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Relentless Pursuit – Nine Medical Fraud Settlements in Just 30 Days – Not Bad!

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Beckers Hospital Review reports that the following hospitals, health systems and healthcare providers entered into settlement agreements to resolve alleged violations of the False Claims Act since Feb. 1.

1. 51 hospitals pay $23M for alleged overuse of cardiac devices
The Department of Justice inked a deal for more than $23 million with 51 hospitals across the nation – including Cleveland Clinic and San Francisco-based Dignity Health hospitals – to settle False Claims Act allegations related to the implantation of cardiac devices in Medicare patients.

2. Adventist Health System to pay $2M for allegedly giving leftover chemo to patients
Altamonte Springs, Fla.-based Adventist Health System Sunbelt Healthcare agreed to pay the federal government $2.09 million to resolve allegations that patients at one of its hospitals were administered leftover portions of single-dose vials of chemotherapy drugs. Adventist self-disclosed some of the improper acts to the federal government, and a former Adventist employee brought the remaining allegations in a whistle-blower lawsuit filed under the False Claims Act.

3. NJ physician accused of submitting false claims settles for $5.25M
A Westfield, N.J.-based physician, Labib E. Riachi, MD, agreed to pay the federal government $5.25 million to resolve allegations that he and two of his companies fraudulently billed federal healthcare programs for tests that were never provided.

4. Pfizer’s Wyeth unit to pay $784.6M to settle False Claims Act violations
Pfizer’s Wyeth unit agreed to pay a $784.6 million settlement for cases related to the calculation of Medicaid rebates for a gastric drug sold between 2001 and 2006.

5. Vermont physician pays $500k to settle false claims allegations
Gamal H. Eltabbakh, MD, of Lake Champlain Gynecologic Oncology in Burlington, Vt., paid the federal government and the state of Vermont $500,000 to resolve allegations that he submitted false claims to Medicare and Medicaid.

6. 4 physicians, 2 pharmacies allegedly bilked $10M from military’s healthcare program
Four physicians and two compounding pharmacies agreed to pay the federal government a total of approximately $10 million to resolve allegations they submitted false claims to TRICARE.

7. Rose Radiology settles false claims allegations for $8.7M
Rose Radiology Centers in Tampa, Fla., agreed to pay the federal government $8.71 million to resolve allegations it violated the False Claims Act.

8. Norwalk Hospital to pay nearly $920k to settle false claims allegations
Norwalk Hospital in Fairfield County, Conn., agreed to pay the federal government $920,000 to settle accusations that it falsely billed Medicare while treating patients for osteoporosis.

9. Memorial University Medical Center reaches $9.89M false billing settlement
Memorial Health University Medical Center and its affiliates in Savannah, Ga., agreed to pay more than $9.89 million to settle unlawful referral allegations brought under the whistle-blower provision of the False Claims Act.

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Split Panel Decision Continues UR/IMR Erosion

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Esther Sandoval sustained an admitted industrial injury to numerous body parts, which included the shoulders while employed by the San Diego Unified School District. A request for authorization was made for right shoulder surgery in the form of a rotator cuff repair. The request was submitted for utilization review. Both parties stipulated that the utilization review was not performed in a timely manner. Therefore, pursuant to the opinion in Dubon v. World Restoration, Inc. (2014) 79 Cal. Comp. Cases 1298, the panel stated “where there is no timely UR decision subject to IMR, the issue of medical necessity for the surgery is to be determined by the WCJ.”

The WCJ determined that the medical/legal opinions of the treating physician, Dr. Tradonsky, and the consultative report of Dr. John W Miles constitutes substantial evidence in favor of applicant’s present need for a right shoulder surgery.

Defendant filed a timely petition for reconsideration, which alleges that the opinions of Dr. Miles and Dr. Tradonsky do not comply with the requirements of labor code section 4604.5(a), as they failed to specifically cite the guidelines set forth in the medical treatment utilization schedule (MTUS) adopted by the administrative director pursuant to labor code section 5307.27. Two Commissioners disagreed in the terse denial of reconsideration in the case of Sandoval v San Diego Unified School District by simply stating “We agree with the WCJ that a requesting physician’s report need not cite to the MTUS in order to comply with Labor Code section 4604.5.1 Here, the medical evidence supporting applicant’s need for right shoulder surgery was not only consistent with the MTUS, but also compelling.” Commissioner Razo disagreed stating “I write separately, however, because I do not agree with the majority’s statement that a requesting physician’s medical report need not cite to the MTUS in order to comply with section 4604.5.”

The Opinion incorporated the Report of the WCJ which stated in pertinent part: “This WCJ disagrees with petitioner’s interpretation of labor code section 4604.5. In the present case, the issue presented is whether applicant should be provided with surgery in the form of a rotator cuff repair. The task of the WCJ is to review the provided medical reports, as well as the MTUS, and determine whether the treatment requested in the medical reports complies with the requirements of the MTUS. If the answer is in the affirmative, the treatment will be awarded to applicant.”

“In reviewing chapter 9 of the 2004 ACOEM practice guidelines, the following language appears under the heading Rotator Cuff Tear: “For partial thickness rotator cuff tears and small full-thickness tears presenting primarily as impingement, surgery is reserved for cases failing conservative therapy for three months. The preferred procedure is usually arthroscopic de compress1. 0n ….. ” In the present case, 10 months have passed from the date of injury. Applicant has not improved after three injections, and therefore it is clear that conservative therapy has failed. Therefore, the WCJ finds that the proposed treatment falls within the MTUS.”

Thus the WCAB approved of a WCJ being the person to read, interpret and apply treatment guidelines instead of a medical doctor. However, this stance seems to be contraindicated in prior panel and appellate level decisions. For example, the panel decision of Elvin Salguero v Charles Gemeiner Cabinets and Insurance Company of the West, January 2014 required a citation to a treatment guideline before an award of medical care. This split panel decision seems to be an erosion of the prior standards.

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FEHA Discrimination Claim Does Not Require Evidence of Animus

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Dennis Wallace was hired by the County of Stanislaus in 1997 as a deputy sheriff. He started in patrol and then worked in various positions with the sheriff’s department.

In October 2007, Wallace injured his left knee and filed a workers compensation claim. He later reinjured his left knee during a river sweep. He wore a knee brace at work until he had knee surgery in 2008. After the surgery Wallace took a Labor Code section 4850 paid leave of absence from time to time until he returned to light duty. After this leave, Wallace began to work a light duty assignment in the property and evidence room. His restrictions at the time were limited climbing, limited walking on uneven ground, and limited running.

Later, the The restrictions were clarified in a supplemental report to (1) no prolonged walking in excess of 30 to 45 minutes without a five-minute break, (2) no walking on uneven ground in excess of 30 minutes without a five-minute break, and (3) no prolonged standing in excess of 30 to 45 minutes without a five-minute break.

Wallace received and initialed a “NOTICE OF OFFER OF MODIFIED OR ALTERNATIVE WORK” on a preprinted workers compensation form. The County offered Wallace an assignment as a bailiff for at least 12 months at his pre-injury rate of pay. The cover letter referred to the position as a permanent modified duty assignment with the restrictions stated in the supplemental report. It also stated the restrictions “are to be considered ‘Permanent’ until your Agreed Medical Exam.” During the period that Wallace worked as a bailiff, the sergeants who supervised him had no issues with his performance.

The AME then issued a report that listed various “preclusions” including (1) no lifting more than 50 pounds, (2) no bilateral overhead work or repetitive right over shoulder work, (3) no forceful pushing, pulling, torqueing with the right upper extremity, (4) no weight bearing more than 75 percent of the time, (5) no more than occasional climbing, squatting, kneeling, crouching, crawling or pivoting, and (6) no walking on uneven ground more than 75 percent of the day. Wallace was removed from his bailiff position on the grounds that he could not perform the job with those restrictions. At a meeting called to discuss this decision Wallace stated that he could perform the functions of a bailiff and also mentioned working as a detective or school resource officer.

On May 20, 2011, a few days before his accruals for sick leave and vacation were exhausted, Wallace filed a civil complaint against County and the sheriff’s department alleging causes of action under the California Fair Employment and Housing Act (FEHA) (§ 12900 et seq.) for (1) disability discrimination, (2) failure to accommodate his disability, (3) failure to engage in the interactive process, and (4) failure to prevent discrimination.

After a first jury trial, the jury was deadlocked on some of the causes of action. On January 30, 2013, over three months before the second trial, Wallace returned to full duty as a patrol office. After the second jury trial, the court entered judgment in favor of the County, and Wallace appealed. The Court of Appeal reversed in the partially published case of Wallace v Stanislaus.

An employer can violate the law by taking an adverse employment action against an employee “because of” the employee’s physical disability even if the employer harbored no animosity or ill will against the employee or the class of persons with that disability. This conclusion resolves how the jury should have been instructed on the County’s motivation or intent in connection with the disability discrimination claim. The trial court told counsel that it read the case law as requiring employee plaintiffs to “prove that the actions taken by the employer were done with the intent to discriminate,” which the court equated with “animus.” Thus, over plaintiff’s objection, the court modified the standard jury instruction (CACI No. 2540) accordingly. This was error, and the judgment reversed accordingly.

The court published its discussion of motive and animus to alert practitioners and other courts that “animus” is an imprecise term that can cause confusion when used in disability discrimination cases with direct evidence that the employer’s motive for taking an adverse employment decision was the plaintiff’s actual or perceived disability. To avoid this confusion, courts and practitioners would be better served by limiting their use of the terms “animus” and “ill will” to employment discrimination cases involving proof of an illegitimate motive by circumstantial evidence.

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Researchers Find Steep Rise in Benzodiazepine Fatal Overdoses

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Even as opiate abuse has become a growing problem, overdose deaths involving sedatives and antiseizure medications in the benzodiazepine category have also risen steeply, according to a recent study published in the American Journal of Public Health and summarized in Reuters Health.

Benzodiazepines are most often prescribed for anxiety disorders, mood disorders such as depression, and insomnia. Benzodiazepines typically used to treat anxiety or depression include alprazolam (Xanax), chlordiazepoxide (Librium), diazepam (Valium) and lorazepam (Ativan). The benzodiazepine clonazepam (Klonopin) is used for seizures, while oxazepam (Serax) and temazepam (Restoril) are used for insomnia.

Benzodiazepines are one of the more common prescription drugs used recreationally. When used recreationally benzodiazepines are usually administered orally but sometimes they are taken intranasally or intravenously. Recreational use produces effects similar to alcohol intoxication. When illegally used as recreational drugs, benzodiazepines are often referred to on the street as benzos, temazies, jellies, eggs, moggies or vallies. These Schedule III and IV substances have also earned the dubious distinction of being second only to opioid painkillers like OxyContin as our nation’s most widely abused class of drug.

Prescriptions for benzodiazepines have more than tripled and fatal overdoses have more than quadrupled in the past 20 years, researchers found. “Overdoses rose at a faster rate than prescriptions, suggesting that people were using benzodiazepines in a riskier way over time,” said lead author Dr. Marcus Bachhuber, assistant professor of medicine at Albert Einstein College of Medicine in New York.

“Benzodiazepines have several known safety risks: in addition to overdose, they are conclusively linked to falls, fractures, motor vehicle accidents, and can lead to misuse and addiction,” Bachhuber told Reuters Health by email.

The study team used data from the annual Medical Expenditure Panel Surveys between 1996 and 2013, which asked U.S. adults whether they had filled one or more benzodiazepine prescriptions. In those 20 years, the number of adults with benzodiazepine prescriptions grew by more than two thirds, from 8.1 million to 13.5 million, the researchers found. In 1996, around 4 percent of people surveyed had filled a benzodiazepine prescription, and by 2013, this had risen to 5.6 percent. They also found that the amount of medication distributed had grown by three-fold. After standardizing doses of all drugs, they found that people with prescriptions received 1.4 times more medication in 2013 than 20 years earlier.

Based on data from the Centers for Disease Control and Prevention, overdose deaths involving benzodiazepines rose from 0.58 per 100,000 people in 1999 to 3.07 per 100,000 in 2013, according to the results in American Journal of Public Health. This increase seemed to level off after 2010 overall, but among certain groups, including people over age 65 and certain minorities, there was no plateau and the rate kept rising, the study found.

It may be wise for workers’ compensation claim administrators to submit treatment requests for benzodiazepines to the UR process when abuse or over prescribing is suspected.

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U.S. Supreme Court Sides With Liberty Mutual Over State Rights to Health Data

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The U.S. Supreme Court on Tuesday ruled that Vermont cannot compel health insurers to hand over data on the amount paid on medical claims, backing Liberty Mutual Insurance Co’s contention that federal law prohibited such requirements. The case is Gobeille v. Liberty Mutual, U.S. Supreme Court, No. 14-181.

The court, in a 6-2 decision, found that a 2005 Vermont data collection law that was aimed at improving the quality of healthcare did not apply to self-funded insurance plans, which are most commonly used by large companies, and ran afoul of the U.S. Employee Retirement Security Act (ERISA). A federal appeals court backed Liberty Mutual’s challenge to the Vermont law. The Obama administration had supported Vermont in the case.

Liberty Mutual sued after Vermont issued a subpoena to Blue Cross in August 2011, ordering it to file data on its covered Vermonters or risk a $2,000-a-day fine and loss of its license to operate in the state. Blue Cross administers Liberty’s plan. The ruling is likely to put limits on similar laws in 17 other states. The decision was one of two issued by the court on its first day of rulings since the Feb. 13 death of Justice Antonin Scalia.

Writing for the court’s majority, conservative Justice Anthony Kennedy said that “reporting, disclosure and record-keeping are central to, and an essential part” of the federal law, meaning that it trumps the state’s efforts to legislate on the same issue. “The fact that reporting is a principal and essential feature of ERISA demonstrates that Congress intended to pre-empt state reporting laws like Vermont’s,” Kennedy added.

Two of the court’s liberal justices, Ruth Bader Ginsburg and Sonia Sotomayor, dissented.

Liberty Mutual, which runs a self-funded plan administered by Blue Cross Blue Shield of Massachusetts, had challenged a request made under the law. The company said the ERISA law exempted it from such requirements.

The Vermont law mandated that insurers provide the state data on the types of healthcare services they paid for and how much they paid in a bid to keep healthcare costs under control and improve the quality of care.

Vermont is one of 18 states with a data collection law.

Liberty Mutual and its supporters argued that such requirements were a particular problem for companies that operate nationally because they must meet multiple different mandates. The ERISA law is intended to protect employers from a patchwork of burdensome state regulations, Liberty Mutual said.

Self-funded plans provide insurance for 93 million Americans, according to the American Benefits Council. They are an alternative to plans in which companies contract with insurance companies, which assume the risk.

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Nevada, Pennsylvania and Ohio Announce Comp Rate Reductions

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Workers’ compensation premiums in California continue to grow at double-digit rates, according to the Workers’ Compensation Insurance Rating Bureau. The 2014 Oregon Workers’ Compensation Premium Rate Ranking Summary, which differs slightly from the WCIRB figures, showed California’s workers’ comp premium rates were $3.48 last year, topping No. 2 Connecticut by 61 cents. While rates in California are headed up, other states just announced rate reductions.

Nevada state officials announced that workers compensation insurance rates are heading lower, with the biggest decrease in loss cost rates since 2010. The lower rates are good for employers, said the announcement from the state Division of Insurance. Acting Insurance Commissioner Amy Parks approved a filing from the National Council on Compensation Insurance for an average decrease of 5.5 percent for Nevada workers’ compensation voluntary insurance loss costs.

An average decrease of 4.2 percent for workers’ compensation insurance assigned-risk rates was also approved.

The filing will take effect Tuesday. This decrease in loss costs is the largest since a 2010 filing when loss costs decreased by an average of 7.6 percent.

This suggests that the amount of reported workers’ comp claims will not grow over time by as large a proportion as previously anticipated. Both indemnity and medical loss components of workers’ comp, as analyzed by NCCI in its recently approved filing, showed improved experience and favorable loss development, according to Parks.

In addition to the average decrease of 4.2 percent for the assigned-risk market, NCCI also reduced its assigned-risk expense constant from $240 to $160. This change would tend to benefit smaller risks in the assigned-risk market and is thus a change that is favorable to small-business development in Nevada.

Pennsylvania businesses will see another decrease in workers’ compensation insurance rates, while benefit levels for injured workers will be maintained. Workers’ comp insurance rates will drop 0.90 percent, effective April 1, reducing a key expense for many companies and saving Pennsylvania businesses an estimated $20 million this year.

The rate reduction follows the Insurance Department’s approval of the Pennsylvania Compensation Rating Bureau’s annual loss cost filing. These loss costs are used to determine the premiums businesses pay for workers’ compensation insurance. The premium savings for an individual employer will vary based on the employer’s risk classification, claims experience, and other factors.

This is the fifth consecutive workers’ compensation insurance cut in as many years in Pennsylvania, and brings the cumulative savings to $570 million for the past five years. Workers’ compensation insurance covers the cost of medical care and rehabilitation for injured workers, lost wages, and death benefits for the dependents of those killed in work-related accidents.

The Ohio Bureau of Workers’ Compensation said that it wants to cut the average rate by 8.6 percent for the one-year period that begins July 1. The cut is projected to save private employers $113 million. The cut would be the latest in a series of reductions in premiums for private employers that began in 2011. If it is adopted by the bureau’s board next month, private employers will pay $463 million less a year than they did in 2011, a 28.2 percent reduction. The average rate would fall to $1.07 per $100 in payroll, the lowest rate in at least 40 years, the bureau said.

The bureau has credited lower rates to lower-than-expected claims costs and a decline in workplace injuries.

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DWC Hearing Calendar Now Available Online

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The Division of Workers’ Compensation (DWC) has posted a new court calendar on its website, listing daily hearing schedules at its 24 district offices and satellites. The calendar is updated daily and shows the schedule for the next two weeks.

Legal practitioners and others can now confirm court dates from their computers. “This will help them plan their schedules and will also reduce calls to our district offices,” said DWC Chief Judge Paige S. Levy.

The calendar is downloadable and sortable as a spreadsheet. Step-by-step instructions demonstrate how to filter by attorney name using Excel format.

Because of the size of the calendar download, it will be primarily of use to attorneys and claims administrators who are looking up multiple cases in which they are a party. Injured workers looking for information on their own cases are best served by using the public information case search tool or contacting the Information and Assistance Unit.

Users are responsible for ensuring the information obtained via the download function is not used for purposes other than those allowed by law.

The law requires that people requesting access to public information:

1) Identify themselves
2) State the reason for making the request
3) Not disclose the information to any person who is not entitled to it under Labor Code section 138.7.

Residence addresses and Social Security numbers of injured workers are confidential and are not disclosed by the Division of Workers’ Compensation. Documents are not available through this download. Requests for documents should be made following the guidelines for access to public records.

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Rehabilitation Therapists Pressured to Drag Out Treatment

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Nursing homes in California – and notably in Orange County – are outpacing the nation in embracing the most expensive form of therapy for their patients on Medicare, triggering an outcry from some therapists who say the therapy is frequently unnecessary.

The Orange County Register reports that 72 percent of Medicare rehabilitation patients in Orange County nursing homes in 2014 received treatment at the highest rate allowed. That compares to 66 percent statewide, and 58 percent nationwide, the CHCF Center for Health Reporting found in an analysis of Medicare data for the Orange County Register.

The cost to taxpayers is upward of $500 per patient per day, contributing significantly to the nearly $30 billion per year that Medicare pays nursing homes for all patient care.

The practice, known as ultra high care, can require sometimes frail patients to receive at least 12 hours of physical, occupational or speech therapy every week. Some therapists in nursing homes say they’re being told to give inappropriate treatment to patients, according to the three major therapist professional groups.

“We get calls from therapists who are being pressured to do practices that are unnecessary or illegal,” said Roshunda Drummond-Dye, director of regulatory affairs at the American Physical Therapy Association.

Melissa Lathon said she personally saw Medicare fraud skyrocket in her 16 years as a social services director at six nursing homes, including three in Orange County. “They would pretty much twist the therapists’ arms and say, we need another week at the ultra high level,” she said. And when she handled patient discharges, “If they still had Medicare benefits available, they would not let me discharge them.” She said she left the field after a supervisor ordered her to fill out a document saying a patient needed assistance in walking when he had clearly shown he was walking independently.

A handful of nursing home therapists have turned whistleblower, filing lawsuits under the federal False Claims Act. In November 2013, Mission Viejo-based Ensign Group agreed to pay $48 million to settle a case involving allegedly false rehab claims at Sea Cliff Healthcare Center in Huntington Beach and five nursing homes in other Southern California cities. Two therapists originally filed the suit. Ensign denied wrongdoing at the time and did not respond to questions for this article.

Pending cases against two of the nation’s largest nursing home chains, HCR Manor Care and Life Care Centers of America, allege managers pressured therapists to step up treatments. They also allegedly administered expensive therapy to dying patients. Both HCR and Life Care are fighting the lawsuits. Life Care has nursing homes in Garden Grove, La Habra and Lake Forest.

The recent $125 million settlement with Kindred Healthcare, the nation’s largest nursing home operator, a company with annual revenues topping $2.5 billion, sent its stock to its lowest point in nearly four years. Kindred denied wrongdoing.

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Clinic Operators Convicted After Three Week Trial

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The Los Angeles Times reports that two Glendale men were convicted of laundering more than $1 million generated through fraudulent billings to Medicare for equipment and tests that were either medically unnecessary or never provided.

After a three-week trial, a federal jury found Karen “Gary” Sarkissian guilty of six counts of money laundering, five counts of health care fraud and one count of conspiring to commit money laundering. Edgar Pogosian, also known as Edgar Hakobyan, was convicted of one count each of conspiring to commit money laundering and money laundering. Both are slated to be sentenced in June, according to the U.S. attorney’s office.

Officials said Sarkissian operated an Echo Park clinic, where a physician assistant, L’Tanya Smith, ordered medically unnecessary tests and services in 2009 and 2010 that led to more than $1.2 million in fraudulent Medicare claims.

Smith also ordered medically unnecessary durable medical equipment and tests that were referred to other Medicare providers, who then submitted more than $10 million in fraudulent claims. Smith pleaded guilty to five counts of healthcare fraud and is due to be sentenced in May.

According to the U.S. attorney’s office, Sarkissian was involved in laundering the fraudulent proceeds through five bogus corporations established by two men also convicted in the scheme. The two co-conspirators deposited millions of dollars of fraudulent proceeds into the bank accounts of the bogus companies, and later wrote checks from the companies to themselves and their relatives, including Pogosian, officials said.

Pogosian’s uncle, Khachatour Hakobyan, who prosecutors believe led the scheme, was sentenced last month to 57 months in prison after pleading guilty to conspiring to launder healthcare fraud proceeds and underreporting his income from the conspiracy. The Glendale resident was also ordered to pay more than $600,000 in restitution.

Another Glendale resident involved in the scheme, Aram Aramyan, was sentenced to 51 months in prison and ordered to pay more than $350,000 in restitution, officials said.

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Former CHP Officer Ordered to Pay $183,000 After Comp Fraud Conviction

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A former California Highway Patrol officer who was seen engaging in physically strenuous outdoor activities while receiving workers’ compensation has been ordered to pay more than $183,000 in restitution.

The Sacramento Bee reports that Daniel Corey Clapp pleaded no contest to misdemeanor workers’ compensation insurance fraud in August 2014. He was sentenced to 60 days in county jail and three years probation, and ordered to make restitution to the CHP and State Compensation Insurance Fund.

Sacramento Superior Court Judge Steve White on Wednesday ordered Clapp to pay the CHP $151,927.01 for benefits he received and the costs incurred by the CHP to investigate the case. The judge also ordered Clapp to repay the State Compensation Insurance Fund $31,475.68 for disability benefit payments he received and investigative costs, according to a Sacramento County District Attorney’s Office news release.

On Jan. 3, 2012, Clapp filed a workers’ compensation claim for injuries to his shoulder, neck, knee and back arising from a struggle with a man he was attempting to arrest. Over the next two years, Clapp told his doctors he was unable to work because of the injuries, authorities said.

When fellow officers working traffic control saw Clapp drive by towing a camping trailer and ski boat, an investigation was initiated by the CHP’s Internal Affairs Division, Workers’ Compensation Fraud Unit.

Investigators conducted surveillance during several camping and boating trips that Clapp took with his family. He was filmed hooking up a boat trailer and fifth-wheel camping trailer, launching the boat, and being very physically active, authorities said. Throughout this time, he was telling his supervisors that he was too disabled to do even office work.

During a deposition in his workers’ compensation case, Clapp was asked under oath if he had attempted to do any physical activities like camping, hunting, riding dirt bikes or boating. Clapp testified that he had not, but wished he could, and claimed he could only shuffle around the workbench in his garage.

Results of the CHP’s investigation were submitted to the District Attorney’s Office and prosecuted by the Insurance Fraud Unit.

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