and approved Proposition 103 against challenges under the United States and California Constitutions in a series of cases filed by insurance carriers.

In 2009, Mercury Casualty Co. filed an application with the California Insurance Commissioner to increase its homeowners’ insurance rates. Originally, Mercury sought an overall rate increase of either 8.8 percent or 6.9 percent.

In denying the increase Mercury requested, the California Insurance Commissioner made two decisions that are at issue on appeal.

First, the commissioner determined that Mercury’s entire advertising budget had to be excluded from the calculation of the maximum permitted earned premium because “Mercury aims its entire advertising budget at promoting the Mercury Group as whole” rather than seeking to obtain business for a specific insurer and also providing customers with pertinent information about that specific insurer. Second, the commissioner determined that Mercury did not qualify for a variance from the maximum permitted earned premium because Mercury failed to demonstrate the rate decrease that resulted from application of the regulatory formula results in deep financial hardship.

In June 2014, the superior court issued its ruling denying Mercury’s petition for writ of mandate and complaint for declaratory relief in the superior court seeking review of the commissioner’s decision. The judgment was affirmed in the published case of Mercury Casualty Company v Dave Jones, as Insurance Commissioner.

On appeal, Mercury contends the commissioner erred in disallowing all of Mercury’s advertising expenses in the rate calculation. In 2008, 2009 and 2010, Mercury General Corporation’s advertising expenses totaled $26 million, $27 million and $30 million respectively. The Personal Insurance Federation of California intervened in the action on behalf of other industry stakeholders.

Section 2644.10(f) provides that institutional advertising expenses shall not be allowed for ratemaking purposes, Institutional advertising means advertising not aimed at obtaining business for a specific insurer and not providing consumers with information pertinent to the decision whether to buy the insurer’s product.”

The Court of Appeal concluded “Finding no merit in these arguments, or any of the other arguments offered to overturn the judgment, we affirm.”

View More

New Back Pain Guidelines Shun Medications

WorkCompAcademy

People should try non-drug treatment options like massage or stretching for most cases of chronic low back pain before choosing treatment with over-the-counter or prescription drugs, according to new treatment guidelines promulgated by the American College of Physicians.

The report in Reuters Health says that if the pain began recently, the guidelines recommend superficial heat, massage, acupuncture or spinal manipulation. If patients wish to take medication, they should use nonsteroidal anti-inflammatory drugs (NSAIDs) such as ibuprofen, or skeletal muscle relaxants prescribed by a doctor. Acetaminophen and steroids are not recommended for low back pain, according to the guidelines.

But for chronic low back pain – defined as pain that’s lasted more than 12 weeks – the American College of Physicians (ACP) recommends people hold off on medications.

The new guidelines apply to low back pain that does not radiate to other parts of the body like the legs, said Dr. Nitin Damle of the Alpert Medical School of Brown University in Providence, Rhode Island, who is president of the ACP.

Patients with low back pain that radiates to other parts of the body need further evaluation, he told Reuters Health.

“Most back pain is self-limited,” said Damle. “It’s common, will go away given enough time and patients can help themselves initially by trying some heat and stretching before going to see a physician.”

The new guidelines are based on a review of studies that looked at the use of drug and non-drug therapies for low back pain. The review did not look at creams or injections, however.

Based on the review, the ACP recommends that people who have been suffering with chronic low back pain try non-drug therapies such as exercise, acupuncture, mindfulness-based stress reduction, tai chi, yoga, biofeedback, cognitive behavioral therapy or spinal manipulation.

If those methods don’t work, the guidelines say the next step should be NSAIDs or the pain medications duloxetine, which is marketed as Cymbalta, or tramadol, which is marketed as Ultram.

Opioids should only be considered as last resorts, and only prescribed after doctors discuss their risks and benefits with patients.

“If you’re going to have to use opioids, use them in the smallest dose possible with the least frequency and smallest prescription,” said Damle.

The new recommendations are very reasonable, said Dr. Joel Press, who is physiatrist-in-chief at the Hospital for Special Surgery in New York City.

“Anything you can do with these non-pharmaceuticals that can get you moving faster is going to get you better in the end,” said Press, who was not involved in crafting the new guidelines.

“I hope this reinforces to physicians and patients that a lot of these non-pharmaceutical treatments can have a lot of success,” he told Reuters Health.

View More

15 Arrested in Unlicensed Contractor Sting

WorkCompAcademy

The Yolo County District Attorney’s Office Workers’ Compensation Fraud Unit recently coordinated a joint unlicensed contractor sting operation in Woodland, California with the Contractors State License Board, the Sutter County District Attorney’s Office, and the Woodland Police Department.

The goal was to hold unlicensed contractors accountable for violations of contractor’s law and workers’ compensation fraud. The team was specifically looking for individuals who were posting false advertisements as well as those who were providing a contractor’s bid without being properly licensed.

During the two-day operation there were a total of 15 arrests made for violations including contracting without a license, posting false advertisements, and not having workers’ compensation insurance. Those arrested were processed and provided information on how to become a licensed contractor.

According to California law all individuals performing work regulated by the Contractor’s State License Board at $500 or greater must have a valid contractor’s license. If they have any employees working for them they must provide their employees with proper workers’ compensation insurance as well.

Homeowners can be held liable for any medical treatment stemming from injuries sustained by the employee of an unlicensed contractor if the injury occurred while working on the homeowner’s property.

District Attorney Jeff Reisig emphasized the incredible liability homeowners face when hiring uninsured employers or unlicensed contractors, saying “If the employee was injured or killed while working on the homeowner’s property, the homeowner could be personally liable for all of the medical bills. Most homeowner’s insurance policies will not cover these types of injuries, resulting in the homeowner owing hundreds of thousands of dollars and potentially losing their home and life savings to pay for these bills. It is critical that homeowners ensure the contractors they hire are licensed by the Contractor’s State License Board and have proper workers’ compensation insurance for their employees. We are committed to combating this type of fraud in our community.”

View More

Kaiser Permanente Pharmacy Fined for CSA Violations

WorkCompAcademy

U.S. Attorney Phillip A. Talbert announced that Kaiser Foundation Health System Inc. has paid $850,000 to settle allegations that a Kaiser Permanente pharmacy at 3800 Dale Road in Modesto violated the Controlled Substances Act (CSA) by improperly filling defective prescriptions and by failing to maintain accurate records.

An investigation into a theft of controlled substances at the pharmacy in December 2013 resulted in prosecution of a Kaiser employee on a grand theft charge. It also led to closer scrutiny of the pharmacy by investigators with the Drug Enforcement Administration diversion control unit in Fresno.

The settlement resolves allegations that a large percentage of prescriptions that the pharmacy filled were incomplete, lacking the patient and dosage information required by the CSA’s implementing regulations.

Additionally, the settlement resolves allegations that the pharmacy failed to maintain accurate documentation of incoming and outgoing controlled substances. The investigation identified discrepancies in comparing the pharmacy’s purchase and dispensing records with the actual controlled substances on hand at the pharmacy.

“One purpose of the CSA is to ensure that pharmacies maintain accurate records to minimize the chance of diversion of powerful and potentially addictive drugs, which wreak havoc on our communities and destroy lives,” U.S. Attorney Talbert said. “Large pharmacy chains and health care conglomerates like Kaiser dispense a high volume of controlled substances to customers and members. Strict compliance with the CSA’s recordkeeping provisions by these entities is imperative.”

“Health care providers and pharmacies that don’t fully comply with the CSA give the public the short end of the stick. DEA will hold entities dispensing controlled substances accountable for their actions to protect public health and safety,” stated DEA Special Agent in Charge John J. Martin.

There was no evidence the violations caused harm to patients. Kaiser cooperated with the investigation and has agreed to implement protocols to minimize the chance of future violations.

In a statement Kaiser Permanente said tracking and management of controlled substances is taken seriously at its pharmacies. “Since bringing this matter to the attention of the Department of Justice, we have reviewed the Modesto pharmacy’s documentation and record-keeping of controlled substances, and have taken a number of steps, including instituting additional security controls.”

This case was the product of an investigation by the Fresno DEA Diversion Group. Assistant U.S. Attorney Vincente A. Tennerelli represented the United States in this matter.

View More

Officials Note Increase in Pharmacy Burglaries

WorkCompAcademy

The Ventura County Star reports that in 2015, law enforcement agencies had six pharmacy burglaries in Ventura County. The following year, these burglaries numbered 64, resulting in an average of more than five burglaries per month and leaving law enforcement officials scrambling for answers. Capt. Garo Kuredjian, of the Ventura County Sheriff’s Office, described the 58-burglary increase as a “statistically significant ” change in criminal behavior.

Detective Chip Buttell, of the Oxnard Police Department’s property crimes unit, said most of the burglaries had specific targets, such as opioid-based narcotics, with little variation. The burglars generally have not tried to take everything of value, such as computers or patient information, from a location, officials said.

“It was obvious the criminals were seeking high-priced drugs such as oxycodone,” said Mary Jarvis, a public affairs representative for Kaiser Permanente, whose Oxnard pharmacy was burglarized twice in 2016.

Thieves can potentially make hundreds of dollars from the illicit sale of such opioid drugs on the black market. “Typically, the opioid-based drugs are selling for about 50 cents per milligram,” Kuredjian said. “So it’s $7 to $18 for a 15-milligram pill and $15 to $36 for a 30-milligram pill.”

Indications of the spike began showing up early last year when the Ventura County Sheriff’s Office alerted the public to a string of burglaries in Thousand Oaks and Camarillo. Between January and March, six pharmacies had been burglarized, with the thieves forcing entry into small, independent pharmacies during non-operating hours. They primarily took opioid-based medications, then fled. As the year drew on, the county’s cities – large and small – were plagued by pharmacy break-ins.

In total for 2016, Ventura saw 14 break-ins and Camarillo had 12, while both Oxnard and Thousand Oaks finished the year with 10. Santa Paula reported five and Simi Valley had six pharmacy burglaries. Newbury Park saw two.

Law enforcement officials stressed that the problem is not confined to Ventura County. Regions such as Santa Barbara County, which was unaffected in 2015, reported multiple instances last year, according to the Santa Barbara County Sheriff’s Office. Five pharmacy burglaries were reported in 2016, four in Santa Barbara and one in Montecito.

While law enforcement officials have noted the likely financial motive for the burglaries, there are challenges in alleviating the issue. Authorities are unsure precisely why Ventura County and other parts of Southern California have seen a sudden surge in incidents.

Most of the burglaries have occurred at smaller, independent pharmacies, not chain stores such as CVS or Rite Aid where traffic is higher and security is more prevalent.  A Kaiser Permanente representative confirmed that measures had been taken at its Oxnard location to avoid further incidents, although specifics were not shared.

The decreased supply of legitimate drugs has increased the demand from illicit sources, according to authorities. Burglars are only too happy to fill the void left behind by a decline in prescriptions.

View More

FS&K Announces 7th Annual Employment Law Conference

WorkCompAcademy

Floyd, Skeren & Kelly’s “Annual Employment Law Conference” now enters its 7th year. This year the firm has another stellar group of employment law and workers’ compensation experts to present a comprehensive learning experience for employers, human resource administrators, risk managers and claims adjusters on important topics impacting the workplace.

Kevin Kish, Director of the Department of Fair Employment and Housing (DFEH) will be the keynote speaker during an important year for employers as we transition to a new President and federal administration, along with the inevitable changes in employment law and regulations that will follow.

Tina Walker, Regional Administrator for the DFEH will be joining Mr. Kish to provide her valuable input on the topics covered.

Mark ‘RX Professor’ Pew from PRIUM, will cover recent developments impacting employer policies on marijuana in the workplace and to address the many questions that have arisen since the passage of Proposition 64.

This years conference sessions will include:

1) Expanded Employee Protections: Key Developments on Conducting Lawful Background Checks, Transgender Protections, and Discrimination, Harassment and Retaliation Policies
2) New Laws Impacting Work Place Drug Testing- The Good, the Bad and the Unknown
3) HR Compliance is Complicated – 2017 Update Includes New Legislation, Cases and Key Trends Impacting the Workplace
4) Reducing the Risk of Costly Disability Discrimination Claims – Recommendations for Employer Best Practices (Legislative and Case Law Update Included)
5) Workers’ Compensation Case Law Update
6) Employer’s Fraud Task Force Update
7) Post Brinker-Costly Class Actions For Meal And Rest Period Violations Continue- Key Strategies For Avoiding Liability
8) Is My Employee Drunk, Sick or Simply Sleeping- Training Managers on ‘Reasonable Suspicion’ Based Drug Testing
9) Defending Good Faith Personnel Actions and Post-Termination Workers’ Compensation Claims
10) 2017 Hot Topics in Workers’ Compensation

Please see our Complete Agenda for more details.

The Conference is set for April 28, 2017 from 8:00 am to 5:00 pm at the Disneyland Hotel, 1150 Magic Way in Anaheim. Our conference is in the approval process for MCLE, CE, SPHR, HRCI and Credits for ARPM, CPDM and CCMP.

View More