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Category: Daily News

Complex Matrix of National Requirements for Job Re-Opening

Governors and public health officials across the country have implemented stringent measures to help contain the spread of COVID-19, such as safer at home and face covering mandates. Some jurisdictions also require employers to screen the health of employees, often as they begin a shift. These health screening steps, including temperature checks, are becoming more common as states further reopen their economies.

A a recent post by Littler covers statewide laws and orders across the country, that require employers to take employees’ temperatures and/or conduct other employee health screening procedures, such as asking employees about any COVID-19-consistent symptoms using a questionnaire or checklist.

In California, currently there is no state requirement for temperature screenings. However, some California localities have provisions concerning employee temperature screenings. California does require employers to train employees on how to limit the spread of COVID-19, including how to screen themselves for symptoms and stay home if they have them. Some California localities have provisions concerning employee health screenings.

The post does not address other significant issues related to employer screenings of employee health, including potential wage and hour, discrimination, and privacy concerns. As a result, employers should consult with counsel for details on additional orders that may apply to their operations and for guidance on related legal questions.

Last month, Littler released the results of its COVID-19 Return to Work Survey Report, completed by 1,010 in-house counsel, human resources professionals and C-suite executives.

Employers are moving forward with caution, as only 18 percent plan to bring employees back immediately after stay-at-home orders expire. Another 33 percent will wait a few weeks and 42 percent plan to take a “wait and see” approach to gauge the outcome of other business’ reopening efforts.

Employers are also taking numerous steps to maintain employees’ safety, including increased cleaning (90 percent), limiting employee contact in common areas (87 percent), providing and/or encouraging the use of face coverings or other protective gear (86 percent) and modifying workspaces to maintain safe distances (78 percent).

More than half (58 percent) of respondents also plan to conduct testing or health screenings on employees, with most referring to temperature checks (89 percent) and symptom screenings (72 percent) and a small number selecting antibody (8 percent) and antigen (7 percent) tests.

Yet while the U.S. Equal Employment Opportunity Commission has released some guidance about screening employees for COVID-19, uncertainty remains around implementation, privacy matters and litigation risks.

Employers interested in further information may wish to consult Littler articles identifying face covering guidance and return to work protocols, as well as its interactive reopening map.

Smoking or Vaping are COVID-19 Complications Risk Factors

The WCIRB estimates about 30,000 COVID-19 claims will be filed in California, generating about $1.2 billion in costs. About 15,000 have been filed so far. Medical research on causative and risk factors are in the process of being created and published. This research will be critical evidence as causation and apportionment issues are litigated in these claims.

COVID-19 morbidity and mortality reports in the U.S. have not included findings specific to young adults. The Centers for Disease Control and Prevention provides a list of conditions and associated behaviors, including smoking, conferring risk of severe COVID-19 illness regardless of age.

A new University of California San Francisco study published this month in the Journal of Adolescent Health, examined young adults’ medical vulnerability to severe COVID-19 illness, focusing on smoking-related behavior.

A young adult subsample (aged 18-25 years) was developed from the National Health Interview Survey, a nationally representative data set, pooling years 2016-2108. The medical vulnerability measure (yes vs. no) was developed, guided by the Centers for Disease Control and Prevention risk indicators. The estimates of medical vulnerability were developed for the full sample, the nonsmoking sample, and the individual risk indicators. Logistic regressions were conducted to examine differences by sex, race/ethnicity, income, and insurance.

Smoking was the most common risk factor for severe COVID-19 complications among otherwise largely healthy young people. For young men, smoking or vaping may more than double the potential of being hospitalized, needing intensive care or even dying from the virus. For young women, it could increase the possibility 1½ times.

The findings from this analysis indicate that nearly one in three young adults are medically vulnerable to severe COVID-19 illness (32%).

In contrast, in the nonsmoking young adult group, only about one in six is medically vulnerable to severe COVID-19 illness (16%).

This difference between estimates is driven largely by the sizable portion of young adults who reported that they engaged in past 30-day smoking (1 in 10) and past 30-day e-cigarette use (1 in 14).

By contrast, relatively fewer young adults reported medical conditions identified by the CDC as conferring severe illness risk.

WCIRB Expects $1.2B in COVID Comp Claims

The Workers’ Compensation Insurance Rating Bureau of California released its 2020 State of the System report highlighting key metrics of the California workers’ compensation system. While much of the historical data in the report predates the COVID-19 pandemic, the pandemic and resultant stay-at-home orders will likely impact premium levels, claim frequency and claim severity in 2020 and beyond.

WCIRB Chief Actuary David Bellusci and the Vice President, Actuarial Services Tony Milano discussed the State of the System report in a webinar that you are able to view. Here are some of the highlights of the Report and the webinar.

The sharp decrease in employment projected for 2020 combined with continued decreases in insurer rates will contribute to a large decrease in premium for 2020. The WCIRB is expecting a roughly $3.5 billion decline in written premium in 2020, from $15.9 billion in 2019 to $12.5 billion this year.

California had the highest rates in the country until 2018, when rate declines moved it from the top spot. The highest rates are now found in New York.

Average insurer rates are down almost 40% since 2015. Current charged rates are at the lowest level in approximately 50 years, as over the long term declining claim frequency and increasing wage levels have offset rising medical costs and increases in indemnity benefits.

The average charged rates per $100 of payroll fell to $1.96 in 2019 from a peak of $2.97 in 2014. The rate is expected to dip to $1.81 in 2020.

However, average insurer manual rates are significantly above the rates charged to employers, indicating that insurers are, on average, applying significant pricing discounts to their filed rates.

The report also examined Gov. Gavin Newsom’s order during the height of the pandemic regarding a rebuttable assumption of compensability for all workers directed by their employer to work outside their home. “We estimate about 30,000 claims arising during this period generating about $1.2 billion in costs,” Bellusci said in his webinar discussing the report.

In the WCIRB’s evaluation of the Governor’s Executive Order, the low-range estimate was $0.6 billion, the mid-range estimate $1.2 billion and the high-range estimate $2.0 billion. These estimates are lower than those in an earlier WCIRB estimate.

According to Bellusci, recent data from the Division of Workers’ Compensation shows about 15,000 COVID-19 claims so far. As expected, the vast majority of COVID-19 claims reported to the Division of Workers’ Compensation are in the health care and government/public administration sectors. It is likely as California’s economy begins to re-open that the industry mix of COVID-19 claims will be more dispersed.

The report shows pre-pandemic cost trends were generally stable with modest frequency and severity growth, continued high levels of frictional costs and significant regional differentials, while 2020 claim frequency could be impacted by the economic downturn and surges of COVID-19 and post-termination claims.

San Diego Psychiatrist to Serve 21 Months for Fake Treatment

Dr. Marco Antonio Chavez was sentenced to 21 months in custody and ordered to pay restitution of $783,764.37 for defrauding TRICARE, the health care benefits program for military service members and their dependents.

Chavez was a physician licensed by the State of California who provided psychiatry services, including therapy and prescription medications for children and adults diagnosed with ADHD and depression, for San Diego patients. He is a 2006 graduate of the University of Texas Medical School.

Chavez defrauded TRICARE by using the personal information of these patients to create and submit false and fraudulent claims for nonexistent appointments when he did not actually treat those patients. And he routinely selected the billing code for the highest-level (and highest-reimbursement) patient visit for these fabricated appointments, to maximize the fraudulent reimbursements he received from TRICARE.

Chavez became a network provider for TRICARE in 2013 under contract with United Health Care Military & Veterans, West. That August, Chavez became eligible to submit claims directly to TRICARE through XPressClaim (“XPC”), a web-based system. Chavez used that access to help his scheme to defraud TRICARE, using his unique personal security key code to avoid review by other billing staff. He then caused the payments to be electronically transferred into an account that was in his name, which he controlled.

Chavez tried to deflect attention and avoid detection of his fraudulent billing through a variety of deceptive means. For example, he notified patients that they might see entries on their Explanation of Benefit (“EOB”) forms from TRICARE that they would not recognize. This was an attempt to prevent patients from complaining to TRICARE and drawing attention to the false bills. In reality, Chavez knew that the reason the patients would not recognize the entries on their EOBs was because they had not actually occurred – Chavez had simply made them up.

When the TRICARE contractor conducted an audit and requested certain of Chavez’s patient files, Chavez falsely claimed that he had already sent the files, when he knew those files did not exist and could not have been sent. Chavez also misrepresented that a member of the office staff had stolen his TRICARE checks and deposited them without his permission.

Over the course of his scheme, Chavez submitted approximately $928,800 in false and fraudulent claims to TRICARE via XPC, and was paid $783,764.37 on those claims by TRICARE.

Separately, records of the State of California reflect that Chavez’s medical license was suspended in May 2018, upon the finding of an administrative judge that Chavez had treated patients while under the influence of a narcotic or alcohol.

Mobile Wash New Target of AB-5 Misclassification Suit

The Labor Commissioner’s Office has filed a lawsuit against a gig-economy car wash company in Southern California for violating labor laws by misclassifying employees as independent contractors. Mobile Wash, Inc. of Bellflower misclassified at least 100 workers, harming both the workers and law-abiding businesses in the car washing industry, the lawsuit says.

This is the first lawsuit filed by the Labor Commissioner’s Office to enforce Assembly Bill 5, the 2019 law that requires the application of the “ABC test” to determine if workers in California are employees or independent contractors. Under the ABC test, a worker is considered an employee unless they are free from control from the hiring entity, perform work outside of the hiring entity’s usual business, and engage in an accepted independent trade or occupation.

Mobile Wash uses a phone app to offer car washing and detailing services to customers throughout Southern California and a few locations in Northern California. The company requires its workers to use their own cars and buy their own uniforms, insurance, cleaning equipment, supplies and gas. Mobile Wash does not reimburse the workers for these business expenses or travel time in violation of the requirement to pay for all hours worked at no less than the minimum wage. It also unlawfully charges workers a $2 “transaction fee” for every tip left on a credit card.

An analysis by the Labor Commissioner’s Office found that a Mobile Wash employee working for 10 hours a day, 6 days a week is entitled to $1,521 per week for unpaid wages including minimum wage and overtime violation, liquidated damages, rest period violations, reimbursements of business expenses and recovery of stolen tips, and other violations including but not limited to failure to provide paid sick leave. Mobile Wash had over 100 car washers at any given time.

The lawsuit, filed in Los Angeles Superior Court, asks the court to order Mobile Wash, Inc. to stop misclassifying its employees and to halt its operations using employee labor until it meets California’s car wash registration and bond requirements, as it has never been licensed with the Labor Commissioner’s Office. The suit also seeks the recovery of unpaid wages, penalties and interest on behalf of workers going back to April of 2017 as well as civil penalties and any costs and reasonable attorneys’ fees incurred by the Labor Commissioner’s Office.

Also named in the lawsuit is Mobile Wash’s president and CEO, Alfred Davtyan, who faces liability under provisions in the Labor Code that hold business owners, directors, officers, and managing agents jointly liable, along with the business entity, for the types of violations that were committed by Mobile Wash, as a consequence of the adoption of a business plan founded upon unlawful misclassification.

The Community Labor Environmental Action Network (CLEAN), a nonprofit that assists car wash workers, assisted the Labor Commissioner’s Office with this case.

27 So. Cal. Nursing Facilities Pay $16.7M for Inflated Medical Bills

Longwood Management Corporation and 27 affiliated skilled nursing facilities have agreed to resolve allegations that they violated the False Claims Act by submitting false claims to Medicare for rehabilitation therapy services that were not reasonable or necessary, the Department of Justice announced today. Longwood is headquartered in Los Angeles, and the 27 skilled nursing facilities are located in Southern California.

The settlement covers conduct that occurred from May 1, 2008 through August 1, 2012 at six facilities: Alameda Care Center in Burbank, Burbank Rehabilitation Center, Magnolia Gardens Convalescent Hospital in Granada Hills, Montrose Healthcare Center, Sherman Oaks Health & Rehab Center, and West Hills Health & Rehab Center.

The settlement also covers conduct that occurred from January 1, 2006 through October 10, 2014 at 21 facilities: Burlington Convalescent Hospital in the Westlake District of Los Angeles, Chino Valley Rehabilitation Center LLC, Colonial Care Center in Long Beach, Covina Rehabilitation Center, Crenshaw Nursing Home, Green Acres Lodge in Rosemead, Imperial Care Center in Studio City, Imperial Crest Health Care Center in Hawthorne, Laurel Convalescent Hospital in Fontana, Live Oak Rehabilitation Center in San Gabriel, Longwood Manor Convalescent Hospital in the Mid-City District of Los Angeles, Monterey Care Center in Rosemead, Intercommunity Healthcare Center in Norwalk, Park Anaheim Healthcare Center, Pico Rivera Healthcare Center, San Gabriel Convalescent Center, Whittier Pacific Care Center, Studio City Rehabilitation Center, Sunnyview Care Center in the Pico Union District of Los Angeles, View Park Convalescent Center in Baldwin Hills, and Western Convalescent Hospital in the Jefferson Park District of Los Angeles.

Longwood allegedly submitted false and fraudulent claims to Medicare for medically unreasonable and unnecessary Ultra High levels of rehabilitation therapy for Medicare Part A residents. Specifically, Longwood allegedly pressured therapists to increase the amount of therapy provided to patients to meet pre-planned targets for Medicare revenue. These targets were alleged to have been set without regard to patients’ individual therapy needs and could only be achieved by billing for a high percentage of patients at the Ultra High level.

The settlement partially resolves allegations brought in two lawsuits filed by whistleblowers under the qui tam provisions of the False Claims Act, which allows private parties to bring suit on behalf of the government and to share in any recovery. The whistleblowers – Judy Boyce, Benjamin Monsod and Keith Pennetti – will collectively receive $3,006,000 of the settlement proceeds.

FDA Approves Device Reducing Disc Reherniation Risk

Disc herniation is a common cause of stenosis and the back and limb pain that it leads to. It occurs when disc nuclear material pushes through a tear in the annulus.

Lumbar discectomy is a common procedure used to remove the disc material that is pressing on nerves or the spinal cord. But reherniation is the most common failure mode for these procedures due to the weakened state of the disc annulus.

A study published in April 2020 in the journal Expert Review of Medical Devices (Expert review with meta-analysis of randomized and nonrandomized controlled studies of Barricaid annular closure in patients at high risk for lumbar disc reherniation“) found that symptomatic reherniation rates after lumbar discectomy with Barricaid were 50% lower than lumbar discectomy without Barricaid.

The market and impact for the device is quite large, with Barricaid’s manufacturer, Intrinsic Therapeutics, estimating 400,000 total lumbar discectomy procedures performed in the U.S. annually, 120,000 of which involve a large defect, which is most likely to herniate and benefit from the use of the Barricaid Annular Closure device.

Intrinsic Therapeutics, Inc. of Woburn, Massachusetts, received FDA approval for Barricaid Annular Closure device in 2019.

The device consists of a metallic anchor connected to a polyester plug that the company refers to as the occlusion component. The anchor is affixed to the vertebral body closest to the annular defect and the occlusion component is inserted into the defect. The device is designed to withstand up to 330psi, which allows for normal anatomical movement.

The Centers for Medicare and Medicaid Services (CMS) listed a new billing code for annular closure (C9757) for which the Barricaid Annular Closure device is the only one that is FDA-approved. The new code went into effect on January 1, 2020.

Additionally, the International Journal of Spine Surgery issued guidance supporting both coding and coverage of the device.

CEO and President of Intrinsic Therapeutics, Cary Hagan said in a recent press release, “We appreciate all the progress that is being made on patient access to Barricaid by leading surgeons and spine specialty societies. With more than 20 insurers now covering Barricaid, together with the support of surgeons and specialty societies, and more than 50 peer reviewed manuscripts, we are confident in our ability to continue delivering needed and cost-effective care for lumbar discectomy patients with large annular defects.”

Claim Volume Declines as Insurance Fraud Storm Arrives

From the moment news of COVID-19 started spreading, insurance carriers knew there would be a significant business impact. Exactly what the impact would be was not immediately clear, and still leaves some room for guessing.

First, claims saw a sharp decline as the Coronavirus started hitting worldwide. For the most part, this came as no surprise. With fewer cars on the road, fewer accidents result in damage claims. There are fewer ways for people to hurt themselves if they never leave their homes. Workers’ comp claims decline when the workplace is nearly empty. This was an anticipated and completely logical result.

As the world started to come alive after 3 months and “life as normal” began to resume, claims volume started trending back toward normal. This regional trend was steady as municipalities loosened restrictions.

Friss, a Dutch tech company that provides fraud-detection software to 180 insurers, suggests that now a fraud storm is well underway.

The company said in a blog post last week that it has seen a strong uptick in the volume of fraud investigations tracked by its detection software, even though total claims volume is down. In other words, even though there are fewer claims, a higher proportion of them look suspicious.

A graphic that showed a declining volume of claims starting when coronavirus lockdowns began in March and leveling off as lockdowns eased in June. A corresponding line showed the share of claims investigated rising sharply, easing and then rising again. Exact percentages were not revealed.

We’ve seen this before in economic downturns and other times of hardship, and sadly we predicted this at the onset of the pandemic.

Inflated COVID-related cleaning charges, fake testing locations and non-existent telemedicine visits are just a few of the emerging fraud schemes the company is seeing. Unethical customers are aware of what they can get away with. They are also adept at coming up with new schemes – quickly. When the opportunity is available, it will be taken advantage of.

The take away from this trend is “that carriers who wish to weather the storm must remain diligent on treating their customers well. Policies must be easy to obtain at a competitive price, and claims handling must become more efficient and customer-centric. Modern carriers must adapt quickly and provide the service their customers demand.”

Judge Rules OSHA Injury Report Form 300 is Not Confidential

A judge for the U.S. District Court for the Northern District of California ruled that Amazon.com Inc.’s injury data is not confidential information.

The Center for Investigative Reporting, a journalism nonprofit based in Berkeley, California, filed Freedom of Information Act requests between with the U.S. Occupational Safety and Health Administration, seeking annual data on Amazon’s injuries, illnesses and fatalities at certain warehouses.

OSHA requires employers with more than 10 workers to annually submit data on workplace injuries and illnesses using its Form 300. The log includes the name and title of workers who are injured or contract an occupational illness, along with a description of the injury or illness, and the result of the injury or illness. Employers are required to provide copies of these records to current and former employees and their representatives upon request, and employers must retain the records for five years.

OSHA’s final rule on record keeping also stipulates that an “employer may not require an employee, former employee or designated employee representative to agree to limit the use of the records as a condition for viewing or obtaining copies of records.”

Although OSHA noted in 2016 that public access of this data could encourage employers to abate hazards and prevent injuries and illnesses, in August 2019, OSHA stated that it considered the Form 300 data to be confidential commercial information.

The DOL argued that the Form 300 logs fall under the FOIA exemption that shields from mandatory disclosure any “commercial or financial information obtained from a person.”

Judge Kim, however, disagreed in her 28 page July 6, 2020 Order, holding that Amazon itself had not customarily treated its Form 300 data as confidential, and noted that OSHA regulations require employers, including Amazon, to post such information at its facilities for a three-month period.

Although the DOL also argued that the data could be “misused,” Judge Kim dismissed this argument, noting that employees’ personal and medical information does not appear on the form, and that Amazon’s broad disclosures required under the regulations to all current employees, former employees, and employees’ representatives – with no restrictions on their further disclosures – defeats the DOL’s effort to demonstrate confidentiality.

Kim’s ruling comes just one month after another federal judge in Oakland, California, ruled against the Department of Labor in a similar lawsuit brought by the Center for Investigative Reporting. In that case, U.S. District Judge Donna Ryu ordered the department to release 237,000 workplace injury logs submitted by various employers from Aug. 1, 2017, through Feb. 6, 2018. Like Kim, Ryu also found the companies were already warned the information could be posted on a public website in 2016.

Monterey County DA Reports Two Premium Fraud Cases

Monterey County District Attorney announced that Monica Herrera, a 43-year-old resident of Newman, California and former owner of a licensed, Monterey County cannabis company, pled no contest on July 7, 2020 to felony payroll tax fraud and not having workers’ compensation insurance, a misdemeanor.

Herrera owned and operated Holistic Farms, LLC, pursuant to a California Temporary Cannabis Cultivation License and a Monterey County permit. The licensing and permits authorized Herrera to run her business at 2242 Alisal Road in Salinas, California.

During the course of a search warrant served on June 26, 2018 in an unrelated investigation, Monterey County District Attorney investigators discovered that Herrera had violated her license and permit conditions by relocating her cannabis processing operations to 2348 Alisal Road.

During that search, investigators interviewed multiple individuals who verified that they worked for Herrera as cannabis processors and that Herrera paid their wages in cash. Though Herrera had employees, investigators confirmed with public agencies that Herrera had never paid payroll taxes on employee wages to the California Employment Development Department and she did not have workers’ compensation insurance.

Herrera will be sentenced on August 25, 2020. The Court is expected to place Herrera on probation, order her to pay fines of as much as $30,000 and perform 300 hours of community service.

The Monterey County District Attorney also just announced that John Bresciani, a 65-year-old Salinas resident and owner of Pacific Coast Battery Service, Inc. (“PCBS”), pled no contest to defrauding his insurance carrier.

In September 2018, while investigating an insurance claim, Mr. Bresciani’s insurer determined that an injured worker had not been identified in prior policy years. In an ensuing investigation by the Monterey County District Attorney’s Workers’ Compensation Fraud Unit, Mr. Bresciani conceded that he had not truthfully reported the worker’s employment and had kept the employee “off book” by paying cash wages.

Felony criminal charges for insurance premium fraud were filed on December 11, 2019. Mr. Bresciani cooperated with the investigation and paid restitution to his insurance carrier for the $2,943.44 premium that should have been paid. He pled guilty to a misdemeanor charge and Judge Andrew Liu accepted the plea on July 8, 2020. Mr. Bresciani was placed on 3 years’ probation and ordered to pay a $5,000 fine.