Category: Daily News

The California Employment Development Department (EDD) detected and is quickly taking action to halt a recent move by organized criminal elements to file false disability insurance claims.

The new disability insurance identity theft scam involved suspected organized criminal elements filing false disability insurance claims by attempting to use stolen credentials of individuals and medical or health providers.
Medical and health providers certify the existence of a disability that an applicant reports when seeking disability insurance benefits from EDD.

Evidence of the scam included a recent increase in new online medical or health provider account EDD registrations and a rise in disability insurance claims.

“The Department saw a recent rise in new online medical and health provider account registrations and strongly suspects most of those registrations were fraudulent,” said Ronald Washington, EDD’s Disability Insurance Deputy Director.

“We deployed additional safeguards that further protect providers and claimants from these scams.”

The Department has suspended payments on certain claims until it can further verify information on that claim. EDD is also boosting its medical and health provider vetting process and halting payment on many new claims. These efforts help protect legitimate providers and claimants from further fraud. The filters will slow the process of registering new providers and may impact the time it takes for legitimate claimants to receive benefits. EDD will be contacting providers as soon as possible to complete the additional verification processes.

There is currently no evidence that California medical or health providers were knowingly involved in this latest scam attempt. EDD is expanding its fraud information sharing across state and federal agencies as well as impacted medical groups. California will continue to closely monitor claim activity and take actions to protect the integrity of state disability insurance funds.

EDD continues to urge the public to remain vigilant about protecting personal information when engaging in any online activities. Communication from EDD seeking further information to verify a claim are examples of anti-fraud efforts at work and to stop payment on suspicious claims.

Those who receive communications from EDD and suspect fraud, such as someone filing a claim or creating an account, may want to file a fraud report by visiting Ask EDD and selecting the “Report Fraud” category to complete the Fraud Reporting Form. Victims may also want to file an identity theft report with the Federal Trade Commission (FTC). Information about how to combat fraud and guard against identity theft is available on the EDD’s Help Fight Fraud webpage.

EDD has posted Frequently Asked Questions about the new identity theft scam on the Help Fight Fraud page, along with helpful information and resources to help assist those who may be victims of identity theft.

In the midst of the pandemic, the total number of job injury claims reported by California public self-insured employers edged down slightly last year, but a growing number of lost-time claims and rising claim severity (average loss per claim) fueled by higher indemnity costs drove up total workers’ compensation paid and incurred losses for cities, counties and other public agencies in the state according to a California Workers’ Compensation Institute analysis of data from the state’s Office of Self-Insurance Plans (OSIP).

OSIP’s summary of public self-insured data for fiscal year (FY) 2020/21, issued late last week, provides an initial glimpse at the volume of claims, total loss payments and total incurred (paid losses plus reserves) for the 12 months ending June 30, 2021.

The state compiles the data annually from workers’ compensation reports submitted by hundreds of public self-insured entities, including cities and counties, local fire, school, transit, utility and special districts, and joint powers authorities. The latest summary shows that in FY 2020/21 these employers provided workers’ compensation coverage to nearly 2 million California public workers whose wages and salaries totaled more than $139 billion.

CWCI’s review of the data found that the number of employees covered by public self-insured employers last year declined 4.4% from the total noted in the FY 2019/20 initial report, though the total number of reported claims fell less than 1% to 107,161 cases.

Despite having fewer workers and slightly fewer claims, public self-insureds’ total claim payments at the first report increased by more than $30 million to $445 million, 7.3% more than the comparable figure for FY 2019/20, and $130.7 million (41.6%) more than the $314.3 million noted in the first report for FY 2013/14, which was the low point for the past decade and the first year following enactment of SB 863, the 2012 workers’ comp reform bill signed by Governor Brown.

Though overall public self-insured claim volume was down compared to a year earlier, CWCI noted that decline was completely due to a 19.7% drop in medical-only claims, which are relatively inexpensive, while the number of more costly lost-time claims increased by 8,957 claims (15.5%).

The average indemnity paid per FY 2020/21 lost-time claim at the first report was $4,256, so the addition of the 8,967 lost-time cases was the key factor fueling the increase in public self-insured payments last year.

According to CWCI, the recent increase in the number of indemnity claims in the public sector last year is likely due, at least in part, to the addition of COVID-19 claims to the claim mix, as the public self-insured work force includes many essential workers such as police, firefighters, prison guards, and state hospital workers who have a presumption of compensability if they contract the virus, and who were particularly hard hit by COVID last year.

The introduction of COVID claims into workers’ comp also coincided with a spike in public self-insured death claims, which according to the OSIP data more than doubled from 104 claims in FY 2019/20 to 220 claims in FY 2020/21.

The incurred data (paid losses + reserves for future payments) on public self-insured claims tell a similar story.

The U.S. Supreme Court on Monday declined to issue an injunction against New York’s COVID-19 vaccine mandate for health care workers, which doesn’t allow them to seek a religious exemption.

New York state imposed the vaccine mandate for doctors and nurses in August, which allows only for medical exemptions, not religious ones. The religious exemption policy expired in November.

The latest decision suggests the high court lacks the appetite to wade into the matter of mandates. The Supreme Court has previously rejected other challenges, including one that focused on Maine’s lack of a religious exemption to vaccine mandates for health care workers.

Petitioners, which included Christian doctors, said New York’s vaccine mandate violates the U.S. Constitution’s First Amendment prohibition on religious discrimination on behalf of the government. They also argued that it violates federal civil rights law that requires businesses to accommodate employees’ religious beliefs.

Justices Clarence Thomas, Samuel Alito, and Neil Gorsuch wrote they would have supported temporarily halting enforcement of New York’s mandate.

“Sometimes dissenting religious beliefs can seem strange and bewildering. In times of crisis, this puzzlement can evolve into fear and anger,” Gorsuch wrote in his dissent.

“One can only hope today’s ruling will not be the final chapter in this grim story,” Gorsuch continued. “Cases like this one may serve as cautionary tales for those who follow.”

In October, when the Supreme Court didn’t take up the Maine vaccine case, Gorsuch wrote that “healthcare workers who have served on the front line of a pandemic for the last 18 months are now being fired and their practices shuttered,” adding that they have been terminated “for adhering to their constitutionally protected religious beliefs.”

“Their plight is worthy of our attention,” he argued.

Other than Maine and New York, Rhode Island is the only other state that doesn’t allow religious exemptions to the vaccine for health care workers.

In a move that may concern those responsible for payment of healthcare costs, Pfizer and Arena Pharmaceuticals, Inc. announced that the companies have entered into a definitive agreement under which Pfizer will acquire Arena, a clinical stage company developing innovative potential therapies for the treatment of several immuno-inflammatory diseases.

Under the terms of the agreement, Pfizer will acquire all the outstanding shares of Arena for $100 per share in an all-cash transaction for a total equity value of approximately $6.7 billion. The boards of directors of both companies have unanimously approved the transaction.

Pfizer expects to finance the transaction with existing cash on hand.

“The proposed acquisition of Arena complements our capabilities and expertise in Inflammation and Immunology, a Pfizer innovation engine developing potential therapies for patients with debilitating immuno-inflammatory diseases with a need for more effective treatment options,” said Mike Gladstone, Global President & General Manager, Pfizer Inflammation and Immunology. “Utilizing Pfizer’s leading research and global development capabilities, we plan to accelerate the clinical development of etrasimod for patients with immuno-inflammatory diseases.”

Arena’s portfolio includes diverse and promising development-stage therapeutic candidates in gastroenterology, dermatology, and cardiology, including etrasimod, an oral, selective sphingosine 1-phosphate (S1P) receptor modulator currently in development for a range of immuno-inflammatory diseases including gastrointestinal and dermatological diseases.

Arena has built a robust development program for etrasimod, including two Phase 3 studies in ulcerative colitis (UC), a Phase 2/3 program in Crohn’s Disease, a planned Phase 3 program in atopic dermatitis, and ongoing Phase 2 studies in eosinophilic esophagitis and alopecia areata.

In addition, Arena’s pipeline includes two development-stage cardiovascular assets, temanogrel and APD418. Temanogrel is currently in Phase 2 for the treatment of microvascular obstruction and Raynaud’s phenomenon secondary to systemic sclerosis. APD418 is currently in Phase 2 for acute heart failure.

“We’re delighted to announce Pfizer’s proposed acquisition of Arena, recognizing Arena’s potentially best in class S1P molecule and our contribution to addressing unmet needs in immune-mediated inflammatory diseases,” said Amit D. Munshi, President and Chief Executive Officer of Arena. “Pfizer’s capabilities will accelerate our mission to deliver our important medicines to patients. We believe this transaction represents the best next step for both patients and shareholders.”

Under the terms of the merger agreement, Pfizer will acquire all of the outstanding shares of Arena common stock for $100 per share in cash. The proposed transaction is subject to customary closing conditions, including receipt of regulatory approvals and approval by Arena’s stockholders.

In a case that is not quite good news for workers’ compensation claims administrators hoping to see lower generic drug prices, a federal judge on Thursday suspended California’s first-in-the-nation ban on pharmaceutical industry pay-for-delay deals, ruling the law intended to increase the flow of affordable generic drugs likely violates out-of-state commerce protections.

AB 824, was signed into law by California Governor Gavin Newsom on October 7, 2019. It creates a presumption that “reverse payment” settlement agreements regarding patent infringement claims between brand-name and generic pharmaceutical companies are anti- competitive and unlawful. A violation of the law is punishable by a civil penalty.

According to the State, AB 824 closes this loophole in the federal Hatch-Waxman Act and ensures a brand-name company cannot continue to enforce an otherwise weak patent against generic companies through these reverse payment settlement agreements.

The plaintiff in the case is a nonprofit, voluntary association comprised of the leading manufacturers and distributors of generic and biosimilar medicines, manufacturers and distributors of bulk active pharmaceutical ingredients, and suppliers of other goods and services to the generic and biosimilar pharmaceutical industry that filed suit in an attempt to invalidate AB 824.

Plaintiff argues AB 824: violates the dormant Commerce Clause by directly regulating out-of-state-conduct; is preempted by federal patent law, the delicate balance between the competing interests of patent protections and antitrust law struck by the U.S. Supreme Court in prior decisions.

The State contends that “AB 824 seeks to prevent or reduce anticompetitive pharmaceutical sales in California, and, thus, applies to agreements to engage in that conduct,” not “conduct occurring wholly outside California.”

U.S. District Judge Troy Nunley in his Opinion, agreed the law enables California to issue multimillion-dollar civil penalties against companies that have no connection to the state, and said it must be temporarily enjoined due to clear constitutional shortcomings.

“As it is written, the civil penalties provision could hypothetically reach a corporate officer of a Delaware company entering into a settlement agreement with another Delaware company regarding pharmaceutical sales in only Delaware,” Nunley wrote. “The court cannot reasonably find that Assembly Bill 824 regulates only the California market.”

“The court finds the balance of equities and the public interest element tips sharply in plaintiff’s favor such that an injunction would be proper even if there were only serious questions going to the merits,” Nunley concluded.

According to Courthouse News, the bill’s author said the judge’s decision was “beyond frustrating.”

“The association’s name and mission would imply that they are somehow on the side of patients when, in fact, they are only on the side of protecting their own profits,” said Assemblyman Jim Wood, D-Eureka.

On the other side, Jeff Francer, the association’s general counsel, celebrated the decision in an email. “AAM is encouraged that the federal court today recognized the harm caused by California in restricting litigation settlements that typically bring more affordable medicines to patients and taxpayers more quickly.”