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DWC Accepting Nominations for 2014 Carrie Nevans Community Service Awards

The Division of Workers’ Compensation (DWC) is now accepting nominations for its annual Carrie Nevans Community Service Awards which will be presented during the luncheons at the 21st annual educational conferences in February 2014. The awards, which began in 2010, were renamed in memory and honor of Carrie Nevans, the acting administrative director who passed away in 2011.

“This award acknowledges those MVPs who go above and beyond to benefit the comp system for the betterment of employees and employers,” said Department of Industrial Relations (DIR) Director Christine Baker. DWC is a division of DIR.

Nominations should be made for those individuals who have made a significant contribution to the betterment of the workers’ compensation community in the highest professional manner. DWC will evaluate the nominations and honor one Southern California recipient in Los Angeles and another Northern California recipient in Oakland during an award ceremony at the educational conferences.

Those who make a nomination should complete the attached DWC nomination form and send to Wendy So at no later than January 10, 2014.

Last year’s award in Northern California was given to Angie Wei, Legislative Director of the California Federation of Labor, AFL-CIO. Sean McNally, president of KBA Engineering in Bakersfield was the Southern California recipient. Both were commissioners with the Commission on Health and Safety and Workers’ Compensation. The awards were presented at the 20th annual DWC educational conference luncheons.

New Law Clarifies Death Benefit Presumption

Governor Brown signed new law clarifying a death benefit presumption.

Existing law provides that totally dependent minor children of the deceased worker shall receive death benefits until the youngest child attains 18 years of age, or until the death of a child physically or mentally incapacitated from earning, at a weekly rate of at least $224. Existing law conclusively presumes, for the purpose of determining the amount of workers’ compensation benefits, that children under 18, or certain adult children, who were living with the employee-parent at the time of injury resulting in death, or for whose maintenance the employee-parent was legally liable at the time of the injury resulting in death, is wholly dependent for support on the deceased employee-parent if there is no surviving totally dependent parent.

A.B. 607 eliminates the requirement that, in order to conclusively presume that children under 18, or certain adult children, are wholly dependent for support on the deceased employee-parent, there not be a surviving totally dependent parent.

According to the sponsor, the Police Officers Research Association of California (PORAC), this law was necessary to clarify the rights of totally disabled children of employees who have died on the job to receive dependent death benefits. PORAC claims that an unusual phrase in the statute appears to limit the scope of death benefits to cases where there is a merely partially dependent surviving spouse, but denies the expanded “disabled child” death benefit where there is a fully dependent surviving spouse. The bill deletes this offending clause, thereby ensuring that totally disabled dependent children regardless of age obtain the death benefit to which they should be entitled.

While PORAC is the sponsor of this measure, the death benefit being addressed by the bill is not one of the “special” public safety officer benefits that are afforded to defined police and firefighters. Rather, this new law applies to the totally disabled dependent children of any employee who dies as a result of a job-related injury.

While there does not appear to be any rigorous quantification of the extent to which the new law might expand the number of cases where this death benefit is awarded, after legislative consultation with representatives of employer organizations, the consensus seemed to be that there are relatively few cases, and of those, the beneficiaries were probably intended to be covered by the existing statute.

Back in 2002, AB 749 enacted a broad range of workers’ compensation benefit increases, notably in the amounts paid for permanent disabilities. However, one small piece of that measure adopted the language at issue in AB 607. While it remains unclear precisely what was intended by the 2002 language when it was enacted, correcting the resulting confusion seems consistent with the intent of the original enactment.

Brown Vetos Safety Officer Death Benefit Extension

Existing law specifies the time period within which various proceedings may be commenced under provisions of law relating to workers’ compensation. With certain exceptions, a proceeding to collect death benefits is required to be commenced within one year from the date of death or, in some cases, from the last furnishing of benefits. However, no proceedings for death benefits may be commenced more than 240 weeks from the date of injury.

AB 1373 would have provided that certain proceedings related to the collection of death benefits of firefighters and peace officers may be commenced within, but no later than, 480 weeks from the date of injury and in no event more than one year after the date of death if all of the specified criteria are met, including, but not limited to, that the employee’s death is the result of a specified injury.

According to the author, and the sponsor the California Professional Firefighters, there are cases where current law they say “unfairly harms” the dependents of fallen public safety officers. In circumstances where a safety officer dies more than 240 weeks after a diagnosis of the condition that causes death, current law does not provide benefits for surviving dependents. However, there are conditions where survival for more than 240 weeks after diagnosis is not uncommon, notably a cancer that goes temporarily into remission, or a blood-borne disease that results in a debilitating but long, slow decline.

A number of public agencies opposed the bill primarily on the basis of increased costs as well as the uncertainty of the as-yet unspecified time period. These agencies believe that the workers’ compensation benefits available to public safety officers are already sufficiently generous, and local governments are simply not in the position to incur new financial obligations.

Last year the legislature passed AB 2451 which also proposed to extend the statute of limitations in presumption cases. AB 2451 was significantly broader in at least 2 respects: it also applied to death resulting from heart conditions, and it did not limit the cases where the extended limitations period applied to those where the date of injury was during active employment. Rather, AB 2451 would have applied regardless of when the condition arose, resulting in significantly more uncertainty, and significantly more cases, than AB 1373 will apply to. Governor Brown vetoed AB 2451 last year.

And he also vetoed AB 1373 passed by the legislature this year. His veto message said “This measure is identical to the one I vetoed last year. At that time, I outlined the information needed to properly evaluate the implications of this bill. I have not yet received that information.”

Governor Brown Signs Extension of Time for Interpreter Certification

Governor Brown signed AB 1376 which Delays until March 1, 2014, a regulation adopted by the Division of Workers’ Compensation (DWC) that requires medical interpreters in the workers’ compensation system to be certified. The bill is deemed an urgency measure and thus takes effect immediately.

The regulation that was is in place prior to this measure being signed by the Governor, provides for three pathways for an interpreter to become certified. First, an interpreter who is on the existing State Personnel Board (SPB) list is automatically certified – however, the SPB has not updated its list in several years, and it is not “open” for new applicants at this time. An interpreter can also seek certification by passing either the Certification Commission for Healthcare Interpreters (CCHI) exam, or the National Board of Certification for Medical Interpreters (National Board) exams. Representatives of interpreters indicate that it can take up to six months to navigate these certification processes. The bill provides approximately six and a half months from the effective date of the regulation for uncertified interpreters to obtain the necessary certification.

According to proponents of this law, Voters Injured At Work (VIAW), the regulation adopted by the DWC was not able to include a delayed implementation date that would allow interpreters adequate time to comply with the specific certification requirements allowed by the regulation. As a result, VIAW claimed that an insufficient number of certified interpreters will lead to delays in obtaining medical treatment for injured workers who require an interpreter to effectively communicate with their physician.

Prior to the passage of last year’s workers’ compensation reform bill, SB 863 (DeLeon), multiple stakeholders reported significant abuse and serious problems with how medical interpreters were provided to injured workers. One of the most common complaints was the use of non-certified medical interpreters providing interpretive services to injured workers. These non-certified interpreters (also known as provisionally certified interpreters) were largely unregulated

Former Livingston Cop Convicted In Comp Fraud Case

A former Livingston police officer pleaded no contest Friday to insurance fraud and was ordered to repay the state more than $14,000. The Merced Sun-Star reports that Sammy Galindo, 31, pleaded to a single felony count of workers’ compensation fraud in Merced Superior Court before Judge Ronald W. Hansen. The judge ordered Galindo to serve two years of probation and pay $14,200 in restitution.

This sends the message that nobody is immune from the law and if you engage in fraud, you’ll be prosecuted,” said Walter Wall, the deputy district attorney who prosecuted the case.

After Friday’s hearing, Galindo made his first restitution payment of $4,500, Wall said. Galindo’s attorney, Marshall Hogkins, could not be reached for comment Friday.

According to the complaint, Galindo claimed he injured his right shoulder while making an arrest May18, 2011. He was placed on disability leave. It was at least the third disability claim Galindo had made since he was hired in September 2006. Livingston Police officials found it suspicious..Galindo claimed he was unable to move his shoulder without pain, but video surveillance taken by private investigators on June30, 2011, shows him performing heavy manual labor, including unloading a large tree from the bed of a pickup, digging holes in his yard and mowing his lawn.

Subsequent medical examinations showed no damage to Galindo’s shoulder, according to court documents.

When investigators confronted Galindo, he initially denied performing any yardwork. As part of his plea, he acknowledged making false statements to detectives, prosecutors said.

According to court records, the Livingston Police Department fired Galindo in September 2012 for dishonesty and violating the Police Officer’s Code of Ethics. He lost his appeal during a mediation hearing that same year.

Police Chief Ruben Chavez declined to comment directly on the case Friday, citing personnel confidentiality laws. Speaking in general terms, Chavez acknowledged that cases involving lying police officers do more than harm the image of law enforcement, they can undermine any investigations or convictions that involved those individuals. “As officers, we’re held to a very high standard of integrity and professionalism,” Chavez said. “Anytime an issue of credibility comes up, it causes great concern. You cannot risk losing the trust of the community.”

Burbank Diagnostic Lab Pays $17.5 Million to Resolve Kickback Case

Kan-Di-Ki, LLC, doing business as Diagnostic Laboratories and Radiology has agreed to pay $17.5 million to resolve allegations that it submitted false claims to Medicare and Medi-Cal that were tainted by a kickback scheme.

Diagnostic Labs, which is headquartered in Burbank, provides lab and x-ray services to patients at skilled nursing facilities (SNFs) in Southern California. SNFs, commonly known as nursing homes, are a healthcare option for senior citizens who are in need of constant medical attention.

Diagnostic Labs allegedly charged SNFs below cost rates for Medicare Part A business, in exchange for the facilities’ provision of Medicare Part B and Medi-Cal business back to Diagnostic Labs;This scheme is alleged to have violated the federal Anti-Kickback Act (42 U.S.C. § 1320a-7b(b)(2)(A)) and the federal and state False Claims Acts.

“When medical facility owners illegally offer discounts to customers to generate business, it results in inflated claims to government health care programs and increases costs for all taxpayers,” said Glenn R. Ferry, Special Agent in Charge for the Los Angeles Region of the Department of Health and Human Services’ Office of Inspector General; “This $17.5 million settlement demonstrates OIG’s ongoing commitment to safeguarding federal health care programs and taxpayer dollars against all types of fraudulent activities.”

The United States will receive $12.95 million of the settlement amount, and California will receive $4.55 million.

This settlement resolves a lawsuit filed under the qui tam, or “whistleblower,” provisions of the federal and state False Claims Acts, which allow private citizens with knowledge of fraud to bring civil actions on behalf of the federal and state governments and share in any recovery;The case was filed in 2010 in federal court in Los Angeles by two former Diagnostic Labs employees, and is titled United States and State of California ex rel. Pasqua et al. v. Kan-Di-Ki, LLC, Civil Action No. CV10-0965 JST (RZx) (C.D. Cal.); The two men who filed the lawsuit, Jon Pasqua and Jeff Hauser, will collectively receive $3,755,500 as their share of the federal recovery.  Their share of the state recovery has not yet been determined.

The United States Attorney’s Office for the Central District of California, the Justice Department’s Civil Division, and the California Attorney General’s Office handled the civil settlement.  This matter was investigated by the U.S. Department of Health and Human Services, Office of Inspector General.

Hospitals Announce Record Number of Layoffs

USA Today reports that hospitals are starting to cut thousands of jobs amid falling insurance payments and inpatient visits.The payroll cuts are surprising because the Affordable Care Act (ACA), whose implementation took a big step forward this month, is eventually expected to provide health coverage to as many as 30 million additional Americans. “While the rest of the U.S. economy is stabilizing or improving, health care is entering into a recession,” says John Howser, assistant vice chancellor of Vanderbilt University Medical Center.

Health care providers announced more layoffs than any other industry last month – 8,128 – largely because of reductions by hospitals, according to outplacement firm Challenger Gray and Christmas. So far this year, the health care sector has announced 41,085 layoffs, the third-most behind financial and industrial companies.Total private hospital employment is still up by 36,000 in the past 12 months, but it’s down by 8,000 since April, and more staff reductions are expected into next year.

This month, Indiana University Health laid off about 900 workers as part of a move to trim its budget by $1 billion over five years. Vanderbilt plans to eliminate 1,000 jobs by the end of the year to help shave operating costs 8% a year. The Cleveland Clinic is offering buyouts to 3,000 employees as it shaves its annual operating costs by $330 million. “This is a challenging time for the health care industry,” says Jim Terwilliger, president of two of Indiana health’s hospitals. “The pace of change is far greater than any time in recent history.”

There are myriad reasons for the cuts, which are affecting administrative staff as well as nurses and doctors. Medicare, Medicaid and private insurance companies are all reducing reimbursement to hospitals. The federal budget cuts known as sequestration have cut Medicare reimbursement by 2%, the American Hospital Association says. The health care law has further reduced the Medicare payments to hospitals that provide lower-quality service or have high readmission rates.The National Institutes of Health reduced funding to hospitals by 5% as part of sequestration, forcing hospitals to trim research staff. The number of inpatient hospital days fell 4% from 2007 to 2011, in part because of the economic downturn, the hospital association says. As more Baby Boomers turn 65, their services will be reimbursed at Medicare rates that are lower than those of private payers, putting further pressure on hospital revenue.

The new health care law was supposed to ease the burden on hospitals by expanding Medicaid coverage to more low-income Americans, who often use hospital services in emergencies, then don’t pay their bills. But 26 states rejected the ACA’s offer of federal funding to expand Medicaid. That decision led to about a third of the job cuts by Nashville-based Vanderbilt, Howser says.

Small Businesses File Class Action Against AIG Over Comp Reporting

The Insurance Journal reports that class action lawsuits in federal courts on both coasts have been initiated on behalf of small businesses in California, New York and New Jersey against American International Group (AIG) over workers’ compensation reporting. Plaintiff attorneys say the case could involve thousands of firms doing business from the 1970s until the early 2000s and could result in damages up to hundreds of millions of dollars, although no figure has yet been established.

AIG says the suits are an attempt to reopen charges that have already been settled.

The suit filed this week against AIG and its subsidiary companies, and former AIG CEO Maurice Greenberg, charges unfair business practices, fraud and violations of the federal racketeering statutes. The attorneys who filed the suit allege that beginning in the 1970s AIG engaged in a scheme to misreport the amount of workers’ comp premium it collected in each state, which resulted in insured employers paying more in certain workers’ comp fees. Plaintiffs claim that by making it appear that less money in workers’ comp premium was collected, AIG caused insurance regulators to assess artificially inflated fees on insured employers for certain state mandated workers’ comp programs, the attorneys argue.

In 2010 AIG agreed to pay $146.5 million in fines and additional taxes to state insurance regulators for alleged under-reporting of premiums to states more than a decade ago. AIG has also agreed to pay $450 million to resolve litigation brought by other insurance carriers over the misreporting. The deal was believed to have resolved a multi-state probe that examined whether AIG violated premium reporting rules governing workers comp insurance from 1985 to 1996. The misreporting had the effect of lowering the premium taxes and premium-based assessments AIG paid, according to regulators.

In a response to this week’s suit AIG referred to that deal. “The court filings attempt to recycle allegations of wrongdoing from decades past that AIG has already resolved via settlements with its regulators and with civil plaintiffs,” AIG said in a statement issued to Insurance Journal on Thursday. “AIG will defend the cases vigorously.”

However that deal did not give damages to the companies that were paying the higher premiums as a result of AIG’s “scheme,” an attorney on the case said on Thursday. “The wrong that we’re suing for has not been dealt with at all,” said Drew Pomerance, a partner in Roxborough, Pomerance, Nye and Adreani LLP, the firm representing the class in California. “AIG has not compensated any insured employers affected by this conduct.” With an air of confidence he added: “There’s been judgment against them before, and we expect to get a judgment against them this time.”

Based on previous litigation and analysis, Pomerance estimates AIG underreported premiums by $2 billion, which could lead to a large figure for any damages that may be sought. “It looks like there was more than $2 billion of underreporting and probably substantially more over the years,” he said. “It could be tens to hundreds of millions of dollars in damages.”

The first court of appearance in California is a case management conference set for Jan. 17 in the U.S. District Court for the Northern District of California in San Francisco. Similar appearances are expected in New York and New Jersey, according to Pomerance.

Injured Worker Loses Subro Case Against Cop

Knowing what is, or is not a good subrogation case takes time and experience. The negligence “reasonable man” standard has clear extremes, and a grey area in the center that makes a determination of what conduct is below the standard sometimes difficult. A new case from the California court of appeal shows what ended up to be not such a good case for the injured worker.

Plaintiff James C. Keith filed an action against the City of Pleasant Hill, and Kelli M. Geis, a police officer employed by the City, seeking damages for injuries he suffered at his job when he was struck by a water pump attached to a hose that became entangled with the underside of Geis’s squad car.

Keith was working for the Contra Costa Water District at the time, performing repairs in the street on Golf Club Road in Pleasant Hill. The construction area was set up with orange traffic cones directing eastbound traffic on Golf Club Road into the right hand, or “number two” lane. Keith was working in the number one lane, where a hole had been dug to fix a leaking pipe. As part of the construction work, the District workers placed a flexible hose attached to a water pump across the active lane of traffic, the number two lane.

Kelli Geis, a Pleasant Hill police officer, was driving a patrol car eastbound on Golf Club Road on a nonemergency assignment to back up a fellow officer. The posted speed limit was 25 miles per hour. Geis slowed as she entered the construction area, and passed over the hose at under 25 miles per hour. Traffic had been passing over this hose for several hours earlier that day, with some vehicles traveling faster than Geis and some traveling slower. When Geis passed over the hose, it became entangled in the undercarriage of her vehicle. As she continued driving, the hose pulled the water pump out of the excavation hole. The pump struck Keith’s leg, causing multiple serious fractures. The force of the impact also sent him into the air, causing him to fall on and injure his head and shoulder. Geis was not aware of the accident at the time it occurred. As she traveled further down the road, another driver indicated to her that some material was trailing from her patrol vehicle. She stopped the car and retrieved a section of yellow hose.

Defendants filed a motion for summary judgment. Defendants argued that Geis did not breach any duty to Keith. In opposition, Keith offered the opinion of an expert in accident reconstruction and analysis who concluded that Geis’s speed had “caused the pressurized hose to ‘jump’ higher than other motorists who had traveled at slower speeds over the hose, which allowed the hose to catch or entangle on the undercarriage of [her] vehicle.”

The trial court granted summary judgment in favor of the City and police officer. The judgment was affirmed in favor of the defendants in the unpublished case of Keith v. City of Pleasant Hill.

The Court concluded that it “is not reasonable to require a driver of a vehicle to foresee that driving at or below the posted speed limit over a hose that has been deliberately extended over the road, and which the driver has no choice but to drive over, will become entangled in the undercarriage of his or her vehicle. If such were the case, any vehicle driven over such a hose would potentially subject its driver to liability. Indeed, it is difficult to perceive how a driver could avoid potential liability in this case, given that hundreds of vehicles of all sizes had driven over the hose prior to Geis, some at different speeds and all without incident.”

The outcome of this case is not surprising. The opinion is based on simple common sense. Often it is just common sense that helps a claim administrator determine what is or is not a good case for subrogation. Keith’s claim is a good example of a case that would not justify a subrogation effort.

Controversy Over SB 863 Supplemental Payments Heats Up

Senate Bill (SB) 863 includes a program to provide supplemental payments to injured workers for whose permanent disability benefits are “disproportionately low” in comparison to their earnings loss. This program is to be funded by a $120 million per year surcharge. However, the language in the statute does not expressly define what is “disproportionately low.” The bill provided the Director of the Department of Industrial Relations (DIR) with wide leeway in the design and implementation of the program. In addition, the bill required the Director in consultation with the California Commission on Health and Safety and Workers’ Compensation (CHSWC) to determine eligibility and the amount of payments to be made based on a study.

CHSWC has released on its website for public comment and feedback the Working Paper, “Identifying Permanently Disabled Workers with Disproportionate Earnings Losses for Supplemental Payments. The paper was repared by RAND, and conducted by the Office of the Director, Department of Industrial Relations in consultation with CHSWC. The Working Paper presents one definition of how this program could be defined and implemented. The Director’s office will be using RAND’s findings in the development of the return-to-work program. The tentative working title of the program is the Special Earning Loss Supplement (SELS).

One of the topics of the RAND study included the issue of the period over which to observe the post injury loss experience of injured workers. In this regard, the study claims “a person’s actual losses can only be measured after they have been realized. That is, we can only compare pre-injury and post-injury earnings after an individual has actually accumulated their post-injury earnings.” ….”This implies that eligibility criteria based on actual earnings needs to focus on the earnings in the post-injury period for a sufficient period of time after the date of injury to allow for the effects of the injury to be realized. Past RAND work suggests it takes 3-5 years after the date of injury for earnings losses to stabilize (Reville et al. 2005). Given this time frame, this suggests that an eligibility determination based on actual earnings losses would likely need to focus on earnings that occur several years after the date of injury (or the date at which the injury is determined to have become permanent). An obvious consequence of this requirement is that if eligibility can only be determined several years after an injury, then compensation can only be paid out several years after an injury.”

The California Applicant Attorneys Association has voiced its objection to such a delay in making the SELS payment. In addition to other issues raised by the CAAA objection, the letter states “we strongly object to the suggestion in the RAND Paper that a worker’s eligibility for this program can be determined only several years after the injury. That suggestion essentially dismisses the findings of this study. As noted above, this study found that virtually all workers who do not return to their at-injury employer – regardless of their assigned disability rating – experience an almost total loss of earnings. When it is already known that certain workers will experience a total loss of earnings, requiring those workers to wait several years to prove that earnings loss would be unconscionable.”

The SELS benefit will not be administered or paid by California employers. Thus, employers theoretically would have no particular interest in this controversy.