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Category: Daily News

California Workers Comp Bonds Get AA Rating

Fitch Ratings affirmed the ‘AA’ rating on approximately $559.5 million in California Infrastructure and Economic Development Bank workers compensation relief bonds, series 2004A and 2004B. The bonds are limited obligations of the infrastructure bank, payable solely from pledged revenues consisting primarily of special bond assessments imposed by the California Insurance Guarantee Association (CIGA) upon all insurers providing workers compensation insurance policies in the state.The bonds are secured by a first lien on an unlimited, mandatory special assessment on all insurers writing workers compensation policies in the state. The special assessment is established annually at a level projected to provide 1.1x coverage, and supplemental assessments may be levied as necessary.

The bonds are secured by a first lien on a mandatory and unlimited special benefit assessment (SBA) charged to all insurers writing workers’ compensation policies in California. CIGA sets the SBA rate annually at a level projected to cover expected debt service by 1.1x; if insufficient, supplemental SBAs may be levied as necessary to ensure coverage. The minimum levy is 1% of net direct premium. CIGA’s calculation of the SBA includes a variance factor for series 2004B, which were issued as auction rate bonds and are held by the bank.

CIGA’s regular assessment on workers compensation insurers, levied at 1% of net direct premium, and the SBA are deposited first to the trustee to meet debt service requirements; regular assessments are available to CIGA thereafter. By statute, CIGA may use other resources including its regular assessment to pay bonds, but these funds are not pledged. Moreover, if an insurer’s payment is insufficient, amounts received are statutorily applied first to cover the SBA levy. Residual SBA revenues are held by the trustee and available for early bond repayment. A debt service reserve is also funded at maximum annual debt service.

Fitch noted that the California workers compensation system has undergone considerable reform over the last decade. Prior to reforms in 2003 and 2004, the market faced a high level of payouts, fierce price competition, and subsequent insurer insolvencies and voluntary departures from the market. Reforms included significant changes to medical delivery and treatment for injured workers, higher statutory deposit requirements for insurers, higher regular assessments on insurers, and authorization for up to $1.5 billion in bonds supported by the SBA.

The outstanding bonds were issued in 2004, with proceeds used by CIGA to pay claims on insolvent insurers. A second issuance, planned for 2006, was never undertaken. The remaining bond authorization, which was intended to expire in 2006, has been extended by the state’s legislature. Interest on the auction rate bonds is calculated on a weekly basis, linked to one of two short-term reference rates. The authorization provides flexibility to CIGA to refund the 2004B auction rate bonds, if necessary, should interest rates rise significantly. Any additional issuance also requires levying a sufficient SBA as well as consent of the state insurance commissioner.

Orthopedic Surgeon Faces Sexual Misconduct Charges

The Medical Board of California, Department of Consumer Affairs has filed an accusation against Ronald Glousman, M.D., of the Kerlan Jobe Orthopedic Clinic in Los Angeles alleging sexual misconduct while performing an evaluation of a workers’ compensation claimant. The Accusation is a public record and contains the following information.

The alleged victim was identified as “patient R.A., a Spanish-speaking male, who sustained injuries at work when a rack toppled over and struck him on the right shoulder and right side of his head. As a result, patient R.A. filed a worker’s compensation claim.” He then suffered two additional injuries including to his spine while at work.

The patient was then allegedly seen by Philip A. Sobol, M.D., at the Sobol Orthopedic Medical Group, Inc. in 2008 for a worker’s compensation evaluation. Dr. Sobol diagnosed R.A. with right shoulder sprain/strain/contusion/tendinitis, cervical sprain/strain with right upper extremity radiculitis, spondyolosis of the cervical spine at C4-C5, and a lumbar sprain/strain.

Because of the patient’s continued complaints about his right shoulder Dr. Sobol requested a worker’s compensation authorization for a surgical consultation with Ronald Glousman, M.D. (Respondent). Respondent is an orthopedic surgeon specializing in sports medicine, and shoulder, elbow, and knee injuries at Kerlan-Jobe Orthopaedic Clinic.

During the course of Glousman’s treatment of the claimants shoulder, he allegedly conducted an examination of patient’s hip and groin area on several occasions after asking the patient to remove his pants and underwear.

The accusation alleges that because “of what occurred in the last two follow up visits, the patient decided to record this examination. The patient positioned his cell phone’s video camera to capture a majority of the examination room and table.” Allegedly the patient obtained a video recording of sexual misconduct at the time of this visit, according to the allegations of the Accusation. Allegedly Dr. Glousman provided information to the Board about this event and “admitted that by the time he walked back into the examination room Respondent intended to engage in a sexual act with R.A.”

According to the Board, the conduct constitutes “sexual exploitation of a patient” in violation of law, for which the Board seeks to revoke his Physicians and Surgeons Certificate in addition to other relief.

The Accusation is in the preliminary stages of litigation, and Dr. Glousman of course can have evidentiary hearings to disprove any or all of these allegations, and his license status will be determined at the end of any litigation process he may follow.

Controversial WCAB MSC Goes Off Calendar

Attorneys representing John Pike and the University of California will try to reach a deal over the former UC Davis police lieutenant’s worker’s compensation claim, out of court and away from the media spotlight. The sides had been scheduled to take part in a mandatory settlement conference on Aug. 13 in Sacramento to discuss Pike’s claim of psychiatric injury. That hearing has been scratched from the calendar, according to State Department of Industrial Relations spokesman Peter Melton. The case will not go before a judge unless the sides fail to reach an agreement.

Pike, a former U.S. Marine with 17 years of law enforcement experience, gained worldwide notoriety after he pepper-sprayed seated, unarmed Occupy UC Davis protesters who blocked police on a Quad sidewalk on Nov. 18, 2011. Hackers posted his personal information online, and Pike received threatening calls and emails.

After the Davis Enterprise first reported Pike’s injury claim on its website July 25, the pepper-spraying regained regional and national attention. That may have pushed the sides back to the table.

Protesters with ties to Occupy UCD had planned to hold a tongue-in-cheek “support” rally for Pike outside the scheduled hearing, mocking an injury claim that would see the former cop “rewarded” for his actions, in the words of Davis attorney Bernie Goldsmith. Because the hearing was removed from the court calendar, another event, the Officer Pike Fiesta of Emotional Support has also been canceled. The fiesta was meant as an opportunity for a demonstration for those opposed to Pike receiving workers’ compensation.

Pike ceased to be a university employee in July 2012. He was fired, according to a Sacramento Bee account, despite a confidential internal affairs investigation finding his actions “reasonable” and recommending discipline, not termination. He remains entitled to retirement credit for his years of service, but he was to receive no other payout. He collected eight months of his $121,680 annual salary while being investigated by a separate task force that found both the police and UCD administration at fault.

Protesters pepper-sprayed or arrested that day split a $1 million settlement. Criminal charges were not filed against police or protesters.

Legislators Propose Fed Work Comp Benefits Reduction

A provision in bipartisan Senate postal reform legislation would overhaul workers’ compensation policies for all federal employees.

Titled the 2013 Workers’ Compensation Reform Act, the provision — introduced by Sens. Tom Carper, D-Del., and Tom Coburn, R-Okla. — would cut benefits for federal workers injured on the job once they reach retirement age. Currently, federal employees receive 66 2/3 percent of their basic salary tax-free, designed to approximately replicate their entire post-tax salary. That figure is bumped to 75 percent if the employee has dependents. Related medical expenses are also covered.

The new plan would trim the benefit to 50 percent of an employee’s salary, once that employee is eligible for retirement. Additional compensation for dependents would no longer be provided.

The changes would not affect individuals eligible for retirement on the date of the bill’s enactment, those with an exempted disability condition or those who “face financial hardship” — such as workers eligible for food stamps. The proposal also contains a provision that would boost efforts to help employees on workers’ compensation return to work.

A similar proposal was included in the postal reform bill Carper sponsored last Congress, which cleared the Senate but died in the House. Some Democrats and federal employee unions opposed that measure.

Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, has expressed support for previous Senate proposals to overhaul the federal workers’ compensation system. Issa’s own postal reform bill included changes for only postal workers’ compensation, but he said during the bill’s markup he only put them in so the final bill would adopt the Senate’s broader plan after going through conference negotiations.

Court Finds “Probability” that El Centro Regional Medical Center Adversely Risks Patient Care

San Diego Hospital Based Physicians (SDHBP) and its two owners, Dr. Maria Ramirez and Dr. Dalia Strauser, sued El Centro Regional Medical Center alleging the Hospital retaliated against plaintiffs for complaining about patient care practices. The Hospital is a municipal agency owned by the City of El Centro and is governed by a seven-person Board of Trustees. SDHBP is an entity that provides hospitalist personnel and services. SDHBP is owned by Dr. Strauser and Dr. Ramirez, who both specialize in internal medicine and hospital medicine. Dr. Strauser has practiced medicine for more than 20 years and Dr. Ramirez has practiced medicine for more than 15 years. Hospitalists are generally internal medicine doctors who treat hospitalized patients to ensure they receive proper care, including diagnosis and appropriate specialty referrals.

According to allegations in the complaint, the Hospital hired Team Health, Inc. to manage and operate the Hospital’s emergency department. Shortly after, SDHBP became concerned about Team Health’s practices and the nature of the contract between the Hospital and Team Health, which SDHBP believed negatively affected patient care. SDHBP doctors found that Team Health physicians frequently admitted patients into the Hospital (or sought to compel SDHBP physicians to do so) despite the fact that these patients were not properly stabilized, diagnosed, or treated in the emergency room and/or that they should have been transferred to other hospitals with available surgeons and/or necessary medical equipment.

Dr. Ramirez and Dr. Strauser reported to Hospital administrators “at the highest levels” their concerns about patient care arising from Team Health practices and operations. The doctors identified approximately 35 specific cases of inadequate patient care. Later, SDHBP sent an email to Dr. George Hancock, the Hospital’s chief of medicine (who became medical chief of staff on January 1, 2011), detailing 19 separate cases in which Team Health and Hospital practices allegedly negatively affected patient care in a substantial manner. SDHBP also sent the email to several other Hospital officials, including the Board president, the Hospital’s chief of staff, and the Hospital’s quality committee chair.

On March 22, 2011, the Hospital’s Board held its monthly public meeting. During a closed (nonpublic) portion of this meeting, the Board voted to terminate the SDHBP Agreement “without cause.” When Dr. Strauser asked Hospital official Virgen why the Agreement was terminated, he allegedly said ” ‘you turned on the light and all the cockroaches ran away scared.’ ”

Several months later, plaintiffs filed their lawsuit against the Hospital and Team Health. Plaintiffs alleged five causes of action against the Hospital. In the first three, plaintiffs alleged the Hospital violated statutes prohibiting retaliation against physicians for complaining about, or advocating for, patient care. The Hospital moved to strike the complaint under the anti-SLAPP statute. (§ 425.16.) The Hospital argued that plaintiffs’ complaint arose from constitutionally protected activity because it was based on the Board’s contract termination decision, which it said was a “quasi-legislative” act made at an “official proceeding.” The trial court denied the motion, and the Hospital appealed. The Court of Appeal sustained the denial of the anti-SLAPP motion in the unpublished opinion of San Diego Hospital Based Physicians vs El Centro Regional Medical Center.

One of the elements required to reject an anti-SLAPP motion to dismiss is a determination that there is a “probability” that plaintiffs will prevail on its claims. In meeting this burden, the plaintiff cannot rely solely on the allegations in the complaint and must present evidence that would be admissible at trial. The Court of Appeal concluded that plaintiffs met this burden, and may proceed with their case.

American Claims Management Awarded El Camino Hospital TPA Contract

The Insurance Journal reports that American Claims Management Inc., a national third party administrator (TPA), has been selected as the workers’ compensation TPA for El Camino Hospital in Northern California. Under the terms of the contract, which was effective July 1, 2013, ACM will manage claims, bill review, managed care, subrogation, investigation and other ancillary services for new claims. ACM will also take over the administration of approximately 300 existing claims from the prior TPA.

“After conducting a very thorough search, we are excited to work with ACM,” said Sandra Speer, director of Employee and Labor Relations at El Camino Hospital. “ACM is well-suited to help us manage workers’ compensation claims while continuing to provide quality care for our employees.”

“El Camino Hospital and ACM are a great match because both companies embrace innovation,” says Deirdre Gonzalez, president of ACM’s Workers’ Compensation Division. “In fact, El Camino Hospital and its advanced robotics program were featured in a piece by 60 Minutes showcasing the economic impact of robots. So, it’s no surprise that the organization sought an equally forward-thinking TPA.”

Since 1988, American Claims Management has been a nationwide third party claims administrator specializing in both commercial and personal lines.

Nine States Adopt Significant Comp Law in 2013 reports that nine states have seen significant workers’ compensation reform bills signed into law in 2013. Oklahoma’s workers’ compensation reform laws have received the most attention lately because of the inclusion of an opt-out provision, known as the Oklahoma Option. The Oklahoma Option is significantly different from the Texas opt-out option. Employers that opt out in Texas cannot simply endorse their excess liability policy to cover Oklahoma. Rather, employers in Oklahoma that choose the option are required to provide a written benefit plan that serves as a replacement for the workers’ compensation coverage. This benefit plan must provide for full replacement of all indemnity benefits offered in the workers’ compensation system. The key component of the Oklahoma Option for employers is that it gives them full control of the medical treatment through their benefits plan. Unlike the Texas opt-out, the Oklahoma Option does not permit employees to pursue a negligence action through the civil courts.

The recently passed reform bill in Delaware was designed to control medical costs and encourage return-to-work efforts.

The use of physician-dispensed medication has been a significant issue in Florida workers’ compensation. Physicians were charging several times what the same medication would cost from a retail pharmacy, and the costs were not regulated by a fee schedule. New law creates a maximum reimbursement rate for physician-dispensed medication of 112.5% of the average wholesale price, plus an $8 dispensing fee.

Legislation passed in Georgia should have a positive impact on workers’ compensation costs for employers. Effective July 1, 2013, medical benefits for non-catastrophic cases are capped at 400 weeks from the date of accident, whereas previously, injured workers were entitled to lifetime medical benefits for all claims.In Indiana, legislation was passed that establishes a hospital fee schedule at 200% of Medicare rates. This is consistent with other states that base their fee schedules on Medicare rates.

Minnesota joined most other states in amending its statutes to allow for mental-mental injuries (a psychiatric disorder without a physical injury).

Missouri’s reforms were focused on addressing the insolvent second injury fund and returning occupational disease claims to the workers’ compensation system.

Recent legislative changes in New York will reduce employer costs by about $800 million annually. These savings are derived primarily by streamlining the assessment collection process and eliminating the 25-a fund and its associated assessments. New York’s workers’ compensation assessments are the highest in the nation, so employers welcome any relief in this area.

Tennessee and Oklahoma both moved its workers’ compensation dispute resolution process from a court-based system to an administrative system, leaving Alabama as the only state that still uses the trial courts for all such litigation.

EMPLOYERS® Celebrates 100 Year Anniversary

EMPLOYERS Insurance celebrated its 100th anniversary on July 31, 2013. In recognition and celebration of its rich history, EMPLOYERS hosted commemorative events at its Reno, Nevada headquarters and at its offices across the country.

The company originated in 1913 as Nevada’s State Fund as a means to increase workplace safety for the state’s workers and provide insurance for the state’s businesses. After a successful and industry-leading privatization in 2000, the organization transformed in 2005 into a mutual holding company, the first ever in Nevada. In 2007, EMPLOYERS demutualized and completed an initial public offering to become a publicly traded company listed on the New York Stock Exchange. The company has continually added to and expanded its operations to better meet the needs of more small businesses, as well as to increase the ease of doing business with insurance agents. Today, the company operates in 31 states and the District of Columbia.

“EMPLOYERS’ growth and evolution from a monopolistic state fund to a publicly traded company is impressive. Its 100-year anniversary is a tremendous milestone, and it couldn’t have been achieved without the support of our dedicated and talented employees, as well as our valued policyholders, agents, partners, and shareholders. Together, we have delivered on an ambitious vision,” stated Douglas D. Dirks, president and chief executive officer. Dirks added: “I’m very proud of what we have accomplished as an organization and am confident of our future as we continue to help America’s small businesses succeed.”

Employers Holdings, Inc. is headquartered in Reno, Nevada and listed on the New York Stock Exchange. EMPLOYERS is a holding company with subsidiaries that are specialty providers of workers’ compensation insurance and services focused on select small businesses engaged in low-to-medium hazard industries. The company, through its subsidiaries, operates coast to coast. Insurance is offered by Employers Insurance Company of Nevada, Employers Compensation Insurance Company, Employers Preferred Insurance Company, and Employers Assurance Company, all rated A- (Excellent) by A.M. Best Company.

“Big and Famous” Hospitals Fall Short in Quality

In the first effort of its kind, the nonprofit publisher of Consumer Reports magazine released ratings of 2,463 U.S. hospitals in all 50 states on Wednesday, based on the quality of surgical care. The group used two measures: the percentage of Medicare patients who died in the hospital during or after their surgery, and the percentage who stayed in the hospital longer than expected based on standards of care for their condition. Both are indicators of complications and overall quality of care, said Dr John Santa, medical director of Consumer Reports Health.

According to the story in Reuters Health, the ratings will surely ignite debate, especially since many nationally renowned hospitals earned only mediocre ratings. The Cleveland Clinic, some Mayo Clinic hospitals in Minnesota, and Johns Hopkins Hospital in Baltimore, for instance, rated no better than midway between “better” and “worse” on the CU scale, worse than many small hospitals. Because CU had only limited access to data, the ratings also underline the difficulty patients have finding objective information on the quality of care at a given facility.

Nevertheless, “this is a step in the right direction,” said Paul Levy, former president of Beth Israel Deaconess Medical Center in Boston, who was not involved in the project. “To whatever extent you can empower patients to get better care and become partners in pushing the healthcare system to make improvements is to the good.”

CU’s ratings are based on Medicare claims and clinical records data from 2009 to 2011 for 86 kinds of surgery, including back operations, knee and hip replacements, and angioplasty. The rates are adjusted to account for the fact that some hospitals treat older or sicker patients, and exclude data on patients who were transferred from other hospitals. These are often difficult cases that, CU felt, should not be counted against the receiving hospital.

Although the ratings do not explicitly incorporate complications such as infections, heart attacks, strokes, or other problems after surgery, the length-of-stay data captures those problems, said Santa.

Some of the findings are counterintuitive. Many teaching hospitals, widely regarded as pinnacles of excellence and usually found at the top of rankings like those of U.S. News and World Report, fell in the middle of the pack.

“This isn’t the first time we’ve seen this sort of surprise,” said Dr Marty Makary, a surgeon at Johns Hopkins Hospital and author of the 2012 book, “Unaccountable: What Hospitals Won’t Tell You and How Transparency Can Revolutionize Health Care.” “For a complex procedure you’re probably better off at a well-known academic hospital, but for many common operations less-known, smaller hospitals have mastered the procedures and may do even better” with post-surgical care.

CU also found that several urban hospitals did well despite serving many poorer, sicker patients, including Mount Sinai Hospital in New York and University Hospitals Case Medical Center in Cleveland. Rural hospitals did better, on average, than other hospitals, and many hospitals practically unknown beyond their zip code outranked famous ones, including Kenmore Mercy near Buffalo, New York; Arrowhead in Glendale, Arizona; Sacramento Medical Center in California; and Arkansas Heart in Little Rock.

San Gabriel DME Supplier Gets 2 Years in Prison

The owner and operator of a durable medical equipment (DME) supply company was sentenced yesterday to serve 24 months in prison for conspiring to submit nearly $1 million in fraudulent claims to Medicare.

Tigran Aklyan, 37, of Van Nuys, California, was sentenced today by U.S. District Judge Michael W. Fitzgerald in the Central District of California. In addition to his prison term, Aklyan was sentenced to serve three years of supervised release and ordered to pay $653,461 in restitution.

In April 2013, Aklyan pleaded guilty to conspiracy to commit health care fraud. In his plea agreement, Aklyan admitted that he was the owner and president of Las Tunas, a DME supply company located in San Gabriel, California. Aklyan admitted that from in or around October 2007 through in or around May 2009 he conspired with others to commit health care fraud by providing medically unnecessary power wheelchairs and other DME to Medicare beneficiaries and submitting false and fraudulent claims to Medicare. Aklyan admitted that he paid the owners and operators of fraudulent medical clinics to provide him with prescriptions and supporting medical documentation for the power wheelchairs and DME that he billed to Medicare. Aklyan knew that the prescriptions and medical documents that the clinics produced were fraudulent, yet he certified to Medicare with the submission of each claim that the DME was medically necessary. Aklyan also admitted that he knew that it was illegal for him to pay for prescriptions, but he did so anyway.

From on or about December 17, 2007, through on or about February 20, 2009, Aklyan, through Las Tunas, submitted approximately $910,377 in fraudulent claims to Medicare for PWCs and related services, and Medicare paid Las Tunas approximately $653,461 on those claims.

The case was investigated by the FBI and the Los Angeles Region of HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California. This case is being prosecuted by Assistant Chief Benton Curtis and Trial Attorneys David M. Maria and Blanca Quintero of the Criminal Division’s Fraud Section.