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Author: WorkCompAcademy

Nine States Adopt Significant Comp Law in 2013 reports that nine states have seen significant workers’ compensation reform bills signed into law in 2013. Oklahoma’s workers’ compensation reform laws have received the most attention lately because of the inclusion of an opt-out provision, known as the Oklahoma Option. The Oklahoma Option is significantly different from the Texas opt-out option. Employers that opt out in Texas cannot simply endorse their excess liability policy to cover Oklahoma. Rather, employers in Oklahoma that choose the option are required to provide a written benefit plan that serves as a replacement for the workers’ compensation coverage. This benefit plan must provide for full replacement of all indemnity benefits offered in the workers’ compensation system. The key component of the Oklahoma Option for employers is that it gives them full control of the medical treatment through their benefits plan. Unlike the Texas opt-out, the Oklahoma Option does not permit employees to pursue a negligence action through the civil courts.

The recently passed reform bill in Delaware was designed to control medical costs and encourage return-to-work efforts.

The use of physician-dispensed medication has been a significant issue in Florida workers’ compensation. Physicians were charging several times what the same medication would cost from a retail pharmacy, and the costs were not regulated by a fee schedule. New law creates a maximum reimbursement rate for physician-dispensed medication of 112.5% of the average wholesale price, plus an $8 dispensing fee.

Legislation passed in Georgia should have a positive impact on workers’ compensation costs for employers. Effective July 1, 2013, medical benefits for non-catastrophic cases are capped at 400 weeks from the date of accident, whereas previously, injured workers were entitled to lifetime medical benefits for all claims.In Indiana, legislation was passed that establishes a hospital fee schedule at 200% of Medicare rates. This is consistent with other states that base their fee schedules on Medicare rates.

Minnesota joined most other states in amending its statutes to allow for mental-mental injuries (a psychiatric disorder without a physical injury).

Missouri’s reforms were focused on addressing the insolvent second injury fund and returning occupational disease claims to the workers’ compensation system.

Recent legislative changes in New York will reduce employer costs by about $800 million annually. These savings are derived primarily by streamlining the assessment collection process and eliminating the 25-a fund and its associated assessments. New York’s workers’ compensation assessments are the highest in the nation, so employers welcome any relief in this area.

Tennessee and Oklahoma both moved its workers’ compensation dispute resolution process from a court-based system to an administrative system, leaving Alabama as the only state that still uses the trial courts for all such litigation.

EMPLOYERS® Celebrates 100 Year Anniversary

EMPLOYERS Insurance celebrated its 100th anniversary on July 31, 2013. In recognition and celebration of its rich history, EMPLOYERS hosted commemorative events at its Reno, Nevada headquarters and at its offices across the country.

The company originated in 1913 as Nevada’s State Fund as a means to increase workplace safety for the state’s workers and provide insurance for the state’s businesses. After a successful and industry-leading privatization in 2000, the organization transformed in 2005 into a mutual holding company, the first ever in Nevada. In 2007, EMPLOYERS demutualized and completed an initial public offering to become a publicly traded company listed on the New York Stock Exchange. The company has continually added to and expanded its operations to better meet the needs of more small businesses, as well as to increase the ease of doing business with insurance agents. Today, the company operates in 31 states and the District of Columbia.

“EMPLOYERS’ growth and evolution from a monopolistic state fund to a publicly traded company is impressive. Its 100-year anniversary is a tremendous milestone, and it couldn’t have been achieved without the support of our dedicated and talented employees, as well as our valued policyholders, agents, partners, and shareholders. Together, we have delivered on an ambitious vision,” stated Douglas D. Dirks, president and chief executive officer. Dirks added: “I’m very proud of what we have accomplished as an organization and am confident of our future as we continue to help America’s small businesses succeed.”

Employers Holdings, Inc. is headquartered in Reno, Nevada and listed on the New York Stock Exchange. EMPLOYERS is a holding company with subsidiaries that are specialty providers of workers’ compensation insurance and services focused on select small businesses engaged in low-to-medium hazard industries. The company, through its subsidiaries, operates coast to coast. Insurance is offered by Employers Insurance Company of Nevada, Employers Compensation Insurance Company, Employers Preferred Insurance Company, and Employers Assurance Company, all rated A- (Excellent) by A.M. Best Company.

“Big and Famous” Hospitals Fall Short in Quality

In the first effort of its kind, the nonprofit publisher of Consumer Reports magazine released ratings of 2,463 U.S. hospitals in all 50 states on Wednesday, based on the quality of surgical care. The group used two measures: the percentage of Medicare patients who died in the hospital during or after their surgery, and the percentage who stayed in the hospital longer than expected based on standards of care for their condition. Both are indicators of complications and overall quality of care, said Dr John Santa, medical director of Consumer Reports Health.

According to the story in Reuters Health, the ratings will surely ignite debate, especially since many nationally renowned hospitals earned only mediocre ratings. The Cleveland Clinic, some Mayo Clinic hospitals in Minnesota, and Johns Hopkins Hospital in Baltimore, for instance, rated no better than midway between “better” and “worse” on the CU scale, worse than many small hospitals. Because CU had only limited access to data, the ratings also underline the difficulty patients have finding objective information on the quality of care at a given facility.

Nevertheless, “this is a step in the right direction,” said Paul Levy, former president of Beth Israel Deaconess Medical Center in Boston, who was not involved in the project. “To whatever extent you can empower patients to get better care and become partners in pushing the healthcare system to make improvements is to the good.”

CU’s ratings are based on Medicare claims and clinical records data from 2009 to 2011 for 86 kinds of surgery, including back operations, knee and hip replacements, and angioplasty. The rates are adjusted to account for the fact that some hospitals treat older or sicker patients, and exclude data on patients who were transferred from other hospitals. These are often difficult cases that, CU felt, should not be counted against the receiving hospital.

Although the ratings do not explicitly incorporate complications such as infections, heart attacks, strokes, or other problems after surgery, the length-of-stay data captures those problems, said Santa.

Some of the findings are counterintuitive. Many teaching hospitals, widely regarded as pinnacles of excellence and usually found at the top of rankings like those of U.S. News and World Report, fell in the middle of the pack.

“This isn’t the first time we’ve seen this sort of surprise,” said Dr Marty Makary, a surgeon at Johns Hopkins Hospital and author of the 2012 book, “Unaccountable: What Hospitals Won’t Tell You and How Transparency Can Revolutionize Health Care.” “For a complex procedure you’re probably better off at a well-known academic hospital, but for many common operations less-known, smaller hospitals have mastered the procedures and may do even better” with post-surgical care.

CU also found that several urban hospitals did well despite serving many poorer, sicker patients, including Mount Sinai Hospital in New York and University Hospitals Case Medical Center in Cleveland. Rural hospitals did better, on average, than other hospitals, and many hospitals practically unknown beyond their zip code outranked famous ones, including Kenmore Mercy near Buffalo, New York; Arrowhead in Glendale, Arizona; Sacramento Medical Center in California; and Arkansas Heart in Little Rock.

San Gabriel DME Supplier Gets 2 Years in Prison

The owner and operator of a durable medical equipment (DME) supply company was sentenced yesterday to serve 24 months in prison for conspiring to submit nearly $1 million in fraudulent claims to Medicare.

Tigran Aklyan, 37, of Van Nuys, California, was sentenced today by U.S. District Judge Michael W. Fitzgerald in the Central District of California. In addition to his prison term, Aklyan was sentenced to serve three years of supervised release and ordered to pay $653,461 in restitution.

In April 2013, Aklyan pleaded guilty to conspiracy to commit health care fraud. In his plea agreement, Aklyan admitted that he was the owner and president of Las Tunas, a DME supply company located in San Gabriel, California. Aklyan admitted that from in or around October 2007 through in or around May 2009 he conspired with others to commit health care fraud by providing medically unnecessary power wheelchairs and other DME to Medicare beneficiaries and submitting false and fraudulent claims to Medicare. Aklyan admitted that he paid the owners and operators of fraudulent medical clinics to provide him with prescriptions and supporting medical documentation for the power wheelchairs and DME that he billed to Medicare. Aklyan knew that the prescriptions and medical documents that the clinics produced were fraudulent, yet he certified to Medicare with the submission of each claim that the DME was medically necessary. Aklyan also admitted that he knew that it was illegal for him to pay for prescriptions, but he did so anyway.

From on or about December 17, 2007, through on or about February 20, 2009, Aklyan, through Las Tunas, submitted approximately $910,377 in fraudulent claims to Medicare for PWCs and related services, and Medicare paid Las Tunas approximately $653,461 on those claims.

The case was investigated by the FBI and the Los Angeles Region of HHS-OIG 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. This case is being prosecuted by Assistant Chief Benton Curtis and Trial Attorneys David M. Maria and Blanca Quintero of the Criminal Division’s Fraud Section.

Lien Claimants File Federal Suit to Invalidate SB 863 Activation Fee

Angelotti Chiropractic, Mooney and Shamsbod Chiropractic, Christina-Arana and Associates, Joyce Altman Interpreters, Scandoc Imaging and Buena Vista Medical Services filed a lawsuit yesterday in the United States District Court, Central District of California seeking to avoid payment of millions of dollars in lien activation fees before the end of 2013. The Defendants are Edmund G. Brown (Governor), Kamala D. Harris (Attorney General), Christine Baker (DIR Director), Ronnie Caplane (WCAB Chair) and Destie Overpeck (DWC Acting Director)

The suit requests declaratory, injunctive and other relief and challenges the constitutionality of certain provisions of SB 863 that retroactively impose a $100 “activation” fee on workers’ compensation liens filed prior to January 1, 2013. Plaintiffs allege that they filed valid liens prior to December 31, 2013 that constitute “vested property rights.” They allege that the mandatory dismissal provisions of the activation fee law interfere with those rights.

The Plaintiffs also complain that other “large holders of workers’ compensation liens are arbitrarily exempted from the fee” such as insurance companies, HMOs and labor union benefit plans. Thus they say that SB 863 “specifically targets independent providers of services to workers’ compensation claimants and was adopted with the purpose of destroying their liens.”

Thus, they allege that these “provisions of SB863 are unconstitutional under the Takings, Due Process and Equal Protection Clauses of the United States Constitution. Accordingly, this action seeks preliminary and permanent injunction preventing Defendants from enforcing these provisions of SB863.”

Christina Arana and Associates Inc. holds approximately 4,500 liens, Joyce Altman Interpreters, Inc. holds approximately 4,745 liens, Sandoc Imaging Inc. holds approximately 2,300 liens and Buena Vista Medical Services Inc. allege they hold approximately 20,888 liens. In total Plaintiffs allege they hold “tens of thousands of liens” which require activation fees in an amount of “more than $2 million” and the Plaintiffs allege they presently lack the ability to pay the lien activation fees.

The complaint will now be served on the defendants, who will likely demur the complaint. This will test the legal validity of the Plaintiff’s’ constitutional theories before a federal judge. After that step, should they survive the demurrer, it is likely that the case will be submitted by way of the summary judgment process inasmuch as there are no substantial disputes as to the facts. This case will move rapidly through the federal system, at least at the trial level.

Study Says Non-Guideline Back Pain Treatment Increasing

Despite guidelines to treat back pain conservatively, the proportion of people prescribed powerful painkillers or referred for surgery and other specialty care has increased in recent years, according to a new study reported in Reuters Health. “This is kind of concerning,” said Dr. Steven Cohen, an anesthesiologist and critical care doctor at the Johns Hopkins School of Medicine in Baltimore who didn’t participate in the research. Surgery, injections and scans for back pain “have all gone up pretty dramatically,” he told Reuters Health. “We have increased utilization, yet we don’t have better treatment outcomes.”

The American College of Physicians and the American Pain Society recommend that people with low back pain consider treatment with Tylenol or non-steroidal anti-inflammatory drugs (NSAIDs), as well as heating pads and exercise. The groups say doctors should only order CT and other scans when they suspect nerve damage. Opioids are only recommended for patients with “severe, disabling pain” that doesn’t get better with over-the-counter medicines – and their risks, such as for abuse and addiction, should be weighed against potential benefits.

For the new study, Dr. Bruce Landon from the Harvard Medical School in Boston and his colleagues tracked nationally-representative data on outpatient visits for back and neck pain collected between 1999 and 2010. The researchers had information on about 24,000 visits, which represented a total of 440 million appointments across the U.S.

During that span, they found the proportion of patients prescribed Tylenol and NSAIDs dropped from 37 percent to 25 percent. At the same time, the proportion given narcotics rose from 19 percent to 29 percent. About 11 percent of people with back pain had a CT or MRI scan in 2009 and 2010, compared to seven percent in 1999 and 2000. Finally, although the rate of referrals to physical therapy held steady during the study period, the proportion of patients referred to another doctor – likely for surgery or other treatments – doubled from seven to 14 percent, the researchers reported Monday in JAMA Internal Medicine. “Physicians want to offer patients treatments that are going to work sooner and patients are demanding them and sometimes it’s just easier to order the MRI or order the referral,” Landon said. But, he added, “They often lead to things that are unnecessary and expensive and maybe not better in the long run and maybe even worse,” such as surgery or injections that haven’t proven to be effective.

According to the National Institutes of Health, eight out of ten people have back pain at some point in their lives. One of the difficulties of treating back pain, Cohen said, is that there are so many possible causes – including disc, joint and nerve problems. He said the strongest evidence supports treating the pain with exercise, including stretching and some aerobic activity. Landon said 95 percent of patients will recover from back pain with a little bit of time and conservative treatment. “They key thing for patients is, give it time,” he told Reuters Health. “Patients expect and want it to get better in seconds and that’s not always going to happen. But if you give it time, work on it, do stretching and physical therapy exercises, that’s what’s going to make it better in the long run.”

Occupy Movement Plans August 13 WCAB Protest Over Cop’s Psyche Claim

John Pike, the former police officer who pepper-sprayed students during an Occupy protest at the University of California, Davis is applying for worker’s compensation, claiming he suffered psychiatric injury from the 2011 confrontation.

Pike has a settlement conference set for Aug. 13 in Sacramento, according to the state Department of Industrial Relations’ website. Organizers are already planning a demonstration outside the state building in the hopes of urging the WCAB to reject the former cop’s claim. “It’s so outrageous,” Protest Organizer Bernie Goldsmith said. “While he might be entitled to receive workers compensation, the idea that his own actions of brutality would entitle him to a payout is absolutely unjust. It’s crazy.”

Pike was fired in July 2012, eight months after a task force investigation found that his action was unwarranted. Online videos of him and another officer casually dousing demonstrators with pepper spray went viral, sparking outrage at UC Davis leaders. The images became a rallying symbol for the Occupy Wall Street movement.

Hackers posted Pike’s information online. The former Marine sergeant received scores of threats that led an Alameda County Court judge to rule against releasing the names of other officers at the scene.

This week, a state appeals court ruled news organizations are entitled to know the names of a dozen University of California police officers who were interviewed about the use of pepper spray on demonstrators at UC Davis. The Los Angeles Times and The Sacramento Bee are seeking the officers’ identities, which were redacted from two reports on the incident.

In the aftermath, the University of California agreed to pay $1 million to settle a lawsuit filed by demonstrators and the chief of the UC Davis police department resigned. Ian Lee was one of the protesters pepper-sprayed. He and about 20 others shared in a million-dollar settlement. The college junior hopes Pike’s claim is denied. “It’s wrong what he’s trying to do,” Lee said. “When you reward people like Pike by giving them benefits, you tell people it’s okay to hurt students. That’s the message we absolutely cannot send.”

DWC Now Accepting Applications for October 19 QME Exam

Applications are now being accepted for the Qualified Medical Evaluator examination, which will take place Saturday, Oct. 19. Applications for the QME exam may be downloaded from the DWC Website. The QME application form is included in the exam packet. Applicants may also contact the Medical Unit at 510-286-3700 to request an application via U.S. mail, email or fax. The deadline for filing exam applications is Sept. 12.

The QME exam will be given at two locations. The northern California exam will be given at the South San Francisco Conference Center, 255 South Airport Blvd,.South San Francisco. In southern California the examination will be at the Irvine Marriott Hotel 18000 Von Karman Ave., in Irvine.

The examination content is based in part on the information contained in the Physician’s Guide to Medical Practice in the California Workers’ Compensation System, An IMC publication, Winter 2001, 3rd edition, and the DWC Medical Unit, “Study Guide” 2013 version, (available Summer 2013). As a result of 2003 and 2004 legislative changes and 2009 and 2013 regulatory changes, some portions of this Physician’s Guide may be inconsistent with current law. Therefore, it must not be considered authoritative, and should only be consulted as an historical document. Effective January 1, 2001, a physician seeking appointment as a QME on or after January 1, 2001, shall also complete prior to appointment, a 12 hour course on Disability Evaluation Report Writing approved by the DWC. (LC§139.2).

For more information please contact the Medical Unit at 510-286-3700, Joanne Van Raam at 510-628-2004 or Francine Wooley at 510-628-2038.

Navy Employee Sentenced to Two Years for Comp Fraud

United States Attorney Laura E. Duffy announced that veteran Leray Shurn was sentenced to serve two years in federal prison by United States District Court Judge Thomas J. Whelan for running a landscaping business while claiming worker’s compensation and unemployment benefits from the Department of the Navy and Department of Veterans Affairs to which he was not entitled. Judge Whelan also ordered Shurn to pay $357,977 in restitution and a $5,000 fine. Shurn’s fraud spanned more than five years and cheated two U.S. government agencies out of over $350,000.

According to evidence presented during trial, Shurn falsely represented to the Navy and VA that back and later knee injuries prevented him from working as a Navy civilian employee, and that he was not engaged in any employment where he received payment of any kind, was not self-employed, was not involved in any business enterprises, and did not have an ownership interest in any business enterprises. He also falsely claimed that his disability prevented him from being able to obtain employment.

In January 2013, a jury returned guilty verdicts on all 16 counts of fraud (5 counts of mail fraud, 4 counts of wire fraud, 5 counts of fraud to obtain federal employee’s compensation, and 2 counts of false statements to the VA). During the trial, the jury heard and saw evidence, including video recordings, that Shurn operated a landscaping business in which he personally performed landscaping work for numerous customers, provided customers with his business card for “Leray’s Landscaping” as well as monthly invoices, and represented to landscaping suppliers that he was in the landscaping business. The jury also received evidence that while Shurn was concealing his landscaping business from the Navy and VA, he completed a survey in which he indicated that he was a business owner.

United States Attorney Duffy added, “During these difficult budgetary times, submission of fraudulent claims harms our community and government agencies by diverting financial resources away from those with legitimate claims who are most in need of benefits payments and prevents agencies from funding other priorities.”

New FDA Law Fast Tracks Breakthrough Drugs

In July 2012, a provision in the new law called the Food and Drug Administration Safety and Innovation Act, or FDASIA for short, gave FDA another powerful expedited development tool, known as the “breakthrough therapy” designation. This new designation is now helping FDA assist drug developers expedite the development of new drugs with preliminary clinical evidence that indicates the drug may offer a substantial improvement over available therapies for patients with serious or life-threatening diseases. Although the designation is not yet even a year old, FDA has received 62 requests to grant this new designation to products under development. The FDA has already granted the breakthrough designation to 20 potential innovative new drugs that have shown encouraging early clinical results.

To help industry better understand each tool, including when the tools can be used and the features of each, the FDA has just published an industry draft guidance titled Expedited Programs for Serious Conditions – Drugs and Biologics. Among other important information, the draft guidance describes FDA’s policies and the threshold criteria for each expedited program, defines and discusses important concepts, including serious condition, unmet medical need, and available therapy, and provides some general considerations for products utilizing an expedited program, such as manufacturing and product quality, nonclinical considerations, and clinical inspection considerations.

The FDA previously had three other programs for over 20 years: Fast Track, Accelerated Approval, and Priority Review. But breakthrough designation required early clinical data in people showing an “unprecedented effect.” The close relationship allows the company to “design collaborative, multidisciplinary development plans that hasten timelines to approval and minimize the number of patients exposed to less efficacious treatment or placebos.”

Yesterday, there was a congressional briefing on the status and efficacy of breakthrough status designations. Jay Siegel, Johnson and Johnson’s head of global regulatory affairs, spoke about the accelerated drug development process, and how it has shaved two years off of the close to 10 years that a typical drug takes to go to market. “This has had an enormous impact,” Siegel said. “There is a very pro active role on the part of the FDA. They’ll pick up the phone and call us and say ‘Have you thought of this way to do this faster? Have you thought about this problem?'” The FDA suggested some avenues the companies should take to seek approval that they hadn’t thought of, Siegel said, without being specific. The agency also helped J and J and Sunnyvale, California-based Pharmacyclics determine which trials must be done before submitting an approval application and which could be conducted after potential approval, he said.

Vertex Pharmaceuticals Inc., based in Cambridge, Massachusetts, was the first to receive a breakthrough designation for expanded use of its cystic fibrosis drug Kalydeco.