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US Supreme Court Rules on Drug Patent Cases

The U.S. Supreme Court on Tuesday vacated a lower court’s ruling that had ended patent protection for Teva Pharmaceuticals’ multiple sclerosis drug Copaxone. The decision could have broader implications for how courts decide future pharmaceutical patent disputes.

According to the summary in Modern Healthcare, the justices decided 7-2 to vacate a lower court’s ruling that the Jerusalem-based pharmaceutical company’s key patent on the drug was invalid. They ruled that the U.S. Court of Appeals for the Federal Circuit was wrong to evaluate the facts of the case independently rather than rely on the district court’s previous finding of the facts.

The justices decided to send the case back to the U.S. Court of Appeals for the Federal Circuit, which handles patent issues, for further review in light of their ruling. The federal circuit court had ruled against Teva on a technical question having to do with whether Teva had adequately described the molecular weight of an active ingredient in Copaxone known as Copolymer 1 in its drug patents. More broadly, the justices’ decision Tuesday will likely make it more difficult for the U.S. Court of Appeals for the Federal Circuit to overturn district court decisions in certain pharmaceutical patent cases moving forward, said Daryl Wiesen, an attorney for Teva with Goodwin Proctor.

Arti Rai, a professor at Duke University School of Law, also said that the ruling Tuesday might make appeals in certain patent cases less frequent. It might also make trial courts more willing to “engage in time-consuming” analysis when it comes to looking into claim construction, or what specific patents cover and prevent others from doing. “In the past, because trial courts knew they would be reviewed de novo in any event, they didn’t want to do inquiries that were time consuming,” Rai said. Rai co-authored a brief filed in the Teva case arguing for a result similar to the one reached by the Supreme Court. The brief was not in support of either side, however.

“We are encouraged by the U.S. Supreme Court’s decision and look forward to the Federal Circuit’s review,” Erez Vigodman, Teva president and CEO, said in a statement. “We will continue to explore all available avenues to protect our intellectual property for COPAXONE 20mg/mL.” In 2013, Teva sold $4.3 billion worth of the drug, according to a company financial statement.

Mylan Inc. CEO Heather Bresch said in a statement Tuesday that, “We continue to believe that the ‘808 patent is invalid as indefinite and we will address that issue with the Federal Circuit Court of Appeals.” The pharmaceutical company, along with Sandoz, Momenta Pharmaceuticals and Natco Pharma were respondents in the Supreme Court case.

Portable X-ray More Common But Quality Questions Remain

Portable X-ray services are becoming more popular as patients seek medical care in familiar surroundings.

According to the Report in Reuters Health, proponents say-home X-ray services help frail patients avoid difficult and potentially hazardous trips to hospitals. Other patients seek in-home providers out of convenience, as an ankle or chest X-ray can take less than 20 minutes. “We go to the patient and take the X-ray, rather than having the patient go to the doctor’s office,” said Paul Fowler, founder of Specialty Portable X-Ray, Inc. in New York. “Usually, in about an hour after we take an X-ray we give these results directly to the doctor,” he told Reuters Health. “With the digital X-rays, we are using probably less exposure than you would at the hospital.”

Patients must have a doctor’s prescription for an x-ray, or for an ultrasound exam, which can also be done at home. Fowler’s company charges about $300 for a visit for patients without health insurance, he said. Some celebrities seek his services to avoid paparazzi and unwanted attention.

Jacob R. Wuerstle, president of Diagnostic X-ray Service, Inc. in Pennsylvania, said portable X-rays are also used in assisted living facilities and prisons. “We keep the patients in a setting that they’re familiar with, that they’re comfortable with,” he told Reuters Health. The option for home X-rays is especially helpful for elderly patients in snowy parts of the country. His technicians scan more than 30,000 patients per year. Sessions cost about $200. “We use state-of-the-art equipment and we transmit right from the patient’s bedside to the radiologist,” he said.

Dr. James C. Carr, a professor of radiology at Northwestern University’s Feinberg School of Medicine in Chicago, believes trained technicians using portable machines can provide quality scans for patients in rural areas or unable to move. “As long as the equipment is being regulated and the technologists are satisfactorily trained, concerns can be mitigated,” he told Reuters Health.

But portable X-ray machines, while convenient, may be less accurate. Dr. David Levin, professor and chairman emeritus of the Department of Radiology at Thomas Jefferson University Hospital in Philadelphia said he would not recommend in-home X-rays for mobile patients. “The quality of those images is usually not very good. If you compare the quality of those kinds of studies with the quality of a study that was performed in a hospital in a radiology department or in a private radiology office, there is going to be no comparison,” he told Reuters Health. “If a portable X-ray is absolutely necessary because of the patient’s clinical condition, then it’s justifiable.”

As the portable X-ray market grows, state and federal regulations for radiation protection must be followed, said Dr. William Thorwarth, Jr., chief executive officer of the American College of Radiology in Virginia. “You want to be very certain that the technologist who’s acquiring the images is appropriately trained and qualified,” he told Reuters Health. “There needs to be appropriate precautions so that other people in the house are not exposed.”

Calderon Corruption Trial Postponed to August

The Press Telegram reports that Lawyers have agreed to delay the public corruption trial of former state Sen. Ron Calderon and his brother until August,.

Prosecutors and defense lawyers filed a stipulation Wednesday in Los Angeles federal court to postpone the trial from May 19 to Aug. 11 because they need to review about 280,000 pages of evidence, including about 2,000 recorded phone calls.

The Montebello Democrat has pleaded not guilty to accepting $100,000 in cash bribes, trips and dinners in exchange for pushing workers’ compensation legislation and a film industry tax credit scheme that was actually an FBI sting. His term expired at the end of the year.

Thomas Calderon, 60, a former lawmaker-turned-lobbyist, has pleaded not guilty to laundering bribes through a tax-exempt group and consulting company he operates.

Ron Calderon, 57, was one of three Senate Democrats suspended last year because of felony charges, due in part to bribes he is accused of receiving from the former owner of Pacific Hospital in Long Beach. Michael Drobot, head of the now-defunct hospital, pleaded guilty last year to federal charges related to his role in a medical fraud scheme that authorities have said may be the largest of its kind in California history. Drobot has told federal officials that he also bribed Ron Calderon in order to keep on the books the labor code provisions that made it possible to seek inflated reimbursements for spinal hardware.

Feds Say Los Angeles Major Source of Diverted Illegal Drugs

The California Department of Justice was one of five law enforcement agencies investigating a Los Angeles “Pill Mill” medical clinic that lead to the arrest of five suspects after a federal grand jury issued a 33-count indictment, Authorities allege this was a narcotics trafficking ring in which illegal prescriptions were sold for a flat rate of $500 at the now-closed Southfork Medical Clinic in Los Angeles and the drugs obtained with those prescriptions were shipped to Texas for sale on the black market. Prescriptions were allegedly sold for drugs that included oxycodone, hydrocodone, alprazolam (best known by the brand name Xanax), carisoprodol (a muscle relaxant) and promethazine with codeine (a cough syrup sold on the street as “purple drank” and “sizzurp”).

Those arrested include Jagehauel Gillespie, 39, of Houston, the operator of Southfork, and alleged ringleader. Investigators seized nearly 10,000 pills from his home in January 2013 and 48 bottles of promethazine with codeine from a car driven across Texas by Gillespie and another suspect in July 2010. Gillespie is also charged with using fake identities and fraudulent driver’s licenses to fill prescriptions at Los Angeles-area pharmacies. Gillespie faces up to 149 years in federal prison if convicted.

Also arrested was Dr. Madhu Garg, 63, of Glendora, the medical doctor who wrote prescriptions at Southfork, allegedly without any medical necessity, before the Medical Board of California revoked her license in late 2013. Garg, issued more than 10,000 prescriptions – with nearly 80 percent of those for hydrocodone or alprazolam, most of which were at the maximum dosage – over a 15-month period, according to records maintained by the State of California. In addition to drug counts, Garg is charged with money laundering for allegedly wiring money obtained from the drug conspiracy to an account in Kuala Lumpur.

According to records at the California Medical Board, in 2011 Garg “was a partner with Southern California Permanente Medical Group and worked at Kaiser Baldwin Park Medical Center-West Covina Medical Offices, practicing family medicine. On or about October 24, 2011, she reported for work and was asked to undergo drug testing as she appeared to be “out of it.” The results of that drug test were received on or about October 31, 2011, and were noted to be positive for amphetamines, methamphetamines, and hydrocodone. Respondent was placed off-work.” Medical Board Records also reflect that she claims to have practiced “occupational medicine.” These and other allegations led to the revocation of her medical license.

Diane Nunez, 24, of Long Beach who oversaw day-to-day operations at Southfork was also arrested along with Daniel Clay, 45, of Houston, who allegedly shipped controlled substances from Southern California to Texas. Ray Steven Benton, 56, of Baldwin Hills, was arrested and is allegedly, a “capper” who allegedly recruited patients to obtain prescriptions at Southfork. Benton is also charged with firearms offenses and with using fake identities and fraudulent driver’s licenses to fill prescriptions at Los Angeles-area pharmacies.

“Los Angeles is a major source of the deadly and addictive prescription drugs that are diverted to street sales across the Western United States,” said Acting United States Attorney Stephanie Yonekura. “This case is the latest in a series of prosecutions clearly demonstrating that law enforcement is committed to stemming the tide of drugs being diverted to the black market, as well as putting an end to medical professionals who abuse their prescription pads and their ethical obligations.”

The indictment describes multiple undercover operations conducted during the investigation. During an October 2013 meeting at Southfork, Gillespie allegedly agreed that Garg would prescribe oxycodone and promethazine with codeine for an undercover cooperator in exchange for the person returning to the clinic with bottles of the prescribed cough syrup. Later that day, Garg allegedly gave the undercover witness prescriptions for those drugs and agreed to issue more prescriptions later that week under a different patient name. Six days later, during another meeting at Southfork, Gillespie allegedly gave the undercover witness forged prescriptions for oxycodone and promethazine with codeine using another doctor’s name and medical license number.

Two other suspects named in the indictment are currently being sought by authorities. Those two fugitives are: Jessica Poe, 32, of Inglewood, California, Gillespie’s girlfriend, who allegedly forged a doctor’s signature on prescriptions; and Joseph Tyree Boyance, 35, whose whereabouts are presently unknown, an alleged “capper” who recruited patients to obtain prescriptions at Southfork.

This case is the product of an investigation by the Drug Enforcement Administration’s Los Angeles and Houston field divisions, Internal Revenue Service-Criminal Investigation, the Los Angeles Police Department, the California Department of Justice, and the Texas Department of Public Safety.

Insurance Agent Sentenced to Three Years

Isidro Santillan, 54, of Pacoima, was sentenced to three years in state prison and agreed to pay more than $133,000 in restitution to multiple victims. For more than two years Santillan embezzled over $100,000 from clients, pocketed premium money and created phony documents leaving his clients at great financial risk Santillan pleaded no contest to two felony counts of grand theft and multiple acts of embezzlement.

The Department of Insurance launched an investigation in late 2012 after receiving complaints about Santillan’s business practices regarding the sale of commercial auto, general liability, and worker’s compensation insurance and bonds. Some of his victims discovered canceled checks that exceeded the cost of the insurance policy they had agreed to purchase.

Investigators said that Santillan, aka Art Sanchez, issued premium checks that did not require the payer’s signature, and then instead of sending these premiums to his clients’ insurers, he cashed the checks for his own personal use. Santillan did not forward premium payments to purchase policies for his clients, which left his victims at risk for uninsured losses. Santillan attempted to cover up his theft by providing both falsified and legitimate certificates of insurance and premium finance agreements. In some instances, he allegedly made partial premium payments but the policies were later canceled by insurers due to lack of full payment.

This case was prosecuted by the Los Angeles County District Attorney’s Office-Consumer Protection Unit.

Growth in Outcome Based Medical Networks Predicted for 2015

Medical treatment reimbursement schemes continue to evolve over time. Decades ago, health practitioners we paid for “procedures” no matter how well they worked. The more procedures one was able to accomplish over time resulted in more revenue. This was a disincentive for quality, and a huge incentive for simple quantity. Today the emphasis is moving in the direction of higher payment for better outcomes. A recent article in Property Casualty 360 predicts this evolution to continue into workers’ compensation this year.

Larger employers are developing outcome-based networks, not only for workers’ compensation, but for their group health as well. They’re contracting directly with the healthcare networks to ensure that their workers receive the best medical care and tying compensation to outcomes. We’re seeing a shift from a focus on price to programs with an understanding that better outcomes lead to increased productivity and overall lower costs.

Employers also are recognizing the importance of mental health to wellness. We’re seeing a wellness revolution more focused on the patient as a whole person and the importance of managing health both physically and mentally.

The evolving health care model is tied directly to an evolving viewpoint on disability management. More employers are realizing the importance of managing all disability, not just that associated with workers’ compensation claims. This integrated disability management model is reportedly the future of claims administration. Employers who retain risk on the workers’ comp side usually do the same thing with non-occupational, short-term and long-term disability.

Coventry advertises the most recent addition to its suite of network offerings, an Outcomes-based Network program aimed at identifying workers’ compensation providers who have been statistically shown to contribute to effective patient outcomes and controlled claims costs. The Outcomes-based Network was developed in response to the market’s desire for smaller occupational health focused networks whereby clients can increase utilization with doctors who are associated with their most desirable outcomes. The Outcomes-based Network claims to differ from other focused network offerings as it addresses the importance of identifying providers based on total claims outcomes.

Sedgwick embarked on a mission to create a truly outcomes-based network solution with two main components. Deploy the network solution throughout the daily claims and medical management process. Measure how medical providers are doing across a broad spectrum of data points by creating scorecards. In a recent evaluation of 107,000 claims, using high-scoring providers resulted in: 40% faster claim resolution, 61% less incurred expense, 62% less incurred medical expense and 73% less lost time days. A company white paper provides details of its approach.

Liberty Mutual has Outcomes Based Networks in fifteen states including California. Provider selection was based on an in-depth analysis of medical and return to work outcomes for point of entry providers and orthopedic surgeons and extensive field knowledge of regional medical directors and claims and managed care professionals for all other providers.

Yet others are not convinced that this new payment model will deliver as promised. Aaron E. Carroll, a professor of pediatrics who writes a column for the New York Times, said after reviewing the medical literature in 2014 that pay for performance in the U.S. and U.K. has brought “disappointingly mixed results.” Sometimes even large incentives don’t change the way doctors practice medicine. Sometimes incentives do change practice, but even when they do, clinical outcomes don’t improve. Critics say that pay for performance is a technique borrowed from corporate management, where the main outcome of concern is profit.

Responding to public backlash to managed care in the 1990s, California health care plans and physician groups developed a set of quality performance measures and public “report cards”, emerging in 2001 as the California Pay for Performance Program, now the largest pay-for-performance program in the country. Financial incentives based on utilization management were changed to those based on quality measures. Provider participation is voluntary, and physician organizations are accountable through public scorecards, and provided financial incentives by participating health plans based on their performance.

LA County Probation Officer Faces Fraud Charges

A Los Angeles County probation officer has been arrested and charged with two counts of worker’s compensation insurance fraud after allegedly altering medical documentation, authorities said Tuesday.

Raymond Milton, who is assigned to a juvenile detention camp as a deputy probation officer, is expected to face two counts of insurance fraud for allegedly altering medical documents to dupe the county Probation Department out of more than $2,300 in sick time pay, officials said.

Milton, 41, was arrested Saturday afternoon and posted bail the next day, according to Sheriff’s Department records.

The Probation Department has been cracking down on insurance fraud and employee misconduct.

“Within the last year, the department added a Special Projects Team comprised of four supervisory level investigators,” said Senior Probation Director Jennifer Kaufman. “These investigators are specially trained to recognize the signs of workers compensation and medical fraud.”

WCJ Pamela A. Pully Appointed PJ in Santa Ana

Workers’ Compensation Judge Pamela A Pulley has been appointed to the position of Presiding Judge at the Santa Ana district office of the Workers’ Compensation Appeals Board. .

Judge Pully received her undergraduate degree from Northwestern University from 1983 to 1987 and then her law degree from the University of Connecticut School of Law between 1987 and 1990.

She began her law career as an Associate Attorney with the Cantrell, Green, firm in Long Beach for ten years between 1991 and 2001 in Long Beach. She was then an Associate Attorney with Prindle, Decker and Amaro for four years between 2001and 2005

She has been a Workers’ Compensation Administrative Law Judge February 2005 until her current appointment as the Presiding Workers’ Compensation Judge

Santa Barbara Contractor Faces 43 Felonies

Santa Barbara County District Attorney Joyce E. Dudley announced the arrest of local business owner Alberto “Al” Rodriguez, his wife Maria Rodriguez, and Byron Duran. Rodriguez and his wife own United Seal Coating, also known as United Sealcoating and Slurry Seal, Inc., United Paving, and Santa Barbara Paving. Duran is a long-time employee of the company.

The complaint filed by the District Attorney’s Office alleges 42 felony counts which include violations of the California Unemployment Insurance Code, Workers’ Compensation Premium Fraud, Fraudulent Denial of Workers’ Compensation Benefits, and Wage Theft. All three suspects are scheduled to appear for an arraignment in Department 8 of the Santa Barbara Superior Court on January 30, 2015.

The three suspects were arrested by detectives from the California Department of Insurance along with members of local law enforcement on January 14, 2015. The arrest of the three suspects was the result of an investigation by the California Department of Insurance Fraud Division, the Santa Barbara County District Attorney’s Office, the Franchise Tax Board, the Employment Development Department, and the Division of Labor Standards Enforcement.

California Claim Frequency Continues Relentless Increase

The WCIRB has released an update to its Analysis of Changes in Indemnity Claim Frequency report which was originally published in 2012 and last updated in December 2013. In prior reports, WCIRB researchers explored potential causes for the increases in claim frequency in California that have persisted since 2010 and that differ from the claim frequency experience of other states. Prior frequency reports have identified a number of factors influencing claim frequency including increases in cumulative injury claims, increases in smaller non-cumulative injury claims that may have been reported as medical-only in the past, increases in the proportion of indemnity claims relative to total claims, and increases in late-reported indemnity claims and the proportion of medical-only claims that later transition to indemnity.

In this latest update, WCIRB researchers studied the influencing factors driving recent claim frequency based on the most up-to-date data available. The WCIRB’s principal findings include:

1) Unlike in most other states over the last several years, California indemnity claim frequency has continued to increase as WCIRB data currently indicates increases of 3.2%, 3.9% and 0.9% in 2012, 2013, and 2014, respectively.
2) The number of late reported indemnity claims continues to increase, whereas the percentage of medical only claims reported after 18 months has generally remained stable since 2007.
3) The level of cumulative injury claims has continued to increase. Approximately 13% of indemnity claims are estimated to involve a cumulative injury in 2013 compared to approximately 8% in the 2005 to 2007 period.
4) The growth in cumulative injury claims beginning in 2009 has been concentrated in claims involving more serious injuries and multiple injured body parts. Both the proportion of cumulative injury claims involving indemnity benefits and the proportion involving injuries to multiple body parts have increased significantly since 2010.
5) Based on WCIRB surveys of cumulative injury claims, both the proportion of cumulative injury claims involving multiple insurers and the proportion involving attorney representation has increased in recent years. In addition, approximately two-thirds of surveyed claims were initially denied in part or in whole by the insurer and approximately 40% of claims, despite long-standing statutory limitation on the compensability of post-termination claims, were reported post-termination.
6) Shifts to a less hazardous composition of industries in California (“industrial mix”) have historically driven claim frequency downward. The recent economic recovery in higher hazard industries such as construction and manufacturing has had the opposite impact. In 2013, rather than dampening claim frequency, shifting industrial mix is increasing claim frequency by approximately 1%.
7) The 2010 increase in frequency was greatest in industries that were most impacted by the recession (e.g. construction and real estate). Since 2010, relativities for higher-frequency industries such as agriculture, construction, and entertainment have increased while those for the lower-frequency industries such as real estate, professional services, and finance have declined.
8) The 2010 indemnity claim frequency increase was generally experienced across all California regions. Since that time, the increases have been concentrated in the Los Angeles area. Indemnity claim frequency increased an estimated 9% in the Los Angeles Basin region from 2010 to 2013 while, similar to the pattern shown in many other states, other California regions showed modest declines. By comparison, indemnity claim frequency in the Bay Area declined by 7% over the same period. The Los Angeles area also has experienced significantly higher numbers of cumulative injury claims and claims involving multiple body parts than other regions of California.
9) As the economy recovers, newer workers enter the system and are often more likely to be injured on the job than more experienced workers. The proportion of injured workers with less than 2 years of experience at their current job has grown by 8% from 2010 to 2014, suggesting the economic recovery is a significant driver of recent claim frequency increases.

The full Analysis of Changes in Indemnity Claim Frequency – January 2015 Update Report is available in the Research and Analysis section of the WCIRB website.