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No Time Limit for Recovery Suits Against Secondary Payers

MSP Recovery LLC, a law firm out of Miami, Florida has been initiating class action litigation country-wide as assignees on behalf of Medicare Advantage Plans (MAPs) alleging that various primary payers have failed to reimburse MAP conditional payments allegedly giving rise to a Private Cause of Action under the Medicare Secondary Payer Act (MSP), specifically located at 42 USC §1395y(b)(3)(A). The litigation success of this organization should serve as a wakeup call for secondary payers, including the workers’ compensation industry. Here is the statutory back story to a new success story (for them) in a recently published appellate decision.

In 1980, to “curb the rising costs of Medicare,” Congress enacted the Medicare Secondary Payer Act, 42 U.S.C. § 1395y, which flipped the payment order, such that private insurers became the primary payers and Medicare became the secondary payer. A primary payer can include an entity responsible for providing workers’ compensation medical care.

When a primary-payer plan doesn’t or can’t pay “promptly” – say, for instance, when it is contesting liability – Medicare can make a conditional payment on behalf of a beneficiary, for which it can later seek reimbursement from the primary plan. If Medicare pays and then seeks reimbursement, only to be refused, the United States can sue the primary plan (or a medical provider) to recover its payment.

Section 1395y(b)(2)(B)(iii) contains a statute of limitations that requires the government to sue within three years of the date that Medicare receives notice of a primary payer’s responsibility to pay. The Act also contains a “private cause of action,” codified at § 1395y(b)(3)(A), which is available to Medicare beneficiaries and other private entities, who “are often in a better position than the government to know about the existence of responsible primary plans” that haven’t reimbursed Medicare or paid a beneficiary’s healthcare provider.

The private cause of action rewards successful plaintiffs with double damages after giving Medicare its share of the recovery, the plaintiff can keep whatever is left over. Unlike the government cause of action, the private cause of action contains no statute of limitations.

In 1997, in yet another effort to make Medicare more efficient, Congress enacted Medicare Part C, or the “Medicare Advantage” program. The legislation created Medicare Advantage Organizations. MAOs – like Medicare itself – were categorized as secondary payers. MAOs can sue to recover from primary plans that should pay, but don’t. MAOs, must utilize the Act’s private cause of action, rather than the government cause of action.

The case of MSPA Claims v. Kingsway Amigo began with an automobile accident in 2012. One of the people injured was a Medicare beneficiary who received her benefits from a Medicare Advantage Organization – Florida Healthcare Plus – that later assigned its claims to MSPA Claims (aka MSP Recovery LLC).

The other party involved in the accident was insured by Kingsway Amigo Insurance. The Medicare beneficiary obtained treatment for her accident-related injuries and Florida Healthcare made $21,965 in payments. The beneficiary settled a personal-injury claim with Kingsway and received a $6,667 settlement payment.

In 2015 MSPA sued Kingsway under the Act’s private cause of action. MSPA argued that Kingsway was the primary payer and Florida Healthcare was the secondary payer, giving MSPA – as Florida Healthcare’s assignee – the right to recover.

Kingsway filed a motion for judgment on the pleadings, arguing that MSPA’s claim was stale because it didn’t comply with the Act’s claims-filing provision limiting recovery claims to 3 years from the time item or service was furnished. The complaint alleged that services were provided between April 29 and July 26, 2012, Kingsway contended that a request for reimbursement had to have been made before July 26, 2015, which it wasn’t.

The district court granted Kingsway’s motion and MSPA appealed. The Court of Appeals for the 11th Circuit disagreed and reversed in the published case of MSPA Claims v. Kingsway Amigo .

The central issue in the appeal was whether MSPA’s failure to comply with the Medicare Secondary Payer Act’s claims-filing provision, § 1395y(b)is fatal to its suit against Kingsway, as the district court concluded.

In rendering its decision, the 11th Circuit Court noted that the plain reading of the MSP claims filing provision did not preclude MSPA Claims from filing suit. Essentially, the Court found that the dependent “notwithstanding” clause and the permissive term “may” in the actual text of the MSP claims filing provision means that MAOs are not required to bring suit as a prerequisite in the 3 year period.

Essentially, the permissive language within the law does not erect a separate bar that private plaintiffs must overcome to sue under the MSP private cause of action.

$1.6 Billion Global Settlement with Opioid Manufacturer Mallinckrodt

The California Attorney General announced a global settlement framework between state attorneys general, local subdivisions, and Mallinckrodt, its subsidiaries, and certain other affiliates. Mallinckrodt is currently the largest generic opioid manufacturer in the United States.

The company said that it had an agreement with a key committee of lawyers representing thousands of local governments suing various drug industry players over opioids – and that the deal has the support of the attorneys general of 47 states and territories.

In the agreement, Malinckrodt agrees to pay $1.6 billion in cash to a trust that will cover the costs of opioid addiction treatment and related efforts, with the potential for increased payment to the trust. The company also agrees that its future generic opioid business will be subject to stringent injunctive terms that, among other things, will prohibit marketing of its opioid products and ensure systems are in place to prevent the drugs from falling into the wrong hands.

Documents gathered as the company prepared for trial showed that a Mallinckrodt sales manager told a distributor in 2009 of the pills: “Just like Doritos; keep eating, we’ll make more.” A company spokesman later called the statement “outrageously callous.”

The company argued in court filings that unlike makers of brand-name drugs, it did not promote opioids to doctors or understate the addiction risks. But plaintiffs in the cases said Mallinckrodt continued to ship suspicious orders without making sure the drugs weren’t going to be diverted to the black market.

Under its agreement, Mallinckrodt is filing for bankruptcy. The plan calls for it to make payments for eight years after the company emerges from the protections. That route is similar to one OxyContin maker Purdue Pharma is taking to settle opioid claims against it.

“Reaching this agreement in principle for a global opioid resolution and the associated debt refinancing activities announced today are important steps toward resolving the uncertainties in our business,” Mark Trudeau, president and CEO of the company, said in a statement.

Joe Rice, a lawyer on the executive committee of plaintiffs suing in federal court over opioids, said in an interview Tuesday that some details of the Mallinckrodt agreement still remain to be ironed out.

Mallinckrodt’s announcement comes weeks before a trial on the toll of opioids is scheduled to start in Central Islip, New York. The looming trial has been a factor in a ramped-up push for other drugmakers and distributors to settle, as well.

There have been increasingly public tensions between attorneys general and the private lawyers for local governments over the biggest of the proposed settlements, which would involve at least the three biggest U.S. drug distribution companies.

States have also been divided on whether to accept the deal, under which the distributors would pay a total of $18 billion over 18 years.

Jury Convicts Manhattan Beach Physician of $700K Fraud

A urologist was sentenced to 71 months in federal prison for submitting fraudulent billings totaling more than $700,000 to Medicare for medically unnecessary and nonexistent treatments, sometimes billing for purported patient visits miles apart and occurring at the exact same time.

Mark Wilfred Tamarin, 65, of Manhattan Beach, was sentenced by United States District Judge Dale S. Fischer, who also ordered him to pay nearly $345,000 in restitution.

After a seven-day trial in July 2019, a jury found Tamarin guilty of six counts of wire fraud and one count of attempted health care fraud. He has been in federal custody since the trial’s conclusion.

According to the evidence presented at trial, from 1987 until 2014, Tamarin was a partner Advanced Urology Medical Offices (AUMO), which had offices in Torrance and West Los Angeles.

From January 2009 until January 2013, at AUMO, where the majority of the patients were covered by Medicare, Tamarin billed Medicare for services he did not and could not have performed and also ordered medically unnecessary tests.

Tamarin covered Kindred Hospital, a sub-acute medical center in Ladera Heights, for AUMO. Kindred is a facility designed for patients with serious medical problems and in need of long-term care, but for whom a traditional hospital setting is unnecessary.

There, he billed for numerous patient visits that never happened and for services he never provided. The evidence presented at trial showed that on multiple occasions between 2009 and 2013, Tamarin purportedly was in two places miles apart at the same time he was treating patients in both locations.

At his office at AUMO, Tamarin ordered medically unnecessary tests for his patients. In particular, he ordered two to three times the number of post-void residual (PVR) tests and renal ultrasounds for urology patients in comparison to his three medical partners. Tamarin ordered so many PVRs that the office’s medical assistants suggested that the office purchase a second PVR machine. Tamarin ordered these tests before speaking with or seeing a patient despite the fact that the tests themselves only were appropriate in limited medical circumstances.

In total, Tamarin caused more than $700,000 in fraudulent claims to be billed to Medicare, of which Medicare paid approximately $219,934 in fraudulent Kindred claims and $124,802 in medically unnecessary PVR and renal ultrasound claims.

Judge Issues AB-5 Injunction Against Instacart

A county judge in San Diego has ruled that Instacart misclassified the overwhelming majority of its California workforce.

While it will not have any immediate effect, the injunction represents a critical first step in enforcing the new state law known as “AB5.”

The statute, which took effect earlier this year, attempts to ensure that so-called “gig economy” and other workers are considered employees, rather than unilaterally being declared independent contractors. Under state law, employees are eligible for consideration benefits, including workers’ compensation, unemployment, unionization rights and more. Companies save millions annually by avoiding such financial costs.

“We disagree with the judge’s decision to grant a preliminary injunction against Instacart in San Diego,” the company said Monday night in a statement provided by Instacart spokeswoman Natalia Montalvo.

“We’re in compliance with the law and will continue to defend ourselves in this litigation. We are appealing this decision in an effort to protect shoppers, customers and retail partners. The court has temporarily stayed the enforcement of the injunction, and we will be taking steps to keep that stay in place during the appeals process so that Instacart’s service will not be disrupted in San Diego.”

The labor law case, People of California v. Maplebear – Instacart’s official corporate name – was initially brought by the San Diego city attorney in September.

Instacart “avoids paying its ‘shoppers’ a lawful wage,” San Diego City Attorney Mara W. Elliott said late Monday.

The “landmark ruling makes clear that Instacart employees have been misclassified as independent contractors, resulting in their being denied worker protections to which they are entitled by state law,” Elliott said in a statement to NBC News. “We invite Instacart to work with us to craft a meaningful and fair solution.”

Even though the judge’s order was issued Feb. 18, it was not formally served on the parties until Monday. The order will not take effect until Friday, the same day as a hearing related to arbitration, another central issue in this case.

“The ruling on the motion for preliminary injunction is not an adjudication of the ultimate rights in controversy,” San Diego Superior Court Judge Timothy Taylor wrote. “It simply represents the court’s discretionary decision whether defendant should be restrained from exercising a claimed right pending trial.”

The judge’s ruling practically invited Instacart to appeal.

“Frankly, the sooner the Court of Appeal can hold forth on these issues, the sooner the parties will have a clear and definite signal of what is expected of them,” Taylor wrote.

Similar companies including Uber have resisted the law and have a multi-pronged approach, including arguing that its drivers are not “core” to its business and should be treated as contractors. Uber has also lead the charge for a new ballot measure that supporters say would “protect flexibility,” while critics say would gut the heart of AB5 and the state Supreme Court ruling that underpins it.

FDA to Use Claims Data to Confirm Drug Clinical Trials

The Institute for Clinical and Economic Review (ICER), a small but influential Boston-based research group, has signed a deal with private technology company Aetion to help it use patient health data in its reports on whether individual drugs are priced properly.

Large national regulators, including the U.S. Food and Drug Administration and United Kingdom’s National Institute for Health and Care Excellence (NICE), are considering increasing the use of data gathered outside of clinical trials on the effectiveness of treatments, often referred to as real-world data.

The FDA is running a pilot project using Aetion’s technology to analyze insurance claims to try to replicate clinical trial results, as part of a requirement to comply with healthcare legislation called the 21st Century Cures Act. It is seeking to determine under what circumstances such data could replace clinical trials, which have long been the foundation of medicine regulation.

Former FDA Commissioner Scott Gottlieb is a board member at Aetion.

The agreement with Aetion, which licenses the required claims data, will allow ICER to better inform its cost-effectiveness reports beyond clinical trial data and other information provided by patients, pharmaceutical companies and research papers.

ICER will pilot the use of real world analysis in follow-up reports on how patients are being prescribed and how they react to treatments that have reached the market through one of the FDA’s accelerated approval pathways.

ICER President Steve Pearson said it can use data collected by Aetion to analyze the standard of care for a disease, or to see if larger numbers of patients in medical practice react similarly to drugs as those in tightly controlled clinical trials.

For instance, he said, patients may be taking different dosages than given in trials, which could impact the cost effectiveness of a drug.

ICER is not a government agency and has no authority to set prices. But many large health insurers take their reports into account when they negotiate prices with drug manufacturers and determine patient access. Drugmakers also take into account ICER estimates when they set prices for new medicines.

New York-based Aetion has funding from venture capitalists including from units of Amgen and McKesson, as well as from drugmakers Sanofi and Ucb and health insurer Horizon Health Services.

24 Companies Join Blockchain Group to Limit Counterfeit Meds

Some of the industry’s largest pharmaceutical companies, including Pfizer and Eli Lilly have developed a blockchain-based system to track prescription drugs across the supply chain to better halt the flow of counterfeit medicines.

Some two dozen companies in the industry including drugmakers, distributors, retailers and delivery firms created the blockchain-based MediLedger Network, which it has been testing in the verification of drug returns. They said they intend to further expand the system this year.

Blockchain, which first emerged as the technology underlying virtual currency bitcoin, is a shared database maintained by a network of computers.

The MediLedger group submitted a report to the U.S. Food and Drug Administration laying out the benefits of blockchain for this specific issue, Susanne Somerville, chief executive officer at technology company Chronicled, told Reuters.

The company claims that Blockchain has the capacity to break apart the silos dividing pharmaceutical suppliers and customers, while also building bridges for secure record keeping of each transaction that protects every party and ensuring fidelity across supply chains.

“Even though the drug supply in the United States is safe, there are small percentages – of potential counterfeit drugs. Certainly, there’s a lot of evidence of diverted drugs,” Somerville told Reuters in an interview.

She said counterfeit drugs are a big problem in third world countries, where it is estimated that half of their drugs are counterfeit. “This is a plan intended that this never happens in this country.”

Among the 24 participating companies are Amgen, FedEx, GlaxoSmithKline, Novartis, AmerisourceBergen, Sanofi, Walgreens Boots Alliance and Walmart.

The World Health Organization estimates that counterfeit medicines worth $79.26 billion are traded annually.

“The current point-to-point systems infrastructure lacks the ability to keep data in sync across the healthcare supply chain, which ultimately increases the risk of counterfeit, diverted or otherwise illegitimate products,” David Vershure, head of channel and contract management for Roche’s Genentech unit, said in a statement.

The core function of the MediLedger Network is to validate the authenticity of drug identifiers throughout the supply chain, the MediLedger report said. This can all be done without any proprietary data being shared openly on the blockchain or ever leaving a company’s control.

The MediLedger project was created in response to the FDA’s call early last year for pilot projects testing an electronic inter-operable system as outlined in the Drug Supply Chain Security Act (DSCSA).

CMS Implements Penalty Provisions of Rule 111 Reporting

Medicare Secondary Payer (MSP) is the term generally used when the Medicare program does not have primary payment responsibility (that is, when another entity has the responsibility for paying for medical care before Medicare). These entities with primary payment responsibility include GHPs and NGHP entities, such as liability insurers (including self-insured entities), no-fault insurers, and workers’ compensation arrangements.

Section 111 of the Medicare/Medicaid SCHIP Extension Act (MMSEA) of 2007, at its most basic level, requires insurers and self-insureds to both identify Medicare beneficiaries with whom they pay benefits or settlements associated with workers’ comp, no fault or liability claims and – once identified – report data to Medicare as directed by the Secretary of Health & Human Services.

The reporting act originally mandated that failure to comply with the reporting requirements “shall be subject to a civil money penalty of $1,000 for each day of noncompliance” for each individual for which the information should have been submitted.

Enter the SMART Act. On January 10, 2013, President Obama signed into law the Medicare IVIG Access and Strengthening Medicare and Repaying Taxpayers Act of 2012. The SMART Act, among other things, softened the language relative provide CMS with discretion not only to the imposition of the penalty but also into the amount of the penalty.

Now, civil money penalties “may be (rather than shall be) subject to a civil money penalty of up to $1,000 for each day of noncompliance with respect to each claimant.” The SMART Act also required the Secretary to quickly solicit proposals determining “specified practices for which such sanctions will and will not be imposed” via the regulatory process.

About a year after the SMART Act was signed into law, CMS kicked off the rulemaking process with an advance notice of proposed rulemaking (ANPRM).  Now, nearly a decade later, CMS has proposed the penalty rules for non-reporting or improper reporting.

This proposed rule will ensure that the appropriate insurers are compliant with their reporting requirements and primary payment responsibilities for healthcare services covered by their healthcare coverage programs. A 60-day public comment period seeks feedback on the proposals.

Here are some highlights of the proposed rule.

— Under the proposed new rule, should a GHP fail to perform the required Section 111 reporting within one year of the coverage effective date, it would be subject to a CMP of $1,000 for each day of noncompliance for each individual whose coverage information should have been reported. A maximum penalty of $365,000 per individual per year would apply.
— Should it fail to perform the required Section 111 reporting at all within one year of the date a settlement or other payment obligation was established, an NGHP would be subject to a CMP of up to $1,000 for each day of noncompliance for each individual whose information should have been reported. A maximum penalty of $365,000 per individual per year applies.
— Entities that have performed Section 111 reporting as required, but subsequently provide information that contradicts reported information in response to MSP recovery efforts, would be subject to a CMP based on the number of days that the entity failed to appropriately report updates to beneficiary records. For GHP entities, penalties would be $1,000 per day of noncompliance per individual. For NGHP entities, the penalty would be up to $1000 per day of noncompliance, for a maximum penalty of $365,000 (365 days) per individual.
— CMS has proposed an error tolerance that would not exceed a 20% threshold. In the public comment period it is seeking feedback on the threshold value for entities that have submitted their Section 111 reporting and Medicare identifies data errors. Reported information that exceeds any of the established error tolerance(s) threshold(s), and exceeds those tolerances for any four out of eight consecutive reporting periods, would be subject to a CMP with the fourth occurrence above the tolerance submission.

The proposed rule can be found online.

NAIC Lists Top Ten Comp Carriers by Market Share

Improving employment conditions and equity markets have driven the workers’ compensation insurance industry’s performance in recent years. IBISWorld reported that the industry saw 2.1% annual growth from 2013 to 2018. Meanwhile, the National Association of Insurance Commissioners (NAIC) reported that the industry amassed $58 billion in direct written premiums in 2018. The cumulative market share of the 10 largest insurance groups stood at 45.2%.

Here are the top 10 workers’ comp insurance providers, according to NAIC, ranked by countrywide premium and market share:

1. Travelers Direct Written Premiums: $4.3 billion Market Share: 7.4%

2. Hartford Direct Written Premiums: $3.4 billion Market Share: 5.9%

3. Berkshire Hathaway Direct Written Premiums: $2.8 billion Market Share: 4.7%

4. Zurich Insurance Direct Written Premiums: $2.7 billion Market Share: 4.7%

5. AmTrust Financial Services Direct Written Premiums: $2.6 billion Market Share: 4.5%

6. Chubb Ltd Direct Written Premiums: $2.5 billion Market Share: 4.3%

7. Liberty Mutual Direct Written Premiums: $2.5 billion Market Share: 4.3%

8. New York State Insurance Fund Direct Written Premiums: $2.3 billion Market Share: 3.9%

9. AIG Direct Written Premiums: $1.7 billion Market Share: 2.9%

10. Blue Cross Blue Shield of Michigan Direct Written Premiums: $1.6 billion Market Share: 2.7%

Coventry Reports Better Claim Outcomes with Nurse Triage

When an on-the-job injury occurs, the initial response can be critical in aiding an employee in making the right decisions about what type of care they need. Injured workers need to trust that their employer will support them with the resources needed to make the best choices.

Coventry had the opportunity to work with a national client who wanted to evaluate its processes and create a solution to help improve the injured worker experience. They turned to Coventry to enhance their program and decrease lag times from the date an injury occurred to the date it was reported.

To do this, Coventry embarked on a mission to make its nurse resources available to their injured workers immediately to help navigate the most appropriate course of action for a sustained injury. They also had a goal to implement nurse triage into their claims administration and reporting process to achieve the following:

— Improve the injured worker experience by eliminating confusion and frustration
— Triage injured workers on a timely basis to the right level of care for the sustained injury
— Convey that they cared for their employees
— Reduce the use of the emergency room as a first level provider for non-emergent injuries
— Offer telemedicine services as a convenient and cost-effective solution for injuries warranting remote assessment — Reduce litigation due to a lack of understanding the system and benefits available

When injuries occur at work, many employees aren’t sure what to do. They may go to their family health care provider, who may not be in-network, or go to an urgent care clinic or the emergency room. This can result in unnecessary costs and aggravated conditions for employees. In addition, without access to a nurse resource, an injured employee often has to rely on a front-line supervisor to know what to do (i.e., whether to call 911 or tell the employee to go to the emergency room or an urgent care clinic). The consequences of such scenarios can be over- or under-treatment, employees who don’t follow a treatment plan, or an employer/employee relationship that may be on shaky ground. To assist in addressing these concerns,

Coventry developed a nurse triage solution to fit the client’s specific needs, and in 2017 they launched their program with key clients. Here are the results they recently published for this program.

— Average reporting lag for non-traumatic cases from injury to time of reporting declined from 7.4 days to 1 day
— Injured employees are put in immediate contact with a nurse and receive the most appropriate course of action
Litigation rates dropped 3% and NT24 is considered to be the main attributing factor
The experience modification of the program is expected to improve due to fewer medical-only claims being reported — Average 31% decline annually in medical-only claims resulted in savings in both administrative and medical costs

The program has been a complete success. Not only did it achieve the initial goals of improving the injured worker experience by providing a timely, trusted resource, it also delivered amazing results in the form of reduced reporting lag time, reduced litigation, more appropriate utilization, and financial savings.

Researchers Improve Design of Robotic Surgery Controller

Robotics has weaved its way into many different fields, and medicine is no exception; robot-assisted surgery has advanced dramatically over the past decade in almost every surgical subspecialty.

Robot-assisted surgery is usually performed using surgical robot systems that involve a master-slave configuration, in which the “master” is a controller device that the surgeon manipulates to control a robotic arm. Such systems improve the dexterity and precision of surgeons by filtering out hand tremors and scaling their hand motions into smaller movements. They also reduce the risk of common surgical complications such as surgical site infection.

However, robot-assisted surgery comes with its own disadvantages, especially for the person performing the surgery. Robotic surgeons sometimes feel physical discomfort during surgery, with finger fatigue being common.

This discomfort is associated with the way in which they grip the master controller. Two types of grips are usually used to control surgical robots: the “pinch grip” and “power grip.” The pinch grip has been used in conventional surgeries for centuries; it involves using the thumb, middle, and index fingers to achieve high-precision movements.

On the other hand, the power grip involves grabbing a handle with the entire hand and is more suitable for forceful work and large movements.

Because the pinch grip puts tension on certain muscles of the hand and fingers, it is more likely to cause fatigue. And although the power grip does not seem to cause such discomfort, it offers less precise control. Therefore, there is a trade-off between the discomfort caused by the pinch grip and the lack of fine control of the power grip.

Fortunately, Mr. Solmon Jeong and Dr. Kotaro Tadano, a pair of researchers from Tokyo Institute of Technology found a clever solution to this problem. In a study published in The International Journal of Medical Robotics and Computer Assisted Surgery , the researchers speculated that a master controller that combines both types of gripping can be designed.

Dr. Tadano explains, “In robotic surgery, the limitations of the two conventional gripping methods are strongly related to the advantages and disadvantages of each gripping type. Thus, we wanted to investigate whether a combined gripping method can improve the manipulation performance during robotic surgery, as this can leverage the advantages of both gripping types while compensating for their disadvantages.”

After a proof-of-concept experiment that yielded promising results, the researchers designed a robotic surgery system with a modular master controller that could be adjusted to employ either pinch, power, or combined gripping. The system was tested through a pointing experiment, in which 15 participants had to control a robotic arm to bring the tip of a needle into target holes in the least amount of time without touching obstacles.

The findings showed that the combined grip yielded better performance in the pointing experiment on various fronts, including number of failures (touching an obstacle), time required, and overall length of the movements performed to reach the targets. Many participants also reported to prefer the combined gripping method over the other two, owing to the ease and comfort in using this method.

This new master controller design could be a step in the right direction in robot-assisted surgery. “The manipulating method of master controllers for robotic surgery has a significant influence in terms of intuitiveness, comfort, precision, and stability.

In addition to enabling precise operation, a comfortable manipulating method could potentially benefit both the patient and the surgeon,” remarks Dr. Tadano. Although future work is needed to analyze other variables involved in robotic arm manipulation, this work surely paves the way for advanced surgical robot systems.