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Attorney General Says California Leads the Nation in Transnational Organized Crime

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California has long been known as one of the epicenters of insurance fraud, medical fraud, and other organized crimes. And now, according to a new 118 page report by California Attorney General Kamala Harris, California leads all states in the number of computer systems hacked or infected by malware, the number of victims of Internet crimes, the amount of financial losses suffered as a result and the number of victims of identity fraud. The report says the state also is particularly vulnerable to thefts of intellectual property because of its leading role in developing new technologies and mass-media entertainment. The report should serve as a wake up call to any California businesses that maintain data on individuals such as insurance companies that digitize claim files, and third party administrators.

Between 2009 and 2012, the number of intentional breaches of computer networks and databases in the U.S. jumped by 280 percent, with California’s share leading the nation. Many of these breaches have been tied to transnational criminal organizations operating from Russia, Ukraine, Romania, Israel, Egypt, China, and Nigeria, among other places.

The report claims that transnational criminal organizations are increasingly taking advantage of new communications technology and the interconnectedness of the globalized world to further their trafficking activities in California. This creates new challenges for law enforcement. But transnational organized crime in California extends beyond drugs, weapons, and human trafficking. In the 21st century, the problem posed by transnational criminal organizations threatens the security of computer and data networks, the integrity of online bank accounts, and the rights of intellectual property holders. By virtue of its population and knowledge-powered economy, “California is the top target in the nation for this new generation of transnational criminal organizations – originating in significant numbers from Eastern Europe, but also Africa and China – whose purpose is to commit highly profitable hacking, fraud, and digital piracy crimes.”

California’s gross domestic product of $2 trillion, significant foreign trade activity and border with Mexico also makes the state an easy target for international money-laundering schemes, the report says. It estimates that more than $30 billion is laundered through California’s economy each year. Some is filtered through legitimate businesses or by using virtual currencies such as Bitcoin. But the report says backpacks and duffel bags stuffed with cash have been seized more frequently since Mexico began toughening its money-laundering laws in 2010. Seizures of bulk cash increased 40 percent by 2011 in California, which now leads the nation in the number of currency seizures.

Transnational criminal organizations are taking advantage of new communications technologies and social media to facilitate criminal activity, recruit new members, and intimidate or harass their rivals – even from inside prison walls. In 2011, for example, over 15,000 cell phones were seized from inmates in California prisons. The public safety threat posed by Mexico-based drug trafficking organizations has been amplified as cartels have formed alliances with California prison and streetgangs to control trafficking routes, distribute drugs, and kidnap, extort, and kill as necessary to protect their criminal activities. The Mexican Mafia, for example, provides protection for members of numerous cartels both inside and outside prison, and various Hispanic Sureño and Norteño gangs in Southern and Northern California have teamed up with Sinaloa, La Familia Michoacana, The Knights Templar, and other Mexico-based drug trafficking organizations.

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Intoxication is No Defense to Claim Against Uninsured Employer

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Sacramento Lopez was injured while working for Elena Delgadillo and and Jesus Cortez. He sued them in superior court, seeking damages for the injury and also alleging violations of various wage and hour laws. In response to an interrogatory request propounded during discovery, the employer admitted they did not have workers’ compensation insurance covering Lopez’s injury. The employer later reversed course and contended they did have insurance, relying on a workers’ compensation policy purchased for a different employment site, which they argued also covered the employment site where Lopez was injured. Their insurance company denied coverage and the employer filed a separate lawsuit against the insurance company and others (the insurance action), naming Lopez as an indispensable party. The employer voluntarily dismissed with prejudice the insurance action prior to trial in Lopez’s lawsuit.

After a jury verdict in Lopez’s favor, the trial court entered judgment awarding Lopez unpaid wages and penalties for the wage and hour violations, and damages (medical expenses and noneconomic losses) for the workplace injury. The trial court subsequently awarded Lopez attorney fees, including fees for work performed in the insurance action “because that action was closely related with this action and useful to its resolution.” The employer appealed, and the court of appeal sustained the judgment in the unpublished case of Lopez v. Delgadillo.

With respect to the arguments about the exclusive remedy under workers compensation, if an employer has failed to obtain workers’ compensation insurance or permission from the state to self-insure, the employee may bring a civil action for damages. (Labor Code, §§ 3700, 3706.). In this case the employer failed to properly plead and prove that it had proper workers’ compensation insurance.

The employer sought, over Lopez’s objection, to present evidence at trial of Lopez’s drug and alcohol use at the time of his injury. The trial court excluded the evidence as more prejudicial than probative under Evidence Code section 352, and refused appellants’ request for a jury instruction regarding intoxication. The court of appeal agreed with the ruling. In lawsuits seeking damages for workplace injuries when the employer failed to obtain workers’ compensation insurance (§ 3706), “it is presumed that the injury to the employee was a direct result and grew out of the negligence of the employer, and the burden of proof is upon the employer, to rebut the presumption of negligence. It is not a defense to the employer that the employee was guilty of contributory negligence” (§ 3708). After the California Supreme Court replaced contributory negligence with comparative negligence, this statute was construed to preclude a defense of the employee’s comparative negligence. (Logan v. Masters (1981) 120 Cal.App.3d 145, 147-148 [“[c]omparative negligence, like contributory negligence, is unavailable to the employer,” otherwise “uninsured employers would have a potential advantage over insured employers, a result clearly contrary to the Legislature’s intent”].) Accordingly, any evidence of Lopez’s drug and alcohol use to show his negligence was properly excluded.

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Bipartisan Agreement Raises Hopes to Avoid 24% Physician’s Pay Cut

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Hundreds of thousands of doctors who participate in traditional Medicare face a 24 percent pay cut on April 1, as part of a 1990s initiative to restrain federal spending on the government healthcare program, which today serves nearly 50 million elderly and disabled people.

Using language seldom reserved for Congress, the nation’s most powerful lobbies for physicians are heaping praise on rare bipartisan legislation heading to the floors of the U.S. Senate and House of Representatives perhaps within the next month to fix a flaw in how doctors are paid by the federal Medicare health insurance program for the elderly. After years of watching Congress delay, debate and dither on the repeal of Medicare’s “sustainable growth rate,” or SGR, reimbursement formula, a solution has passed three powerful Congressional committees and is headed possibly next month to likely passage.

According to the story in Forbes, the deal, which both the American Medical Association and the American Academy of Family Physicians have called a “bicameral, bipartisan” agreement to repeal SGR would bring an end to stopgap corrections to dramatic cuts in doctor payments from Medicare in what has since been labeled the “doc fix.” At the same time, the legislation heading for Senate and House votes would tie more physician reimbursement to quality and outcomes measures. “Legislators and staff have shown a Herculean effort in crafting this proposal,” Dr. Jeffrey Cain, chair of the American Academy of Family Physicians board said in a letter Monday to Congressional leaders including House Speaker John Boehner and Senate Majority Leader Harry Reid.

Congress has several times for a decade now merely made stopgap corrections to avert drastic payment cuts to Medicare payments under SGR, which was created by the Balanced Budget Act of 1997 in an effort to slow the growth of Medicare spending. Last year alone, Congress averted a fee cut of nearly 27 percent to physician payments. The AMA, family doctor group and other physician lobbies say Congress needs to act before March 31 when the latest stopgap measure that extends “the Medicare payment formula that includes the Sustainable Growth Rate expires,” Cain said. “The looming threat of frequent reductions also stifles innovation in case delivery and hinders the transformation of primary care practices,” Cain said. “Investments in process and quality improvement have proven difficult for most physicians under the current unpredictable payment structure.”

Should the legislation pass, it will increase payments 0.5 percent annually through 2018. Meanwhile, more Medicare payments would be tied to quality measures that include “clinical care, safety, care coordination, patient and caregiver experience and population health.” To get bonus payments, physicians would be compared to their peers and measures would be updated every year by the U.S. Secretary of Health and Human Services.

The move to new payment could also be good news to the health insurance industry with companies like Aetna, UnitedHealth Group, Humana and others seeing greater numbers of seniors flocking to their Medicare Advantage plans that contract with the Medicare program to provide seniors with health benefits. They need doctors to participate if they are going to provide seniors with adequate medical care provider networks.

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Public Service Insurance Exits California Comp Market

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Public Service Insurance Co.’s newly announced exit from California’s workers’ compensation market is not a reflection of the health of the state’s workers’ comp system, according to the California Department of Insurance. The workers’ comp carrier is part of the Magna Carta Cos.

A.M. Best this week downgraded the financial strength rating to B+ (Good) from B++ (Good) and the issuer credit ratings to “bbb-” from “bbb” of Public Service Insurance Co. and its affiliates, Paramount Insurance Co. (New York, NY) and Western Select Insurance Co.(Los Angeles, CA) The companies are collectively referred to as Magna Carta Cos., which operate through an intercompany pooling reinsurance agreement, according to A.M. Best.

The rating downgrades reflect the significant deterioration in Magna Carta Companies’ operating performance during the fourth quarter of 2013, due to a $57 million charge to strengthen reserves. Approximately $31.9 million of the group’s reserve strengthening actions were related to its workers’ compensation line of business. To provide protection against further unexpected adverse reserve development, management plans to implement an ADC, which will cover 100 percent of net losses within the ADC coverage limit. Inclusive of the benefit of the additional reinsurance protection, Magna Carta Companies’ overall risk-adjusted capitalization adequately supports its current obligations and those anticipated by its near-term business plans. While risk-adjusted capitalization is expected to remain at a level that supports the current ratings in the near to midterm, A.M. Best is concerned about the lack of clarity regarding Magna Carta Companies’ risk appetite and business strategy, which has contributed to the below-average underwriting and operating results in recent years. A.M. Best expects management will focus on these critical issues to return the group to profitability in the near term.

According to the story in the Insurance Journal, a call to Magna Carta wasn’t immediately returned, and spokespersons for Magna Carta or Public Service couldn’t be located.

Bryant Henley, assistant chief council for CDI, said the department has been aware of the exit. “We certainly were aware the Public Service Insurance Co. was planning to exit the market,” Henley said. Aside from that Henley declined to comment specifically on Public Service’s exit, but he said that it would have a negligible impact on the state. “The short answer there is that Public Service Insurance Co. was a very small part of the market share of California,” he said. According to CDI, the company wrote less than “One-half of 1 percent” of California’s workers’ comp business. Henley said the exit doesn’t portend any developing problems for California’s workers’ comp carriers. “No, we would not consider this a trend,” he said. “We don’t have a lot of workers’ comp business leaving California. We don’t anticipate it to be a larger trend of things to come.” He added: “the California market, it’s very vibrant and thriving.”

A spokesman for the state’s Workers’ Compensation Insurance Rating Bureau said the bureau wouldn’t offer a comment on the announced exit of the company, and a spokesman for the California Workers’ Compensation Institute also declined comment.

It’s estimated the company wrote less than $29 million in direct premiums amid the state’s $9 billion market.

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DWC Proposes Regulatory Move from ICD-9 to ICD-10

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The Division of Workers’ Compensation (DWC) has posted proposed changes to regulations reflecting transition from ICD-9 to ICD-10 to the online forum where members of the public may review and comment on the proposals.

Work on ICD-10 began in 1983 and was completed in 1992. ICD-10 is the 10th revision of the International Statistical Classification of Diseases and Related Health Problems (ICD), a medical classification list by the World Health Organization (WHO). ICD-10 is already in use in about 25 countries. The United States continues to use ICD-9, the prior edition of ICD. The new code set allows more than 14,400 different codes and permits the tracking of many new diagnoses. The codes can be expanded to over 16,000 codes by using optional sub-classifications. The detail reported by ICD can be further increased, with a simplified multi-axial approach, by using codes meant to be reported in a separate data field.

The deadline for the United States to begin using Clinical Modification ICD-10-CM for diagnosis coding and Procedure Coding System ICD-10-PCS for inpatient hospital procedure coding is currently October 1, 2014. The deadline was previously October 1, 2013. In preparation for this deadline, it is necessary for the DWC to update regulations and forms to refer to ICD-10, rather than ICD-9. Affected regulations are 8 C.C.R. §§ 9702(e), 9770(g) and 9789.16.2(a).

Affected forms are DLSR 5021 (Doctor’s First Report of Injury), PR-2 (Primary Treating Physician’s Progress Report), PR-3 and PR-4 (Primary Treating Physician’s Permanent and Stationary Reports).

The forum can be found online on the DWC forums web page under “current forums.” Comments will be accepted on the forum until 5 p.m. on Friday, March 28, 2014/

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WCAB Panel Rejects Use of Figure 15-19 to Rate Cervical Impairment

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Ron Davis, while employed as a laborer by Walt Disney Company,suffered industrial injury while pulling a heavy file cabinet on 1/3/2008 to the cervical spine, with resulting psyche, sleep disorder, sexual dysfunction and GERD. He was provided industrial benefits and treatment. He underwent cervical spine surgery on 3/11/2008 and 5/19/2009. To resolve disputed medical issues the parties obtained AME orthopedic reports of Dr. Roger Sohn, AME psychiatric reports of Dr. Perry Maloff, PQME internal reports of Dr.Revels Cayton. Also placed in evidence at trial were treating physician reports of Dr. Sam Bakshian and Dr.Dan Nairn.

The psychiatric AME, Dr. Maloff, found 8% whole person impairment for the applicant’s psyche, with 90% apportionment to industrial causes. The internal PQME, Dr. Cayton, found that the applicant’s sexual dysfunction was related to his psyche, with no independent ratable impairment. He found 9% whole person impairment for sleep maintenance insomnia, and 6% whole person impairment for GERO.

The orthopedic AME, Dr. Sohn found the applicant had a work restriction limiting him to light work only, precluding repetitive motions of the cervical spine and he should not do overhead work or keep his neck in a fixed position. Also he found 23 %. whole person impairment using the ROM method of the AMA Guides because of the multi-level cervical disc involvement in this case. He also found under DRE Category IV he would have a 26% WP!, plus 3% for chronic pain producing a 28% WP!. The AME explained why he felt this did not-accurately reflect the applicant’s impairment rating and attempted to apply an Almaraz/Guzman rebuttal rating as follows: “However, I do not think this accurately rates the applicant’s impairment rating. Under AMA guidelines, work activities are not taken into account. This accounts only for activities of daily living. I think to get an accurate rating in this person, work activities certainly must be taken into account in this workers’ compensation setting. Not to do so would lead to an obvious inaccurate rating. This is a gentleman who has virtually no extension of his cervical spine. He has 0% extension and only 40% of normal flexion. He has moderate spasm. He has significant diminution in his ability to lift, as well as his ability to move his neck. All-in-all, in my opinion, the applicant has lost 60% of his capacity for function of the cervical spine. Taking into consideration of Figure 15-19, which provides for 80% whole person impairment for complete loss of cervical spine fusion, the applicant’s whole person impairment is best rated, therefore, at 48 % impairment whole person. Adding 3% for his chronic pain level, the applicant’s whole person impairment is thus rated at 50% whole person. This in my opinion, is a more accurate rating under Almaraz/Guzman, and is far more accurate than the above rating using traditional AMA guidelines.”

The WCJ awarded 62% PD, after apportionment based strictly upon the AMA guides. He did not apply the attempted Almaraz./Guzman analysis by the orthopedic AME Dr. Sohn. The applicant’s Petition for Reconsideration was denied in the panel decision of Davis v Walt Disney Company..

The WCJ reasoned that the AME attempts to rebut the Guides by referring to Figure 15-19 of the Guides, attempting to stay within the four comers of the AMA Guides. However, the AME fails to provide sufficient explanation as to why rating applicant’s WPI using Figure 15-19 is more appropriate than the ROM or DRE method for rating the WPI under the spinal chapter, other than to achieve a desired result because he views the AMA Guides as not considering work functions. The AME’s attempt to rebut the AMA Guides whole person impairment rating of the cervical spine factors of disability by reference to Figure 15-19 to produce a 48% WP! cervical spine disability is not substantial evidence. In the instant case, Dr. Sohn did not utilize any other chapter, table; or method in the AMA Guides. Rather, he referenced Figure 15-19. Figure 15-19 is a pictorial diagram of the side view of the spinal column. There is no rating methodology described therein. Figure 15-19 simply states, “the whole spine divided into regions indicating the maximum whole person impairment represented by a total impairment .of one region of the spine. Lumbar 90%, thoracic 40%, cervical 80%.” The figure is provided ONLY for a discussion of Chapter 15.which explains how to convert whole person impairment into regional spine impairment, NOT VICE-VERSA.”

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Employer Loses Negligence and Bad Faith Case Against State Fund

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Pearson Food Company owns and operates a large food and sundries distribution warehouse in Los Angeles County, employing between 35-40 employees. It was insured by the State Compensation Insurance Fund between 2003 and 2005. At the end of the policy period for 2004 – 2005 an audit of Pearson’s financial records by SCIF revealed that Pearson had under reported its payroll and therefore owed additional insurance premiums to SCIF in the amount of $8,341.61. SC IF ultimately assigned the collection of the unpaid premiums to a third party, Allied Interstate Incorporated. Allied subsequently brought a collection action in the superior court against Pearson on the claim.

Pearson filed the cross-complaint against SCIF. Pearson’s causes of action centered around three workers’ compensations claims that Pearson alleged SCIF failed to fully investigate, had mishandled, over-valued and negligently adjusted in various ways resulting in overpayment and setting improper reserves on those claims. Pearson also claimed that as a result of SCIF’s conduct Pearson was charged higher insurance premiums and was unable to secure less expensive insurance from another insurance company. Pearson’s second amended complaint alleged that SCIF breached the insurance contract, and engaged in bad faith in various ways.

The trial court ordered the matter to reference under Code of Civil Procedure section 639, subdivisions (a)(1)-(3). During the trial before the appointed Referee Pearson presented the testimony of William Wilson, the CEO of Pearson, and Adam Wilson, the Vice President of Pearson. Pearson presented expert testimony of Sam Smith, a claims handling expert, Susan Silberman, an attorney and expert on claims handling and legal support, and Duncan Prince. SCIF’s claim adjuster/employees George Ashkharian, Rosa Rodriguez-Cubero, and Christopher Punzalan also testified. The SCIF employees testified about handling of the claims as to the three claimants, setting medical evaluations, and obtaining medical reports, and the process of determining benefit payments and setting reserves. SCIF presented expert witness William Spiegel, who testified about the proper methods of claims handling for workers compensation claims.

After reviewing the evidence, including the expert testimony presented by both parties, the Referee found that Pearson failed to prove its claims. The Referee found that although certain claims may have warranted additional investigation, that Pearson’s complaints were trivial, and did not result in significant damage or demonstrate a pattern of negligence or bad faith. The statement of decision indicated that: Pearson failed to produced evidence that the employee Herzog was not injured” or that setting a lifetime reserve in that case affected Pearson’s “ex-mod” or future premiums. As to the alleged fabricated claim by employee Aguilar, the Referee concluded that although Pearson suspected fraud, it was never reported to SCIF and the evidence indicated that employee Quinones’s injury occurred and the applicant was telling the truth. The Referee rejected the testimony of Pearson’s experts on the handling of Herzog’s, Aguilar’s and Quinones’s claims. The Referee found Susan Silberman unqualified to give medical testimony and found Mr. Smith’s testimony on reserve amounts lacked foundation and was unpersuasive. The Referee further found Pearson failed to demonstrate SCIF’s conduct damaged Pearson as alleged.

Pearson appealed the decision. The Court of Appeal affirmed in the unpublished case of Pearson Food Co. v. State Compensation Ins. Fund

Pearson claimed on appeal that the judgment must be reversed because: (1) the statement of decision upon which the judgment is based did not resolve its causes of action for breach of contract and quantum meruit; (2) the Referee’s findings did not support a ruling in favor of SCIF on the other causes of action, the Referee applied the improper standard of care in assessing the case and incorrectly shifted the burden of proof onto Pearson; and (3) the trial court erred in denying Pearson a new trial. The Court of Appeal found no merit to any of these arguments.

The statement of decision summarized the evidence presented during the trial with respect to the three cases. Thereafter in the decision, the Referee assessed Pearson’s factual and legal contentions in light of the evidence presented about each case. With respect to the Herzog claim the Referee found that “no evidence was produced that Herzog was not injured” or that “he was playing golf during the time of his treatment.” The Referee further found that SCIF’s adjuster’s setting of reverses was not unjustified or excessive in light of the evidence presented at trial. The Referee also noted that the impact of the reserves on Pearson’s “ex-mod, if calculable was not identified” even though the claim remained “open.” The Referee concluded that “[a]t the end of the day, I am persuaded that Pearson’s dispute on this issue is a quibble that does not support significant damages.”

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FDA Ignores Complaints About New Pain Drug

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Reuters Health reports that the head of the Food and Drug Administration on Thursday defended the agency’s approval of Zohydro, a powerful prescription opioid made by Zogenix Inc, saying it offers a “unique” option to treat pain despite concerns about potential abuse. The FDA’s approval of the drug has drawn a flood of criticism, including protests from the attorneys general of 28 states as well as dozens of groups representing doctors and addiction treatment specialists who are concerned that Zohydro will set off a wave of addiction similar to problems with the original form of OxyContin, another opioid. These critics have petitioned the FDA to consider pulling the drug’s marketing approval.

FDA Commissioner Margaret Hamburg, testifying at a Senate hearing, acknowledged that Zohydro is “a powerful drug” but said “…that if appropriately used, it serves an important and unique niche with respect to pain medication and it meets the standards for safety and efficacy.” Her comments to the Senate Health, Education, Labor and Pensions Committee come barely a week after Zogenix said it was making the painkiller available at “select pharmacies” following the drug’s FDA approval in October. In approving the drug, the FDA overruled its panel of outside advisers, who had recommended against approval, citing safety concerns about the potential for abuse.

Senators at the committee’s hearing echoed worries about abuse, noting the Zohydro is not made in a way to thwart crushing or chewing of such drugs to get a high. “The concern that I think a number of us have … (are) about the implications of allowing this new product on the market without these abuse deterrent properties,” said Senator Robert Casey, a Democrat from Pennsylvania on the panel. Senator Joe Manchin of West Virginia, whose state has been particularly hard-hit by prescription drug abuse, earlier this week called on U.S. Health and Human Secretary Kathleen Sebelius to overturn the FDA’s approval. “Americans are abusing, and (in) many cases dying, at an alarming rate from highly addictive pain medicine, and it is shameful that the FDA would ignore its own experts to approve this drug,” Manchin said in a statement after the hearing. He later introduced legislation that would ban Zohydro. Hamburg said unlike other approved hydrocodone drugs, Zohydro does not contain acetaminophen, which can be toxic to the liver. She also said other factors, including doctors’ prescribing practices, play a role in drug abuse.

Abuse of OxyContin became so widespread that manufacturer Purdue Pharma changed its formula in 2010 so that the drug could not be injected or snorted as easily. On Wednesday, Purdue said it was moving ahead with an abuse-resistant rival to Zohydro. Zogenix last week also said it is making progress on another version of Zohydro to deter abuse. “I would love if we had abuse-deterrent formulations that were actually meaningful and effective at deterring abuse in all instances. We are moving in that direction,” Hamburg told lawmakers. “Right now, unfortunately, the technology is poor.” She added that the FDA is working on guidelines to help manufacturers come up with more effective abuse deterrents but gave no timeline for when the guidelines would be finalized. Developing more non-opioid pain drugs could also help prevent misuse, she said.

“Acute and chronic pain needs to be treated. Opiates are very effective for acute pain, less effective for chronic pain, but we don’t have a lot of good alternatives at the present time,” she told the Senate panel. Hamburg also said more attention needs to be paid to the overdose-reversal medication called naloxone, which could save more lives if it was easier to use and more widely available.

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Truck Mechanic Faces Felonies For Fraudulent Claim

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Jose Fabian Ruiz, 61 of Los Angeles, is in custody and charged with multiple felony counts including allegedly filing a fraudulent insurance claim. Video surveillance revealed that Ruiz continued physically demanding work on a side job while receiving more than $150,000 in workers’ compensation benefits after claiming an allegedly debilitating lower back injury which supposedly prevented him from working.

“I find Ruiz’s actions reprehensible,” said California Insurance Commissioner Dave Jones. “Not only did he attempt to cheat the system, but lies like his are the very reason that premiums rise as insurers are forced to pass the cost of fraud onto consumers.”

In response to a complaint, the Department of Insurance opened an investigation and interviewed Ruiz on two occasions. In both interviews Ruiz stated that his injury left him unable to lift more than ten pounds, and resulted in a limited range of motion, preventing him from performing parts of his job, such as climbing into big rig trucks.

Department investigators obtained surveillance footage that showed Ruiz working on large trucks and showed him performing his regular work like, working on large trucks with a full range of motion. Two independent medical experts reviewed the video and both determined that Ruiz was not impaired by any major injury nor was he functioning with any significant level of pain.Ruiz was arrested February 27, 2014 by department investigators. He is currently being held on $80,000 bail at the Lynwood Detention Center.

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Top U.S. Scientific Misconduct Official Quits in Frustration

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Most medical delivery systems, including treatment in the California workers’ compensation program, have evolved to payment only for “evidence based” medicine. High quality medical science is supposed to be used to approve or disapprove UR and IMR treatment requests. Consequently, there needs to be some oversight of the medical science. Gatekeepers are needed who will scrutinize supposed medical science for foul play. As simple as that sounds, there are frustrating bureaucratic hurdles to overcome at the highest levels of federal government.

The director of the U.S. government office that monitors scientific misconduct in biomedical research has resigned after 2 years out of frustration with the “remarkably dysfunctional” federal bureaucracy. David Wright, director of the Office of Research Integrity (ORI), writes in a scathing resignation letter that the huge amount of time he spent trying to get things done made much of his time at ORI “the very worst job I have ever had.”

ORI, which is part of the Department of Health and Human Services (HHS), monitors alleged research misconduct by researchers funded by the National Institutes of Health (NIH) and other Public Health Service (PHS) agencies. It runs education programs and reviews institutions’ misconduct investigations, each year posting a dozen or so findings of misconduct, defined as fabrication, falsification, or plagiarism. It also recommends PHS sanctions, such as barring researchers from receiving grants. ORI’s visibility has grown recently along with a rise in retracted research papers, some involving misconduct.

Observers lauded Wright’s appointment in December 2011, which ended 2 years in which the office had no permanent director. Wright, a historian of science at Michigan State University in East Lansing, had served as an ORI consultant and came in with plans to beef up training programs. But last February, he fired off a fiery resignation letter to his boss, HHS Assistant Secretary for Health (ASH) Howard Koh.

In his letter, David Wright writes that working with ORI’s “remarkable scientist-investigators” was “the best job I’ve ever had.” But that was only 35% of his job; the rest of the time he spent “navigating the remarkably dysfunctional HHS bureaucracy” to run ORI. Tasks that took a couple of days as a university administrator required weeks or months, he says. He writes that ORI’s budget was micromanaged by more senior officials, and that Koh’s office had a “seriously flawed” culture, calling it “secretive, autocratic and unaccountable.” For example, he told Wanda Jones, Koh’s deputy, that he urgently needed to appoint a director for ORI’s division of education. Jones told him the position was somewhere on a secret priority list of appointments. The position has not been filled 16 months later, David Wright notes.

OASH itself suffers from the tendency of bureaucracies to “focus on perpetuating themselves,” David Wright writes. Officials spent “exorbitant amounts of time” in meetings and generating data and reports to make their divisions look productive, he writes. He asks whether OASH is the proper home for a regulatory office such as ORI, noting that Koh himself has described his office as an “intensely political environment.”

David Wright makes no mention of a recent letter to ORI from Senator Charles Grassley, who has complained that ORI was not tough enough on an AIDS researcher at Iowa State University who faked data to obtain nearly $19 million in NIH funding. ORI barred the researcher, Dong-Pyou Han, from participating in PHS-funded research for 3 years, but Grassley has asked why ORI did not make him return federal grant money or impose harsher sanctions.

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