Author: WorkCompAcademy

Property Casualty 360 reports that plaintiffs’ attorneys alleging that State Farm Mutual Automobile Insurance Co. bought off an Illinois Supreme Court justice to evade a $1.05 billion award have cleared a major hurdle in their long-running litigation against the insurer.

U.S. District Judge David Herndon of the Southern District of Illinois granted a motion certifying a class of roughly 4.7 million auto insurance policyholders who were allegedly deprived of their 1999 trial court victory against State Farm.

Herndon found that the alleged fixing of the state Supreme Court decision affected all the proposed class members uniformly, and that the named plaintiffs and their attorneys otherwise satisfied court rules around class actions.

A State Farm spokesman, said the company plans to appeal the ruling. “Plaintiffs have unsuccessfully asserted and reasserted these allegations for many years and should not be permitted to do so any longer.”

The suit stems from a 2005 decision by the Illinois Supreme Court that upended the billion-dollar judgement against State Farm. A jury had found the company defrauded policy holders by requiring the use of cheaper, non-manufacturer parts when repairs were made to covered vehicles after a crash, handing plaintiffs $1.18 billion in damages. An appeals court affirmed but reduced the amount of the award.

According to the complaint, filed in 2012, the state high court’s decision reversing the judgment was unfairly influenced by Justice Lloyd Karmeier, who State Farm and its agents worked to elect during a campaign in 2003 and 2004. Karmeier’s campaign received at least $4 million from the insurer and individuals connected to it, plaintiffs allege.

Illinois’ Supreme Court has seven justices, and the decision at issue was not authored by Karmeier. It won the support of four justices, with two issuing a dissent that still concurred on key holdings, and another abstaining. The court reversed the award against State Farm on the grounds that certification of a nationwide class of policyholders was improper, among other things.

RICO litigation has become a popular tool against insurance companies by disgruntled claimants, even within the workers’s compensation arena.

The Racketeer Influenced and Corrupt Organizations Act, commonly referred to as the RICO Act or simply RICO, is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization. Federal RICO allows a successful plaintiff to recover treble damages, plus attorney fees.

The plaintiffs bar has sought to apply RICO laws as a penalty in workers’ compensation claims for at least a decade with mixed results. Conceptually they allege that an employer, carrier or third party administrator concocts a fraudulent scheme that is used over and over to prevent workers from obtaining just benefits.

Workers’ compensation claimants recently lost a RICO case filed in California.

In the California case John Black, and a group of police officers and fire fighters asserted a RICO claim in their fourth amended complaint involving the City of Rialto and the City of Stockton, CorVel Enterprises, York Risk Services Group and others. These plaintiffs allege “York, CorVel, and Rialto engaged in a pattern of fraudulently denying and delaying legitimate claims in order to lower the liability of the city, while at the same time maximizing the TPA’s revenues (and allowing the TPA to maintain and obtain contracts with other public entities based on their ‘outstanding’ financial performance at the expense of public servants)”

The number of children and teens hospitalized for prescription opioid poisonings has more than doubled in recent years, with both accidental overdoses and suicide attempts on the rise, according to a new study published in the JAMA Pediatrics and summarized by Reuters Health.

Annually, the rate of these opioid poisonings among youth up to 19 years old surged from 1.4 per 100,000 children in 1997 to 3.71 per 100,000 kids by 2012, the study found.

“I believe that the two-fold increase in hospitalization rates over time for opioid poisonings in children are a direct consequence of the increasing reliance in the U.S. on opioid analgesics to treat acute and chronic pain,” said lead study author Dr. Julie Gaither, a public health researcher at Yale University in New Haven, Connecticut.

For teens aged 15 to 19, the rate of poisonings surged from 3.69 per 100,000 at the start of the study to 10.17 per 100,000 by the end, fueled in part by overdoses involving heroin and methadone, researchers report in JAMA Pediatrics.

“Trends we see in teens mirror what we’ve seen in adults – an increase in accidental overdoses (poisonings) from either taking an opioid as prescribed or, increasingly, using opioids for purposes other than to treat pain, including to get high or to enhance the effects of alcohol or other drugs,” Gaither noted by email.

With children 4 years old and under, the rate of poisonings climbed from 0.86 per 100,000 kids to 2.62 per 100,000 by the end of the study period.

“The vast majority of opioid poisonings in young children – toddlers and preschoolers – are the result of unsupervised ingestions of medications prescribed for an adult (parent, grandparent) in the household,” Gaither added.

To assess trends in poisonings over time, researchers examined data from 13,052 pediatric hospitalizations due to ingestion of prescription opioids. For teens, they also identified poisonings due to heroin.

Overall, 176 children, or 1.3 percent, died during hospitalizations for opioid poisoning during the study period.

Among teens in the study, poisonings from heroin increased by 161 percent from 0.96 to 2.51 per 100,000 children, while poisonings involving methadone increased by 950 percent from 0.10 to 1.05 per 100,000 children.

When the authors examined intent behind the opioid poisonings, there were 16 poisonings attributed to suicide or self-inflected injury among children younger than 10 from 1997 to 2012.

In children ages 10 to 14, the incidence of poisonings attributed to suicide or self-inflicted injury increased by 37 percent from 0.62 per 100,000 in 1997 to 0.85 per 100,000 in 2012. The incidence of poisonings attributed to accidental intent increased by 82 percent from 0.17 to 0.31.

For teens ages 15 to 19, opioid poisonings attributed to suicide or self-inflicted injury increased by 140 percent, while those attributed to accidental intent roughly tripled in this age group.

“It is a common practice for adults to place leftover opioid medications in the medicine cabinet or in the kitchen, which leaves them completely available to not only children and adolescents in the household but also any friends that come to visit,” said Dr. Constance Houck, a researcher at Harvard Medical School and Boston Children’s Hospital who wasn’t involved in the study.

“It is a well-known technique for adolescents with substance use issues to ask to use the bathroom in a friend’s or relative’s home and rifle through the medicine cabinet while alone in the bathroom,” Houck said. “Many adolescents have described this as a way that they have regularly obtained opioids.”

CompPharma’s 13th Annual Survey of Prescription Drug Management in Workers’ Compensation analyzed the 2015 pharmacy cost data of 30 workers’ compensation insurance carriers, third-party administrators, self-insured employers, and state funds.

Total workers’ comp annual pharmacy spend is approximately $5.5 billion, but it is not possible to more precisely calculate workers’ compensation drug spend.

After a one-year bump up in inflation, work comp drug costs declined again, this time by 8.7%. The 30 payers saw a decline in spend, which they attributed to tighter clinical management, better integration with their PBMs on a variety of services, and specific efforts to reduce initial opioid scripts and decrease the level of morphine equivalents across as many patients as medically appropriate.

Over the last four years, drug costs for payers surveyed by CompPharma have dropped by 11%. This year, seven respondents’ drug costs dropped by 17 points or more. Claim volume changes were only involved for a handful of payers. Respondents attributed the steep decline to more active and assertive clinical management, especially focused on opioids and other potentially problematic drugs.

Over the 13 years the survey has been conducted, the pharmacy cost inflation rate decreased by 26.5 points.

Compounds were named as the emerging issue of most concern to payers, while opioids remained the “biggest problem” in workers’ comp pharmacy management.

Payers credited tighter clinical management, better integration with their pharmacy benefit managers, and prescriber interventions for the decrease. All have opioid management programs to limit the number of initial opioid prescriptions and/or decrease morphine equivalents across as many claims as medically appropriate.

“Twenty percent of the respondents also had assertive settlement initiatives and have been closing older claims,” said Joseph Paduda, president of CompPharma, LLC. “Overall, payers have seen drug costs go down by 11 percent in the past six years despite the 2014 increase.”

PBM consolidations received mixed reactions from the payer community. Some respondents hoped mergers would bring better pricing and more clinical capabilities while others expressed concern that the lack of competition would breed complacency.

The survey’s final question asks respondents to identify the single biggest problem in workers’ compensation pharmacy. This year the answers were diverse indeed. Prescriber behavior and variations thereof garnered a quarter of the responses; opioids were named by four respondents and compounds by three. If anything the most insightful answers involved the need to work with other stakeholders to address prescribing patterns, implement evidence-based guidelines and influence regulatory authority. Respondents would also like to receive more complete data (not just on pharmacy, but other medical cost data) and have better communication of the right information among stakeholders.

In a small trial of 10 patients with damaged knee joints, doctors harvested cells from their noses to engineer new cartilage tissue and transplant it into their damaged knees. In a paper published in The Lancet, the Swiss team describes how 2 years after transplant, most of the patients had developed new tissue similar to normal cartilage and reported improvements in knee function, pain, and quality of life.

However, the authors point out that while the results of their phase I study are promising and show the approach is feasible and safe, there is still a long way to go before such a procedure can be approved for routine use with patients. There now needs to be randomized trials – with longer follow-up – that compare the promising treatment with conventional alternatives.

About 2 million people in Europe and the United States are diagnosed with damage to knee joint cartilage every year, caused by injury or accident. Joint or articular cartilage is the layer of smooth tissue at the ends of bones that eases movement, and protects and cushions the surfaces of the joint where the bones meet.

As this tissue has no blood supply, if it gets damaged it cannot regenerate. Eventually, as the cartilage wears away, the bones become exposed and inflamed from rubbing against each other, leading to painful joint conditions like osteoarthritis.

There are medical techniques – such as microfracture surgery – that can prevent or delay the onset of cartilage degeneration following injury or accident, but they do not regenerate healthy cartilage to protect the joints.

There have also been attempts to use cartilage cells or chondrocytes from the patients’ own joints to make new cartilage in the joint, but these have not been very successful at creating the right structure and function of the cushioning tissue.

One of the unique features of the new study is that Prof. Martin and colleagues used chondrocytes harvested from a site far away from the damaged joint – from the patients’ nasal septum. These cells have a unique ability to grow new cartilage tissue.

For the study, the team enrolled 10 patients (age 18-55) with full-thickness cartilage damage to the knee and took a biopsy from their nasal septum under local anesthetic. They grew chondrocytes harvested from the biopsy tissue by stimulating them with growth factor for 2 weeks.

The team then took the cultured new cells and seeded them onto “scaffolding” made of collagen and grew them for another 2 weeks. The result was a 2-millimeter thick graft of new cartilage measuring about 30-40 millimeters.

Each patient then underwent surgery where the damaged knee cartilage was removed and replaced with their own cultured graft cut into the appropriate shape. After 2 years, scans showed new tissue of similar composition to cartilage had grown at the affected sites.

Nine of the 10 patients – one was excluded because of sports injuries not related to the trial – also reported significant improvements in the use and function of their knee and reduction in pain, compared with pre-surgery.

The authors note there were no reports of adverse reactions to the surgery, although there were two reports of injuries not related to the procedure. Patient age does not appear to affect success They also mention the promising result that patient age does not appear to affect the success of the procedure.

The Santa Barbara Independent reports that Freddy Pachon, a former vice president of risk management for Select Staffing, was sentenced Monday to eight years and eight months in prison for embezzling more than $700,000 from the Santa Barbara-based temp agency.

Between January 2008 and December 2012, Pachon funneled money from reimbursement checks related to workers’ compensation claims into a personal account he created under the fictitious business entity “Select Consulting Services.” At a previous court hearing, it was revealed that Pachon had placed his sister-in-law, Paula Orozco, in a job at AG Employment Services, the company contracted by Select Staffing to handle medical claims. Orozco testified she altered the checks then mailed them to an address provided by Pachon, on some occasions even hand-delivering them to him in the Select Staffing parking lot or at his house. Orozco was later fired from her job but avoided criminal charges.

According to prosecutors, Pachon spent the stolen funds on a lavish home and backyard renovations. At the time of his arrest, he was earning approximately $250,000 a year from Select Staffing, where he’d been working since 2001.

At the Monday hearing, Pachon’s attorney Steven Andrade admitted his client “made a horrible exercise in judgment” but deserved leniency and probation, not the 20-year prison sentence prosecutor Brian Cota had asked the judge to impose. Andrade said as soon as Select Staffing discovered Pachon’s theft, he immediately sold his home and transferred the funds to the company. He had hoped to make full restitution and not involve law enforcement, Andrade said. “Mr. Pachon was like the most cooperative suspect in the world,” he stated. Since his arrest, Pachon has been volunteering and cleaning offices part-time, and still works in risk management. “He’s really fighting for his family,” Andrade said of Pachon’s wife and young children.

Pachon’s wife, Julia Orozco, also pleaded with Judge Michael Carrozzo to show her husband compassion. “I know he did something wrong,” she said, “but he’s not a bad guy. He’s a good father.” Attorney and real estate broker John J. Thyne III, who helped Pachon sell his home, said he found him honest and well-meaning.

In arguing for a lengthy prison term, Cota stressed the depth and repetition of Pachon’s deception. “And using a family member is way beyond a typical embezzlement case,” he said. Cota said Pachon meticulously planned his scheme and deserved no credit for selling his home, as it was going to be foreclosed upon anyway. “He was just trying to save his own skin,” Cota said, noting that since his arrest Pachon has still not paid Select Staffing any of the the $250,000 or so he still owes. Instead, that money has been used to pay four different private attorneys. In addition, Cota went on, all the embezzled funds previously went toward “vanity projects” so Pachon, who has multiple ex-wives and as many as 10 children, would “look like the big guy in the office.” None of it went to his family.

More than a dozen of Pachon’s family members were present in the courtroom Monday. During a short break in the proceedings, a woman who identified herself as one of Pachon’s cousins offered to pay Independent staff photographer Paul Wellman to not publish photographs of Pachon. Wellman declined. The cousin persisted, offering to double his hourly rate and insisting he could take the money without the Independent finding out. Wellman again declined.

In handing down his sentence, Judge Carrozzo said while Pachon’s case certainly didn’t warrant probation, he also didn’t deserve 20 years behind bars. “I think the defendant is a good person who made a mistake,” Carrozzo said. He noted multiple letters of support from friends and family influenced his decision. He said he hoped Pachon, from Colombia on a work visa, would get his life back on track after prison. “I hope Mr. Pachon is still able to become an American success story,” he said.

Though Pachon was technically sentenced to eight years and eight months in prison, the credit he receives for good behavior – along with new incarceration rules guided by current and pending legislation aimed at reducing prison overcrowding – may make him eligible for parole in as little as eight months.