Author: WorkCompAcademy

MAXIMUS, is an American, for-profit, company that provides business process services to government health and human services agencies in the United States, Australia, Canada, Saudi Arabia and the United Kingdom. MAXIMUS focuses on administering government-sponsored programs, such as Medicaid, the Children’’s Health Insurance Program (CHIP), health care reform, welfare-to-work, Medicare, child support enforcement, and other government programs. It was selected by the DWC to provide IMR services for the California workers’ compensation community. The company is based in Reston, Virginia, and has more than 13,000 employees.

And MAXIMUS is financially prospering. This week it reported the financial results for the three months that ended December 31, 2015. It claimed a revenue growth of 19% to $556.7 million compared to the same period last year. It had year-to-date signed contract awards of $665 million and new contracts pending (awarded but unsigned) of $285 million at December 31, 2015. The increase in revenue was primarily driven by the acquisitions of Acentia and Remploy and organic growth in the Health Services Segment.

The company focuses primarily on “operating government-sponsored programs for vulnerable populations” according to one of its earlier annual reports. The outsourcing of health and human services function to private for-profit firms raises significant concerns, at least according to non-profit research group In the Public Interest, a comprehensive resource center on privatization and responsible contracting,

Maximus has been a Private Sector member of the American Legislative Exchange Council (ALEC) at least from 1994 to 1995. The American Legislative Exchange Council (ALEC) describes itself as the largest “membership association of state legislators,” but over 98% of its revenue comes from sources other than legislative dues, primarily from corporations and corporate foundations.

In March 2014, Maximus CEO Richard Montoni told Investors Business Daily that Maximus had booked $347 million in contracts related to the Affordable Care Act (Obamacare) in 2013 and that Maximus was expected to generate $200 million in annual revenue from work related to the ACA. In its 2013 annual statement, Maximus reported that 65 percent of its total revenue for that year came from its Health Services Segment and state that it expects health-sector-related revenue to continue to increase:

“We expect that demand for our core health and human services offerings will continue to increase over the next few years, driven by new legislation, austerity measures and increasing caseloads, as governments strive to deliver more services with fewer resources. Legislation, such as the Affordable Care Act in the United States as well as other health and welfare reform initiatives abroad, has created increased demand for our services, a trend we expect to continue over the next several years.”

More than a dozen major healthcare organizations and associations have jumped into a Supreme Court case over the validity of a legal theory now used to bring many fraud lawsuits against them. The case has the potential to reduce – or increase – the number of False Claims Act suits brought against healthcare providers and other companies, depending on which way the high court rules.

The US Supreme Court has agreed to hear Universal Health Services v. United States ex rel Escobar. The case focuses on situations in which whistle-blowers allege providers have submitted false claims to government programs by failing to follow certain regulations. That legal theory is known as “implied certification” and has been accepted by some federal appeals courts and rejected by others.

Organizations found liable under the False Claims Act, also called Qui Tam litigation, face penalties and triple damages. In 2015, two-thirds of federal whistle-blower lawsuits targeted healthcare entities. That’s prompted a number of healthcare organizations to file briefs siding with the Universal Health Services, which argues against the theory. Organizations that have filed briefs include the Pharmaceutical Research and Manufacturers of America, the Generic Pharmaceutical Association, the American Hospital Association and the Chamber of Commerce of the United States.

The American Medical Association argues in its brief that imperfect compliance is not the same as fraud. “The healthcare regulatory environment is especially complex, making it particularly inappropriate to use the hammer of (False Claims Act) liability to punish noncompliance,” according to the brief.

In their brief, the American Hospital Association, Federation of American Hospitals and Association of American Medical Colleges say the healthcare field is already targeted by whistle-blowers seeking massive payouts. In False Claims Act cases, whistle-blowers are entitled to a percentage of whatever money the government recovers. They argue in the brief that the implied-certification theory has exacerbated the filing of meritless suits against healthcare organizations. The suits “try to tap into the extreme complexity of Medicare and Medicaid and use that as a basis for asserting all sorts of hospitals, healthcare providers and others – have committed fraud for what might be fairly minor regulatory missteps,” said Jessica Ellsworth, a partner at Hogan Lovells who filed the brief on behalf of the hospital associations and medical college association.

The United States Chamber of Commerce claims that the theory “profoundly increases risk and uncertainty for government contractors, grantees, and program participants” and should be rejected.

But Patrick Burns, co-executive director of the Taxpayers Against Fraud Education Fund, a not-for-profit group that supports whistle-blower incentive programs, said implied certification is important for holding healthcare and other organizations accountable for doing the right thing – even if that right thing isn’t explicitly stated in a contract with the government.

He said the facts of this case before the Supreme Court are a prime illustration. The Universal Health Services case was brought by the parents of a patient who died at a Massachusetts mental health clinic. Her parents alleged that the clinic’s caregivers were not properly supervised and that the clinic did not employ a board-certified or board-eligible psychiatrist and a licensed psychologist, in violation of state Medicaid program regulations. The 1st U.S. Circuit Court of Appeals sided with the plaintiffs in that case.

It is difficult to understand how the facts of this case can be construed to be about “fairly minor regulatory missteps.” The teen who died, Yarushka Rivera began seeing Universal Health Services counselor Maria Pereyra in 2007 after experiencing behavioral problems at school. Pereyra, though on staff at its Arbour satellite clinic, had no professional license to provide mental-health therapy. After hearing parent complaints about the quality of her care, Yarushka was transferred to another staff member, Diana Casado. Like Pereyra, Casado was unlicensed. In February 2009, Yarushka was once again assigned to a new therapist, Anna Fuchu. Fuchu held herself out as a psychologist with a Ph.D., though the parents later learned that she had trained at an unaccredited online school and that her application for a professional license had been rejected. Notwithstanding Fuchu’s lack of essential credentials, she treated Yarushka and eventually diagnosed her with bipolar disorder.

Several months later, when Yarushka’s behavioral problems had not abated, officials at her school informed the parents that she would be permitted to attend classes only if she saw a psychiatrist. When the parents told this to Fuchu, she referred Yarushka to Maribel Ortiz, another staff member at Arbour. Believing Ortiz to be a psychiatrist, the parents referred to her as “Dr. Ortiz.” They eventually discovered, however, that she was not a psychiatrist, but rather a nurse, and that she was not under the supervision of the one Arbour staff psychiatrist, Maria Gaticales – herself not board-certified, or eligible for board certification, as contemplated by the regulations. Yarushka died after having a second seizure while under this care.

There is an old saying in the practice of appellate law “bad facts make bad law.” Cases with bad facts should not be appealed. It is very difficult to see how the U.S. Supreme Court can construe what happened in this case to be nothing more than quibbling over vague and ambiguous regulations dealing with being properly trained, licensed and supervised to provide health care.

A federal appeals court ruled Monday that four patents related to Purdue Pharma’s painkiller OxyContin are invalid, potentially bringing Teva Pharmaceutical Industries Ltd and others a step closer to introducing generic versions of the drug.

Reuters Health reports that privately owned, Connecticut-based Purdue had sued Teva, Amneal Pharmaceuticals, Epic Pharma and a U.S. arm of Mylan NV after they sought approval from the U.S. Food and Drug Administration to make generic OxyContin.

Monday’s ruling by the Federal U.S. Circuit Court of Appeals upheld earlier orders from a lower court judge in favor of the generic drugmakers.Purdue said in a statement that it was reviewing the decision and considering what to do next. ;”Despite the court’s ruling, Purdue has several other patents protecting OxyContin, and we do not anticipate generic manufacturers selling the product in the near future,” it said.

Representatives of the generic drugmakers could not immediately be reached for comment.

Currently, the only generic versions of OxyContin on the market are so-called “authorized generics,” which are exact copies of the brand-name version authorized by Purdue.

Three of the patents Purdue sought to enforce in its lawsuits are related to an improved formulation of oxycodone, the active ingredient in OxyContin.

The other patent describes technology designed to prevent abuse of the drug by making it difficult to crush and causing it to form a gel when dissolved in water so that it cannot be injected. Purdue licensed that technology from German pharmaceutical firm Grunenthal GmbH, which is also a plaintiff in the lawsuit.

Purdue’s lawsuit against Teva went to a non-jury trial before U.S. District Judge Sidney Stein in Manhattan in 2013. In January 2014, Stein said that the patents were invalid because they did not add enough to what was already known. Stein subsequently dismissed the lawsuits against Mylan, Amneal and Epic as well, since they were based on the same patents. Purdue appealed all four cases to the Federal Circuit.

The case is Grunenthal GmbH et al v Teva Pharmaceuticals USA Inc, U.S. Court of Appeals, Federal Circuit, No. 2014-1311.

Rodolfo Arroyo sustained industrial injury in 2000 to his back, knees and right big toe while working for Inland Concrete Enterprises as a concrete worker. The parties’ Agreed Medical Evaluator (AME) Stuart Green, M.D., testified at his deposition in 2008 that it was medically reasonable for applicant to use a motorized scooter to relieve the effects of his industrial injury. Dr. Green reiterated that opinion in his comprehensive March 12, 2009 report of examination. Defendant accepted the opinion of the AME and provided applicant with a motorized scooter.

After approximately five years of use, the scooter began to break down. On February to, 2015, applicant’s primary treating physician Jalil Rashti, M.D., reported to defendant that applicant’s scooter was broken and he requested authorization to replace it with a new scooter in light of the costs of repair.

Defendant submitted the request for authorization to UR. However, the UR reviewer did not evaluate whether the scooter should be replaced or repaired.  Instead, the timely UR decision addressed whether Arroyo should use a motorized scooter as a matter of medical necessity, and denied authorization to purchase one on the grounds that it was “not essential to care.”

Applicant requested a hearing to challenge defendant’s action, and the issues of “(n]eed for further medical treatment in the form of a motorized scooter” and “[s]ubject matter jurisdiction over the medical treatment dispute” were tried before the WCJ who issued his decision finding that the WCAB lacked subject matter jurisdiction over the treatment dispute because defendant issued a timely UR decision. The WCAB granted a petition for reconsideration and reversed this finding in the panel decision of Arroyo v Inland Concrete Enterprises.

The panel concluded that the WCJ correctly noted in his Report that the UR decision issued within the time allowed by Labor Code section 4610(g)(I), but he then incorrectly concludes from that fact that the WCAB has no jurisdiction over the treatment dispute. Contrary to the WCJ’s conclusion, the WCAB does have jurisdiction over this dispute. Dr. Rashti requested authorization to replace the broken scooter that defendant previously provided, but the UR conducted by defendant did not address whether the broken scooter should be repaired or replaced. Instead, the UR considered whether provision of a scooter is medically supported, but that is not the issue raised by the request for authorization.

When a defendant authorizes a particular kind medical treatment it does not become obligated to provide that treatment forever. For example, the conduct of URs at reasonable intervals to address the ongoing use of a medication may be appropriate to determine if the medication continues to be effective and medically necessary. Similarly, the ongoing provision of physical therapy and chiropractic treatment may properly be evaluated through UR to determine if it is reasonable to continue to authorize those treatments. UR of other forms of medical treatment may also be supported when there is a change in the employee’s circumstances or condition that raises a question about the necessity for continued provision of the treatment. But in all of these situations, the UR that is conducted must address the treatment for which authorization is requested or the medical treatment issue in dispute. That did not occur in this case.

Here, defendant did not conduct a timely UR of the treating physician’s request for authorization to replace or repair the broken motor scooter. Thus, there is no valid UR concerning the request for authorization submitted by Dr. Rashti, and as held in Dubon II, the determination of whether the treatment should be authorized may be made by the WCAB based on substantial medical evidence consistent with Labor Code section 4604.5. Accordingly, the WCJ’s October 28, 2015 decision is rescinded and the case is returned to the trial level for consideration of the reasonableness and necessity of repairing or replacing the broken scooter.

Jason Schmelzer CCWC Legislative Advocate has prepared and circulated an excellent forecast of the workers’ compensation isssues likely to be raised this year by the California legislature.

The California State Legislature returned to Sacramento on January 4 to complete the remainder of the 2015-2016 legislative session. California’s workers’ compensation system hasn’t been a major focus for the legislature for the last few years. The Division of Workers’ Compensation, however, has been busy promulgating regulations to implement SB 863, and the legislature and governor have stayed focused on other issues like climate change, transportation infrastructure, the drought, and affordable housing.

The first order of business for the legislature was to deal with the bills remaining from 2015, which are still eligible for consideration in the early weeks of 2016. One bill, in particular, that CCWC opposed aggressively in 2015 was SB 563 by Senator Richard Pan (D-Sacramento). Previous versions of the bill sought to place significant roadblocks in front of employers seeking to perform legitimate utilization review. However, recent amendments narrow the scope of the bill to simply prohibit UR contracts with a payment structure that specifically incentivizes delays, denials, and/or modifications of treatment requests. While there are some small details to be worked out, it appears that most of the concerns with this bill have now been resolved.

This is likely to be a year in which the stakeholders once again engage with seriousness. The reforms contained in SB 863 have finally been implemented and, as a result, workers’ compensation costs for employers have essentially stabilized. Benefits for injured workers are once again considered “adequate” after SB 863 increased permanent disability benefits by approximately $1 billion per year. The data, although preliminary, indicates that SB 863 has done what it was intended to do – augment benefits and slow or stop the growth in employer costs.

SB 863 is over three years old, and stakeholders are realizing that maintenance needs to occur if the system is to stay in balance. With three years of experience under SB 863 and plenty of data to drive discussions it seems likely that policymakers will attempt to smooth out whatever rough edges remain with recent reforms; and maybe even tackle some of the big issues that still remain. Additionally, stakeholders are getting itchy. Governor Brown has taken a cautious approach to workers’ compensation legislation since signing SB 863 in 2012. The result has been a lack of progress on priority legislation for many stakeholders that are pursuing changes as a direct result of SB 863, or weren’t involved in the negotiations and have priorities that predate SB 863.

It is unclear whether the conditions exist to tackle the big issues in 2016 – cumulative trauma reform, utilization review frequency, and myriad other issues from every corner of the stakeholder world. CCWC continues to watch the situation and work with the legislature, administration, and stakeholders to develop a strategy to move beyond the accomplishments of SB 863 and lower employer costs in what is still, at last evaluation, the most expensive venue for workers’ compensation in the nation.

The legislature, however, may have other ideas. The first new workers’ compensation bill of the year, SB 897 by Senator Richard Roth (D-Riverside), would unquestionably increase costs considerably for cities, counties, and the state. Labor Code Section 4850 provides for one year of full salary replacement, in lieu of temporary disability, for certain law enforcement personnel and firefighters. This provision is a source of great expense for local governments and the state, and SB 897 would double the duration to two years.