Author: WorkCompAcademy

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.In order to prevail in a RICO action, a plaintiff must prove a “predicate offense” one of which is fraud. In addition to the predicate offense, a plaintiff must also prove a “pattern of racketeering activity” which requires a showing of at least two acts of racketeering activity. This second requirement opens the doors to fairly broad discovery rights covering practically any history of a target defendant that might prove a pattern of racketeering, an open ended discovery process. 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.

Plaintiff efforts to succeed at RICO in the federal 6th Circuit (Kentucky, Michigan, Ohio, and Tennessee) ultimately ended in failure. In one the the last tries, a Michigan claimant alleged that employer/carrier defrauded him with “false” medical testimony, and filed federal Racketeer Influenced and Corrupt Organizations Act RICO case, In that case, Brown v. Ajax Paving Industries, 752 F.3d 656 (2014), the United States Court of Appeals for the Sixth Circuit followed the prior ruling in Jackson v. Sedgwick Claims Management Services, a carbon copy of this case, 731 F.3d 556, 558 (6th Cir.2013) (en banc). Essentially in the 6th Circuit, RICO cannot be based on an underlying workers’ compensation claim because the court held that “loss or diminution of benefits the plaintiff expects to receive under a workers’ compensation scheme does not constitute an injury to ‘business or property’ under RICO.”

The effort to win comp related RICO cases then moved to the 9th Circuit (nine western states including California and Arizona) arguably the most liberal Circuit in the federal system. In Laurie Miller et al. v. York Risk Services Group, nine plaintiffs worked as firefighters or engineers for the Phoenix fire department, and York adjusted the department’s workers comp claims. The plaintiffs alleged, in part, that York worked with the City of Phoenix to wrongfully deny or delay their workers comp benefits in violation of the federal RICO Act. York moved to dismiss based partly on the en banc decision from the 6th U.S. Circuit Court of Appeals, which dismissed similar RICO claims against Sedgwick Claims Management Services Inc. That defense did not work in Arizona. Judge Sedwick ruled in 2013 that the employees “possess a property right in their workers compensation benefits under Arizona law,” which allows them to have a property interest under RICO law and the case was allowed to proceed. Before the case went to trial, it was settled at the end of 2015. Thus the ruling was not tested in the 9th Circuit Court of Appeals.

Now they have lost another 9th Circuit RICO case this time filed in California.

John Black, and a group of police officers and fire fighters assert 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)”

At the end of April, the Federal Judge granted the defendant’s motion to dismiss the third amended complaint, but gave the plaintiffs leave to amend for the fourth time.  And on August 25, the federal judge reviewed the 4th amended complaint and dismissed the case without leave to amend. The decision was based in part upon a determination that a workers’ compensation benefit is not a property right subject to RICO, a ruling consistent with the 6th Circuit.

Plaintiffs now have an opportunity to appeal the decision in the 9th Circuit Court of Appeals. Assuming a defense result in that tribunal, this would likely end the effort in the 6th and 9th Circuits, and these plaintiffs will have to go elsewhere.

It will be important to monitor the City of Rialto case until it reaches its ultimate conclusion.

Physician Naga Raja Thota, a board certified anesthesiologist who works as a pain-control specialist with an office in El Cajon, was arrested and charged with distributing oxycodone and other highly addictive drugs without any legitimate medical purpose in exchange for sex acts. He has been licensed to practice in California since 1994.

The doctor was taken into custody by San Diego Drug Enforcement Administration agents at his place of work.

The criminal complaint said at least two young women received prescriptions for opioids without a legitimate medical purpose on numerous occasions in exchange for sex acts. The complaint also shows a pattern in which sexually-explicit texts are exchanged by the doctor and the women, followed by prescriptions written for them by Thota.

According to the complaint, one victim said she met Thota when she was hospitalized for withdrawal symptoms for Hydrocodone and Alprazolam. Thota agreed to treat her but documented that his treatment was for pain even though this victim did not suffer from any medical condition that caused chronic or ongoing pain. This victim also stated that Thota kept increasing the dosage.

This victim, who was twenty years old when she met Thota, said she felt that if she did not submit to sexual acts with Thota he would not have provided her with additional opioid prescriptions. After being exposed to greater dosage levels of opioids by Thota, the young woman started using an even stronger opioid – heroin.

About a dozen potential new victims have come forward following the arrest according to Amy Roderick of the U.S. Drug Enforcement Administration. Roderick said she could provide no details on those individuals or their allegations

Thota’s arrest came at the conclusion of a several-year investigation Officials said he is accused of prescribing the alleged victims, ranging in age from early 20s to early 30s, various narcotics, including hydrocodone, methadone and oxycodone, and using his access to the narcotics a way to pressure them into sex acts.

During his arraignment, Assistant U.S. Attorney Orlando Gutierrez said a 20-year-old patient of Thota’s reported that the doctor upped the dosage of a prescription she was taking without telling her and that she felt she couldn’t get more of it unless she had sex with the defendant.

Another woman threatened to take allegations of abuse to the DEA, and Thota paid her money not to do so, the prosecutor alleged.

And this is not his first run-in with authorities. In 2014 the California Medical Board accusation claimed that he committed gross negligence in his care and treatment of patients. The specific allegations say he prescribed increasing doses of opiates to patients without any clear positive response. In November 2015 Thota entered into a stipulated settlement and disciplinary order which provided for the revocation of his license, however the revocation was stayed and he was placed on seven years probation with restrictions. He was therefore on probation when this current arrest was made.

“Prescription drug abuse and overdoses have reached alarming levels,” said U.S. Attorney Laura Duffy. “We are going after doctors who abuse their power to prescribe and exploit the desperation of addicts for their own gratification.”

“Doctors who exploit patients are the worst kind of predators.” said DEA San Diego Special Agent in Charge William Sherman. “DEA recognizes the trust the citizens of San Diego place in their doctors. We will continue to ensure that physicians who are abusing that trust by bartering sex for prescriptions will be arrested and prosecuted.”

If anyone has information regarding other victims or if you believe you were victimized by Dr. Thota, we urge you to contact DEA at (858) 616-4100 and ask for the Diversion Duty Agent.

Under Title 21, United States Code, Section 841, and Title 21, United States Code of Federal Regulations, Section 1306.04(a), a medical doctor may not prescribe a controlled substance unless there is a legitimate medical purpose.

It seems as though some doctors may be milking their better-insured patients. In fact, a recent study published in JAMA Internal Medicine suggests that more than $750 billion of U.S. health care spending annually represents waste, including approximately $200 billion in overtreatment. Keep in mind, that a person treating under the California workers’ compensation system is a “better-insured” patient since they do not have any policy limit and no deductible.

This study examines low-value health care spending among US adults ages 18 to 64 years using data from Optum Clinformatics Datamart of UnitedHealthcare commercial claims for 2011 to 2013.

Data from 2013 insurance claims, which included nearly 1.5 million adults with commercial insurance, showed that just under eight percent of people had received “low-value services,” meaning they provided little value to patients given all the costs and alternatives.

The most commonly received low value services included: triiodothyronine measurement in hypothyroidism (1.5%), imaging for nonspecific low back pain (1.3%), and imaging for uncomplicated headache (1.0%). The greatest proportion of spending was for spinal injection for lower-back pain at $12.l million (37.0%), head imaging for uncomplicated headache at $3.6 million (11.0%), and imaging for nonspecific low back pain at $3.1 million (9.4%)

“The important caveat to highlight is, we’re only looking at 28 services. We’re looking at a very small slice, but it can give you a lens on the larger problem,” said Rachel Reid, lead author and a policy researcher at RAND Corporation to CNN.

In a previous report published in The National Academies of Sciences – Engineering – Medicine, a study found that the U.S. spends more on healthcare than any other nation. In 2009, health care costs reached $2.5 trillion, nearly 17 percent of the GDP. Yet, despite this spending, health outcomes in the U.S. are considerably below those in other countries.

It was also discovered that low-value spending was less among patients who were older, male, black or Asian, lower income, or enrolled in a Consumer-Directed Health Plan. Regionally, the Southern, Middle Atlantic, and Mountain regions had greater proportionate low-value spending

What happens when a patient asks for a specific test? Should a doctor refuse? “What are you supposed to say – no?” says Dr. Jane Orient, executive director of the Association of American Physicians and Surgeons, to CNN. “Failure to diagnose is one of the most common reasons for filing a lawsuit, so there is a lot of pressure [on doctors], if you think of something, to do it,” according to Dr. Orient.

Ideally, the California workers’ compensation Utilization Review and Independent Medical Review process will screen for and refuse authorization for low value care. And current and future amendments to the Medical Treatment Utilization Schedule will continue to identify what is considered by evidence based medicine to be low value care.

In October 2015, Governor Brown signed Assembly Bill 1124 mandating that the California Division of Workers’ Compensation (DWC) adopt a prescription drug formulary for the California workers’ compensation system. The draft regulations published last week reflect a broad effort by the Division to streamline the delivery of effective care to injured workers by implementing the formulary and the 30-day pass-through utilization review (UR) provisions proposed under Senate Bill 1160 (Mendoza).

Studies by the California Workers’ Compensation Institute (CWCI) and the Workers Compensation Research Institute (WCRI) published before the new law estimated that depending on how it was structured and implemented, a state-mandated workers’ compensation formulary could save 8 to 42 percent of total drug spend,

At this point it remains to be seen what savings will actually materialize.

But, a new California Workers’ Compensation Institute (CWCI) study uses data from 1.2 million drug prescriptions dispensed to California injured workers in 2014 to model the impact of the draft Medical Treatment Utilization Schedule (MTUS) Drug Formulary released by the Division of Workers’ Compensation last week.

The draft MTUS Drug Formulary List classifies listed drugs as either “Preferred” or “Non-Preferred.” If prescribed in accordance with the state’s Medical Treatment Utilization Schedule for outpatient use, Preferred drugs would not have to be authorized through prospective review, while authorization via prospective review would be required before Non-Preferred drugs could be prescribed or dispensed. Drugs not on the formulary’s Preferred or Non-Preferred list, (“Not Listed” drugs), also would require authorization through prospective review prior to prescribing or dispensing. All opioids would be Non-Preferred, but the regulations would allow a limited “first fill” of 7 specific opioids if prescribed or dispensed at an initial visit within 7 days of the injury date and the prescription meets MTUS standards.

To test the impact of the draft MTUS Drug Formulary, the authors determined the percentage of the 1.2 million prescriptions and prescription dollars in the study sample that would fall into the Preferred, Non-Preferred, and Not Listed categories; identified the drug groups that would be most affected; and estimated the effect of the “first-fill” provision.

The model found that Preferred drugs comprise 26.6% of currently prescribed drugs and 22.0% of total drug spend; Non-Preferred drugs make up 57.0% of the prescriptions and 53.1% of the drug spend, while Not Listed drugs made up 16.4% of the prescriptions and 24.9% of the drug spend. The most-prescribed drugs that would be subject to prior review include opioids and certain bulk chemicals found in compound drugs. The model also found that the First Fill policy for the 7 opioids would affect fewer than 5% of current prescriptions.

Based on the preliminary analysis summarized in this report, the proposed formulary represents a significant step forward in achieving the legislative intent of AB 1124. In a follow-up report, the authors will provide a more in-depth analysis of the potential system-wide impact of the proposed formulary on UR and IMR expenses by comparing the specific drugs currently subject to UR and IMR, as well as dispute resolution outcomes, against the MTUS drug list.

CWCI plans a follow-up analysis that will examine the proposed formulary’s impact on system-wide utilization review and independent medical review (IMR) expenses by comparing specific drugs currently subject to UR and IMR and the outcomes of disputes involving those drugs against the formulary drug list. In the meantime, the initial study has been issued as a CWCI Spotlight Report, “California’s Proposed Workers’ Compensation Formulary, Part 1: A Review of Preferred and Non-Preferred Drugs,” and is available for free in the Research section at www.cwci.org.

Two doctors who each operated medical offices in Lynwood have been arrested on federal drug charges that allege they issued prescriptions for narcotics and sedatives without a medical purpose. The two doctors were charged by the United States Attorney’s Office in conjunction with an operation conducted by the Torrance Police Department and the Los Angeles District Attorney’s Office that targeted members and associates of the East Coast Crips criminal street gang.

The two doctors – Sonny Oparah, 75, of Long Beach, and Edward Ridgill, 64, of Ventura – surrendered to federal authorities on Friday and were released on bond that afternoon after making their first appearances in United States District Court. Both men were ordered to again appear in federal court for arraignments on September 15.

Two criminal complaints unsealed on Friday charge Oparah and Ridgill with illegally prescribing the powerful painkillers hydrocodone (best known as Vicodin or Norco) and codeine (for example, promethazine with codeine cough syrup, which is known on the street as purple drank), alprazolam (commonly known as Xanax), and carisoprodol (a muscle relaxer best known as Soma). According to the affidavit filed in the cases, Oparah issued nearly 13,000 prescriptions for those drugs in a one-year period between July 2014 and July 2015, and Ridgill issued more than 21,000 such prescriptions in a three-year period between July 2011 and July 2014. All of the prescribed drugs were at or near maximum strength.

The affidavit describes 12 undercover operations during which Oparah or Ridgill sold prescriptions in exchange for cash fees. In most instances, the doctors sold the prescriptions without ever examining the undercover officer or cooperating witness. A medical expert’s independent review of the undercover recordings and seized patient files confirmed that there was no legitimate medical basis for the prescriptions. The expert, writing about Oparah, said his “actions are very alarming” and the evidence reflects “extreme departures from the standard of care,” according to the affidavit.

The federal investigation into Oparah and Ridgill showed that they operated cash businesses. Federal authorities made cash seizures from both doctors, and bank records showing that Ridgill deposited $500,000 in cash into his bank accounts over a period of less than three years.

The arrests of Oparah and Ridgill occurred jointly with a sweep that targeted the East Coast Crips street gang in “Operation Money Bags.” The charges against gang members and their associates are being unsealed. As described in the federal affidavit, the investigation into Oparah and Ridgill originated when the investigation into the East Coast Crips revealed evidence that “Oparah and Ridgill served as large-scale sources of supply to [gang] members and associates via their issuance of medically unnecessary controlled drug prescriptions.”

“These arrests demonstrate DEA’s resolve to target all drug traffickers regardless of their standing in the community,” said Anthony A. Chrysanthis, Assistant Special Agent in Charge of the DEA’s Los Angeles Field Division. “With our law enforcement partners, we will continue our pursuit of those that contribute to the opioid addiction crisis and poison our society under the guise of the medical profession.”