Author: WorkCompAcademy

Despite efforts by the Obama administration to ease shortages of critical drugs, shortfalls have persisted, forcing doctors to resort to rationing in some cases or to scramble for alternatives, a government watchdog agency said on Monday. At the end of the day, this will translate to increases in medical costs for payment systems including workers’ compensation. According to the article in the New York Times, drug shortages have become an all but permanent part of the American medical landscape. The most common shortages are for generic versions of sterile injectable drugs, partly because factories that make them are aging and prone to quality problems, causing temporary closings of production lines or even entire factories. The number of annual shortages – both new and continuing ones – nearly tripled from 2007 to 2012.

The analysis by the United States Government Accountability Office, released Monday, was required by a 2012 law that gave the Food and Drug Administration more power to manage shortages. The watchdog agency was charged with evaluating whether the F.D.A. had improved its response to the problem, among other things. The accountability office concluded that the F.D.A. was preventing many more shortages now than in the past – 154 potential shortages in 2012 compared with just 35 in 2010 – but that the number of shortages has continued to grow.

“We are at a public health crisis when we don’t have the medicines to treat acutely ill patients and we don’t have the basics like intravenous fluids,” said Erin Fox, a drug expert at the University of Utah whose data was used in report. The most acute shortage now is that of basic I.V. fluids, she said.

The drug industry rarely spells out the precise reason for a shortage, citing its need to protect competitive trade information. Dr. Douglas C. Throckmorton, a senior F.D.A. official who deals with shortages, said in written testimony released on Monday that 66 percent of production disruptions that led to shortages were caused by quality problems and efforts to fix them.

The 2012 law required that drug companies provide the F.D.A. with a general reason, but Ms. Fox said that it was often not specific enough to understand what was driving the shortage.

Economic factors are also contributing to the shortages. Narrow profit margins are making some drug companies reluctant to invest in fixing old production facilities. Dr. Throckmorton compared aging drug facilities to an old car, which requires significantly more upkeep than a new one. Changes in Medicare reimbursement and the role of group purchasing organizations, which buy drugs on behalf of hospitals, could also be contributing, by further reducing prices.

The F.D.A. said in a statement that it is “committed to the prevention of new drug shortages and the resolution of ongoing drug shortages, which remain a significant public health issue in the United States.”

On September 9, 2013, applicant, Eun Jae Kim, filed an Application for Adjudication of Claim alleging that she sustained cumulative industrial injury to her back and other body parts while working for B.C.D. Tofu House, Inc. (BCD) as a waitress manager. The employer asserted that upon receipt of the claim a “complete MPN package” was sent to applicant on September 18, 2013. However, on September 19, 2013, the next day, a letter was sent to the employee denying liability “as there is no policy in effect at the time of alleged injuries” and also because there was no “medical proof to substantiate whether your alleged injuries were due to your employment with BCD Tofu House.” Notwithstanding the denial letter, a delay notice was sent to applicant on September 30, 2013. The delay letter identified “Dr. David Heskiaoff” as primary treating physician, but did not schedule an initial medical evaluation. The next day on October 1, 2013 she was “informed that defendant” had selected Richard Feldman, M.D., as her new primary treating physician and had scheduled an initial evaluation for October 23, 2013.

Applicant at some point thereafter identified non-MPN physician Gabriel Rubanenko, M.D., as her primary treating physician. A WCJ found that that an expedited hearing was “not appropriate” to address defendant’s provision of medical treatment through its MPN because the case was not admitted. As a result, the defendant filed a Declaration of Readiness to Proceed on October 11, 2013, with the following statement: “Claim is in delay mode. Applicant has been advised of treatment within the MPN. Defendant is attempting to provide medical tretment [sic] within the delay period, within the MPN. Applicant’s attorney has selected a non-MPN physician as primary treactmng [sic] physician. Defendant seeks an order for treatment and transfer of care into the MPN, and an order regarding no liability for non-MPN treatment with Dr. Rubanenko.”

An expedited hearing was calendered for November 13, 2013, and the attorneys for applicant and defendant appeared at that time. However, the expedited hearing did not go forward. Instead, the case was ordered off calendar by the WCJ, who wrote on the Minutes of Hearing: “As of 11/13/13 defendant confirms that case is not admitted. Not appropriate for [Expedited Hearing].” The employer filed a Petition for Removal. In his Report, the WCJ confirms that the case was taken off calendar “because the [d]efendant confirmed on the day of hearing that it had not admitted or denied liability for the alleged injury, and the 90-day time frame permitted [by section 5402(b)] to make such a decision had not yet elapsed.” The logic was that Rule 10252 of the Rules of the Court Administrator, which provides that a party is entitled to an expedited hearing and decision on the issue of “the employee’s entitlement to medical treatment pursuant to Labor Code section 4600” when “injury to any part or parts of the body is accepted as compensable by the employer.” (Cal. Code Regs., tit. 8, § 10252.) In sum, the WCJ reasoned that Court Administrator Rule 10252 precluded an expedited hearing on the issue of applicant’s medical treatment in the MPN because defendant had not accepted any part of the claimed injury as compensable even though the 90-day period allowed by section 5402(b) to make such a decision had not yet elapsed.

The WCAB granted the Petition for Removal in the case of Eun Jae Kim v B.C.D. Tofu House and Cypress Insurance Company and concluded that the WCJ erred by ordering the case off calendar instead of proceeding with the expedited hearing. The reasoning given by the WCJ in his Report for not conducting an expedited hearing on November 19, 2013 is incomplete because it does not take into account the amendment of section 5502(b)(2) by Senate Bill 863 to provide for an expedited hearing to address the question of, “Whether the injured employee is required to obtain treatment within a medical provider network…” The amendment to section 5502(b)(2) does not take into account the pre-existing Rule 10252, which requires that at least one part of the body be accepted as industrially injured in order to obtain an expedited hearing. However, to the extent the amendment to section 5502(b) is inconsistent with Rule 10252, the statutory provision prevails. The WCJ also did not address Rule 9767.6(c) of the Rules of the Administrative Director, which requires an employer to provide up to $10,000 of medical treatment within its MPN “until the date that liability for the claim is rejected.”

Section 4616.3(a), provides: “If the injured employee notifies the employer of the injury or files a claim for workers’ compensation with the employer, the employer shall arrange an initial medical evaluation and begin treatment as required by Section 4600.” Thus, section 4616.3(a), which is one of the MPN statues, requires a defendant to commence treatment within its MPN when the employer receives notice of the injury from the employee, even if the claim has not been accepted or denied and is within the 90-day delay period allowed by section 5402(b).

Accordingly, the WCAB found that the WCJ erred when he decided not to proceed with the expedited hearing on November 13, 2013 as requested by defendant. Instead, the WCJ should have conducted an expedited hearing to determine whether defendant had met its obligation to provide reasonable medical treatment through its MPN pursuant section 5402(c) and as described in Administrative Director Rule 9767.6(c), or whether defendant was liable for the reasonable cost of medical treatment self-procured by applicant.

A new California Workers’ Compensation Institute (CWCI) analysis of closed and resolved work injury claims from accident years 2005 through 2010 finds that statewide, attorneys were involved in 11.6 percent of all claims (including medical-only cases), 38 percent of lost-time claims and 80 percent of permanent disability claims. The study also confirms that the area in and around Los Angeles remains a hotbed for California workers’ compensation litigation, especially compared to Northern California — including San Francisco and most of the Bay Area — where attorney involvement rates on lost-time claims are nearly 15 percentage points lower.

Medical-only claims make up about 75 percent of all California workers’ comp claims, but because less than 2 percent of them involve an attorney, and those that do account for less than 1 percent of workers’ comp benefits statewide, the Institute study focuses on a sample of 262,490 closed and resolved indemnity claims with 2005 through 2010 injury dates. These claims, all of which involved either temporary and/or permanent disability payments, accounted for $7.6 billion in total payments – nearly $7.1 billion in medical and indemnity benefits, and another $523 million in allocated loss adjustment expenses (ALAE). A total of 99,913 (38.1 percent) of these indemnity claims involved an applicant attorney, a defense attorney, or both, with paid benefits and expenses on those claims averaging $62,652 ($57,679 benefits + $4,973 ALAE ) which translates to $6.26 billion, or 82 percent of all payments in the indemnity claim sample.

Though the attorney involvement rate for closed and resolved indemnity claims statewide was 38 percent, as in past studies, litigation was more prevalent in the Los Angeles Basin, where 46 percent of all lost-time cases in Los Angeles County involved an attorney. The attorney involvement rate also was above the statewide level in Orange County, Ventura/Santa Barbara/San Luis Obispo Counties, and in the Inland Empire, though it was slightly below the statewide rate in San Diego. In comparison, attorneys were involved in 34 percent of similar cases in San Jose, which was the highest rate in Northern California, while the rate for rest of the Bay Area was 31.4 percent, well below the statewide rate. Limiting the analysis to just permanent disability (PD) claims, the study found attorney involvement rates ranging from a low of 75.2 percent of the Bay Area PD claims to 83.8 percent of the PD claims in Los Angeles County. The study also found Orange and Los Angeles Counties and the Inland Empire have the lowest closure rate for attorney involvement claims in the state, while average claim costs are among the highest.

CWCI has published more details, including regional data on attorney involvement rates, claim payments and closure rates in a report, “Attorney Involvement in California Workers’ Compensation, AY 2005-2010”, which is available to CWCI members and nonmember subscribers who log in to the Institute’s website at www.cwci.org.

A psychologist apologized in a Los Angeles federal court for defrauding the federal government with inflated and fraudulent workers compensation claims.

The indictment handed down June 8, 2011 charged clinical psychologist Arnold P. Nerenberg, co-founder of the Whittier-based World Legion of Power bodybuilding organization, with seven counts of mail fraud. The indictment alleged that from June 2000 through April 2008, he submitted fraudulent paperwork to obtain compensation for psychological conditions that were never diagnosed and were reimbursed for medical expenses that were never incurred. According to court documents, Nerenberg billed the U.S. Postal Service for nearly $1 million in bogus medical fees and received about half of that. Also charged in the case are two ex-postal workers, Lois L. Washington, 47, of Inglewood, and Cetric T. Fletcher, 51, of Long Beach. Fletcher allegedly pocketed more than $200,000 as a result of the scheme, while Washington allegedly made more than $145,000.

In some instances, Nerenberg allegedly billed the government for treatment sessions with Washington and Fletcher when records indicate the psychologist was out of the area or out of the country. According to court documents, one of his “patients” was actually an HSI undercover agent posing as a postal worker for whom Nerenberg secured disability pay from the Department of Labor based upon his claimed acute fear of dogs.

Nerenberg said he was grateful federal agents caught him. In an emotional speech, the 72-year-old told the judge he overbilled patients whose costs were covered by the government so he could treat those who could not pay. After his arrest, Nerenberg said a friend told him: “It’s too bad you got caught.” He said he disagreed. “I think it’s too bad I committed the crime. I’m grateful I got caught,” Nerenberg said. “I wanted to stop what I was doing, but I was caught in an inner struggle. … I was grateful for the vigorous federal intervention.”

In an agreement with prosecutors, Nerenberg pleaded guilty to one count of fraud. Six other counts were dismissed. He was sentenced to five years’ probation with the first 12 months on home confinement and electronic monitoring. He also must pay restitution of $172,754. The two ex-postal workers indicted with Nerenberg in the 2011 case reached plea agreements and were sentenced earlier to probation and restitution.

U.S. District Judge Christina A. Snyder said she considered letters from Nerenberg’s family and friends in deciding his sentence. The prosecutor, Assistant U.S. Attorney Rozella Oliver, said she was persuaded that there were mitigating factors weighing in Nerenberg’s favor. She agreed home confinement was an appropriate sentence. “Dr. Nerenberg has done far more good than harm,” said his attorney, who noted that former patients were in the courtroom to support him. She said he had suffered public humiliation and would probably lose his medical license. “My remorse is profound,” said Nerenberg, who spoke of his pain when agents went to interview his former patients. “They came to me for healing, and the harm that came to them – I just couldn’t face it,” he said, his voice breaking. Nerenberg said he is turning his life around, concluding, “I have not always lived with honor, but I will die with honor.”

The judge said she was impressed with Nerenberg’s remarks and felt he was sincerely sorry. “But this is a very serious crime, defrauding the government of $172,000, whether with good or bad intentions,” Snyder said. She then imposed his sentence.

The California Board of Psychology records do not reflect any disciplinary action against Nerenberg. His license is currently active.

In this Longshore and Harbor Workers’ Compensation Act (LHWCA) case, Rick Carter injured his back and neck at work in 1991, and he has been permanently totally disabled since October 1, 1993. In 1996, the parties entered stipulations, and the ALJ awarded Carter disability and medical benefits based on those stipulations. In this protracted case, litigation has continued over disputes involving post award issues.

In the current dispute, Rick Carter appeals to the 9th Circuit Court of Appeals in California from the district court’s order awarding him $14,268.50 in attorneys’ fees and costs on his fee petition in the amount of $22,585.The district court’s selection of a blended hourly rate of $400, combined with its reduction in the number of compensable hours by almost half, from 60.9 to 35 hours, resulted in Carter receiving a 27 percent reduction in fees: from $22,585 to $14,268.50. Carter contends on appeal that the district court erred as a matter of law by reducing the fee award without sufficiently explaining its rationale for the reduction.

The panel in the published opinion of Carter v Caleb Brett LLC held that the district court erred as a matter of law by reducing the fee award without sufficiently explaining its rationale for the reduction. The panel vacated the district court’s order awarding attorneys’ fees and costs, and remanded for the district court to articulate the basis for its fee determination with greater specificity.

When determining a reasonable fee award under a federal fee-shifting statute such as the Longshore Act, a district court must first calculate the lodestar by multiplying the “number of hours reasonably expended . . . by [the] reasonable hourly rate.” This Circuit requires that courts reach attorneys’ fee decisions by considering some or all of twelve relevant criteria set forth in Kerr v. Screen Extras Guild, Inc., 526 F.2d 67 (9th Cir. 1975). The Kerr factors are (1) the time and labor required; (2) the novelty and difficulty of the questions involved; (3) the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the “undesirability” of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.

A mere statement that a court has considered the Kerr guidelines does not make a decision within the court’s discretion. Rather, the court must “articulate with sufficient clarity the manner in which it makes its determination.” While detailed calculations are not mandated, “something more than a bald, unsupported amount is necessary” to affirm an award of attorneys’ fees. As a general rule, a fee-awarding court that makes a substantial reduction in either documented time or authenticated rates should offer reasonably explicit findings.” The district court must also “explain how it arrived at its determination with sufficient specificity to permit an appellate court to determine whether the district court abused its discretion in the way the analysis was undertaken.”

The district court’s selection of a blended hourly rate of $400, combined with its reduction in the number of compensable hours by almost half, from 60.9 to 35 hours, resulted in Carter receiving a 27 percent reduction in fees: from $22,585 to $14,268.50. In its fee order, the district court identified the twelve Kerr factors and mentioned two that it considered most relevant: (1) “the disproportionate relationship between the amount of fees incurred($22.585.00) and the amount at stake in the litigation ($3,220.20)”; and (2) that “Carter [did] not bear primary responsibility for the fact that this matter became considerably more protracted than the ‘quick and inexpensive mechanism’ envisioned by the statute.” Beyond that very brief discussion, however, the district court offered no other analysis before concluding that “[u]nder the circumstances here, for purposes of fee-shifting, 35 hours of attorney time at a blended hourly rate of $400 is reasonable.”

The Court concluded that the district court did not explain its decision to reduce Carter’s fee request with sufficient specificity to allow it to review the reasonableness of the fee award.