Category: Daily News

Since the onset of the COVID-19 crisis in March, the Division of Workers’ Compensation (DWC) has worked hard to ensure the continuity of its services to the workers’ compensation community. District offices continue to hear all cases either via teleconference or by video.

In an additional measure to keep DWC and the workers’ compensation community safe, DWC has not accepted any walk-in documents or walk-through documents since March. Documents have only been accepted via e-filing, JET filing or by mail during this time. Recently, DWC issued a Newsline further encouraging the workers’ compensation community to file documents by e-filing or JET filing due to the limited availability of staff in our district offices.

The Workers’ Compensation Appeals Board (WCAB) recently issued an en banc decision suspending Regulation Section 10789(c) on walk-throughs. This change allows DWC, effective January 11, to now offer a “walk-through alternative” in the Lifesize video conferencing platform. Instructions on using that platform may be found on the DWC website.

District offices will be available for walk-throughs Monday through Friday, from 2 to 4 p.m. only. Walk-throughs will be available only for a Compromise and Release, or Stipulation with Request for Award at this time. To be heard, the documents must be filed at least 24 hours ahead of the walk-through appearance, by either JET filing or e-filing. Documents filed by U.S. mail must be available to the judge in EAMS prior to the walk-through.

DWC has previously posted instructions on how to e-file settlement documents. The walk-through procedure will be handled via the Lifesize virtual courtroom which will be available for each office. A list of links for each office may be found here. The link for each virtual walk-through courtroom will not change. It should be noted that a judge will handle as many walk-throughs as are feasible for the day. The order in which a judge will hear the walk-throughs will be up to the judge handling that day’s matters. We encourage parties to file proposed orders to assist the judge with handling the matter more expeditiously.

DWC understands that parties may want to walk-through other documents. However, at this time walk-throughs are limited to only a Compromise and Release or Stipulation with Request for Award. Limits will be based on both availability and pursuant to the DWC/WCAB Policy and Procedural Manual section 1.25.

DWC will be monitoring the impact of this program and will look to expand hours and documents allowed in the future based on staffing availability.

Exceltox, a California diagnostic laboratory located in Irvine California, has agreed to pay $357,584 to resolve allegations that it violated the False Claims Act by submitting or causing to be submitted claims for genetic tests to Medicare without valid physician oversight..

Between September 2015 to November 2015, Exceltox used the services of contractor Seth Rehfuss, of Somerset, New Jersey, who persuaded groups of senior citizens in senior housing complexes to submit to genetic testing, despite applicable Medicare rules requiring proper orders from a treating physician for such tests.

Exceltox, in turn, submitted claims for payment to Medicare for Rehfuss’ genetic tests performed without valid physician oversight.

Rehfuss previously pleaded guilty in Trenton federal court to a superseding information charging him with conspiracy to commit health care fraud and was sentenced in May 2019 to 50 months in prison.

Exceltox was also connected with the prosecution of a Bakersfield physician in 2019, Jason Helliwell, who was at the time on probation by the state medical board for negligent patient care and sex with patients, faced criminal allegations of billing fraud.

Helliwell and two others were charged Sept. 4 2019, in a 31-count criminal complaint alleging a fraudulent medical billing scheme, according to the complaint filed by the Kern County District Attorney’s Office.

The complaint alleges that Helliwell, 47, conspired with Brandon Williams, 40, a sales representative for Irvine-based Exceltox toxicology lab, and Tamara Head, 53, owner of Rosedale Medical Billing Solution, to charge insurance companies for medically unnecessary treatment. The alleged fraud in the complaint dates back to 2010 and occurred as recently as 2016.

The schemes alleged in the DA’s complaint and investigative reports involve Helliwell ordering unnecessary blood and urine tests for patients for which Head is accused of fraudulently charging insurance companies. Helliwell received kickbacks from Williams, whose lab performed some of the testing, for the samples.

Reports state that Helliwell would collect urine samples from patients for lead and mercury testing and would “surreptitiously” order additional testing for illicit drugs without the patient’s knowledge.

Helliwell was given $20 to $25 per patient sample by the toxicology lab, former employees told an investigator, and the lab also paid for a personal medical assistant for Helliwell, according to reports.

Helliwell also ordered testing on an in-house blood allergy machine for patients who didn’t complain of allergy symptoms, the reports said.

Emails obtained between Helliwell and Head indicated the two worked together to bill insurance companies for services not provided to patients, to bill under other doctor’s names and to manipulate billing to receive higher reimbursements, the reports said.

The discovery was made as part of a joint investigation with the California Department of Insurance, according to Kern County Deputy District Attorney Joseph Kinzel.

Courthouse News reports that the pharmaceutical industry’s effort to block California’s requirement that drug companies publicly notify and explain major price increases has stalled, with a federal judge ruling the landmark transparency law does not violate the First Amendment.

Siding with the state, a U.S. District Judge rejected an industry group’s arguments that the 2017 bill infringes drugmakers’ free speech and regulates interstate commerce. Noting the Pharmaceutical Research and Manufacturers of America (PhRMA) willingly bypassed discovery and pushed for summary judgment, the court found the group’s case plainly underdeveloped and unfit for market.

“There are genuine disputes of material fact as to whether providing advance notice of certain increases in a prescription drug’s wholesale acquisition cost results in either direct or extraterritorial regulation,” the judge explained while denying the group’s facial challenge. “Ultimately, PhRMA has not met its burden in showing that Senate Bill 17 violates the dormant Commerce Clause on its face.”

Hoping to force the industry to explain sudden increases to Californians, a bipartisan group of lawmakers approved the transparency bill in 2017. Then-Governor Jerry Brown quickly signed the bill, saying the public deserved more information on medication costs with “pharmaceutical profits soaring.”

Supported by an influential coalition of California unions and health care groups, SB 17 requires drug companies to give the state and insurers at least 60 days’ notice before planned price increases of more than 16% over a two-year period. It also forces insurance companies to file yearly reports with state regulators outlining the impact of medicine costs on health care premiums.

Additional reporting requirements include annual reports to regulators by health plans and insurers with specified information related to the proportion of the premium dollar spent on prescription drugs, the year-over-year increase in net costs and member costs, the 25 most frequently prescribed medications, most costly drugs by total plan spending, and drugs with the highest year over year increase in net cost.

The law also tasks regulators with compiling the information into a consumer-friendly report showing the overall impact of drug costs on health care premiums.

Shortly after its passage, the industry responded with its lawsuit in the Eastern District of California, arguing the state was picking on drug manufacturers and ignoring the underlying reasons for spiking costs.

In court, the group contended the advance-notice requirement effectively triggers a “60-day nationwide price freeze” by preventing manufacturers from increase a drug’s wholesale acquisition cost or list price. It also claimed SB 17 interferes with Medicaid reimbursement schemes enacted in other states.

“That is unconstitutional,” the group claimed in court papers. “The Commerce Clause does not permit a single state to ‘project its legislation into other states by regulating the price to be paid for drugs in those states.’”

Following the defeat, the group’s public affairs director hinted an appeal was likely.

“Our position remains that SB 17 is unconstitutional. We will continue to make that case,” said Nick McGee in an email.

Adir International, LLC operates the Curacao chain of retail department stores. From 2004 to 2011, Travelers issued a workers’ compensation insurance policy to Adir. The policy was a “guaranteed cost” policy with standard language approved by the Commissioner.

Before issuing the policy to Adir, in accordance with Insurance Code section 11658, Travelers filed the policy with the Workers’ Compensation Insurance Rating Bureau for the Commissioner’s review. The Commissioner did not object to the policy. The policy did not contain an arbitration provision.

As an annual condition for issuing the policy, Adir executed a separate agreement with Travelers that contained the terms and conditions for the Retrospective Rating Plan Endorsement. The annual agreement introduced a requirement for binding arbitration of disputes.

On February 14, 2011, the Commissioner issued a letter to the Rating Bureau requesting it to “notify its member insurers” that the Commissioner “has prohibited the use of collateral agreements, which is synonymous with the term ‘side-agreement,’ concerning workers’ compensation insurance unless they are attached to the policy.” The Commissioner further stated that an insurer’s attempted enforcement of unfiled side agreements could constitute a violation of California law.

When Adir’s coverage expired on July 1, 2012, it did not renew its workers’ compensation insurance with Travelers. Travelers then sought arbitration regarding “the amount of premium currently owing to Travelers by Adir.

On March 13, 2015, Adir filed a complaint in the Los Angeles County Superior Court against Travelers. The Superior Court refused to rule on the validity of the arbitration clause, asserting that the arbitrator was to resolve that issue.

Adir then filed a motion with the arbitration panel, arguing that since the arbitration agreement was not “filed or approved by the Insurance Commissioner,” the agreement was “an illegal agreement and therefore unenforceable.” The arbitration panel denied Adir’s motion to dismiss Travelers’ arbitration claims.

On June 22, 2016, the Commissioner, in a precedential administrative decision (Matter of Shasta Linen Supply, Inc.) ruled that unapproved policy side agreements were illegal.

On July 20, 2017, the arbitration panel issued an interim award of $2,709,280 in favor of Travelers and against Adir. Before the arbitration panel issued a final award, on May 3, 2018, the Fourth District Court of Appeal issued Nielsen Contracting, Inc. v. Applied Underwriters, Inc. (2018) 22 Cal.App.5th 1096, which held that the trial court, not the arbitrator, should determine the enforceability of the specific arbitration provisions.

On June 18, 2018, under the trial court’s “inherent authority to reconsider its prior rulings,” Adir filed a renewed motion in the Superior Court, seeking to declare the arbitration provision in the agreement “void and unenforceable for illegality.” The trial court granted Adir’s renewed motion on August 23, 2018, declaring the arbitration provisions unenforceable and void.

Travelers appealed, and the Court of Appeal affirmed the finding in the unpublished case of Adir International v. The Travelers Indemnity.

A number of arguments made by Travelers on appeal were rejected, including its argument that the issue was preempted by the Federal Arbitration Act.

State Compensation Insurance Fund announced plans to distribute an approximate $39 million dividend to its qualifying policyholders with policies that took effect between Aug. 27 and Dec. 31, 2020.

This dividend equals approximately 10% of the estimated annual premium reported during that time period.

This announcement follows up State Fund’s August declaration of an approximate 10% mid-year dividend that applied to all policies incepted between Jan. 1 and Aug. 26, 2020. The dividend distribution for the entire year equals approximately $114 million.

Through 2020, State Fund is reporting approximately $1.13 billion in premium.

“This has been a very challenging year for our policyholders and we’re glad we can continue to support them with this dividend declaration,” said State Fund President and CEO Vern Steiner. “We took a number of actions during 2020 to help our policyholders, including accelerating the delivery of our 2019 dividend payments and providing more than $40 million in COVID-19 safety support grants. This latest declaration continues that support – all qualifying State Fund policyholders now know they can expect another dividend payment next year.”

Since its creation in 1914, State Fund has paid out more than $5 billion in dividends to policyholders.

State Fund policyholders will begin to receive dividend payments during the second half of next year.