Menu Close

Author: WorkCompAcademy

Injured Worker Mail Order Pharmacy Settles Opiod Suit for $11M

Attorney General Maura Healey announced a $11 million settlement with a mail-order pharmacy resolving allegations that it failed to implement adequate safeguards against unlawful and dangerous dispensing, resulting in the shipment of thousands of potentially illegitimate controlled substance prescriptions across the country.

In the complaint, filed along with a proposed consent judgment in Suffolk Superior Court, the AG’s Office alleges Injured Workers Pharmacy (IWP) violated Massachusetts consumer protection law by failing to implement effective policies and procedures for reviewing prescriptions to determine whether they were legitimate and by engaging in unlawful marketing practices to drive sales, including paying law firms for patient referrals.

Injured Workers Pharmacy created an illegal operation that put dispensing speed and volume over patient and public safety,” AG Healey said. “They dispensed thousands of prescriptions for dangerous drugs, including opioids like fentanyl, with a shocking lack of regard for whether those prescriptions were legitimate. Combatting the opioid epidemic remains a top priority of my office and we will aggressively pursue those who break our laws to profit from this crisis.”

The AG’s Office began investigating IWP, which serves thousands of workers’ compensation patients nationwide, after learning that the pharmacy dispensed a high volume of controlled substances primarily to workers who had been injured on the job.

The AG’s complaint alleges that IWP pressured pharmacists to dispense prescriptions faster and implemented programs that prioritized dispensing speed and volume over protecting its patients and preventing diversion. The complaint further alleges that IWP’s dispensing and sales practices effectively precluded it from complying with statutory mandates and meeting its responsibility to fill only legitimate prescriptions issued in the usual course of professional treatment.

According to the AG’s complaint, IWP also used unlawful tactics to drive sales, including entering into illegal agreements to buy patient referrals and  encouraging sales staff to engage in their own misconduct and ignore red flags by paying them based on dispensing volume.

As a result of these unfair dispensing and sales practices, the complaint alleges IWP filled and shipped:

Thousands of prescriptions written by problem prescribers who were ultimately disciplined, indicted or convicted for improper opioid prescribing. IWP did not stop dispensing their prescriptions until long after their behaviors were or should have been apparent to pharmacy and sales staff.
— Thousands of dangerous, high-dose prescriptions, including for fentanyl formulations known to be especially dangerous.
— Thousands of prescriptions for dangerous drug combinations known to be indicators of drug misuse and potential overdose, including the so-called “holy trinity” – a combination of an opioid, a benzodiazepine, and a muscle relaxant.

The proposed consent judgment, which remains subject to court approval, would require IWP to undertake significant changes to its operations and business practices.

Texas Supreme Court Approves Limits on Air Ambulance Costs

More than a half a million individuals are transported via air ambulance services each year, according to the Association of Air Medical Services. The majority of these transports are via helicopter in emergency situations; the remainder are fixed-wing transports for longer distances.

While fees charged by traditional medical transport services in California workers’ compensation claims are regulated under the Official Medical Fee Schedule, air ambulance providers argue that they fall under the jurisdiction of the Airline Deregulation Act (ADA) of 1978, which prevents states from enacting or enforcing laws or regulations related to the price, route or service of an air transportation carrier.

In California workers’ compensation, the WCAB issued an en banc decision in 2013 ( Luis Enriquez (deceased) v Couto Dairy and Zenith Insurance Company ) conceding the preemption of federal law over Official Medial Fee Schedule limits if the air ambulance provider could establish that they were an “air carrier” that provides air transportation within the meaning of the Airline Deregulation Act.

Yet the litigation debate over the preemption issue continues to rage in other jurisdictions. The Texas Supreme Court just ruled that preemption does not apply in Texas.

Excessive helicopter transport bills were the crux of the lawsuit in PHI Air Medical, LLC v. Texas Mutual Insurance Company, et al. A trial court rendered judgment in favor of eight plaintiff insurers, which included Texas Mutual Insurance Company and Hartford Underwriters Insurance Company, who disagreed with PHI’s per-trip charge for medically transporting injured workers.

The Texas trial court held the insurers could not be asked to pay more than 125 percent of the Medicare amount for air ambulance transport. On Jan. 31, 2018, however, the Texas Court of Appeals remanded the case, holding that any rate provisions for air ambulance transports are preempted by the ADA.

In Split June 26, 2020 Opinion, the Supreme Court of Texas Rejected Preemption Argument in Worker’s Compensation Disputes. The Court held that the Airline Deregulation Act did not preempt state law pertaining to worker’s compensation insurance benefit payments because the law does not expressly refer to air ambulance providers, and the standard for establishing the amount of reimbursement also was not preempted.

Thus the workers’ compensation industry has not seen the final word on this issue.

June 22, 2020 – News Podcast

Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: SCIF Sent Back to Trial After a 15 Year Premium Collection Effort, S.F. District Attorney Files DoorDash Misclassification Case, Five Charged in Sober Living Facility Insurance Fraud, Global Insurance Fraud Detection Market to Grow 22% Annually, Emergency Regulations Mandate Recalculation of Comp Premiums, COVID-19 Distancing Rules Becoming a “Political Hazard”, DWC Posts Draft Revisions to the Pharmaceutical Fee Schedule, Contracting Industry Injuries Highest in Opioid Use, WCRI Reports on Workers’ Compensation Prescription Regulations, ACOEM Studies Employer Costs for Opioid Use Disorders.

25 Year Veteran CHP Officer Arrested for Comp Fraud

San Gorgonio Pass CHP Commander Captain Mike Alvarez announced.that a Banning California Highway Patrol officer was arrested Wednesday on suspicion of workers compensation insurance fraud.

Kathleen Beardsley, 46, was arrested by CHP investigators without incident at the Banning Police Department and was booked into Larry D. Smith Correctional Facility on suspicion of three felony charges tied to fraud as well as a felony grand theft charge, jail records show.

Her bail was set at $10,500. A court date has not been set, according to jail records.

The arrest was the culmination of a seven-month long investigation by the CHP’s Workers Compensation Fraud Investigations Unit based at the agency’s Sacramento headquarters, according to Alvarez.

The investigation began after Beardsley filed a workers compensation insurance claim on February 14, 2019 for unspecified injuries.

In October, a tip was received by the investigations unit about possible illicit activities by Beardsley. Surveillance was used on her by investigators, and she was observed “engaging in activities inconsistent with the limitations outlined in her claim,” according to Alvarez’s announcement.

Beardsley, who has been a CHP officer for 25 years, was summoned for questioning at the Banning Police Department, then arrested.

Beardsley, a 25-year veteran of the CHP, had been assigned to the San Gorgonio Pass Area since 2016. As a result of her arrest, she has been placed on administrative leave and her peace officer powers removed, according to Alvarez.

In addition to the criminal investigation, the CHP is also conducting an internal administrative investigation, according to Alvarez, although details were not released.

DWC Proposes Increased Fees for Med-Legal Evals

The Division of Workers’ Compensation (DWC) has posted proposed amendments to the Medical-Legal Fee Schedule to its online forum where members of the public may review and comment on the proposals.

The draft regulations include:

A 25% increase in the multiplier for setting fees for evaluations.
— Standardization of the fee that can be charged for a missed appointment.
Flat fees for comprehensive, follow-up, and supplemental medical-legal evaluations.
Rates for review of medical records based upon the amount of pages reviewed.
Elimination of complexity factors from the Medical-Legal Fee Schedule.
An increase in the hourly fee for medical-legal testimony.

The implementation of a predominantly fixed fee for all procedure billing codes is anticipated to reduce frictional costs. Moving to a flat-fee-based schedule and removing complexity factors is contemplated to reduce the incidence of disputes over billing.

The fee schedule was formulated after numerous stakeholder meetings where carriers, employers, physicians, and medical management companies were amply represented. The meetings took place over the course of approximately three months.

The forum can be found on the DWC forums web page under “current forums.” Comments will be accepted on the forum until 5 p.m. on Friday, July 10, 2020.

Santa Ana Police Officer Faces Comp Fraud Charges

A 39-year old Santa Ana police officer has been charged with committing workers’ compensation insurance fraud for continuing to accept his full pay without working even though he was physically capable of returning to work.

On October 5, 2017, Jonathon Ridge was injured on duty while in pursuit of a suspect driving a stolen vehicle. On that day, October 5, 2017, Ridge went out on disability leave due to his injuries. On May 2, 2018, while still on leave, Ridge had surgery on his left wrist, and his doctor continued to keep him off work while he was recovering from the surgery.

In November 2018, Ridge was released by a doctor to return to work with restrictions. The work restrictions were too severe for the City of Santa to accommodate, despite the City of Santa Ana having an extensive return-to-work program for injured employees. This resulted in the City of Santa Ana being required to continue to pay Ridge Total Temporary Disability and for Ridge to receive disability payments through an insurance policy, resulting in Ridge receiving 100% of his pay without working.

From March 2019 to May 2019 the City of Santa Ana authorized surveillance on Ridge because he did not seem to improve despite having had surgery on his wrist in May 2018 for injuries sustained in the on-duty collision 18 months earlier.

The surveillance and subsequent investigation found that Ridge was engaging in activities well beyond what the doctor had imposed. Ridge began attending college classes nearly full-time beginning in June 2018 – just weeks after his surgery. Additionally, he packed up his car and drove to Utah, went to the beach, and drove his motorcycle.

Ridge failed to disclose to his doctor or to the City of Santa Ana what he was actually capable of doing. This deprived the doctor of the opportunity to impose realistic work restrictions that the City of Santa Ana could accommodate. Instead, Ridge continued to receive 100% of his pay without working even though he was capable of returning to work in a modified position.

Ridge has been charged with four felony counts of insurance fraud. He faces a maximum sentence of eight years in state prison if convicted on all counts.

“Workers’ compensation fraud costs honest, hardworking businesses and government entities more than $30 billion a year,” said Orange County District Attorney Todd Spitzer. “We cannot allow those who commit workers’ compensation fraud to go unpunished because the financial cost to government and private business makes the cost of doing business more and more difficult.”

Deputy District Attorney Pamela Leitao of the Insurance Fraud Unit is prosecuting this case.

Three Guilty in $65M Compound Med Fraud Scheme

Kyle Adams, Daniel Castro and Jeremy Syto pleaded guilty in federal court, admitting their roles in a San Diego based fraud scheme that bilked the military healthcare program known as TRICARE out of more than $65 million.

At the same time, the alleged ringleaders of this scheme were charged with additional crimes. Jimmy and Ashley Collins, a civilian married couple living in Cleveland, Tennessee, were originally charged in January 2018. They were charged on June 9, 2020 with additional crimes related to their operation of the scheme.

The defendants admitted they illegallly recruited TRICARE patients to receive extraordinarily expensive and largely unnecessary prescription compounded drugs – which cost TRICARE an average of more than $14,500 per medication per month. They induced the patients to sign up by offering monthly payments to participate in a bogus “medical evaluation,” when, in fact, no medical evaluation was taking place.

Although compounded drugs are not approved by the Food and Drug Administration (FDA), they are properly prescribed when a physician determines that an FDA-approved medication does not meet the health needs of a particular patient, such as if a patient requires a particular dosage or application or is allergic to a dye or other ingredient.

The three worked as recruiters for Jimmy and Ashley Collins. At the Collins’ direction, the defendants recruited TRICARE beneficiaries by promising to pay them to evaluate the medications as part of an ongoing medical study, when in reality, no study was taking place.

Once a recruiter convinced a TRICARE beneficiary to sign up to receive the compounded medications, the straw beneficiary’s information was sent to Choice MD, a Tennessee medical clinic co-owned and operated by Jimmy and Ashley Collins.

Doctors and medical professionals employed at Choice MD, including Dr. Susan Vergot, Dr. Carl Lindblad, and Candace Craven, then wrote prescriptions for the TRICARE beneficiaries, despite never conducting a medical review or examination of the patients in person.

Once signed by the doctors, these prescriptions were not given to the straw beneficiaries, but sent directly to The Medicine Shoppe, a pharmacy in Bountiful, Utah, which filled the prescriptions and received massive reimbursement from TRICARE.

The owners of The Medicine Shoppe then paid kickbacks to the Collinses based on a percentage of the TRICARE reimbursement paid for the prescriptions referred by the Collinses’ recruiter network. These kickback payments to the Collinses totaled at least $45.7 million dollars. The Collinses, in turn, paid kickbacks to the recruiters working as part of their network, including Adams, Castro, and Syto, among others.

In addition to guilty pleas from Adams, Castro, and Syto, both Dr. Vergot and Dr. Lindblad as well as Candace Craven, a nurse practitioner at Choice MD, have previously pleaded guilty for their roles in the conspiracy to commit healthcare fraud. CFK, Inc., the corporate owner of the Medicine Shoppe, has also pleaded guilty and paid a fine as part of this investigation.

En Banc WCAB Adds Disabilities for SIBTF Calculation

Richard Todd, a former police officer, sustained a cumulative trauma injury arising out of and in the course of his employment with the City of Los Angeles to his kidneys, heart, psyche, and in the form of hypertension during the period from January 1, 1990 through November 25, 2009.

A Findings and Award issued on March 6, 2012 against the employer of 64% permanent disability as a result of applicant’s injury to his kidneys, heart, and in the form of hypertension. After filing a petition to reopen, the parties stipulated to 68% permanent disability, In addition, there had been five prior stipulated awards in unrelated cases. Together, Todd made an argument for a 100% permanent disability award against the Subsequent Injuries Benefits Trust Fund.

The WCJ found that the sum of applicant’s successive disabilities entitled applicant to permanent and total disability.

The sole issue presented by the SIBTF Petition for Reconsideration was whether the WCJ correctly combined applicant’s prior and subsequent permanent disabilities under section 4751 by adding them to find that applicant is permanently and totally disabled. The WCJ findings were affirmed in the en banc decision of Todd v Subsequent Injuries Benefits Trust Fund.

SIBTF is a state fund that provides benefits to employees with preexisting permanent disability who sustain subsequent industrial disability. The preexisting disability may be congenital, developmental, pathological, or due to either an industrial or nonindustrial accident. It must be “independently capable of supporting an award” of permanent disability, “as distinguished from [a] condition rendered disabling only as the result of ‘lighting up’ by the second injury.” There is no specific statute of limitations with respect to the filing of an application against SIBTF.

Once the threshold requirements are met, section L.C. 4751 provides that applicant “shall be paid in addition to the compensation due under this code for the permanent partial disability caused by the last injury compensation for the remainder of the combined permanent disability existing after the last injury . . . .”

The Court of Appeal’s decision in Bookout v. Workers’ Comp. Appeals Bd. (1976) 62 Cal.App.3d 214 [41 Cal.Comp.Cases 595], addressed the issue of how to determine the “combined permanent disability” as specified in section 4751.

The use of the MDT or CVC to combine multiple impairments or permanent disabilities with respect to the rating of single injuries, but not to combine successive permanent disabilities related to prior and subsequent injuries under section 4751. Under section 4751, non-overlapping successive permanent disabilities are to be added.

SIBTF is liable, under section 4751, for the total amount of the “combined permanent disability,” less the amount due to applicant from the subsequent injury and less credits allowable under section 4753.

WCIRB Expands Classification Inspection Report Program

The WCIRB collects and validates classification data for all California employers. This data is critical to ensuring that policyholders engaged in common industries are similarly classified. It is also key to the publication of accurate experience modifications and the use of the data for ratemaking.

As part of this effort, the WCIRB’s team of Field Representatives conducts on-site reviews at policyholders’ business locations to gather a detailed description of the operations and to verify the classifications that apply to their business. Based on this review, the Field Representative prepares a Classification Inspection Report that is sent to the both policyholder and their current insurer.

Effective July 1, 2020, the WCIRB is expanding its Special Inspection Report program to allow agents and brokers to request a WCIRB physical inspection of their clients’ California business operations. This new service is in response to frequent inquiries from agents and brokers for the WCIRB to conduct a physical inspection in order to affirm the standard classification applicable to an employer’s business. Prior to July 1, 2020, only the insurer of record could make a request of the WCIRB to conduct one of these Special Inspections.

The fee for conducting a Special Inspection is $200 per location inspected. The WCIRB will invoice the requesting insurer, agent or broker, once all location inspections are completed and the reports pub-lished. The WCIRB typically completes and publishes Special Inspections within 30 days of the request.

To request a Special Inspection, an agent or broker must complete the Agents/Brokers Request for WCIRB Inspection of Insured – Form 501a (available via WCIRB Connect®) and submit it electronically to the WCIRB Contact Center. For agent and broker requests, the Contact Center will initiate a digital authorization from the policyholder to ensure that the policyholder approves of the request.

For more information about this service, please contact the WCIRB Contact Center at or 888.229.2472. A detailed overview of the WCIRB Classification Inspection Report can be found in the Learning Center on the WCIRB website at

PBS Documentary Investigates Opioid Drugmaker Corruption

What role have pharmaceutical companies played in fueling America’s epidemic of opioid addiction, and how have they and their stockholders profited?

This question has been answered by a new PBS documentary, Opioids Inc., documenting how one drug company bribed doctors, committed insurance fraud and made millions for Wall Street investors pushing a highly addictive opioid painkiller – and how it then became the first pharmaceutical company to have its CEO sentenced to prison time in federal court in connection with the opioid crisis.

The company was Insys Therapeutics, the CEO was John Kapoor, and the drug was Subsys, a fast-acting fentanyl-based spray that is 50 to 100 times stronger than heroin. Approved for treating cancer pain, it was prescribed much more generally, helping the company’s sales reach more than $300 million at their peak and stock prices on Wall Street surging.

Opioids, Inc. examines how federal prosecutors prepared the case against Insys by pursuing a novel strategy, using anti-racketeering laws designed to fight organized crime and working their way up the company’s ranks – and how they ultimately arrived at a “smoking gun”: a spreadsheet ordered by Kapoor that showed how Insys tracked the money that went to doctors, and what the company got in return.

The documentary tells the inside story of the corruption behind Insys’ spectacular rise – a scheme that federal prosecutors said went all the way to the top, and that involved paying doctors to prescribe extreme doses of Subsys to their patients – and how investors looked the other way.

A former sales representatives from Kapoor’s company describe a culture of unbridled greed, detailing how they targeted high-prescribing doctors and nurse practitioners known as “whales.”

“It wasn’t about cancer patients. It was about getting as many people as you could on the drug,” says former sales representative April Moore, adding, “Low doses aren’t that much money. Higher dose, more money.”

The company even held contests for the sales team: the higher the doses they got doctors to write, the larger the cash prize – despite the dangers to patients.

At the same time, the company was misleading insurers to approve prescriptions of the drug: “None of what we were saying was truthful,” a former prior authorization specialist says. “We’re just pocketing the money off of a prescription that should’ve never been approved anyway. That’s insurance fraud.”

Opioids, Inc. will be available to watch in full at, on YouTube, and in the PBS Video App. An in-depth Financial Times story will publish at and at