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WCIRB Estimates Costs of COVID-19 Executive Order at $1.2B

The COVID-19 pandemic and resultant stay-at-home orders are significantly impacting California’s economic, health care and workers’ compensation systems. Many COVID-19 workers’ compensation claims have already been filed. However, at this time, it is unclear what proportion of the illnesses and deaths resulting from the virus will ultimately be determined to be work-related.

On May 6, 2020, the Governor issued Executive Order N-62-20 (Order) providing for a rebuttable presumption of compensability for all workers directed by their employer to work outside the home. Key provisions of the Order include:

— Rebuttable presumption of compensability applied to workers contracting COVID-19 who worked outside of their home or residence at the employer’s direction within 14 days prior to diagnosis
— Presumption limited to dates of injury from March 19, 2020 to July 5, 2020
— Requires a positive test for COVID-19 or a diagnosis of COVID-19 by a licensed physician that is confirmed by a positive test within 30 days
— Temporary disability must be certified by a physician and can be offset by COVID-19 related sick leave
— Elimination of death benefits for workers with no dependents that are usually paid to the state

The WCIRB has evaluated the potential workers’ compensation claims cost arising from COVID-19 claims under the Order. While some of the workers who are directed to work outside their home during this period have filed or would file a compensable workers’ compensation claim in the absence of a rebuttable presumption, we had no basis to estimate this proportion and, as a result, made no estimate of the incremental impact of the Order. Also, since an actual positive test or diagnosis of COVID-19 is required for the Order to apply, our cost estimates exclude any potential costs for workers who are quarantined, but have not been diagnosed with COVID-19. Finally, our estimates reflect the potential cost impact arising from COVID-19 diagnoses during the time the Order applies and do not reflect costs for potential extensions of the Order or future legislation.

The cost estimates in this Research Brief are based on WCIRB data including unit statistical reports, aggregate financial data calls and medical transaction data.  The WCIRB estimates that the cost of COVID-19 claims filed by workers subject to the Order ranges from $0.6 billion to $2.0 billion with a mid-range estimate of $1.2 billion. This mid-range estimate comprises 7% of the $18.3 billion estimated annual cost of workers’ compensation claims in the system prior to the pandemic.

CWCI Reports on Effects of COVID-19 Presumptions

The California Workers’ Compensation Institute (CWCI) has issued a white paper that looks at the historic role of workers’ compensation presumptions, the current and proposed COVID-19 presumptions and results of a survey detailing characteristics and outcomes of initial COVID-19 claims.

On May 6, Governor Newsom issued Executive Order N-62-20 creating a disputable presumption of compensability for COVID-19 as it relates to California workers directed by their employers to work outside the home. The order applies to work performed on or after March 19, 2020 and unless extended, will remain in place until July 5, 2020.

Beyond that, a legislative approach has been proposed in SB 1159 (Hill, Daly) which would create a disputable COVID-19 presumption with an extended timeframe for first responders and “critical” workers, a group that has yet to be specifically defined, but that would include public or private sector employees working to combat the spread of the virus.

The CWCI analysis compares the differences between the current and proposed presumptions, but notes that both shift the traditional burden of proof found in workers’ compensation by no longer requiring employees to prove the illness is work-related, instead requiring employers to accept compensability for a COVID-19 claim unless they can overwhelmingly prove it is not work-related.

Although COVID-19 is new to workers’ compensation, the analysis also reviews existing precedents and policies regarding presumptions that policymakers should consider in evaluating the potential impacts of modifying the existing workers’ compensation legal architecture in regard to compensability and coverage.

The white paper also adds real-world perspective to advance the presumption debate by providing results of a survey of 28 insurer and self-insured CWCI members that encompassed 1,077 California workers’ compensation COVID-19 claims filed before April 30, a week before the governor’s Order granted the disputable presumption.

Among key results, the survey found that 35% of the COVID-19 claims in the study sample were denied, but 7 out of 10 workers whose claims were denied tested negative for the virus, with the balance of the denials made after it was found that the employee had not been exposed at work, or for other reasons including the lack of a diagnosis, lack of symptoms, or that the employee had been working at home or refused to take a COVID-19 test.

CWCI has released the white paper as a Report to the Industry, “Integrating COVID-19 Presumptions into the California Workers’ Compensation System.” The free report is available on the CWCI website.

Trial Lawyers Predict COVID-19 Legal Battles “Most Expensive” in History

An outsized battle looms in Washington, as trade associations for trial lawyers push their own vision of open-ended lawsuits while groups like the U.S. Chamber of Commerce come down on the side of restricting litigation over coronavirus. The brewing fight in Congress, too, could become a hinge-point on whether there is a fourth major coronavirus relief package that could pass and be signed into law in the coming weeks and if there is one what it looks like.

The issue that confronts lawmakers is how to limit the scope of litigation over coronavirus while also not giving away too much to the business community.

A trial lawyer representing part of a group of celebrity chefs suing insurance giants over the pandemic, described the forthcoming fight in a quote to the Washington Post as what he said is “going to be the most expensive legal battle in history.” He then predicted: The insurance companies are going to win some of those, and they’re going to lose some of those. But in the meantime, the businesses are going to fail. People are going to be out of work.

Houghtaling is a managing partner at Gauthier Murphy & Houghtaling LLC, a firm in the New Orleans suburb Metairie, Louisiana. Houghtaling is testifying before the Democrat-led House Small Business Committee on Thursday afternoon, where lawmakers will discuss the liability issues as Congress considers potentially granting a liability shield to companies nationwide upon reopening – something many Republicans consider imperative to successfully return to normal as a society.

Houghtaling is representing Thomas Keller, the celebrity chef who the Washington Post’s Tim Carman described as “the mastermind behind the three-star Michelin restaurants Per Se in New York and the French Laundry in California.” Keller is one of many restauranteurs nationwide suing their insurance companies because the insurance companies are not paying them for the shutdowns caused by COVID-19.

“The owners are pressing carriers to honor business-interruption policies during an outbreak that has wreaked so much financial havoc that it could bankrupt insurance companies and put at risk claims not related to covid-19,” Carman wrote in the Post.

In these particular kinds of cases, what these trial lawyers like Houghtaling and the others representing these various restaurants are looking for is for insurance companies to honor business interruption policies or to cover their clients like they would in a natural disaster even if the policies do not explicitly cover pandemics.

But this is just the tip of the iceberg for trial lawyers as the reopening battle moves forward coast to coast – cases that could be forthcoming include against states for various policies they implemented like New York Gov.

According to Politico, the American Association for Justice – a national collective of trial lawyers – released polling on the issue that forecast many potential lines of litigation that the attorneys may see coming.

“The trial lawyers hired Hart Research Associates, a Democratic polling firm, which surveyed more than 1,200 voters online last week,” Politico’s Theodoric Meyer wrote earlier in May. “The pollsters told voters that companies want to prevent workers and consumers who contract coronavirus from suing them ‘even if they could demonstrate that the company engaged in unsafe practices.’ Sixty-four percent of respondents said they opposed giving companies such immunity, while 36 percent supported it.”

The Chamber of Commerce, which is squarely on the other side of the fight, released its own polling according to Politico showing the exact opposite.

“A poll conducted days earlier by the Republican firm Public Opinion Strategies for the Chamber’s Institute for Legal Reform found the opposite among 800 voters surveyed by phone,” Politico’s Meyer wrote. “Asked whether ‘Congress should protect many businesses and types of companies from lawsuits related to the coronavirus,’ 61 percent of voters agreed and 27 percent said no.”

But no matter who is paying out and who is receiving payments as a result of litigation, and no matter who wins and who loses lawsuits, the one group that always comes out on top is the trial lawyers. That “most expensive legal battle in history” that Houghtaling describes has but one absolute winner: the trial lawyers who bring the cases.

Encino Opiod Ring Conspiracy Ringleader Sentenced

A San Fernando Valley man was sentenced to 108 months in federal prison for leading a conspiracy to distribute powerful prescription opioids via sham medical clinics that hired corrupt doctors who wrote fraudulent prescriptions to black market customers.

Minas Matosyan, a.k.a. “Maserati Mike,” 40, of Encino, was sentenced by United States District Judge Philip S. Gutierrez. Matosyan pleaded guilty in April 2019 to one count of conspiracy to distribute a controlled substance.

Matosyan was arrested in August 2017 pursuant to a federal grand jury indictment charging him and 12 other defendants with scheming to divert at least 2 million controlled prescription pills for sale on the black market.

According to his plea agreement, Matosyan and his co-conspirators controlled the sham clinics and hired corrupt doctors who allowed their names to be used on fraudulent prescriptions in exchange for kickbacks. Matosyan also admitted that he and his co-conspirators stole the identities of other doctors and then issued prescriptions in those doctors’ names, either by personally acquiring prescription pads in the doctors’ names or by arranging for other co-conspirators to do so.

As part of the scheme, Matosyan staffed receptionists at the clinics who would falsely verify the phony prescriptions to pharmacists who called to check on their veracity. He also sold narcotic prescriptions to black market customers – either directly or through couriers – and bulk quantities of hydrocodone and oxycodone he had acquired from phony prescriptions filled at pharmacies by other customers.

In May 2016, Matosyan offered a doctor a “very lucrative position” where the doctor would “sit home making $20,000 a month doing nothing,” according to Matosyan’s plea agreement. After the doctor declined the offer, Matosyan stole the doctor’s identity, sending a co-conspirator a text message containing the doctor’s full name, medical license number and national provider identifier number that the co-conspirator used to order prescription pads in the doctor’s name. Over the next two months, Matosyan and his co-conspirators sold fraudulent prescriptions, purportedly issued by the victim doctor, for at least 9,450 pills of oxycodone and 990 pills of hydrocodone.

Matosyan also admitted in the plea agreement that he conspired with others, including a lawyer, Fred Minassian, 53, of Glendale, to obstruct justice, by providing falsifying medical records to police to thwart an investigation into the seizure of a load of Vicodin from one of the conspiracy’s major customers.

This case so far has resulted in 11 convictions. Minassian is scheduled to go on trial on July 7.

53 of 58 CA Counties Assess Reopening

California is relaxing its criteria for counties that want to reopen their economies faster than the state during the coronavirus pandemic, after local leaders complained that the original requirements were too difficult to meet.

Newsom said his administration estimated that all but five of California’s 58 counties would qualify for a variance from the statewide stay-at-home order through the new rules, though not all may choose to seek one. Newsom did not specify which five counties fell short, but he mentioned outbreaks at Tulare County nursing homes and a meatpacking plant in Kings County, as well as the overall increase in cases in Los Angeles County, as points of concern.

The bottom line is people can go at their own pace, and we are empowering our local health directors and county officials who understand their local communities and conditions better than anyone,” Newsom said during a news conference at Mustards Grill in Napa.

The number of ineligible counties is likely significantly higher, however. A San Francisco Chronicle analysis found at least six counties in the Bay Area alone that still do not meet thresholds previously set by the state for minimum daily testing and hiring employees to trace the spread of infections.

Under the new framework, counties must demonstrate that their hospitalization rates remain stable. Counties will have to show either that their number of coronavirus patients has not increased by more than 5% in the past week, or that they have not had more than 20 patients on a given day for at least two weeks.

Counties must also meet one of two other conditions: fewer than 25 cases per 100,000 residents for at least 14 days, or a rate of positive coronavirus tests that has dropped below 8%.

Qualifying counties could move ahead of the state by resuming dining-in restaurants, permitting shopping in retail stores and reopening schools, provided they implement safety protocols. Two dozen counties were already given permission last week, mainly in the sparsely populated far north or in the Sierra.

A bloc of six Bay Area counties has been moving slower than most parts of the state to ease its own restrictions, agreeing just this week to allow curbside pickup for retail stores, more than a week after Newsom made a similar adjustment to the state order.

All six counties fall short on at least two state targets to move to the next reopening phase. But along with announcing they would be resuming some curbside retail sales, the counties said Monday that they did not plan to further ease restrictions for at least two weeks.

Three North Bay counties that are not part of the group are seeking permission to go faster, despite not meeting the original state benchmarks for a variance. Napa and Solano counties filed requests with the state last week, while Sonoma County supervisors voted Monday to seek one. All three of the counties appear to meet the new criteria laid out by Newsom, or are very close.

CA Employers Deploy Contact Tracing Systems

Technology companies are developing their own contact tracing systems to help prevent coronavirus outbreaks in their offices as countries begin to ease lockdown measures and a return to the workplace is in the offing.

Silicon Valley company Juniper Networks Inc plans to equip its about 10,000 employees with work identification badge holders that have a Bluetooth chip that will help to record a worker’s movements and interactions in the office, company vice president Jeff Aaron said in an interview.

The system employs Wi-Fi routers and access points from Juniper Network’s unit Mist that will communicate with the Bluetooth chips on the badges. The data collected will help determine which employees need to be tested and isolate after a colleague tests positive for the new coronavirus.

All U.S. states have eased virus lockdowns, but work-from-home remains the norm in California’s tech industry. California has reported more than 86,000 coronavirus cases and 3,500 deaths, the lowest tallies in the United States relative to the state’s large population.

Mist, which is a small but fast-growing Wi-Fi equipment maker, is selling its new system to other businesses through its annual subscription of $150 per access point, and about 25 customers are testing it, Aaron said.

He said businesses that are typically reluctant to spend on replacing older technology have indicated that significant funding is available for contact tracing in the workplace.

“They are saying: If this is a reason for me to rip out my old Wi-Fi and put in a Wi-Fi plus BLE (Bluetooth Low Energy) solution and support contact tracing use cases, I can definitely get budget for that,” he said.

Aaron said customers could skip the Bluetooth component in its system, but still see when spaces such as conference rooms become overcrowded by tracking the number of Wi-Fi-connected devices.

Several software companies have announced tools during the pandemic to automate workplace contact tracing and help customers avoid disruptions.

Among others touting workplace tracking tools, Slovakia-based Symbiosy said its own software, along with sensors from technology partner Quuppa, helped identify about 40 people to test after an employee became infected last month.

“Manually, we would not even have been able to get that precision,” said Tomas Melisko, head of real estate company HB Reavis’ Symbiosy unit. “And we would need to have sent twice that many people for testing” if solely analyzing building access logs.

Secret Service Reports Large-Scale Unemployment Fraud

The Secret Service has detected a large-scale foreign attack on the U.S. unemployment system that is processing record numbers of jobless claims amid the pandemic, according to The New York Times.

In a Secret Service memo obtained by the Times, the agency described the attack as a well-organized Nigerian fraud ring that could lead to “potential losses in the hundreds of millions of dollars.”

“We are actively running down every lead we are getting,” Roy Dotson, a special agent who specializes in financial fraud at the Secret Service, said in an interview with investigators obtained by the Times.

The attackers are reportedly using previously obtained Social Security numbers and other personal information to claim unemployment benefits.

Since March, more than 36 million people have filed for unemployment amid shutdowns triggered by the coronavirus pandemic. The sudden increase in jobless claims has overwhelmed state unemployment systems.

The attack was first reported in Washington state, where people who did not file for unemployment reported receiving benefits they didn’t ask for.

The attack adds yet another obstacle as state governments work to send out unemployment benefits in a timely manner.

At Western Washington University in Bellingham, Wash., more than 400 out of roughly 2,500 employees have been targeted with fraudulent claims, the university’s spokesman told the Times.

“This is a gut punch,” Suzi LeVine, the commissioner of the Washington State Employment Security Department, told the newspaper.

Though Washington state has been the primary victim of the attack, there is evidence that the fraud has occurred in Florida, Massachusetts, North Carolina, Oklahoma, Rhode Island and Wyoming.

March 22 – Floyd Skeren HR Follow Up – Free COVID–19 Webinar

Please join Bernadette M. O’Brien, Esq., SPHR, of Floyd Skeren Manukian Langevin, along with Senior Partner Amanda A. Manukian, Esq., for the latest on important topics for employers, human resources administrators, risk managers, and claims adjusters on COVID-19 regulatory requirements and issues.

A variety of topics will be discussed such as:

— A review of Executive Order N-62-20 (Workers’ Compensation Presumption);
— Workers’ compensation case scenarios;
— DOL’s enforcement of paid sick leave laws;
— Update: temperature screening of employees and CDC recently issued guidance;
— Update: Are essential employees who are home due to a “fear of COVID-19” entitled to leave protections?;
— Common questions;
— And more to be announced!

Friday, May 22, 2020 from 10:00 am until 11:30 am (PST).  Webinar is free. Please register online

Contact:  Rebecca.zandovskis@floydskerenlaw.com for assistance.

Bernadette M. O’Brien is a Partner at Floyd Skeren Manukian Langevin, LLP, and an SPHR/SHRM-SCP certified Human Resources Consultant.

Ms. O’Brien is author of the LexisNexis publication Labor and Employment in California: A Guide to Employment Laws, Regulations and Practices, co-author of California Leave Law: A Practical Guide for Employers, and co-author of California Unemployment Insurance and Disability Compensation Programs..

IMR Determination Letters Fall by 11.3%

A new California Workers’ Compensation Institute (CWCI) study on the Independent Medical Review (IMR) process used to resolve California workers’ comp medical disputes finds that the number of IMR determination letters, fueled by a sharp decline in prescription drug disputes, fell 11.3% from 2018 to 2019, with data from the first quarter of 2020 showing the decline is continuing.

The CWCI study examined data from more than one million IMR decision letters that were issued from 2014 through March 2020 in response to applications submitted to the state after a Utilization Review (UR) physician modified or denied a medical service requested for an injured worker. As in prior studies.

State lawmakers expected IMR volume would decline over time as providers became familiar with the treatment guidelines, but the number of IMR determination letters increased steadily over the first five years of the program — the only exception being a modest 2.6% decline in 2017.

The 2019 tally, however, shows the IMR letter volume finally did drop sharply, falling to a five-year low of 163,899, down 11.3% from 2018, while the count from the first quarter of this year shows the decline is continuing, as the letter count from the first three months of 2020 fell 4.9 percent below the total from the corresponding period of 2019, dropping to a 5-year low of 38,981.

The year-to-year declines in letter volume were noted in all 8 regions of the state, with the biggest reduction in letter count noted in the Bay Area, which had about 6,200 fewer letters in 2019 than in 2018, a decline of more than 14%, though the rural, sparsely populated Northern Counties and Sierras showed the biggest percentage decline (26.3%).

As in prior years, a small number of physicians continued to drive much of the IMR activity in 2019, with the top 1% of requesting physicians (106 doctors) accounting for 41.2% of all disputed service requests determined by IMR in 2019; and the top 10 individual physicians alone accounting for 9.9% of the disputed requests.

IMR outcomes have shown little variation as IMR physicians in 2019 upheld 88.2% of UR doctors’ modifications or denials of services, compared to 88.6% in 2018, and 88.5% in the first quarter of 2020.

Uphold rates last year ranged from 74.9% for evaluation/management services to 92.7% for acupuncture; physical therapy; and durable medical equipment, prosthetics, and supplies.

The mix of services reviewed by IMR physicians in 2019 showed prescription drug requests continued to top the list, accounting for 41.1% of the IMRs (and 30.9% of those were for opioids), though that was down from 46.4% in 2018 and down from nearly half of all IMRs in 2015, prior to the adoption of new opioid and chronic pain guidelines in late 2017, and the implementation of the workers’ compensation prescription drug formulary in January 2018.

California Bar Examination Pass Rate Hits All Time Low

The California State Bar Examination is administered twice a year, in July and in February. The February 2020 results were released this May.

The percentage of would-be lawyers who passed California’s February bar exam plummeted to a historic low with fewer than 3 in 10 test-takers posting a passing score, according to figures released by the State Bar. Just 26.8% of the 4,205 applicants who completed the test passed. That’s the lowest success rate recorded in California since at least 1951, the oldest figures provided by the Bar.

The mean scaled Multistate Bar Examination score on the February 2020 bar exam in California was 1357, down from 1370 last year. The national mean score was 1326, down from the previous year’s mean of 1328 and an all-time low.

This year’s dismal pass rate, recorded just two years after the February 2018 exam set a record low, will shine a spotlight yet again on the Bar’s efforts to revamp a controversial test that a majority of applicants regularly flunk. The Bar has completed four studies related to the exam, and trustees will consider possible next steps at a teleconference meeting.

The figures are striking, but the trend is nothing new: pass rates have generally declined in California and nationwide since 2008.

In 2017, the Supreme Court of California commissioned several studies to investigate the bar pass problem in an effort to determine, among other things, if the exam content should be changed or the cut score modified. Perhaps not surprisingly, they concluded that the content was appropriate and that the cut score should not be changed.

The report concluded that changes in credentials for entering law students – primarily LSAT and, to a lesser extent, undergraduate GPA-contributed to 20 to 50 percent of the decline in bar performance.

In a classic glass half-full/half-empty split, critics of law schools use this to claim that weaker students are primarily the explanation, and decry proposals to make it easier for them to pass; while defenders will no doubt insist that we need to focus on whatever accounts for the other 50 to 80 percent of the decline.

Interestingly, the study found little impact on bar pass rates based on which substantive courses law students take, or whether they participate in externships, clinics, or the like.