Author: WorkCompAcademy

The Sacramento District Attorney announced the arrest of 11-year veteran California Highway Patrol (CHP) Officer Daniel Cory Clapp, stationed in Lassen County, and his wife, CHP dispatcher Jolea Marie Clapp, on five felony counts of workers’ compensation insurance fraud.

Daniel Clapp filed his workers’ compensation claim based upon injuries he allegedly received during a scuffle while making an arrest on December 27, 2011. Daniel and Jolea Clapp stated to the workers’ compensation doctor that Daniel was unable to drive, lift heavy items, and that pain prevented him from performing his duties as a CHP officer.

The CHP’s Internal Affairs Section, Workers’ Compensation Fraud Investigation Unit, conducted surveillance on numerous occasions and observed Daniel Clapp camp, boat, swim and dive. In addition, he was observed driving for long periods of time and cutting and carrying firewood rounds 18″ thick and 24″ in diameter. Jolea Clapp often accompanied Daniel Clapp on these pleasure outings and would drive for him while in the local CHP jurisdiction and then change driver positions outside of the jurisdiction.

During medical visits in which Daniel Clapp complained of pain, Jolea Clapp forcefully corroborated her husband’s accounts of disabling pain and his inability to perform physical activities that she was observed seeing him perform. The details of the investigation are documented in the 157 page affidavit and felony complaint prepared in the case.

Both defendants are accused of conspiracy to make false statements in support of a workers’ compensation insurance claim and making false statements about the true extent of Daniel Clapp’s physical activities and abilities in order to obtain benefits. Daniel Clapp is additionally accused of perjury for false statements in a deposition.

The amount of the fraud is in excess of $50,000 and the charges carry a potential state prison sentence of up to 5 years and a $150,000 fine upon conviction. The defendants will appear in Sacramento Superior Court in early February 2014. This case is being prosecuted by the District Attorney’s Insurance Fraud Unit. View Arrest

A doctor and an attorney, the final two defendants in a 19 co-defendant case, have been convicted for their role in the largest medical fraud prosecution in the nation for recruiting thousands of healthy patients to undergo unnecessary and dangerous surgeries to fraudulently bill medical insurance companies. Attorney Roy Chester Dickson, 65, Yorba Linda, pleaded guilty to one felony count of money laundering and one felony count of grand theft with white collar crime sentencing enhancements. In the same case, Dickson was found guilty by a jury Nov. 26, 2012, of two felony counts of filing a false personal tax return and was sentenced Dec. 20, 2012, to two years and eight months in state prison and $41,629 restitution on the tax conviction. He is scheduled to be sentenced for the current convictions Aug. 8, 2014, in Department C-45, Central Justice Center, Santa Ana, and faces a maximum sentence of 14 years in state prison.

Doctor Mario Rosenberg, 66, pleaded nolo contendere Jan. 24, 2014, to two felony counts of insurance fraud and white collar crime sentencing enhancements. He faces a maximum sentence of 10 years in state prison at his sentencing March 28, 2014, in Department C-45.

The defendants in the Unity case participated in a $154 million medical insurance fraud scheme that recruited 2,841 healthy people from all over the country to receive unnecessary surgeries in exchange for money or low cost cosmetic surgery. Insurance companies paid out more than $20 million over a 9-month period. The Orange County Grand Jury examined 1,054 exhibits and heard testimony from 56 witnesses over 28 days, resulting in a 70-page indictment. The indicted defendants include an attorney, accountant, three doctors, and patient recruiters known as “cappers.” The recruitment of patients, or “capping,” is illegal in California.

Andrew Robert Harnen, 59, Rosemead, Unity’s accountant, pleaded guilty to the court Aug. 16, 2013, to two felony counts of conspiracy, eight felony counts of capping or paying for patient referrals, 30 felony counts of grand theft, 30 felony counts of insurance fraud, 30 felony counts of making false and fraudulent claims, one felony count of filing a false tax return, and white collar crime sentencing enhancements for taking over $2.5 million. Harnen was sentenced to five years and four months in prison. The People advocated for a sentence of 41 years and eight months in state prison. The sentence will be served concurrent to the sentence he received Dec. 20, 2012. The defendant was previously sentenced to prison and ordered $904,780 restitution for his Nov. 26, 2012, conviction by a jury of three felony counts of filing a false tax return and six counts of failing to file tax returns.

Doctor William Wilson Hampton, Jr., 58, Seal Beach, pleaded guilty May 8, 2009, to 47 felony counts including conspiracy, insurance fraud, and capping and was sentenced to 16 years in state prison. Doctor Michael Cheeluen Chan, 68, Cerritos, pleaded guilty Aug. 4, 2011, to the court to 40 felony counts including conspiracy to commit insurance fraud, insurance fraud, aiding and abetting capping with white collar crime sentencing enhancements. He faces a sentence ranging from probation up to 28 years in state prison at his sentencing March 28, 2014, at 9:00 a.m. in Department C-45.

The Unity cappers targeted employees from businesses in 39 states who were covered by PPO insurance plans, affecting more than 1,000 employers whose employees became involved in this scheme. They arranged transportation for the patients, scheduled the surgeries, and coached the healthy “patients” on what to say. In exchange for undergoing surgery, the patients received a cash payment, usually between $300 and $1,000 per surgery, or credit toward a free or discounted cosmetic surgery.

The three doctors charged in this case participated in medical insurance fraud for performing unnecessary medical procedures on healthy people with the knowledge that the patients were being recruited. Doctors Chan, Hampton, and Rosenberg performed a total of 1,037 procedures, resulting in insurance billings exceeding $30 million for the facilities fees alone. Unity received over $5.1 million in payment as a result of the surgeries performed by these doctors. The doctors performed many of the surgeries on Saturdays and Sundays and often performed the same procedures on co-workers or members of the same household on the same day. The doctors ignored basic medical protocols such as: 1) Patients receiving surgeries on consecutive days instead of under one anesthesia; 2) Doctors not meeting the patients prior to operating; 3) Doctors not following up with patients after the procedure was completed; and 4) Doctors not obtaining necessary medical information.

Attorney Dickson went to Unity after having previously managed and represented another surgery center involved in similar illegal activities. He was sanctioned by the federal bankruptcy court for filing a fraudulent bankruptcy claim for a doctor at that surgery center. Dickson was hired by Unity to collect payments from insurance companies and patients. He helped the surgery scheme by creating fraudulent documents to disguise illegal capping activities.

Robert Oldham Young, 61 , and Rocio “Rosie” Placensia , 32 , of Valley Center, have been charged with conspiracy to practice medicine without a license and multiple counts of grand theft. Young is a published author of the “The pH Miracle,” a diet designed to “alkalinize the body.” The charges allege Young and his cohorts ran afoul of the law when he went beyond advocating dietary changes and used intravenous treatments on patients housed on Young’s avocado ranch in Valley Center.

Young runs the “pH Miracle Center” in Valley Center. He advertises health retreats and medical diagnostic services on his website. Although not a medical facility, Young accepted patients, including terminally ill people, and housed them in temporary quarters on his avocado ranch. Young came to prominence after appearances on Oprah, centred on his treatment of Kim Tinkham for breast cancer. Tinkham and Young both claimed that he had cured her, but she died of her disease shortly afterwards. Young received multiple degrees from Clayton College of Natural Health (formerly American College of Holistic Nutrition), a school that lacked accreditation from any accreditation agency recognized by the U.S. Department of Education. These include a Master of Science in nutrition (1993), a D.Sc. with emphasis in chemistry and biology (1995), a Ph.D. (1997) and an N.D. (Doctor of Naturopathy, 1999).

In 1995, Young allegedly drew blood from two women, told them they were ill, and then sold them herbal products to treat these illnesses. He was charged with two third-degree felony counts of practicing medicine without a license, but pled guilty to a reduced misdemeanor charge. Young argued that he had never claimed to be a medical doctor, that the women had entrapped him by asking to be part of his research, and that he “looked at the women’s blood and simply gave them some nutritional advice.” In 2001, Young was again charged with a felony in Utah, after a cancer patient alleged that Young told her to stop chemotherapy and to substitute one of his products to treat her cancer. Subsequently, when an undercover agent visited Young, he allegedly analyzed her blood and prescribed a liquid diet. The case was taken to preliminary trial, but charges were dropped after the prosecutor stated that he could not find enough people who felt cheated by Young. Young dismissed the arrests as “harassment” and stated that he moved to California because the legal climate there was more tolerant.

Young was arrested this month in San Diego and received 18 felony charges relating to practising medicine without a license, and of theft. According to the Medical Board of California’s press release chronically ill patients were paying Young up to $50,000 for his treatments.

In a similar criminal case prosecuted by the District Attorney earlier this year, Keith Barton, a La Mesa man was convicted of multiple counts of practicing medicine without a license and grand theft for offering a bogus cure for HIV and cancer. Barton is awaiting sentencing on February 10 . Barton called himself “Dr. Barton” and promised to cure a woman and her children of HIV. One of the children subsequently died as a result of not receiving effective treatment. The victim paid Barton $18,000 for the treatment. He also advised a woman wi th autoimmune disease to surgically extract all of her teeth and to take an ineffective treatment called “Dendritic Cellular Therapy.” This victim paid Barton more than $32,000 for his remedies. Barton is not a licensed medical doctor, osteopath or naturopath but shares his name with a real medical doctor who is licensed in California. Barton used the fact that only his middle name differed from the real Dr. Barton to create the impression that he was a licensed professional.

Previous prosecutions by the Consumer Unit include Kathleen Helms, a San Diego woman who posed as a doctor and offered patients non – FDA – approved DMSO infusions as alternative remedies for autoimmune disorders, and Kurt Walter Donsbach, 75, who pleaded guilty to 13 felony charges, including practicing medicine without a license and selling misbranded drugs.

Insurance claims services provider Sedgwick Claims Management Services, Inc. said Monday that private equity giant Kohlberg Kravis Roberts and Co. L.P. (KKR), together with Sedgwick’s management, have agreed to acquire a majority stake in the company for about $2.4 billion.The majority stake will be acquired by KKR and Sedgwick’s management from the company’s current group of investors that includes private equity firms Hellman and Friedman LLC and Stone Point Capital LLC. The transaction is expected to close during the first quarter of 2014.

David North, president and CEO of Sedgwick said, “We couldn’t ask for a better partner in the next stage of Sedgwick’s evolution. KKR has an exceptional record of investing in financial services companies and will be a valuable strategic resource for our organization. We share a commitment to continued innovation in the claims and productivity management industry.”

Last Friday, media reports had indicated that KKR was close to buying Sedgwick for more than $2 billion. Sedgwick will be KKR’s second acquisition of a claims service provider in a span of four months. In September 2013, KKR agreed to buy privately-held automotive claims services provider Mitchell International Inc. from private equity firm Aurora Capital Group in a deal reportedly valued at more than $1 billion.

Sedgwick specializes in workers’ compensation, disability, FMLA, and other employee absence; managed care, general, automobile, and professional liability, warranty and credit card claims services; fraud and investigation, structured settlements, and Medicare compliance solutions. On an annual basis, Sedgwick handles more than 2.1 million claims and has fiduciary responsibility for claim payments totaling more than $11 billion.

In 2010, buyout firms Stone Point Capital LLC and Hellman and Friedman LLC acquired Sedgwick from Fidelity National Financial Inc. (FNF) as well as private equity firms Thomas Lee Partners L.P. and Evercore Capital Partners for about $1.1 billion. Prior to that, the business was owned by insurance brokerage and risk-management company Marsh and McLennan Companies Inc. (MMC). Hellman and Friedman is a private equity investment firm with offices in San Francisco, New York and London. Since its founding in 1984, it as raised and, through its affiliated funds, managed over $25 billion of committed capital. Stone Point Capital is a private equity firm based in Greenwich, Connecticut. Stone Point serves as the manager of the Trident Funds, which have raised more than $10 billion in committed capital to make investments in the insurance, employee benefits and financial services industries.

KKR said that equity for the investment was provided principally by KKR’s North American XI private equity fund. UBS Securities LLC, Deutsche Bank Securities, Morgan Stanley, Mizuho, KKR Capital Markets LLC and MCS Capital Markets LLC provided financing for the transaction. KKR has announced several other billion-dollar acquisitions in recent times. In mid-December 2013, the company agreed to acquire specialty finance company KKR Financial Holdings LLC (KFN) in an all-stock transaction valued at about $2.6 billion. In November, KKR agreed to acquire commercial landscaper Brickman Group Ltd. LLC from Leonard Green and Partners L.P. in a deal valued at $1.6 billion. KKR also said in late September that it agreed to acquire the healthcare unit of Japanese consumer electronics giant Panasonic Corp. (PC) for an equity value of about 165 billion yen, or about $1.67 billion.

Lucia Gonzalez was working for Seal Methods, Inc. (SMI) when she was severely injured while loading material onto a die in a power press. She sought damages from SMI in a lawsuit filed under Labor Code section 4558, known as the “power press exception” which allows an employee to “bring an action at law for damages against the employer where the employee’s injury or death is proximately caused by the employer’s knowing removal of, or knowing failure to install, a point of operation guard on a power press, and this removal or failure to install is specifically authorized by the employer under conditions known by the employer to create a probability of serious injury or death.” (§ 4558, subd. (b).) The trial court granted SMI’s motion for summary judgment, finding that section 4558 did not apply under the undisputed facts of this case.

The accident occurred while Gonzalez was operating a power press, referred to as Preco Punch Press No. 4. At the time of the accident, Gonzalez was operating the Press in “manual” mode because the material being shaped had to be moved onto and off of the die by hand. The Press was equipped with a two-hand activator system for operation in manual mode; the die would not strike unless the operator used both hands to press buttons located outside the strike zone (the “point of operation”). The purpose of this two-hand activator system was to ensure that the operator’s hands were outside the point of operation during the machine stroke. There was no evidence that SMI bypassed, removed, or tampered with the two-hand activator system on the Press used by Gonzalez. Nevertheless, on March 17, 2011, the Press activated while Gonzalez was loading material onto the die, crushing her hand.

Gonzalez subsequently filed the instant lawsuit for general, special, and punitive damages, alleging that SMI knowingly removed or failed to install a point of operation guard on the Press. SMI moved for summary judgment on the ground that the point of operation guard specified by the manufacturer of the Press – the two-hand activator system – was properly installed and activated, and the manufacturer did not specify or require any other point of operation guard. Gonzalez opposed the motion, contending that the operation manual for the Press requires the use of safety blocks (which are small wooden or metal blocks that are placed in the point of operation to physically prevent the machine from striking) whenever the operator’s hands are in the point of operation, and that those safety blocks constitute a point of operation guard. The trial court found there was no evidence that SMI received any communication from the manufacturer that safety blocks needed to be installed or otherwise attached to the Press, and granted SMI’s summary judgment motion. Gonzalez timely filed a notice of appeal from the resulting judgment.

The Court of Appeal affirmed in the published opinion of Gonzalez v Seal Methods Inc.

Labor Code section 4558 authorizes an injured worker to bring a civil action for tort damages against his or her employer where the injuries were “proximately caused by the employer’s knowing removal of, or knowing failure to install, a point of operation guard on a power press,” where the ‘manufacturer [had] designed, installed, required or otherwise provided by specification for the attachment of the guards and conveyed knowledge of the same to the employer.” Whether the section 4558 exception applies in this case hinges upon whether a safety block is a “point of operation guard” within the meaning of section 4558. If it is, the determination whether the manufacturer communicated to SMI that safety blocks must be used whenever a worker must manually position material on the die is a question of fact, and the facts are disputed in this case. But if a safety block is not a point of operation guard, section 4558 does not apply and the judgment must be affirmed.

Section 4558 does not define “point of operation guard,” but the language of the statute lead the Court of Appeals to conclude that a point of operation guard does not include an unattached device, such as a safety block, that the worker moves into and out of the point of operation. The Court concluded “Although we are sympathetic to Gonzalez, who suffered a horrible injury that might have been prevented had a safety block been used, we are bound by the Supreme Court’s directive to construe the section 4558 exception to the workers’ compensation exclusivity rule narrowly. Read in its entirety, section 4558 applies when an employer fails to attach or removes only those guards or devices, designed to protect workers, that are capable of being permanently installed by the manufacturer or the employer. The kind of safety block at issue in this case, which is not attached to the Press and is moved into and out of the point of operation by the worker, is not such a guard or device.”