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NCCI Finds No Pandemic Related Access Delays for Comp Care

The COVID-19 pandemic and resultant shelter-in-place orders disrupted nearly all business activity, especially access to medical care. While the specific timing of disruptions varied by state, April 2020 saw many healthcare facilities suspend all nonurgent medical procedures.

In a newly published study, the National Council on Compensation Insurance associated costs with the time to treatment for WC claims based on historical information to provide some insight into the impact of postponed medical care for specific WC injuries.

The pandemic’s impact on medical services includes:

– – A decline in active claim volume
– – An increased use of telemedicine
– – Minimal change in both the share and seriousness of injuries treated in an emergency room (ER)
– – An increase (after April 2020) in the use of ambulatory surgical centers (ASCs) above pre-pandemic levels

With respect to time to treatment, the pandemic:

– – Did not adversely impact access to care, as measured by the time from injury to initial treatment
– – Produced a backlog of surgeries in April and May 2020 that diminished throughout the summer
– – May have resulted in greater use of noninvasive treatments that, with comparable outcomes, are often preferred over invasive procedures

For four common WC injuries (one back, one shoulder, and two knee injuries), we studied historical experience of how the total incurred cost per case is associated with the time from injury to surgery and found:

– – Post-pandemic delays are typically too short to impact the average incurred cost per case
– – The largest cost increases occur for back and shoulder injuries – and only after exceptionally long delays to surgery
– – For these four WC injuries, the cost impact due to pandemic – based suspensions is minimal

While NCCI found clear evidence of small delays in access to care associated with the pandemic, it found no convincing evidence that either access to care or the quality of care was adversely impacted. The overall impact on claim costs directly associated with postponed medical care is uncertain. While still preliminary, it found no convincing evidence that access to quality care was adversely impacted.

DWC Announces Return of In-Person Hearings

The Division of Workers’ Compensation announced that as of October 1, 2021, in-person hearings will resume at all DWC district offices except Eureka, which is now a completely virtual office, and satellite locations Bishop, Marysville, Chico and Ukiah, which will also remain virtual. In-person hearings will consist of trials, lien trials, expedited hearings and special adjudication unit (SAU) trials only.

Until further notice, DWC will continue to telephonically hear all mandatory settlement conferences, priority conferences, status conferences, SAU conferences, and lien conferences via the individually assigned judges’ conference lines as announced in Newslines issued on April 3, April 28, May 28, August 12 and September 9, 2020.

DWC’s hearing notices will be updated as of September 17, 2021. Thus, there may be a period of time after that date during which notices will state that trials, lien trials, expedited hearings and SAU trials are being heard on the conference lines when they are actually being held in-person.

Parties should be aware that although a notice might state that the case is being heard telephonically, if it is one of the types of cases listed above and not at a satellite office, it will be held in the assigned district office.

DWC appreciates the community’s patience during this transition. If a party to a DWC hearing has a question on a specific case, they may contact the DWC call center at (909) 383-4522.

DWC requires all visitors to DWC offices to wear face coverings regardless of vaccination status or county mandates, following recommendation from the California Department of Public Health (CDPH).

Court of Appeal to Decide Landmark COVID Exclusive Remedy Issue

A lawsuit filed against See’s Candies, a century-old California institution, could make a fundamental change in the workers’ compensation system and its “exclusive remedy” provision.

Matilde Ek, a worker at a See’s distribution center in Southern California, contracted COVID-19 and apparently infected her 72-year-old husband, Arturo, who died. Ek said she worked on the See’s packing line without proper social distancing or other protections even though some workers were coughing, sneezing and showing other signs of COVID-19 infections.

She and her daughters sued See’s, alleging that since her workplace lacked sufficient safeguards against infection, the company is liable for his death.

See’s acknowledged that Ek’s illness was job-related but argued that since it was, the company was protected from liability for her husband’s death under the “exclusive remedy” doctrine.

Los Angeles Superior Court Judge Daniel M. Crowley refused, however, to throw out Ek’s lawsuit, agreeing with Ek’s attorney that her husband’s death was a separate event from her workplace infection.

Crowley’s ruling sent the issue into the appellate courts and it’s drawing attention from major California and national business groups, which see it as potentially undermining a bedrock principle of the workers’ compensation system.

The California Chamber of Commerce, California Workers’ Compensation Institute, Restaurant Law Center, California Restaurant Association, National Association of Manufacturers, and National Retail Federation have filed documents in the case as amicus.

They argue that the “issue presented in the petition is extremely important to employers and their employees in California. As explained in the petition, the Superior Court’s overruling of petitioners’ demurrer was contrary to the longstanding “derivative injury rule” that establishes workers’ compensation as the exclusive remedy for all claims that are derivative of an employee’s covered workplace injury – including claims for injuries sustained by members of the employee’s household. The Superior Court created a new exception to that bright-line rule for injuries from COVID-19 that allegedly derive from employees who contract the virus in the employer’s workplace and then infect their family members.”

The potential impact of this decision on the balance between the workers’ compensation system and the civil court system can hardly be overstated.

The Court of Appeal docket reflects that an Order was issued to the Superior Court on July 21, 2021, directing that it show cause why a peremptory writ should not issue, ordering it to vacate its April 13, 2021 order overruling petitioners’ demurrer to the complaint. The written return in opposition to the writ shall be served and filed on or before August 18, 2021. Any reply to the opposition shall be served and filed on or before September 16, 2021.

International Overdose Awareness Day Focused on Societal Approach

International Overdose Awareness Day is a global event held on 31 August each year. Its purpose is to raise awareness of overdoses, reduce the stigma of drug-related deaths and acknowledge the grief felt by families and friends.

On this day, acting U.S. Attorney Randy Grossman again warned the San Diego community about the serious fentanyl crisis and advocated an “all of society” approach to countering overdoses.

Grossman emphasized that federal prosecutors are leaving no stone unturned to hold peddlers of fentanyl accountable. “These overdose prosecutions seek to accomplish three goals: Deter the distribution of illegal drugs, send a clear message that traffickers of deadly poison will face serious repercussions, and provide a measure of closure and justice to those faced with devastating personal loss,” Grossman said.

Experts report that fentanyl is 50-100 times more powerful than morphine and so dangerous that in its purest form, even a very small amount can be deadly.” San Diego County officials report that fentanyl overdose deaths surged during the pandemic and are expected to reach as high as 700 this year, a staggering increase over 2019, when 152 individuals died from fentanyl overdoses; in 2020, the 2019 number more than tripled to 461.

Grossman emphasized that, in the face of this crisis, “law enforcement is just one part of the solution.  We need an all of society approach.  As a community, we must consider ways that we can all play a role in furthering the public understanding that substance abuse disorder is a disease that warrants treatment, resources, and positive collective action.”

In addition to prosecuting opioid dealers and smugglers, the U.S. Attorney’s Office raises awareness of harm reduction, prevention and education efforts, through Opioid Coordinators Larry Casper and Dylan Aste, and Outreach Director Cindy Cipriani, who Co-Chairs the San Diego Prescription Drug Abuse Task Force. The U.S. Attorney’s Office also coordinates a quarterly Fentanyl Working Group, which brings together more than 100 law enforcement officers to share trends and best practices to combat the fentanyl scourge in this district.

Finally, the U.S. Attorney’s Office co-sponsors a biannual summit that convenes hundreds of leaders to focus on sharing information, reducing stigma, facilitating treatment, and implementing innovative evidence-based harm reduction prevention strategies. This year’s virtual Western States Opioid/Stimulant Summit, scheduled for November 4-5, 2021, will bring multiple disciplines together to address every aspect of the opioid crisis. National Institute of Drug Abuse Executive Director Nora Vokow, M.D., and Acting ONDCP Director Regina LaBelle will be featured speakers, along with dozens of leaders from the prevention, public health, treatment and law enforcement communities.

Grossman urged those struggling with a substance use disorder and their family members to talk to a doctor or pharmacist about Naloxone, which can reverse an opioid overdose.

To learn how to assist a person who is overdosing, including how to administer Naloxone, please see: https://www.sandiegorxabusetaskforce.org/naloxone.

To obtain information about treatment, see the resources at the PDATF Treatment website: https://www.sandiegorxabusetaskforce.org/treatment.

Ninth Circuit Rejects Medical Marijuana Legalization Case

The Controlled Substances Act of 1970 places federally regulated substances into one of five schedules depending on the substance’s “potential for abuse, “medical use,” “safety,” and likelihood of physical or psychological “dependence.” See 21 U.S.C. § 812(b). Schedule I is the most restrictive schedule. Marijuana is currently a Schedule I substance. To merit scheduling in Schedule I, a substance must have “a high potential for abuse,” “no currently accepted medical use in treatment in the United States,” and “a lack of accepted safety for use . . . under medical supervision.”

Stephen Zyszkiewicz, joined by Jeramy Bowers, filed a one-page, handwritten petition to the United States Drug Enforcement Administration (“DEA”) seeking the rescheduling of marijuana in all of its forms under the Controlled Substances Act (“CSA”), 21 U.S.C. § 801 et seq. Zyszkiewicz stated in his petition that he was in prison after a conviction for selling cannabis. In his petition he claimed the current situation of cannabis in Schedule I completely untenable since half the states allow for medical use.

The DEA wrote a letter in response, stating that Zyszkiewicz’s letter was not in the proper format for a petition but that it welcomed the opportunity to respond to his concerns. The DEA’s letter gave reasons for having denied an earlier rescheduling petition filed by Governors Lincoln Chafee of Rhode Island and Christine Gregoire of Washington State. Zyszkiewicz treated the DEA’s answer as a denial of his petition and unsuccessfully sought judicial review.

Zyszkiewicz petitioned for mandamus in the District Court for the District of Columbia. The district court denied mandamus, and the D.C. Circuit affirmed.

Subsequently in May 2020, Dr. Suzanne Sisley an Arizona-based medical marijuana researcher, Scottsdale Research Institute, LLC (“SRI”), Battlefield Foundation (the non-profit research arm of SRI), and three veterans who claim to suffer ongoing harm from cannabis’ status as a Schedule I drug(collectively, “Petitioners”) asked for judicial review of the DEA’s response to Zyszkiewicz’s petition in the 9th Circuit which has jurisdiction over Arizona (and California). These new petitioners did not seek to intervene in Zyszkiewicz’s petition before the DEA, nor have they filed a petition of their own before the DEA.

The government challenges Petitioners’ standing and argues that Petitioners failed to exhaust their claims before the DEA.

The 9th Circuit held in the published opinion of Sisley v DEA that these petitioners satisfy Article III’s standing requirements, but that they have failed to exhaust their administrative remedies under the CSA. The Court therefore did not reach the merits of Petitioners’ arguments. It therefore dismissed their petition for review on this technical ground.

“We are well aware that reclassification of cannabis is a matter of ongoing active debate,” U.S. Circuit Judge William Fletcher, a Bill Clinton appointee, wrote for the panel. “However, this is not an appropriate case in which to consider that issue.”

In a concurring opinion, Judge Watford said “I write separately to note that, in an appropriate case, the Drug Enforcement Administration may well be obliged to initiate a reclassification proceeding for marijuana, given the strength of petitioners’ arguments that the agency has misinterpreted the controlling statute by concluding that marijuana ‘has no currently accepted medical use in treatment in the United States,”

Lawmakers Seek Proof of Vaccination Law to Enter Public Spaces

The Sacramento Bee reports that California lawmakers are considering legislation to require people to prove they’re fully vaccinated against COVID-19 before entering indoor public spaces like restaurants, bars, movie theaters, gyms, hotels and stadiums.

The proposal hasn’t been formally introduced in the Legislature, and the timeline for action is unclear.

Assemblywoman Buffy Wicks, D-Oakland, said the coalition of lawmakers supporting the concept has not decided whether to push the plan immediately before the legislative year’s Sept. 10 deadline or wait until January when lawmakers return to work. The Sacramento Bee obtained a copy of the draft legislation, which Wicks said is also subject to change.

Wicks said she is in conversations with business leaders, union representatives and others whose support is necessary for any legislation to be successful.

“I think everyone right now is honestly and earnestly at the table,” Wicks said.

As currently written, the proposal would take effect immediately upon the governor’s signature, and would direct the Department of Public Health to develop an enforcement mechanism by Nov. 1.

The proposal, first reported by Politico, would create one of the strictest statewide vaccination requirements in the nation.

The state Department of Public Health said last week that it was leading the nation with a requirement that everyone attending an indoor event with 1,000 people or more show proof of vaccination or a negative COVID-19 test. That requirement takes effect Sept. 20.

Wicks said the new verification requirement could help drive up vaccination rates in California and finally end a pandemic that has spread in the state for 18 months. The system could help schools and businesses keep their doors open, Wicks said, and ease overburdened hospitals clogged with COVID-19 patients amid the delta variant surge.

Sutter Health to Pay $575M to Resolve Anticompetitive Claim

A landmark $575 million settlement with Sutter Health has now been given final approval by the court. The settlement agreement was reached in 2019, and resolves allegations by the Attorney General’s office, the United Food and Commercial Workers and Employers Benefit Trust (UEBT), and class action plaintiffs that Sutter’s anticompetitive practices led to higher healthcare costs for consumers in Northern California compared to other places in the state.
Sutter is the largest hospital system in Northern California. The Sutter network consists of some 24 acute care hospitals, 36 ambulatory surgery centers, and 16 cardiac and cancer centers. It also includes some 12,000 physicians and over 53,000 employees. In addition, Sutter negotiates contracts on behalf of the Palo Alto Medical Foundation and many affiliated physician groups.

This settlement is the result of litigation that began in 2014 when UEBT filed a class action lawsuit that challenged Sutter’s practices in rendering services and setting prices. They sought compensation for and an end to what they alleged were unlawful, anticompetitive business practices, which caused them to pay more than necessary for healthcare services and products.

In March 2018, the Attorney General’s office filed a similar lawsuit against Sutter on behalf of the people of California, seeking injunctive relief to compel Sutter to correct its anticompetitive business practices moving forward. The separate lawsuits were combined by the court into one case. In October 2019, one day before the trial, the parties reached an agreement to settle. The settlement was filed with the court on December 19, 2019, and in March, Judge Massullo granted preliminary approval.

Today’s finalized settlement requires Sutter to:

– – Pay $575 million to compensate employers, unions, and others covered under the class action, and to cover costs and fees associated with the legal efforts;
– – Limit what it charges patients for out-of-network services, helping ensure that patients visiting an out-of-network hospital do not face outsized, surprise medical bills;
– – Increase transparency by permitting insurers, employers, and self-funded payers to provide plan members with access to pricing, quality, and cost information, which helps patients make better care decisions;
– – Halt measures that deny patients access to lower-cost plans, thus allowing health insurers, employers, and self-funded payers to offer and direct patients to more affordable health plan options for networks or products;
– – Stop all-or-nothing contracting deals, thus allowing insurers, employers, and self-funded payers to include some but not necessarily all of Sutter’s hospitals, clinics, or other commercial products in their plans’ network.
– – Cease anticompetitive bundling of services and products which forced insurers, employers, and self-funded payers to purchase for their plan offerings more services or products from Sutter than were needed. Sutter must now offer a stand-alone price that must be lower than any bundled package price to give insurers, employers, and self-funded payers more choice;
– – Cooperate with a court-approved compliance monitor to ensure that Sutter is following the terms of the settlement for at least 10 years. The monitor will receive and investigate complaints and may present evidence to the court; and
– – Prevent anticompetitive practices by clearly defining clinical integration to include patient quality of care. The settlement makes clear that for Sutter to claim it has clinically integrated a system, it must meet strict standards beyond regional similarities or the mere sharing of an electronic health record, and must be integrating care in a manner that takes into consideration the quality of care to the patient population. This is important because clinical integration can be used to mask market consolidation efforts by hospital systems, when in fact there is no true integration of a patient’s care. For example, saying that hospitals are regionally close or that hospitals are sharing electronic health records is not enough, there must be close coordination that will lead to less costly, higher quality care for local communities.

A report by the University of California Berkeley showed that over-consolidation drives up prices for consumers. According to the study, outpatient cardiology procedures in Southern California cost nearly $18,000 compared to almost $29,000 in Northern California. For inpatient hospital procedures, the cost in Southern California is nearly $132,000 compared to more than $223,000 in Northern California, a more than $90,000 difference. A 2016 study found that a cesarean delivery in Sacramento, where Sutter is based, costs more than $27,000, nearly double what it costs in Los Angeles or New York, making Northern California one of the most expensive places in the country to have a baby.

COVID Comp Claims Remain Well Managed

As the COVID-19 pandemic goes on, the workers’ compensation industry is still continuing to manage changing claim patterns and trends. As regulations and case rates continue to shift, Mitchell has analyzed its workers’ compensation claims data to identify how claim trends have changed over the past year and a half.  This report includes claim data through June 30, 2021.

From January through June 2021, the finance and insurance, transportation and warehousing and healthcare and social assistance industries reported significantly more workers’ compensation claims than in the first half of 2019.

On the other hand, Mitchell’s data reveals that some industries have not seen prepandemic claim volumes return. The arts, entertainment, and recreation, educational services, and accommodation and food services industries are all still reporting significantly fewer workers’ compensation COVID-19 claims. Though claim volumes are still down, all three of these industries are experiencing an increase in claims compared to 2020 volumes, but are subject to pandemic-related regulations and trends that may explain the lower volume of claims.

About a quarter of workers’ compensation COVID-19 claims include only indemnity costs (no medical costs) – and those costs have declined over time. In January 2021, Mitchell reported that the average indemnity cost (lost wages etc.), for a COVID-19 claim was $2,400 in 2020; now, that number has decreased by almost half to $1380.

On the other hand, average medical costs associated with COVID-19 claims have remained somewhat steady, with just a slight 5% increase since Mitchell’s last report.

According to NCCI, the makeup of claim types is a clear reversal when compared to historical workers’ compensation claim data – prior to the pandemic, about 75% of all workers’ compensation claims were medical-only. NCCI published similar findings to Mitchell’s data, reporting that 75% of COVID-19 claims were lost-time claims.

It comes as no surprise that the healthcare and social assistance industry sector is still the source of the majority of COVID-19-related workers’ compensation claims, accounting for 49% of the total. Similar to Mitchell’s previous reporting, the healthcare industry is still accounting for almost five times more COVID-19-related claims than the next largest source, public administration, which makes up about 10% of all COVID-19 claims.

Jury Convicts SoCal PI Lawyer for Stealing $3.9M Settlement

A disbarred personal-injury lawyer was found guilty by a federal jury of 22 felonies for stealing the majority of a multimillion-dollar settlement that should have been paid to a car accident victim, as well as cheating on his federal income taxes.

Philip James Layfield, a.k.a. “Philip Samuel Pesin,” 48, of Las Vegas and formerly of Coto de Caza, was found guilty of 19 counts of wire fraud, one count of mail fraud, one count of tax evasion, one count of failure to collect and pay over payroll taxes, and one misdemeanor charge of failure to file a tax return. Following the jury verdicts, Layfield was remanded into federal custody.

According to evidence presented at his 13-day trial, Layfield owned and operated law firms, including Layfield & Barrett (L&B), which, at various times, maintained offices in Irvine; Los Angeles; El Segundo; Park City, Utah; and Scottsdale, Arizona.

After he had misappropriated millions of dollars from clients’ settlements, Layfield relocated to Costa Rica. Just before getting on a flight to Costa Rica, Layfield borrowed $700,000 from a business lender by providing misleading information and failing to disclose material information. Then he used substantial portions of the loan proceeds for personal expenses, including buying a horse and shipping horses to Costa Rica.

In 2016, Layfield entered into an agreement to represent an individual who was struck by an automobile in Orange County and suffered significant injuries. After negotiating a $3.9 million settlement related to the accident, Layfield misappropriated most of the money owed to the victim – approximately $2 million for personal and business uses, including to pay clients whose settlement proceeds Layfield had earlier misappropriated. The car accident victim received only $25,000 of the settlement proceeds.

Layfield also failed to file a federal income tax return for the tax year 2016, despite receiving more than $3 million, including embezzled client settlement money. Layfield also caused his law firm to not pay approximately $120,976 in payroll taxes to the United States government for the second quarter of 2017.

The State Bar of California disbarred Layfield in October 2018. Layfield also was a certified public accountant, but his CPA license expired in July 2019, according to the California Board of Accountancy.

United States District Judge Michael W. Fitzgerald has scheduled a November 8 sentencing hearing, at which time Layfield will face a statutory maximum sentence of more than 200 years in federal prison.

Homeland Security Investigations, IRS Criminal Investigation and the FBI investigated this matter.

Assistant United States Attorneys Mark R. Aveis and Carolyn S. Small of the Major Frauds Section and Ian V. Yanniello of the International Narcotics, Money Laundering and Racketeering Section are prosecuting this case.

Pharmacy Owner to Serve 3 Years for $1.8M Fraud

A 62 year old Orange County pharmacy owner who admitted to carrying out a $1.8 million insurance fraud scheme was sentenced Friday to three years in state prison.

The Orange County Register reports that Divina Catalasan, owner of Quality Care Pharmacy at 2413 S. Fairview St. in Santa Ana, pleaded guilty in May to three felony counts of fraudulent healthcare claims and grand theft, along with a sentencing enhancement for aggravated white-collar crime.

Catalasan operated a “complex and secretive scheme” that bilked MediCal, Medicare and Cal Optima, the county’s insurance program for the needy, Deputy Attorney General Ryan Scott said in court papers.

The California Department of Health Care Services during a 2015 audit learned that from 2011 through 2015 Catalasan had billed Medi-Cal more than $540,000 above what her purchase inventory actually showed. A deeper look a unit investigating potential fraud ultimately turned up a total of $1.8 million in over-billings through Medi-Cal, CalOptima and Medicare, according the California Attorney General’s Office.

“The funds she stole were deposited and intermingled in her personal and business bank accounts,” investigator Ernesto Cambrone alleged in a court motion seeking to analyze any money the defendant posts for bail to determine if it came from the alleged criminal behavior.

The pharmacy’s clientele consisted of residents of 40 board and care facilities throughout Southern California, according to prosecutors.

After arriving in the United States from her native Philippines in 1987, Catalasan worked her way up from a machine operator at a paper towel factory to become a pharmacy technician, a licensed pharmacist and ultimately a business owner, according to a sentencing brief.

While out of jail awaiting trial, a court filing said, she worked with members of her church to make and donate masks to medical professionals, nursing home patients, grocery store workers and female inmates.

At her sentencing, she was given credit for 602 days of time served in local lockup, records show.

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