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U.S. Supreme Court Expands Disability Rights Accommodations

The U.S. Supreme Court today sided with a former driver for UPS Inc by giving her another chance to argue that the package delivery company discriminated against her when it refused to lighten her work duties while she was pregnant. In a 6-3 decision, the justices revived Peggy Young’s discrimination claim against the company by sending the case back to a lower court. A federal district court judge and an appeals court had earlier ruled in favor of UPS, which was backed by business groups in the case. “This is a big win for Peggy Young and other women in the workplace,” said Sam Bagenstos, Young’s lawyer.

The case focused on whether, under a federal law called the Pregnancy Discrimination Act, employers must provide accommodations for pregnant workers who may have physical limitations on tasks they can perform. Young, who worked at a Maryland facility, became pregnant in 2006. She made her request for an accommodation after a midwife advised that she not be required to lift packages weighing more than 20 pounds (9 kg).

Writing for the majority, liberal Justice Stephen Breyer said the lower court failed to consider the effects of UPS policies that covered non-pregnant workers who might have disabilities, injuries or otherwise might need accommodations. Breyer said there is a “genuine dispute as to whether UPS provided more favorable treatment to at least some employees whose situation cannot reasonably be distinguished from Young’s.”

Bagenstos said the court “made clear that employers may not refuse to accommodate pregnant workers based on considerations of cost or convenience when they accommodate other workers.”

UPS said it was confident it would ultimately win the case. “UPS is pleased that the Supreme Court rejected the argument that UPS’s pregnancy-neutral policy was inherently discriminatory,” a company statement said.

Conservative Justice Antonin Scalia, joined by Anthony Kennedy and Clarence Thomas, wrote a dissenting opinion accusing the court majority of coming up with “an interpretation that is as dubious in principle as it is senseless in practice.”

UPS said last October that starting this past January it would begin providing accommodations for pregnant women.

The impact of the ruling could be limited in part because a 2008 amendment to the Americans with Disabilities Act could now protect women in Young’s situation. The U.S. Equal Employment Opportunity Commission has said employees must offer accommodations to pregnant women just as they do for other workers with similar physical limitations. The case is Young v. UPS, U.S. Supreme Court, No. 12-1226.

Claim Administrator’s Hostile Work Environment Claim Affirmed

Beverly Myres was hired by the San Francisco Housing Authority (SFHA) in 2006 as a claims assistant. In 2007 she was promoted to workers’ compensation analyst. Myres was a member of the San Francisco Municipal Executives’ Association, and her employment with SFHA was governed by a union memorandum of understanding (MOU).

In 2009, Myres injured her right knee at work and filed a workers’ compensation claim in June 2009. She continued to work full-time without any restrictions until she had surgery on her right knee, Myres was then released to return to modified work with the following restrictions: “Seated work – stand/walk for personal needs only. No lift over 10 lbs. No drive for work. Must work in location free from tripping hazards.” Her employer indicated it would accommodate her restrictions.

Upon returning to work she experienced increased pain in her left knee. It was at first disputed that the left knee was injured as a result of employment. While seeking clarification of the cause of her left knee pain SFHA had advised the entire department that they were being laid off as a result of departmental restructuring. Myres then sued SFHA. Her first three causes of action are each titled “Disability Discrimination.” and she filed a fourth and fifth cause of action for hostile work environment harassment and wrongful discharge in violation of public policy premised on her allegations of retaliation for taking workers’ compensation leave.

According to SFHA, Myres and the rest of the department were laid off for a legitimate reason, “to restructure the department for improved efficiency” and due to reduced federal funding and a budget shortfall. Myres, on the other hand, asserted that SFHA retaliated against her for taking workers’ compensation leave. In support of this contention she called SFHA’s former special assistant to the executive director, who testified that “[t]here were a number of people in the department . . . that [her supervisors] were having trouble with. So they decided to deal with the problem by restructuring and laying everybody off.” As a result of the layoff, Myres testified that she suffered a loss of her annual salary of approximately $81,000 for almost three years, as well as fringe and retirement benefits.

After trial, the jury returned verdicts in favor of the employer on four of the five causes of action. With respect to hostile work environment harassment, the jury found in Myres’s favor and awarded her $35,000 in noneconomic damages. Post judgment interest was awarded in the amount of 10% and Myers was awarded attorney fees and costs. Both parties appealed. SFHA primarily contends on appeal that that the jury’s harassment verdict is not supported by substantial evidence. Myres also appeals from the judgment, arguing that various evidentiary and instructional errors affected the jury’s verdicts in favor of SFHA on her causes of action for failure to reasonably accommodate her disability. With the exception of post judgment interest in the amount of 10%, the Court of Appeal found no prejudicial errors, and after reducing the interest to 7% affirmed the judgment in the unpublished case of Myres v SFHA.

One of the issues raised by Myres was the collateral source rule. Myres filed a motion in limine to exclude evidence of collateral sources of income. She argued that any such evidence of post injury sources of income was irrelevant, as it could not be used to offset a backpay award on her retaliation and wrongful discharge causes of action. The trial court denied the motion. Over Myres’s “collateral source” objection, SFHA’s expert economist detailed the payments Myres received from retirement, social security disability, and worker’s compensation disability between September 1, 2010, and the date of trial. Ultimately, he opined that there was only a $500 difference between Myres’s expected compensation, had she remained employed by SFHA, versus the compensation she received in retirement and disability benefits after separation.

The Court of Appeal agreed that some of the collateral source income should not have been admitted. However, it was not prejudicial error. “In this case, however, we find it unnecessary to remand for a new trial. Under section 12940, subdivision (h), it is an unlawful employment practice ‘[f]or any employer . . . to discharge, expel, or otherwise discriminate against any person because the person has opposed any practices forbidden under this part or because the person has filed a complaint, testified, or assisted in any proceeding under this part.’ We agree with SFHA that, as a matter of law, Myres could not recover for FEHA retaliation on the basis that she was terminated for taking workers’ compensation leave. Taking workers’ compensation leave is not protected activity under FEHA.” Thus the verdicts against her on the discrimination causes of action were affirmed.

But, the Court of Appeal agreed there was evidence in support of her claim of a hostile work environment. Her employer made comments before her injury such as “that other SFHA employees taking workers’ compensation leave were “malingerers,” abused the system, and filed “fraudulent claims.” Another comment was “How can the workers’ comp person be out on workers’ comp?”

Jury Convicts Owner of LA DME Company

A federal jury in Los Angeles found the owner of a medical supply company guilty of four counts of health care fraud this week in connection with a $3.3 million Medicare fraud scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Stephanie Yonekura of the Central District of California, Special Agent in Charge Glenn R. Ferry of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Los Angeles Region and Assistant Director in Charge David L. Bowdich of the FBI’s Los Angeles Field Office made the announcement.

Hakop Gambaryan, 55, of East Hollywood, the owner of Colonial Medical Supply, was convicted of four counts of health care fraud. A sentencing hearing will take place before U.S. District Judge Otis D. Wright II of the Central District of California, and will be scheduled at a later date.

According to evidence presented at trial, between March 2006 and December 2012, Gambaryan paid cash kickbacks to medical clinics for fraudulent prescriptions for durable medical equipment, such as expensive power wheelchairs, which the patients did not need. Gambaryan then used these prescriptions to bill Medicare for the unnecessary power wheelchairs and other equipment. The evidence established that Gambaryan personally delivered power wheelchairs to many beneficiaries who were able to walk without assistance. In one instance, Gambaryan carried a power wheelchair up a flight of stairs for a woman who lived in a second floor apartment with no elevator. In another instance, the power wheelchair would not fit inside the beneficiary’s home so Gambaryan put it in the beneficiary’s garage.

The evidence also demonstrated that Gambaryan generated false documentation to support the fraudulent claims, including fake home assessments that made it appear home assessments had occurred when they had not. In addition, Gambaryan photocopied beneficiary signatures hundreds of times to create the appearance that the beneficiaries consented to ongoing durable medical equipment rentals, when in reality, at least two of the beneficiaries had passed away prior to the date they supposedly signed the rental agreements.

The evidence showed that Gambaryan submitted approximately $3.3 million in false and fraudulent claims to Medicare, and received more than $1.7 million on those claims.

The case was investigated by the FBI and HHS-OIG. The case is being prosecuted by Trial Attorneys Fred Medick and Ritesh Srivastava of the Criminal Division’s Fraud Section.

More Drug Resistant Superbugs Reaching “Crisis” Levels

Over the next 35 years, multidrug-resistant tuberculosis will kill 75 million people and could cost the global economy a cumulative $16.7 trillion – the equivalent of the European Union’s annual output, a UK parliamentary group said on Tuesday. If left untackled, the spread of drug-resistant TB superbugs threatens to shrink the world economy by 0.63 percent annually, the UK All Party Parliamentary Group on Global Tuberculosis (APPG TB) said, urging governments to do more to improve research and cooperation.

According to the report in Reuters Health, “the rising global burden of multidrug-resistant TB and other drug-resistant infections will come at a human and economic cost which the global community simply cannot afford to ignore”, economist Jim O’Neill said in a statement. O’Neill, a former chief at investment bank Goldman Sachs, was appointed last year by British Prime Minister David Cameron to head a review into antimicrobial resistance.

The bacteria that cause TB can develop resistance to drugs used to cure the disease. Multidrug-resistant TB fails to respond to at least isoniazid and rifampicin, the two most powerful anti-TB drugs, according to the World Health Organization (WHO). The UK parliamentary group’s cost projections are based on a scenario in which an additional 40 percent of all TB cases are resistant to first-line drugs, leading to a doubling of the infection rate. The WHO said last year multidrug-resistant TB was at “crisis levels”, with about 480,000 new cases in 2013. It is a manmade problem caused by regular TB patients given the wrong medicines or doses, or failing to complete their treatment, which is highly toxic and can take up two years.

The group urged governments to set up a research and development fund, target investments into basic research and increase support for bilateral TB programs. “We need better tools to deal with this new threat, but since TB primarily affects the poorest and most vulnerable in society, there is little commercial incentive to develop new drugs,” said Nick Herbert, co-chairman of the APPG TB. The fight against TB, the world’s second deadliest infectious disease after HIV, is also hampered by a lack of an effective vaccine, the APPG TB said. The only TB vaccine, BCG, protects some children from severe forms of TB – including one that affects the brain – but is unreliable in preventing TB in the lung, which is the most common form of the disease.

TB, which spreads through the coughs and sneezes of an infected person, killed 1.5 million people worldwide in 2013, according to the WHO. Putting that number into perspective can be done by comparing the death rate for Ebola, the infection that has caused recent international media panic. The CDC reports the entire Ebola international death count as of this month to be less than 11,000. The risk of death by TB is magnitudes higher than the risk of death by Ebola infection.

The workers’ compensation community is not immune to the cost effects of out-of-control superbugs. Infectious diseases can become a costly problem in worker’s compensation claims. Claims can arise as a result of infections on the job, infections during treatment for an industrial injury, or infections to health care workers.

LA Physician Arrested for Working on Disability

Detectives from the California Department of Insurance (CDI) arrested Los Angeles Doctor Glenn Neil Ledesma, 63, owner of California Dermatology Center, Inc. CEO Jonathan Ledesma, 49, Glenn Ledesma’s adopted son, was also arrested. Both are charged with multiple felony counts of health care disability fraud for presenting false claims. The suspects allegedly collected disability benefits totaling more than $1.8 million while continuing to work and practice medicine.

“The Ledesmas knew it was illegal to file for and collect disability benefits while still working,” said Insurance Commissioner Dave Jones. “Their criminal activity is part of the health insurance fraud epidemic that totals billions of dollars annually and results in higher premiums for all consumers.”

Dr. Ledesma first submitted a disability claim in 1997 stating he was unable to treat patients due to his medical condition. His insurer told him he could receive disability benefits while running his corporation, but was not allowed to treat patients or practice medicine. In 2008, Dr. Ledesma continued collecting disability payments while resuming his medical practice and treating patients. From 2008 to 2013, he treated more than 2,900 patients while simultaneously collecting $1,605,464 in disability benefits.

In 2008, Jonathan Ledesma filed a disability claim with UNUM Life Insurance Company of America indicating he was also unable to work due to medical reasons. He denied knowing Dr. Glenn Ledesma even though he listed the doctor as his employer and investigators discovered Jonathan Ledesma was in fact the CEO of one of eight of Dr. Ledesma’s medical corporations, California Dermatology Center, Inc and his adopted son. From 2010 to 2013, Jonathan Ledesma collected more than $200,000 in disability benefits while performing administrative duties as CEO.

Both suspects have been arrested and booked into the Inmate Reception Center in Los Angeles. Bail is set at $50,000 for each and they may face 20 years in state prison if convicted on all counts. This case is being prosecuted by the Los Angeles County District Attorney’s Office.

Contractor Arrested for Refusing to Report Injury to SCIF

Harry Minassian, 55, of Granada Hills and owner of Pacific Construction was arrested on four felony counts of workers’ compensation insurance fraud after refusing to report an employee’s serious injury to the State Compensation Insurance Fund.

A Pacific Construction employee received a puncture wound to his foot while on a jobsite, which became infected. Unfortunately, the seriousness of the infection led to the employee’s leg being amputated below the knee. The employee reported the injury to his employer but Minassian refused to report it to the State Compensation Insurance Fund, his workers’ compensation carrier and denied workers’ compensation coverage for his employee.

“Employers are responsible for ensuring their employees receive the benefits and treatment they are entitled to when they are injured on the job,” said Commissioner Dave Jones. “In this case, the employer was negligent and allowed his employee to suffer unnecessarily and end up with a permanent disability.”

The employee was awarded permanent disability after he filed a claim with the insurer. The department’s investigation began after the State Compensation Insurance Fund reported Minassian and that he had a history of failing to report employee injuries. The investigation revealed Minassian owed nearly $12,000 in workers’ compensation insurance premiums and failed to deduct required payroll taxes and social security for all of his employees.

Minassian was booked at the Los Angeles County Jail Twin Towers Inmate Reception Center. His bail has been set at $120,000. If convicted on all counts, Minassian faces a maximum of five years in county jail. This case is being prosecuted by the Los Angeles District Attorney’s Office.

Insurance Information Institute Slams ProPublica/NPR Comp Report

Early this month, ProPublica/NPR published an article “The Demolition of Workers’ Comp” that asserted that “over the past decade, states have slashed workers’ compensation benefits, denying injured workers help when they need it most and shifting the costs of workplace accidents to taxpayers.” The story has triggered heated response from the workers’ compensation community.

Robert P. Hartwig, Ph.D., CPCU, president of the Insurance Information Institute responded to the criticism of with a letter he sent to ProPublica/NPR that began by saying “it’s necessary that the record be set straight using facts – verifiable, incontrovertible facts – rather than the unsubstantiated assertions, incorrect interpretations and subsequent erroneous conclusions upon which the basic premise of this series is built.”

He goes on to say “The very title … is at best misleading and at worst erroneous. “The Demolition of Workers Comp” is hyperbole of the highest order. The fact of the matter is that workers compensation insurers today provide some $40 billion in benefits annually to hundreds of thousands of injured workers and to the families of those killed on the job – a basic and important fact that is somehow omitted by the authors. Also omitted from the piece is the indisputable fact that the workplace has become safer – much safer – in no small part due to the relentless loss control efforts of insurers and employers in partnership with state and federal government. The incidence rate of fatal occupational injuries plunged by 36 percent over the past two decades and by 90 percent over the past century – precisely coincident with the dawn of modern workers compensation systems.”

He later notes that “Your story asserts that 33 states have “cut” benefits since 2003 through legislation which is characterized as having been passed under the guise of reform. This is far too sweeping of a statement. A system as large as workers compensation, where costs are driven primarily by the same complex factors driving healthcare costs across the United States, is in constant need of monitoring and fine tuning. Many of the changes simply mirror changes in the health care system overall.”

After pointing out other arguments he concludes by saying “Workers compensation, a century after its inception, remains as vital as ever to virtually every worker in the America. Benefits can and do vary from state to state but in no state are workers left without the important safety net that workers compensation provides. Though large, the workers comp system continues to adapt to rapid changes in the workforce, the workplace, the economy and the U.S. health care system. Insurers, employers and workers are united in their agreement that that the safety of workers is paramount and that for those who are injured there is a system that works for their benefit, helping them to achieve maximum medical recovery and return to work as quickly as possible.”

ProPublica/NPR published his letter in its entirety, and then published its rebuttal.

“ProPublica titled its story ‘The Demolition of Workers’ Comp,’ to signify how recent reform laws were dismantling some of the fundamental protections workers’ comp historically provided: The guarantee that workers would receive enough of their wages so they wouldn’t fall into poverty, the promise of the medical care they need to return to as normal a life as possible and the expectation that injured workers would have a voice and be treated with dignity.”

“ProPublica and NPR do not dispute that the workplace has become safer. But the focus of our story was on how changes in workers’ comp laws have affected people who are injured on the job. Workers’ comp is a vital safety net whose costs give employers an incentive to keep their workplaces safe. This is precisely why we felt it was critical to investigate the rollback of benefits by many states.”

“Over the century that workers’ comp has been in effect, workplace injuries have gone both up and down. The decline in fatalities and injuries has multiple causes, including the creation of the Occupational Safety and Health Administration (OSHA), improvements in auto safety and health research, the growth in automation and a changing economy which has reduced jobs in dangerous manufacturing and mining industries and expanded them in the safer service and office sectors.”

The finding that workers’ comp rates have fallen was substantiated by multiple data sources. ProPublica and NPR relied on three separate studies to examine the cost that employers pay for workers’ comp insurance premiums. All three are widely respected and used by the workers’ comp industry, and all three come to the same conclusion: Workers’ comp rates are the lowest they’ve been in decades. The sources, which were included in the graphic, are the Oregon Workers’ Compensation Division, the U.S. Bureau of Labor Statistics and the National Academy of Social Insurance.

Another Medical Cyber Attack Exposes 11 Million Records

Premera Blue Cross, a health insurer based in the Seattle suburbs, announced Tuesday it was the victim of a cyberattack that may have exposed the personal data of 11 million customers – including medical information. According to the story in the Washington Post, the company said it discovered the attack on Jan. 29 but that hackers initially penetrated their security system May 5, 2014. The attack affected customers of Premera, which operates primarily in Washington, Premera’s Alaskan branch as well as its affiliated brands Vivacity and Connexion Insurance Solutions, according to a Web site created by the company for customers. “Members of other Blue Cross Blue Shield plans who have sought treatment in Washington or Alaska may be affected,” according to the site.

The company said its investigation has not determined if data was removed from their systems. But the information attackers had access to may have included names, street addresses, e-mail addresses, telephone numbers, dates of birth, Social Security numbers, member identification numbers, medical claims information and bank account information, according to the company’s Web site. The company said it does not store credit card information. According to a message on the company’s Web site from Premera President and chief executive Jeff Roe, the medical claims data accessible to the attackers included “clinical information.”

“This is potentially one of the largest breaches that has ever been reported involving health-care information,” said Dave Kennedy, the chief executive of TrustedSEC and an expert on health-care security.

The company is offering two years of free credit monitoring and identity theft protection services to those affected by this incident. Premera is currently working with cybersecurity company Mandiant to investigate the breach, as well as law enforcement.

“The FBI is investigating the Premera cyber intrusion and is working with the victim company in order to determine the nature and scope of this incident,” FBI spokesman Joshua Campbell told The Post.

News of the Premera hack comes just two months after Anthem, a fellow Blue Cross Blue Shield associated company and the second largest insurer in the country, announced a cyberattack resulted in the data breach affecting tens of millions of customers. But in that case, hackers are not believed to have obtained medical information, making the breach of Premera particularly concerning for consumers.

Health-care companies have become attractive to hackers because of the premium paid on the black market for insurance credentials. A complete health insurance credentials cost ten to twenty times more than a credit card numbers with security code on underground black markets in 2013, according to Dell SecureWorks. The information can be used for identity theft, but also medical fraud such as purchasing expensive medical equipment or obtaining pricey medical care. This type of fraud often takes longer to detect, security experts have said.

Workers’ compensation insurers also store personal medical information on claimants, and it is more likely than not that industry computers are somewhere on the hacker’s radar.

L.A. Pharmacist Convicted of Kicking Back Cash to Patients

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Stephanie Yonekura of the Central District of California and Assistant Director in Charge David Bowdich of the FBI’s Los Angeles Field Office announced that a pharmacist who owned and operated a pharmacy in Los Angeles pleaded guilty this week in connection with a Medicare fraud scheme.

Rouzbeh Javaherian, 34, of Beverly Grove, California, pleaded guilty to health care fraud in connection with a scheme to defraud the Medicare Part D program through a pharmacy called Emoonah Inc., doing business as Westaid Pharmacy and Medical Supply. According to admissions in the plea agreement, Javaherian was a licensed pharmacist and owner of Westaid, which was located in Los Angeles. From January 2008 to November 2014, Javaherian devised and executed a scheme to defraud the Medicare Part D program by paying illegal cash kickbacks to Medicare beneficiaries to induce them to submit their prescriptions to Westaid. Javaherian then filled some of those prescriptions, but also submitted false and fraudulent claims to Medicare Part D plan sponsors for prescriptions that he did not actually fill.

From January 2008 to November 2014, Javaherian received approximately $644,060 in overpayments from Medicare as the result of the fraud scheme.

Sentencing is scheduled for June 1, 2015, before U.S. District Judge Stephen V. Wilson of the Central District of California. Unfortunately, the California Board of Pharmacy still reports that Javaherian is licensed as a pharmacist in California with no apparent restrictions on his license. The status is reflected as “clear.”

The case was investigated by the FBI, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California. The case is being prosecuted by Trial Attorney Alexander F. Porter of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,100 defendants who have collectively billed the Medicare program for more than $6.5 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

DWC Posts Revised RTW Supplement Program Regs

Following two public hearings on the proposed regulations which took place on December 8, 2014 in Oakland, and December 9, 2014, in Los Angeles, the Department of Industrial Relations has made revisions to the proposed California Code of Regulations to implement the Return to Work Supplement Program. Members of the public are invited to present written comments regarding the proposed modifications to LC139.48@dir.ca.gov until 5 p.m., April 1, 2015.

Diane Worley, the Director of Policy Implementation from the California Applicants’ Attorneys Association was present at the Northern California hearing, along with her colleague, Bert Arnold, who is President-Elect of the California Applicants’ Attorneys Association. According to the Northern California transcript, he was concerned that the Notice to Injured Workers is on the sixth page of the Voucher notice and would not likely be read and understood by the Injured worker. He suggested that the notice be moved to page 1 or to a cover letter. He was also concerned that there was nothing in the regulations to have the notices written in Spanish.

According to the transcript of the Southern California hearing, Robert McLaughlin, an attorney representing injured workers in San Diego, and a member of the California Applicant Attorney’s Association presented comments on December 9. He was concerned that there would be approximately three years of back-payments by the time applicants start getting paid. He also was concerned about the limited notice that would be given to applicants after their injuries, and that the application should be filled out on-line.

Christel Schoenfelder. an applicant attorney, and also a representative of the California Applicant Attorney’s Association presented an example of a worker who qualifies for the benefits, and who has now settled her underlying case due to lack of funds, yet now several years after SB 863 there is still no process in place for her to get this benefit. The statute of limitations starts to run on these claimants one year after the regulations take effect, and she is concerned that these claimants will never be notified since their cases are settled and closed.

Brent Graham on behalf of Latino Comp pointed out that current supplement job displacement benefit requirement, requiring the Return-to-Work form that has to be filled out by medical professionals at the time the worker is permanent stationary is not being filled out by “the vast majority of treating doctors” and thus is an impediment to obtaining benefits. .

The new proposed regulations in section 17303 now require “a cover sheet prepared by the claims administrator” that summarizes the Return to Work Supplement claim process apparently in response to the comments made by Bert Arnold.

The notice, revised initial statement of reasons, and modified text of the proposed regulations can be found on the DIR website.