Category: Daily News

A county in New York state has sued Purdue Pharma LP, Johnson & Johnson and other drugmakers, accusing them of engaging in fraudulent marketing that played down the risks of prescription opioid painkillers, leading to a drug epidemic. The lawsuit, which also named units of Teva Pharmaceutical Industries Ltd and Endo International Plc as defendants, was announced by Orange County, New York, which is located in the southeastern part of the state.

Reuters reports that the case, filed in a New York state court is the latest lawsuit by local and state governments seeking to hold drugmakers accountable for a national opioid epidemic. The lawsuit claims the drugmakers through deceptive marketing misrepresented the dangers of long-term opioid use to doctors, pharmacists and patients. Those misrepresentations about drugs like Purdue’s OxyContin and Endo’s Opana ER led Orange County New York to incur health care, criminal justice and other costs related to addiction, the lawsuit said.

Drugmakers also face lawsuits by Santa Clara and Orange counties in California, the city of Chicago and Mississippi over their marketing practices.

Santa Clara and Orange (California) counties filed a case in 2015 in Orange County Superior Court. They alleged that Purdue Pharma, Cephalon, Janssen Pharmaceuticals, Endo Health Solutions and Actavis violated California’s false advertising and unfair competition laws and created a public nuisance. The case was placed on hold in 2015 pending the outcome of FDA investigations that were underway at the time.

Chicago sued Teva Pharmaceuticals, Purdue Pharma Inc. and other drugmakers in 2014, saying they misled doctors and the public about the addictive nature of opiates and pushed prescriptions despite known dangers of addiction. A defense request for a stay order pending FDA investigations was denied in September 2016, and the Chicago case is still active.

Some state attorneys general have started similar investigations. J&J this month said New Jersey’s attorney general had issued a subpoena related to opioid marketing.

Orange County New York, which has a population of about 379,000, said it recorded 943 opioid-related emergency department admissions in 2014 and 44 deaths from overdoses involving opioid pain relievers in 2015.

Orange County New York Executive Steven Neuhaus said in a statement the county has been working with non-profits and doctors to increase awareness to opioid-related problems. “At the same time, we want those responsible to compensate the taxpayers for the public funds the county has had to pay to address opioid addiction,” he said.

The lawsuit also named four physicians as defendants.

J&J in a statement called the allegations “unfounded” and noted its drugs carry U.S. Food and Drug Administration-mandated warnings.

Purdue said it shares officials’ concerns about the opioid crisis and is “committed to working collaboratively to find solutions.”

Endo did not respond to a request for comment. Teva declined to comment.

Opioid drugs, including prescription painkillers and heroin, killed over 33,000 people in the United States in 2015, more than any year on record, the U.S. Centers for Disease Control and Prevention said.

Orange County’s lawsuit is the fourth since August by a New York county seeking to recover costs related to opioid addiction. Several other counties are also considering suing.

Liberty Mutual is shutting down its research arm in Hopkinton that for six decades put it at the forefront of workplace injury prevention, prosthetic limb development, and the push for safer car features, including collapsible steering columns.

The company will no longer conduct peer-reviewed research, considered the gold-standard for studies, which extended its reach worldwide. The research influenced occupational safety guidelines that were widely used to prevent injuries in the workplace. According to the story in the Boston Globe, up to 44 employees, mostly scientists and researchers, could be laid off when the company ends the program on June 6.

When Liberty Mutual founded the research facility in 1954 it was one of few organizations studying injuries in the workplace and on the road. But since then many more outlets are researching workplace issues. And the nature of work has changed as well. More people are working remotely or in shared spaces and manufacturing now involves robots doing assembly line work. And John Cusolito, a Liberty Mutual spokesman said that other organizations and universities are better positioned to do that kind of research.

Liberty Mutual will focus its research efforts on partnerships with universities that are involved in workplace studies. The company helps fund work at the Harvard T.H. Chan School of Public Health, the University of Massachusetts Amherst, UMass Lowell, and MIT.

“We will use funds to continue and create partnerships with organizations and specialists that give us the flexibility to tap into research studying the evolving ways that people are living and working,” Cusolito said.

Liberty Mutual was among a handful of insurers that ran their own research centers. The institute focused heavily on workplace injuries – falls, carpal tunnel syndrome, and the impact of repetitive work – because Liberty Mutual began as a workers compensation insurer covering railway, shipbuilding, and tannery workers hurt on the job.

As recently as 2012, Liberty Mutual was the largest workers compensation insurer with $4.2 billion in premiums, according to the Insurance Information Institute, a trade research organization. But by 2015, the most recent data available, Liberty Mutual had fallen to fifth in market share with $2.5 billion in premiums.

Over the years it has expanded into auto and home insurance and other commercial lines. It has also scaled back its workers compensation business, as rising medical costs and state regulations cut into profits.

Tom Leamon, who served as director of the research institute for safety for 16 years until 2006, said its closure is disappointing.

“It was a way to distinguish Liberty in the global marketplace,” Leamon said. “We were the leaders in global occupational safety.”

The research that its scientists conducted – bringing in people to lift containers of different sizes to measure the impact on their bodies, or evaluating the best way to grasp tools such as knives and screwdrivers for long periods – was published in scientific journals and accessible to everybody, including competitors, Leamon said.

Working with MIT in the early 1960s, researchers helped develop the first battery-powered prosthetic elbow, called the Boston Elbow. Holliston-based Liberating Technologies Inc., a manufacturer and distributor of prosthetic devices, started out as a project of Liberty Mutual, until it was spun off as an independent company around 2001.

Liberty Mutual will keep open the Hopkinton facility, where driver training programs and classes for claims adjusters will continue.

When EJ Distribution Corporation applied for workers’ compensation insurance, the application indicated that EJ’s employees did not travel out of state. The online application prepared by its insurance agent described EJ’s operations as “local hauling” and that EJ’s employees did not travel out of state and did not have a radius of travel greater than 200 miles.  Accordingly Southern Insurance issued a workers’ compensation policy beginning on January 1, 2009.

On April 6, 2009, EJ’s employee, David Berrios-Segovia, injured his back while on a trip to Tennessee and filed a workers’ compensation claim on May 13, 2009.

On June 12, 2009, Southern’s attorneys sent a letter to EJ stating that “Southern is rescinding the policy.” The decision to rescind was based on material misrepresentations or the concealment of material facts by EJ in the application for the policy, specifically that its employees did not travel out of state and that its operations did not exceed a radius of travel of 200 miles.

In light of Southern’s position that the policy was rescinded the Uninsured Employers Benefits Trust Fund (UEBTF) was joined as a defendant in Segovia’s workers’ compensation claim.

The coverage issue  was submitted to mandatory arbitration pursuant to Labor Code section 5275, subdivision (a)(1). Southern called an underwriter as a witness who testified that Southern never insured long-haul trucking in its business division. In addition, the underwriter testified that, had Southern known that EJ traveled outside of 200 miles or out of state, Southern would not have issued the policy. The underwriter, however, confirmed that the policy itself, in fact all workers’ compensation policies, did not contain an exclusion based on location.

The arbitrator found: There was “no retroactive rescission” of the policy; Segovia’s claim for his April 6, 2009 injury was covered by the policy; and the policy was prospectively canceled under Insurance Code section 676.8, subdivision (b)(5) as of June 15, 2009, and not before. The arbitrator dismissed UEBTF as a defendant.  Southern’s Petition for Reconsideration by was denied by the WCAB. But the court of appeal reversed in the unpublished case of Southern Ins. Co. v. Workers’ Compensation Appeals Bd.

The opinion noted that Insurance Code Section 676.8 which is entitled Cancellation and Failure to Renew Certain Property Insurance, is specifically limited to workers’ compensation insurance and it addresses only the cancellation of a policy. It does not even inferentially address rescission. But, Section 650 provides that “[w]henever a right to rescind a contract of insurance is given to the insurer by any provision of this part such right may be exercised at any time previous to the commencement of an action on the contract.” Section 650 applies to workers’ compensation insurance policies.

UEBTF’s contention that rescission is precluded because section 676.8 does not provide for protection of the right to rescind a workers’ compensation insurance policy was rejected. UEBTF also contended that once a workers’ compensation claim has been filed, section 650 precludes rescission. However, the Court of Appeal ruled that the filing of a workers’ compensation claim is not the equivalent of an action on the contract.

The appeals board generally agreed that a workers’ compensation insurance policy can be rescinded under the authority of section 650. However, the appeals board contends, and rightly so, that rescission should not be used for the improper purpose of obtaining impermissible modifications to a workers’ compensation insurance policy. But, the answer to the appeals board’s concern is that if rescission is asserted as a defense to the claim in a workers’ compensation proceeding, the appeals board itself can ensure that the rescission is not used as a subterfuge to evade the laws governing workers’ compensation insurance.

There is also the concern over the injured worker who has filed a workers’ compensation claim but is faced with an insurer who has acted to rescind the policy. The answer here is that the insurer cannot be certain that the rescission will be enforced and that the insurer is therefore well advised to avoid drastic decisions about coverage until the validity of the rescission has been adjudged.

Contrary to the arbitrator’s ruling, a workers’ compensation insurance policy may be rescinded. The conclusion is unavoidable that the issue whether Southern’s rescission was legally effective remains factually open and unresolved.The decision of the appeals board affirming the findings and award of the arbitrator is annulled and the matter is remanded to the appeals board for further proceedings consistent with this opinion.

An accurate estimate of the life expectancy of a workers’ compensation claimant is important for setting reserves, making or accepting offers for compromise and release, and certain other calculations such as commutations for attorney fees, or lump sum payments.

One method of estimating life expectancy is to use a one-size-fits all chart or table based upon historical data. This is the method set by California regulations (§10169. Commutation Tables and Instructions) when a commutation of future benefits is ordered by a WCJ. This table is based on the U.S. Decennial Life Tables for 1989-91, a metric that is outdated by about two and a half decades.

And the calculation of life expectancy is more complex now, than ever.

According to a new study just published in the Journal of the American Medical Association, “inequalities in life expectancy among counties are large and growing, and much of the variation in life expectancy can be explained by differences in socioeconomic and race/ethnicity factors, behavioral and metabolic risk factors, and health care factors.”

And earlier studies have routinely shown that life expectancy in the United States varies geographically, in some cases dramatically. Between 1980 and 2014, life expectancy at birth for both sexes combined in the United States increased by 5.3%. This masks massive variation at the county level; counties in central Colorado, Alaska, and along both coasts experienced much larger increases, while some southern counties in states stretching from Oklahoma to West Virginia saw little, if any, improvement over this same period.

According to a 2010 report by the Los Angeles Times, Los Angeles County residents are living longer than ever, with an average life expectancy of more than 80 years according to public health officials. The average life expectancy in the county was 80.3 years. However Asian and Pacific Islander women had the longest average life expectancy, 86.9 years, while black men had the shortest, 69.4 years, according to the study.

Public health officials in Los Angeles examined life expectancy in 103 cities and unincorporated areas of the county with populations of more than 15,000. They also assessed each of the 15 Los Angeles City Council districts. Of the cities, La Canada Flintridge had the highest life expectancy, 87.8 years, while Compton had the lowest, 75.7 years.

And wait! There’s more!

Life expectancy is viewed differently by the annuity companies that underwrite the Medicare Set Aside Trusts in worker’s compensation cases. This estimate is often referred to as “rated age.” Every life insurance company has different underwriting guidelines that determine what risk class an individual qualifies for. The company will look at an applicant’s personal medical history, smoker status, height/weight profile, results of the medical exam, family medical history (e.g. cancer or heart disease before age 60 in the immediate family), motor vehicle record, and any hazardous activities they may participate in (such as aviation, scuba diving, drag racing, etc).

Thus, a more sophisticated approach to estimating the life expectancy of an injured worker may be a valuable tool for claims administrators as they reserve cases, and propose or reject settlement offers.

The Department of Industrial Relations and its Division of Workers’ Compensation have suspended four more medical providers from participating in California’s workers’ compensation system. DWC Acting Administrative Director George Parisotto issued Orders of Suspension for two providers who had not appealed suspension notices issued in early April.

The complete list including these newly added names are on the DIR website.

Kenneth Johnson, a physician in Ladera Heights, was suspended based on a criminal conviction, his prior suspension from the Medicare program, and the loss of his professional license. Dr. Johnson was found guilty in February 2014 of federal charges for a $20 million scheme to defraud Medicare and Medi-Cal. Johnson pre-signed thousands of blank prescriptions that were used on fraudulent claims for anti-psychotic medications by Manor Medical Imaging in Glendale.

Raymond Severt, an orthopedic surgeon in Santa Rosa, was also suspended based on a criminal conviction related to his qualifications and duties as a service provider and the loss of his professional license. Severt was convicted in Marin Superior Court for attempted lewd acts on a minor under the age of 14, and the Medical Board of California revoked his license following the conviction.

Parisotto also issued Determinations and Orders upholding the suspension of two providers who had appealed their notices.

Philip Sobol, an orthopedic surgeon in Los Angeles, was suspended based on a criminal conviction involving fraud and abuse of the workers’ compensation system. Sobol pled guilty in November 2015 for participating in a kickback scheme at Pacific Hospital of Long Beach, illegally referring thousands of his patients for spinal surgeries. Sobol did not challenge the grounds for suspension, but argued in his appeal that he could not be suspended because his conviction predated the new law and also that DIR was required to use a different procedure to hear his appeal. Workers’ Compensation Administrative Law Judge (WCALJ) William E. Gunn, who heard the appeal, rejected both arguments.

Thomas M. Heric, a physician in Los Angeles, was suspended due to a criminal conviction and prior suspension from the Medicare program. Heric was convicted over a decade ago in Sacramento’s federal District Court for Medicare and Medicaid-related health care fraud, which also resulted in his suspension from those programs by the U.S. Department of Health and Human Services. WCALJ Robert Mays rejected Heric’s argument that his convictions did not fit within a legal definition of fraud or abuse.

AB 1244 (Gray and Daly) requires the DWC Administrative Director to suspend any medical provider, physician or practitioner from participating in the workers’ compensation system in cases in which one or more of the following is true:

– – The provider has been convicted of a crime involving fraud or abuse of the Medi-Cal or Medicare programs or the workers’ compensation system, fraud or abuse of a patient, or related types of misconduct;

– – The provider has been suspended due to fraud or abuse from the Medicare or Medicaid (including Medi-Cal) programs; or

– – The provider’s license or certificate to provide health care has been surrendered or revoked.

There are currently 23 providers suspended from California’s workers’ compensation system. Where the suspension is due to conviction of a covered crime, AB 1244 also provides for the suspended provider’s lien claims to be consolidated in a special lien proceeding and dismissed, unless it can be shown that the liens were unrelated to the criminal conduct.

Both of the providers who appealed their suspension have a significant volume of lien activity in the workers’ compensation system.

Dr. Sobol has nearly 6,000 active workers’ compensation liens with an estimated total claim value of more than $42.7 million.

Dr. Heric presents a different set of circumstances in that he became active in California’s workers’ compensation system after his federal conviction and suspension from the Medicare program. This is one of the scenarios that the Legislature wanted to stop when adopting AB 1244. Heric is currently being prosecuted in Orange County Superior Court for alleged involvement in a medical insurance fraud scheme with Sim Carlisle Hoffman and several associated businesses (People v. Sim Carlisle Hoffman, Better Sleeping Medical Center. Inc., et al., Orange County Superior Court No. 14CF0243). The liens of Hoffman and associated entities (estimated at over 1400 liens, with an aggregate claim value of more than $7 million) are currently stayed pursuant to the lien stay provision in SB 1160 (Mendoza), and would become subject to consolidation following a conviction for the crimes charged. Therefore, any liens filed by or on behalf of Dr. Heric are also subject to the stay provisions of Labor Code Section 4615.