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Category: Daily News

NICB Report Says DME Fraud As High as $5 Billion/Year

The National Insurance Crime Bureau (NICB) released a ForeCAST analysis that examines the impact of fraud associated with durable medical equipment (DME). The report examines questionable claims (QC) referred to NICB during the period from Jan. 1, 2009, through June 30, 2012. QCs are claims that NICB member insurance companies refer to NICB for closer review and investigation based on one or more indicators of possible fraud. A single claim may contain up to seven referral reasons. DME QCs have increased consistently since 2009 with New York (611), Michigan (366), California (63), and Florida (54) posting the most of all the states.

DME, also referred to as Durable Medical Equipment Prosthetics and Orthotics (DMEPOS), home care products, home health equipment/supplies and/or durable medical supplies, is defined as equipment that can withstand repeated use, is primarily and customarily used to serve a medical purpose, generally is not useful to a person in the absence of an illness or injury; and,is appropriate for use in the home.

All requirements of the definition must be met before an item can be considered DME. In addition to meeting the above criteria, a licensed physician must prescribe the DME and prepare a Certificate of Medical Necessity (CMN), also referred to as a Letter of Medical Necessity. The type of medical personnel allowed to order DME will vary from state to state. In some instances, physician assistants, nurse practitioners, and clinical nurse specialists may order DME.

In the 2011 report on National Health Expenditures (NHE), DME spending for 2010 comprised of $37.7 billion or 1.5 percent of total health expenditures (CMS, Office of the Actuary, National Health Statistics Group, 2011). In the 2011-2021 NHE Projections, DME is projected to increase consistently at an average rate of 6 percent. If these projections prove accurate, spending for DME could exceed $50 billion by the end of 2015 (CMS, 2011). For both public and private health care programs, the FBI in 2011 estimated fraudulent billing to be between 3 percent and 10 percent of total health care expenditures. If those percentages are applied to DME spending, estimates of the cost of DME fraud could fall between $1.5 billion and $5 billion in a single year.

The consistent growth of the DME industry, combined with a general lack of required credentials or training in order to distribute DME, provides ample opportunity for unscrupulous individuals and entities intent on defrauding the insurance industry.

Although DME fraud is but a small part of the overall medical fraud perpetrated against insurers and the government, it is most insidious when patients who have been properly prescribed for DME never receive it. Somewhere in the DME processing chain between doctor and patient, the device never gets delivered. Whether it’s diverted to others, lost in bureaucracy or simply pilfered to be sold on the black market, it is an expensive loss to patients, insurers and the governmental loss that all of us ultimately pay for through higher premiums and taxes.

The fraud occurring in the nation’s health care system is widespread and timeless. It is the reason that since 2010, NICB has been working with the Secretary of Health and Human Services, the Attorney General and others in Washington to establish an information and data sharing effort aimed at detecting and preventing insurance fraud at the public and private sector levels. It is also the reason that in July 2012, NICB was named to the Executive Board of the Health Care Fraud Prevention Partnership.

“We said at the time that there is a significant amount of crossover by those committing fraud against Medicare and Medicaid, and also taking advantage of the property and casualty insurance industry,” said NICB President and CEO Joe Wehrle. “This report confirms that and helps us focus our investigative efforts on the areas where this is a growing problem. And at the same time, it is our goal to share information and work with the public and private sectors to identify these schemes and stop them.”

Hemet Pool Contractor Faces 16 Years In Fraud Case

The owner and general manager of a Palm Desert swimming pool construction and maintenance company faces criminal charges for alleged misconduct while running the company, the Riverside County district attorney’s office announced Friday.

Hemet resident Michael Gregory Silverberg, 31, owner of United States Pools Corp., is accused of defrauding the State Compensation Insurance Fund, two insurance companies and the state Board of Equalization.. Silverberg faces two counts of falsifying statements to reduce worker’s compensation insurance rates, one count of falsifying workers’ compensation and one count of failing to collect taxes, all felonies, and a misdemeanor charge of signing a report to evade an amount due. He also faces a sentence-enhancing allegation of taking more than $500,000 through the commission of two or more white-collar crimes.

Silverberg was arrested on Jan. 21 and pleaded not guilty on Jan. 25 at the Larson Justice Center in Indio. He is due back in court on Feb. 26. If convicted, he faces up to 16 years in prison, according to District Attorney’s Office spokesman John Hall.

The Inland Empire Premium Fraud Task Force started investigating Silverberg after a complaint was made about him by a trade organization serving the California swimming pool industry, Hall said.

Silverberg allegedly reported his pool cleaning employees as independent contractors to avoid paying the appropriate payroll taxes and workers’ compensation insurance premiums. He also allegedly failed to report his new pool construction employees on his workers’ compensation policy, Hall said. In addition, the investigation revealed that Silverberg allegedly failed to properly report the required sales tax due to the state Board of Equalization on an account with a local pool contractor supplier, Hall said.

The alleged fraudulent actions resulted in a loss of about $566,950 to the various agencies between Jan. 1, 2007, and March 5, 2012, Hall said.

The case is being prosecuted by Deputy District Attorney Michael Mayman.The Inland Empire Premium Fraud Task Force includes investigators from the Riverside and San Bernardino county district attorney’s offices and the California Department of Insurance’s fraud division.

DWC Sets Public Hearings for SDJB and Interpreter Regulations

The Division of Workers’ Compensation (DWC) has issued notices of public hearings for the Supplemental Job Displacement Benefit (SJDB) regulations and interpreter services regulations.

The proposed rulemakings are to permanently adopt the emergency regulations which became effective Jan. 1, 2013. A public hearing on the proposed regulations has been scheduled for March 19 at 10 a.m. in the auditorium of the Elihu Harris Building, 1515 Clay Street, Oakland. Members of the public may also submit written comments on the regulations until 5 p.m. on that day.

The SJDB regulations implement SB 863’s changes regarding the amount of the SJDB voucher and the expenses for which it may be used. The proposed regulations administrate the supplement job displacement benefit by providing procedures and forms for those injured on or after Jan. 1, 2013.

The interpreter services regulations define “qualified interpreter for purposes of medical treatment appointments,” add “medical treatment appointments” as an event for which an interpreter is entitled to a fee, and set forth the websites where interpreters who are qualified to interpret at workers’ compensation appeals board hearings and medical treatment appointments can be found.

DWC will consider all public comments, and may modify the proposed regulations for consideration during an additional 15-day public comment period. The notices of rulemaking, text of the regulations, and the initial statements of reasons can be found at the DWC website.

Employers Must Post Annual Work-Related Injury and Illness Summary

The California Department of Industrial Relations’ Division of Occupational Safety and Health (DIR/DOSH), also known as Cal/OSHA, is providing 2013’s notification to all employers to post the annual summary of all work-related injuries and illnesses (Form 300A). The form must be posted at their place of business from February 1 through April 30.

The Form 300A is available for free download on DIR’s website. The form is a required workplace posting so that employees may have the opportunity to review any injury or illness that took place at their worksite in the prior year. Former employees and their representatives have a right to review the form as well. The form must be posted in a visible and easily-accessible area.

“Transparency and accountability are very important aspects of the employer-employee relationship,” said Cal/OSHA Chief Ellen Widess. “This form gives employees, former employees and their representatives access to worksite injury and illness data. Full and accurate reporting of injuries and illnesses is vital to understanding hazards in the workplace. It is also a good tool to determine where additional safety and health measures are needed.”

Employers are required to fill out and post the Form 300A every year, even if no workplace injuries occurred. Information that must be disclosed on the form includes total number of cases with days away from work, total number of days injured or sick employees spent away from work, and the different types of injury or illness suffered.

Employers who would like more information on their posting requirements or who would like more information on how to reduce workplace injuries and illnesses are encouraged to visit the DIR Employer Information page. In addition, if an employer would like to speak with a Cal/OSHA consultant, free assessments are available to California businesses by calling the Cal/OSHA Consultation Program 1-800-963-9424.

Employees with work-related questions or complaints can call the California Workers’ Information Hotline at 1-866-924-9757.

Cal/OSHA Issues Chevron Record $1 Million Fine

California safety officials ordered Chevron Corp. to pay a record-high fine of nearly $1 million for safety violations that led to a massive fire last summer at a refinery in the San Francisco Bay Area.

According to the report in the Los Angeles Times, after the Aug. 6 explosion at Chevron’s facility in Richmond, Calif., an emergency telephone network advised tens of thousands of people in that city to stay indoors behind closed doors and windows to avoid breathing potentially dangerous sulfuric acid and nitrogen dioxide fumes. About 200 local residents sought medical help, complaining of respiratory problems. In addition, Chevron reported that one of its employees suffered a minor injury.

Cal-OSHA said Wednesday that its investigation of the explosion at a leaking crude refining unit, among other things, showed that Chevron did not follow safety recommendations made by its inspectors in 2002 to replace a corroded pipe that subsequently ruptured and fueled the fire. The company also failed to follow emergency shutdown procedures after the leak was found the day of the fire, the state said.

In all, the state Division of Occupational Safety and Health issued 25 citations against California’s biggest oil company, including 11 “willful serious” and 12 lesser “serious” violations related to the blaze, the state said. The $963,200 fine is the highest in Cal-OSHA history, the agency said.

“Ensuring worker safety is the employer’s responsibility,” said Christine Baker, director of the state Department of Industrial Relations, which oversees Cal-OSHA. “Refineries must take the steps needed to prevent incidents like the August Chevron fire. Failure to do so can pose great dangers to workers, surrounding communities and the environment.”

Chevron said it intends to appeal some of the citations. “Chevron takes our commitment to safe operations seriously,” the San Ramon, Calif., company said in a statement. “Although we acknowledge that we failed to live up to our own expectations in this incident, we do not agree with several of the Cal-OSHA findings and its characterization of some of the alleged violations as ‘willful.'”

The company reported that since the fire it has taken a number of corrective actions to enhance safety, mechanical integrity and management oversight at the third-largest refinery in California, which processes 245,000 barrels of crude oil a day. The damaged refining unit is being repaired and should be back in operation by the end of March, Chevron said.

Chevron’s laxity endangered its neighbors, said state Assemblywoman Nancy Skinner (D-Berkeley), who represents the Richmond area. “The community expects more and demands more of Chevron,” she said. “Chevron needs to step up to the plate.”

George Burr New VP of Crum and Forster in Orange County

Crum and Forster named George Burr vice president, California Workers’ Compensation Claims.

Burr will manage the West Coast workers’ compensation claims office located in Orange County, Calif.

Burr brings extensive workers’ compensation claims experience to Crum and Forster, most recently serving as vice president, Claims Operations for Seabright Insurance Company with responsibility for their Western Claims Division.

Burr began his insurance career as a workers’ compensation claims adjuster with Safeco Insurance, and subsequently held a number of management roles at Safeco including responsibility for field and home office workers’ compensation claim technical functions.

Burr reports to Stephen Eisenmann, senior vice president, Claims. Mr. Eisenmann commented: “We are excited to have someone with George’s knowledge and experience in workers’ compensation claims heading up our West Coast claims operation. George is a welcome addition to the claims management team as he shares C&F’s proactive claim management philosophy of early exposure recognition and high customer service standards.”

Court of Appeal Rules that Police Officer 4850 Pay is Part of 104 Week Cap

Bryan Knittel injured his knee in 2009 while working as an Alameda County Deputy Sheriff. Knittel was unable to perform his duties after the injury, and the County of Alameda (County) paid disability benefits from the date of his injury.

He was classified as temporarily disabled for over two years. For the first year Knittel was disabled, the County paid him benefits pursuant to Labor Code section 4850. Under that section, public safety officers who are disabled in the course of their duties are entitled to a leave of absence without loss of salary for up to one year. After the first year passed, the County paid Knittel “regular” temporary disability indemnity benefits for another year. The County then ceased to pay temporary disability indemnity, citing the 104-week limit on aggregate disability payments for an injury causing temporary disability. (Labor Code 4656, subd. (c)(2).).

Knittel disputed the County’s interpretation of the law and requested a hearing before the Workers’ Compensation Appeals Board (WCAB). At the hearing, the workers’ compensation judge (WCJ) assigned to the matter agreed with Knittel, concluding section 4850 benefits do not “count toward the two-year limitation under Section 4656.” The County filed a petition for reconsideration. The WCAB denied the petition in an order that merely adopted the reasons stated by the WCJ in his report. The County then filed a petition for review. The Court of Appeal in the published opinion of County of Alameda v WCAB and Bryan Knittel reversed the WCAB and remanded the case for further proceedings.

The Court noted that there have not been any prior decisions have interpreted the statutory language of Labor Code 4656, subd. (c)(2) at issue in this appeal.

There is a special benefit for injured public safety officers. Pursuant to section 4850, eligible public safety officers who become disabled while performing their duties are entitled to a one-year leave of absence without loss of salary “in lieu of temporary disability payments” for up to one year. If the disability continues beyond one year, the officer is entitled to an unpaid leave of absence and whatever other benefits that might be available under the workers’ compensation law.

In 2004, as part of a comprehensive reform of the workers’ compensation law, the Legislature enacted a 104-week limit on disability payments for an injury causing temporary disability. The law currently (and at the time Knittel was injured) provides: “Aggregate disability payments for a single injury occurring on or after January 1, 2008, causing temporary disability shall not extend for more than 104 compensable weeks within a period of five years from the date of injury.” (§ 4656, subd. (c)(2).). The question here is the meaning of “[a]ggregate disability payments.” The Labor Code does not define the phrase. The County argued that the phrase also encompasses other disability payments for injuries causing temporary disability, including the salary continuation benefit payable to public safety officers pursuant to section 4850.

The Court of Appeal concluded that “The County’s arguments are persuasive. If section 4850 payments are workers’ compensation benefits, then they are part of the “aggregate” of disability payments when they are paid for an injury causing temporary disability. Knittel received an aggregate of two types of workers’ compensation benefits for his temporary disability: section 4850 salary continuation benefits and temporary disability indemnity. Pursuant to section 4656, subdivision (c)(2), Knittel was entitled to a total of 104 weeks of those combined disability benefits, and he received 52 weeks of section 4850 benefits and 52 weeks of temporary disability indemnity.”The reasoning employed by the WCJ to reach the conclusion that section 4850 benefits are not included in aggregate disability payments is unconvincing.”

The current form of the 104-week limit, subdivision (c)(2) of section 4656, was added by the Legislature in 2007. “Ultimately we agree with the County that the Legislature expressed its intent in the plain language of section 4656, subdivision (c)(2). Given the Legislature’s choice of the words “[a]ggregate disability payments,” we think it is clear that section 4850 benefits paid for an injury causing temporary disability must count toward the 104-week limit absent a specific exclusion. Our conclusion is bolstered by the fact that when the Legislature added subdivision (c)(2), the case authority holding section 4850 payments are workers’ compensation benefits was long standing and well established.”

“It appears the Legislature tried to reach a compromise with subdivision (c)(2) of section 4656 – a year of enhanced benefits for public safety officers under section 4850 followed by a year of temporary disability indemnity. To the extent the law is not working or the compromise is unfair, the parties should bring their concerns to the attention of the Legislature.”

Court of Appeal Rules Against Industrial Carrier In Subrogation Case

Bernardino Mejia-Gutierrez began working for AC Square in 2001. AC Square was hired by Comcast to install, maintain, repair, and replace cable utility lines (drop lines), which run from a utility pole to a customer’s building. On the day of his accident, Mejia-Gutierrez was at the jobsite and had already determined that he would use a ladder rather than a bucket truck to do the job To replace the drop line, Mejia-Gutierrez hung his ladder from the mid-span wire. After he ascended the ladder, the wire he was going to replace snapped where there was a knot in it, which made the ladder rock back and forth. Then another wire, which was attached to an adjacent house, snapped, which made the ladder rock even more. Mejia-Gutierrez lost his balance and fell some 26 feet to the ground. As a result of the injuries he sustained in the fall, Mejia-Gutierrez received workers’ compensation benefits from Seabright Insurance Company..

Seabright Insurance Company intervened in a negligence action brought by Bernardino Mejia-Gutierrez and his wife Elvira Vasquez against Comcast of California III, Inc. for on-the-job injuries Mejia-Gutierrez sustained while working for AC Square, a cable company hired as a subcontractor by Comcast. On March 18, 2010, Vasquez dismissed her claim and, on April 5, 2011, Mejia-Gutierrez dismissed his claim with prejudice. At that point, Seabright was the only remaining plaintiff in the case.

On April 13, 2011, Comcast filed a motion for summary judgment. On June 12, 2011, the trial court granted Comcast’s summary judgment motion, ruling that Seabright had not raised a triable issue of material fact as to Comcast “either having negligently exercised retained control, or having breached a relevant non-delegable duty.” Seabright appealed the trial court’s grant of summary judgment in favor of Comcast. The Court of Appeal sustained the judgment in favor of Comcast in the unpublished decision of Bernardo Mejia-Gutierrez v Comcast of California.

Under the peculiar risk doctrine, a person who hires an independent contractor to perform work that is inherently dangerous can be held liable for tort damages when the contractor’s negligent performance of the work causes injuries to others. In Privette v. Superior Court (1993) 5 Cal.4th 689, 691, the California Supreme Court for the first time addressed the potential conflict between the peculiar risk doctrine, as applied in favor of the contractor’s employees, and the system of workers’ compensation. “When an employee of the independent contractor hired to do dangerous work suffers a work-related injury, the employee is entitled to recovery under the state’s workers’ compensation system. That statutory scheme, which affords compensation regardless of fault, advances the same policies that underlie the doctrine of peculiar risk. Thus, when the contractor’s failure to provide safe working conditions results in injury to the contractor’s employee, additional recovery from the person who hired the contractor – a nonnegligent party – advances no societal interest that is not already served by the workers’ compensation system.” The Court therefore joined “the majority of jurisdictions in precluding such recovery under the doctrine of peculiar risk.”

Our Supreme Court further developed the principles discussed in Privette and Toland in Hooker v. Department of Transportation (2002) 27 Cal.4th 198, 202 (Hooker), holding that an independent contractor’s employee can recover in tort from the contractor’s hirer if the hirer retained control of safety conditions at a worksite and its negligent exercise of that retained control “affirmatively contributed to the employee’s injuries.”

In sum, the Privette line of cases “establishes that an independent contractor’s hirer presumptively delegates to that contractor its tort law duty to provide a safe workplace for the contractor’s employees.”

In the present case, Seabright contends the evidence raised triable issues of material fact as to whether Comcast retained control of the jobsite and affirmatively contributed to Mejia-Gutierrez’s injuries. It also contends the evidence raised a triable issue of material fact as to whether Comcast breached a nondelegable regulatory duty to provide Mejia-Gutierrez with a safe workplace.

The Court conclude that, regardless of whether there were problems with either of the wires that snapped, such as crystallization or a knot, which played a part in its snapping, the general duty of rule to “frequently and thoroughly” inspect lines to ensure they are in good condition – is not a basis for holding Comcast liable for Mejia-Gutierrez’s injuries. This is particularly so, given that Mejia-Gutierrez, on behalf of AC Square, was specifically responsible for discerning and addressing problems with drop lines and ensuing job site safety.

Michael McFadden New Regional VP for Patriot National Insurance

Patriot National Insurance Group, a leading provider of workers’ compensation insurance solutions announced the appointment of Michael McFadden as Regional Vice President for California. As RVP, Mr. McFadden will oversee all marketing and underwriting responsibilities for California, and will be based at Patriot’s western regional office in Woodland Hills, CA.

Steven Mariano, Chief Executive Officer and Chairman of Patriot National Insurance Group said, “Mike’s extensive workers’ compensation background and strong leadership make him the natural choice to lead the California region. We are excited to continue our expansion in California operations.”

Mr. McFadden said, “Since joining Patriot in October of 2011 its been a tremendous experience expanding our west coast regional headquarters. The RVP position will allow me to continue to grow the talent within our operation, which now includes local underwriting presence, while also having personal involvement in the production and distribution channels in the region.”

Before joining Patriot National, Mr. McFadden held various leadership positions at Zenith Insurance Company and was most recently Zenith’s Vice President of Claims for the Los Angeles regional office. Mr. McFadden was also the manager of Organizational Development for RJM Adjusters, Inc. He graduated from University of Phoenix with a degree in Business Management.

Patriot National Insurance Group is an insurance holding company focused on workers’ compensation insurance. Patriot National Insurance Group has two operating subsidiaries- Guarantee Insurance Company and Patriot Underwriters, Inc.

Steven E. Penman New Sedgwick Chief Operating Officer

Sedgwick announced today that Steven E. Penman has been named the company’s chief operating officer.

Spending nearly his entire storied career with Sedgwick, Penman joined the company in 1978 and since then has served in several management and leadership roles. As chief information officer, Penman oversaw the original design and development of the JURIS® system, Sedgwick’s industry-leading proprietary technology platform that remains the heart and soul of its business. Under Penman’s leadership, cutting-edge systems and technology became an integral part of Sedgwick’s service offerings.

Penman later transitioned to the operations side of the business, spending nearly a decade as director of field operations with management responsibility for Sedgwick’s claims servicing teams. Most recently, he served as executive vice president of specialty operations, helping Sedgwick grow its specialty claims operations, customer service centers, ancillary services, and clinical and cost containment operations.

Penman began his professional career at Blue Cross Blue Shield, programming the company’s Medicare claims system. He is also a former member of the U.S. Marine Corps.

“Thanks to Steve Penman ‘s thirty-plus years of service with Sedgwick and his wealth of industry knowledge and experience, he understands our business – and that of our clients – inside and out,” said David A. North , Sedgwick’s president and CEO. “Steve is the ideal person to help lead our company to the next stage of our continued growth and development.”

Sedgwick and its affiliated companies deliver claims, productivity, managed care, risk consulting, and other services to clients through the expertise of more than 10,000 colleagues in 195 offices located in the U.S. and Canada. The company specializes in workers’ compensation; disability, FMLA, and other employee absence; managed care; general, automobile, and professional liability; warranty and credit card claims services; fraud and investigation; structured settlements; and Medicare compliance solutions. Sedgwick and its affiliates design and implement customized programs based on proven practices and advanced technology that exceed client expectations. For eight years in a row, Sedgwick has been awarded the distinguished Employer of Choice® certification, the only third-party administrator (TPA) to receive this designation. In 2011 and 2012, the company was named the Best Overall Large Account TPA by buyers of risk services through an independent survey conducted by Business Insurance.