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Category: Daily News

Study Confirms SB 863 Medical Cost Savings

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California Senate Bill (SB) 863, signed into law in 2012, may have contributed to decreases in medical payments per workers’ compensation claim in 2013 and 2014, according to CompScope – Medical Benchmarks for California, 17th Edition, a study by the Workers Compensation Research Institute (WCRI).

According to the study, medical payments per claim in California decreased 4 percent in 2013 and then 3 percent in 2014 for claims with more than seven days of lost time at 12 months of experience, mainly driven by decreases in payments per claim for nonhospital services.

“California’s experience differed from most of the other 17 states WCRI studied since in many states, medical payments per claim grew from 2012 to 2014,” said Ramona Tanabe, WCRI’s executive vice president and counsel. “The decrease in medical payments per claim in California likely reflects the impact of SB 863 provisions.”

Effective January 2013, SB 863 reduced the fee schedule rates for services at ambulatory surgery centers (ASCs). Following this policy change, the average ASC facility payment per claim decreased 27 percent from 2012 to 2014, according to the study. Future WCRI studies will continue to monitor the full impact of SB 863.

Starting in 2014, the law began phasing in the use of a fee schedule based on Medicare’s resource-based relative value scale (RBRVS) for professional services over a four-year period. WCRI reported that prices paid for primary care services increased while prices paid for specialty care decreased in 2014 and 2015. These changes are consistent with the policy goal.

Other reform provisions that may have contributed to decreases in medical payments per claim include eliminating separate reimbursement for implantable medical devices, hardware, and instruments for spinal surgeries; requiring a $150 fee to file liens against an employee’s workers’ compensation benefits and a $100 activation fee for liens already filed; and establishing an independent medical review (IMR) process.

Among other study findings:

1) California had higher medical payments per claim compared with many other study states.

2) Payments per claim for hospital services remained stable from 2009 to 2014 in California.

WCRI studied medical payments, prices, and utilization in 18 states, including California, looking at claim experience through 2015 on injuries that occurred mainly in 2009 to 2014. WCRI’s CompScope Medical Benchmark studies compare payments from state to state and across time. Copies of this report can be ordered from the WCRI web site.

The Cambridge-based WCRI is recognized as a leader in providing high-quality, objective information about public policy issues involving workers’ compensation systems.

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Congress Overwhelmingly Passes New FDA Overhaul

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The Senate voted overwhelmingly to support sweeping legislation that will reshape the way the Food and Drug Administration approves new medicines. It will also provide funding for cancer and Alzheimer’s research, help fight the opioid epidemic, expand access to mental health treatment and advance research into precision medicine.

According to Reuters Health, the 21st Century Cures Act was passed last week by the House of Representatives and will now go to President Barack Obama to sign into law. Supporters say it will speed access to new drugs and devices, in part by allowing clinical trials to be designed with fewer patients and cheaper, easier-to-achieve goals.

“For the second consecutive year, the Senate is sending the President another Christmas miracle for his signature,” Senator Lamar Alexander, a Republican from Tennessee said in a statement. “Last year, it was the Every Student Succeeds Act, and this time, it’s the 21st Century Cures Act – a bill that will hbelp virtually every American family.”

Critics of the legislation say it gives massive handouts to the pharmaceutical industry and will lower standards for drug and medical device approvals.

“This gift – which 1,300 lobbyists, mostly from pharmaceutical companies, helped sell – comes at the expense of patient safety by undermining requirements for ensuring safe and effective medications and medical devices,” consumer watchdog Public Citizen said in a statement.

Democratic Senator Elizabeth Warren was among the handful of senators who voted against the bill, as was independent senator and former Democratic presidential candidate Bernie Sanders. Each decried what they described as big handouts to the pharma industry. Even so the bill passed 94-5. The House passed it by a vote of 392-26.

The $6.3 billion act, sponsored by Republican Representative Fred Upton, authorizes $4.8 billion for the National Institutes of Health and $500 million to the Food and Drug Administration.

It also calls for $1 billion over two years to battle the opioid epidemic. On Tuesday the Drug Enforcement Administration issued a report showing that in 2014 about 129 people died every day as a result of drug poisoning. Of those, 61 percent are opioid or heroin related.

“Opioids such as heroin and fentanyl – and diverted prescription pain pills – are killing people in this country at a horrifying rate,” Acting Administrator Chuck Rosenberg said. “We face a public health crisis of historic proportions.”

The bill also calls for $1.8 billion in funding for Vice President Joseph Biden’s Cancer Moonshot initiative designed to bolster cancer research by reducing bureaucracy and promoting research collaboration.

Critics note that the money described in the bill must be appropriated by separate funding bills and that the money may ultimately never materialize. Yet the changes to the clinical trial process, something long sought by the drug industry, will be set in stone regardless of whether money for the research projects is forthcoming.

Among those changes: Greater prominence will be given to “real world” evidence gathered outside the framework of a randomized, controlled clinical trial, the gold standard for determining whether a drug is safe and effective. Such evidence could be much easier for drug companies to collect.

“The passing of 21st Century Cures Act is a show of extraordinary bipartisan unity after a divisive election that should be celebrated,” said Ellen Sigal, chair of the patient advocacy group Friends of Cancer Research.

Under the Act patient input will be formally incorporated into the FDA’s drug review process.

Funding for the Act will be offset by reductions in some Medicaid payments and through the sale of oil from the Strategic Petroleum Reserve. The White House supports the bill but said earlier it was concerned that draining the Petroleum Reserve “continues a bad precedent of selling off longer term energy security assets to satisfy near term budget scoring needs.”

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U.S. Life Expectancy Declines for First Time in 23 Years

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Reserving estimates for claims with lifetime awards have been a complex task, and for years the assumption has been that the life expectancy of cliamants will continue to increase, thus requiring higher reserves and ultimately higher claim costs. Similarly, the price for annuities, and Medicare Set Aside trusts have been based upon an assumed life expectancy.

In most of the years since World War II, life expectancy in the U.S. has inched up, thanks to medical advances, public health campaigns and better nutrition and education.

But, according to a study just released by the Centers for Disease Control, last year it slipped, an exceedingly rare event in a year that did not include a major disease outbreak. Other one-year declines occurred in 1993, when the nation was in the throes of the AIDS epidemic, and 1980, the result of an especially nasty flu season. In 2015, rates for 8 of the 10 leading causes of death rose. Even more troubling to health experts: the U.S. seems to be settling into a trend of no improvement at all.

Gender matters: For males, life expectancy fell to 76.3 years from 76.5 years. For women, life expectancy decreased to 81.2, about 0.1 year from 2014.

The culprits for our declining years were increases in mortality from heart disease, chronic lower respiratory diseases, unintentional injuries, stroke, Alzheimer’s disease, diabetes, kidney disease, and suicide. Not surprisingly, that group plus cancer and Alzehimer’s disease make up the top 10 causes of U.S. deaths.

Heart disease and cancer are the runaway top killers. The death rate from heart disease increased almost 1%. The death rate from cancer actually fell 2.7%.

Heart disease rates are probably a function of the U.S. obesity epidemic,  say the obesity epidemic, Donald Lloyd-Jones, head of preventive medicine at Northwestern University’s Feinberg School of Medicine, told the Wall Street Journal. Obesity is blamed for increases in rates of hypertension, diabetes and other heart-related problems.

“We’re reaping what we’ve sown,” Lloyd-Jone said. “It’s a clear causal chain.”

But some researchers are also pointing to upticks in suicides and drug use – particularly among poorer white Americans – as potentially contributing factors. “Clearly, that could be related to the economic circumstances that many Americans have experienced in the last eight years, or so, since the recession,” University of Pennsylvania sociologist Irma Elo told NPR.

The United States ranks below dozens of other high-income countries in life expectancy, according to the World Bank. It is highest in Japan, at nearly 84 years.

It is yet too early to determine if this is a trend, or an anomaly. In either case, claims administrators continue to be caught in the middle in terms of justifying reserve estimates for lifetime awards.

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Did Pandora’s Box Just Open For Secondary Injuries to Families?

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Plaintiffs in these actions for personal injury and wrongful death allege that take-home exposure to asbestos was a contributing cause to the deaths of Lynne Haver and Johnny Kesner, and that the employers of Lynne’s former husband and Johnny’s uncle had a duty to prevent this exposure.

In the first case, Johnny Blaine Kesner, Jr., was diagnosed with perotineal mesothelioma in February 2011. He filed suit against a number of defendants he believed were responsible for exposing him to asbestos and causing his mesothelioma.

Johnny’s uncle, George Kesner, worked at the Abex plant in Winchester, Virginia, for much of George’s life, where George was exposed to asbestos fibers released in the manufacture of brake shoes. According to George, Johnny spent an average of three nights per week at his uncle’s home from 1973 to 1979. When Johnny was at his uncle’s home, he would sometimes sleep near George or roughhouse with George while George was wearing his work clothes.

Johnny alleged that his exposure to asbestos dust from the Abex plant, carried home on his uncle’s clothes, contributed to his contracting mesothelioma. Johnny died in December 2014, after the Court of Appeal issued its judgment in this matter. Cecelia Kesner is his successor in interest.

In the companion case, Lynne Haver was diagnosed with mesothelioma in March 2008 and died in April 2009. Her children, Joshua Haver, Christopher Haver, Kyle Haver, and Jennifer Morris (the Havers), filed a wrongful death and survival action alleging negligence, premises owner and contractor liability, and loss of consortium. They allege that Lynne’s exposure to asbestos by way of her former husband, Mike Haver, caused her cancer and death.

Mike was employed by the Atchison, Topeka, and Santa Fe Railway, a predecessor of BNSF Railway Company from July 1972 through 1974. In his position as fireman and hostler for BNSF, Mike was exposed to asbestos from pipe insulation and other products. The Havers allege that Mike carried home these asbestos fibers on his body and clothing, and that Lynne was exposed through contact with him and his clothing, tools, and vehicle after she began living with him in 1973.

Neither the Havers’ nor Kesner’s suit reached a jury as a result of the holding in Campbell v. Ford Motor Co. (2012) 206 Cal.App.4th 15, 34 (Campbell), which held that “a property owner has no duty to protect family members of workers on its premises from secondary exposure to asbestos used during the course of the property owner’s business.” The California Supreme Court granted review in both cases and consolidated them for argument and decision. The dismissal of their cases was reversed in Kesner v Superior Court.

In reversing the California Supreme Court held that the duty of employers and premises owners to exercise ordinary care in their use of asbestos includes preventing exposure to asbestos carried by the bodies and clothing of on-site workers.

Where it is reasonably foreseeable that workers, their clothing, or personal effects will act as vectors carrying asbestos from the premises to household members, employers have a duty to take reasonable care to prevent this means of transmission.

This duty also applies to premises owners who use asbestos on their property, subject to any exceptions and affirmative defenses generally applicable to premises owners, such as the rules of contractor liability.

Importantly, the Supreme Court held that this duty extends only to members of a worker’s household. Because the duty is premised on the foreseeability of both he regularity and intensity of contact that occurs in a worker’s home, it does not extend beyond this circumscribed category of potential plaintiffs.

The obvious question that arises out of this decision is what other types of toxic claims will follow? Or will this case be strictly limited to asbestos exposure?  If not limited only to asbestos, the potential for this case to open a Pandora’s box of secondary claims by immediate family members of workers injured by toxic materials in the workplace will no doubt follow. These secondary claims will not be limited to worker’s compensation by the exclusive remedy rule, and it is unclear what insurance, if any, will be responsible for indemnification.  

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Exclusive Remedy Not Applicable to “Training” Robbery

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This case involves the applicability of the workers’ compensation exclusivity rule to an unusual set of facts.

Plaintiff Kathy Lee was employed as a cashier of defendant West Kern Water District, at the district’s office, working behind a partition where customers came to pay their water bills, often in cash.

She sued the district and four coemployees for assault and intentional infliction of emotional distress after the coemployees staged a mock robbery with Lee as the victim. The district provided its employees with some training on how to respond to a robbery. The complaint alleged that four supervisors formed a plan to test how the district’s female employees would respond if they believed they were really being robbed.

In the mock robbery, one of the district’s managers entered the district’s office in a mask and confronted Lee at the cashier’s window with a note demanding money and saying he had a gun. Lee, who had not been informed of the planned mock robbery, handed over the money and subsequently was treated for psychiatric injury.

The complaint alleged that after the robbery, Lee was crying, shaking, and nauseous and finally had to go home. She later suffered from fears, depression, nightmares, headaches, loss of appetite, and ongoing nausea. She sought psychological treatment and had to use all her accrued sick leave and vacation time during an extended absence from work.

Lee claimed that, even if the facts satisfied the Labor Code section 3600 conditions for an exclusive workers’ compensation remedy, she could still recover damages in this lawsuit because an exception applied, the assault exception of Labor Code section 3602, subdivision (b)(1).

A jury instruction was allowed pertaining to the applicability of the exclusive workers’ compensation remedy was requested by Lee and objected to by defendants. It said “employer conduct is considered outside the scope of the workers’ compensation scheme when the employer steps outside of its proper role or engages in conduct unrelated to the employment.”

The jury awarded her $360,000, however the trail court granted the motion for a new trial. The trial court reasoned that, because the complaint conceded the workers’ compensation exclusivity rule applied unless the assault exception was proven, the jury should not have been instructed with CACI No. 2800, which said the defense had to prove the elements of the exclusivity rule. Instead, the jury should have been told the exclusivity rule applied unless Lee established the assault exception.

The order granting a new trial was reversed in the published case of Lee v Western Kern Water District.

Labor Code section 3602, subdivision (a), repeats the rule that workers’ compensation benefits are the exclusive remedy for industrial injury. Subdivision (b) of that section lists three exceptions to the exclusivity rule. The one pertinent here is: “Where the employee’s injury or death is proximately caused by a willful physical assault by the employer.” (Lab. Code, § 3602, subd. (b)(1).) Subdivision (c) makes explicit the converse of the exclusivity rule, i.e., that ordinary civil remedies apply to injuries falling outside the workers’ compensation system: “In all cases where the conditions of compensation set forth in Section 3600 do not concur, the liability of the employer shall be the same as if this division had not been enacted.” (Lab. Code, § 3602, subd. (c).)

Labor Code section 3601 extends the exclusivity rule to bar tort actions against coemployees who cause injury while acting in the scope of employment.

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Hip Maker Hit With $1 Billion Jury Verdict

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A federal jury in Dallas last Thursday ordered Johnson & Johnson and its DePuy Orthopaedics unit to pay more than $1 billion to six California plaintiffs who said they were injured by Pinnacle hip implants.

The jurors found that the metal-on-metal Pinnacle hip implants were defectively designed and that the companies failed to warn consumers about the risks.

J&J, which faces more than 8,000 lawsuits over the hip implants, said in a statement it would immediately appeal the verdict and was committed to defending itself and DePuy from further litigation over the Pinnacle devices.

The six plaintiffs awarded more than $1 billion are California residents who were implanted with the hip devices and experienced tissue death, bone erosion and other injuries they attributed to design flaws. Plaintiffs claimed the companies promoted the devices as lasting longer than devices that include ceramic or plastic materials.

According to plaintiff’s lawyer Mark Lanier, the total verdict of $1.041 billion included $32 million in compensatory damages. The rest were punitive damages.

Verdicts of such size are often scaled back by courts. In July, the judge presiding over this case, U.S. District Judge Edward Kinkeade, reduced a $500 million verdict in an earlier Pinnacle implant case to $151 million, citing a Texas state law that limits punitive damages awards.

J&J and DePuy have been hit with nearly 8,400 lawsuits over the devices, which have been consolidated in Texas federal court. Test cases have been selected for trial, and their outcomes will help gauge the value of the remaining claims.

The verdict on Thursday came in the third test case, with the second producing the earlier $500 million verdict. J&J and DePuy were cleared of liability in the first test case in 2014

The company rejected a $1.8 million settlement offer from the plaintiffs before trial, Lanier said.

The plaintiffs in the second test case have appealed Kinkeade’s decision to cut the award. Johnson & Johnson and DePuy have also appealed the jury verdict in the case.

John Beisner, J&J’s attorney, said the company will ask the appeals court to postpone any additional trials over the implant defects.

DePuy ceased selling the metal-on-metal Pinnacle devices in 2013 after the U.S. Food and Drug Administration strengthened its artificial hip regulations.

J&J and DePuy also paid $2.5 billion that year to settle more than 7,000 lawsuits over its ASR metal-on-metal hip devices. The ASR devices were recalled in 2010 due to high failure rates.

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Fresno Sleep Center Loses Whistleblower Retaliation Suit

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A Fresno County jury has awarded more than $600,000 to a respiratory therapist who said she was wrongfully terminated at a sleep medicine center because she blew the whistle on Medicare fraud.

Tansi A. Casillas, 51, of Fresno, alleged that her employer, Central California Faculty Medical Group, eliminated her position at University North Medical Specialty Center in retaliation for the fraud complaints she made and for refusing to perform medical services outside the scope of her respiratory care license. Central California Faculty Medical Group is a multispecialty practice affiliated with UCSF-Fresno. It operates several medical offices, including University North Medical Specialty Center for pulmonary and sleep medicine.

In her lawsuit, Casillas said doctors left the responsibility to her to have face-to-face evaluations with patients on continuous positive airway pressure (CPAP), a treatment that keeps the airways open for people who have sleep apnea and other breathing problems. The patient and Medicare were later billed for a doctor’s visit, even though the patient was not seen by a doctor, the lawsuit said.

According to the lawsuit, the faculty medical group’s compliance department investigated Casillas’ claims and found the medical group had “erroneously” overbilled Medicare but that no fraud had occurred. The overbilling resulted in the medical group’s reimbursing Medicare for the overcharges, the lawsuit said.

The jury found Casillas had been retaliated against for being a whistleblower and awarded her $131,200 in economic and emotional damages. And later they awarded her $500,000 in punitive damages.

Karen Rushing, human resources director for Central California Faculty Medical Group, said in an email Wednesday that the medical practice strongly denied wrongdoing.

The faculty medical group, represented by San Francisco lawyer Steven R. Blackburn, argued in a motion to dismiss the case, saying that Casillas was terminated for economic reasons that were aggravated by “her bad behavior in interacting with her coworkers.”

According to Casillas’ lawsuit, the medical group falsely accused her of violating the company’s conflict of interest policy as part of its retaliation for being a whistleblower.

Casillas had worked as a respiratory therapist for the faculty medical group since November 2008 and had received good performance evaluations before her whistleblowing, the lawsuit said. But she worked under a “microscope” after she refused to perform medical services outside the scope of her respiratory care license and refused to participate in unlawful billing to Medicare, the lawsuit said.

She first voiced concerns about Medicare fraud to Dr. Lynn Keenan, medical director for sleep medicine at North Medical Specialty, on April 8, 2013, the lawsuit said. Concerned that the issue had not been taken seriously, she called the faculty medical group’s compliance officer and the National Board of Respiratory Care on April 9, 2013.

The following day, retaliation began, the lawsuit said.

The jury found that Casillas’ disclosure about Medicare fraud and her refusal to participate in medical services outside the scope of her respiratory care license were contributing factors in the faculty medical group’s decision to discharge her. And the jury found the medical practice would not have discharged her for legitimate, independent reasons.

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WCAB Proposes New Lien Claim Rules

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The Workers’ Compensation Appeals Board has issued a notice of public hearing regarding a proposed addition and amendments to its Rules of Practice and Procedure.

Lien claims must be filed electronically on a form approved by the WCAB. (Lab. Code, § 4903.05(a); Cal. Code Regs., tit. 8, §10770(b)(1)(A).)

Senate Bill (SB) 1160 (Stats. 2016, ch. 868) amended Labor Code section 4903.05 to require section 4903(b) lien claimants to file an original bill and a declaration that includes information regarding the type of services provided by the lien claimant. To effectuate these legislative changes, the WCAB proposes amending rule 10770 and adopting rule 10770.7.

A lien claimant’s failure to timely file this declaration shall result in the dismissal of the lien with prejudice by operation of law per Labor Code section 4903.05(c)(3). This rulemaking will mandate use of an e-filed declaration form in order to ensure uniform procedures for lien claimants who first file their liens after January 1, 2017 and current lien claimants who are required to file a declaration by July 1, 2017.

The public hearing is scheduled on Wednesday, January 4 at 10 a.m. in the Milton Marks Conference Center, Santa Barbara Room of the Hiram Johnson State Office Building at 455 Golden Gate Avenue in San Francisco. Members of the public may also submit written comment on the proposed rules amendments until 5 p.m. that day.

The notice, draft regulations text and initial statement of reasons are posted online.

Comments may be submitted by e-mail to WCABRules@dir.ca.gov or they may be mailed to: Workers’ Compensation Appeals Board Attention: Annette Gabrielli, Regulations Coordinator P.O. Box 429459 San Francisco CA 94142-9459.

Although equal weight will be accorded to oral and written comments, the WCAB prefers written comments to oral testimony and prefers written comments submitted by e-mail. If written comments are timely submitted, it is not necessary to present oral testimony at the public hearing.

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Memorial Services Set for Applicant Attorney David Ashton

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It is with great sadness that we announce the passing of applicant’s attorney David Wallace Ashton of Milburn and Ashton. He was born March 3, 1956 and was 60 years of age when he died from cancer on December 1.

His offices has provided legal services to the residents of the Antelope Valley and surrounding communities for more than 30 years. He was very well respected in the workers’ compensation community.

Mr. Ashton graduated from California Polytechnic State University San Luis Obispo with Honors in 1978. He obtained his Master’s Degree in Education from Azusa Pacific University, and his Juris Doctor from University of Laverne in 1992.

He was admitted to the State Bar of California on December 14, 1992, and to the United States Federal District Court on January 11, 1993.

Mr. Ashton has been practicing workers’ compensation law for over 22 years, primarily before the Van Nuys, Bakersfield and San Bernardino Workers’ Compensation Appeals Boards.

He is an active member of the California Applicants Attorney Association (CAAA), the Antelope Valley Bar Association, and the State Bar of California. Mr. Ashton had extensive trial and litigation experience before both the Workers’ Compensation Appeals Board and the Central District California Court of Appeals.

One of his co-workers – Jennifer Loza – said that “Dave was the best boss, and also one of the greatest human beings, in the whole world. My heart is broken. My deepest condolences to Sharon and the kids, who were always the most important things to him. Dave, you fought like a honey badger.”

Services will be held at Joshua Memorial Chapel 808 East Lancaster Blvd. Lancaster, CA 93535 Wednesday December 7th, 2016 at 11:00 am, Graveside Service to follow at 12:00 pm. In lieu of flowers please send donations to City of Hope and PSP Society.

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DWC Appoints James R. Libien to EAC

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The Division of Workers’ Compensation (DWC) Acting Administrative Director George Parisotto has appointed James R. Libien Esq., to serve as a member of the Workers’ Compensation Ethics Advisory Committee. The appointment is effective today.

Mr. Libien is counsel with Renn Sloan Holtzman Sakai, specializing in workers’ compensation.

He has represented public and private employers before the Workers’ Compensation Appeals Board (WCAB). He has also served as a pro tem judge and as a mediator. He will fill the position to be held by an attorney who formerly practiced before the WCAB and who usually represented defendants, which was previously held by the late Robert Ruby.

The ethics advisory committee, established in 1995 by Title 8, California Code of Regulations, section 9722, reviews all ethics complaints from the public against workers’ compensation administrative law judges. The committee reviews all complaints without learning the names of complainants or judges, and then makes recommendations to the administrative director and the DWC court administrator. The committee meets quarterly and members serve without compensation.

As civil servants, WCALJs are not subject to review by the California Commission on Judicial Performance, the agency responsible for investigating misconduct complaints directed at judges serving on the Supreme, Superior, and Appellate courts.

The regulation provides that the committee must include: three members of the public individually representing organized labor, insurers and self-insured employers; an attorney who formerly practiced before the WCAB and who usually represented insurers or employers; an attorney who formerly practiced before the WCAB and who usually represented applicants; a presiding judge; a workers’ compensation administrative law judge (WCALJ) or retired WCALJ; and two members of the public outside the workers’ compensation community.

A judicial ethics complaint form and instructions can be found on the forms page of the DWC website. Anyone may file a complaint with the EAC. Complaints may be submitted anonymously, but all complaints must be presented in writing.

An EAC case is typically opened after the DWC receives a letter from an injured worker, an attorney, or a lien claimant (i.e., medical provider) who has been a party to a proceeding before a WCALJ employed by the DWC, and the complaint alleges ethical misconduct by that judge. The DWC then sends a letter to the complainant acknowledging that the complaint was received by the EAC.

Each complaint that alleges misconduct by a judge is formally reviewed by the EAC. To ensure objectivity by the reviewing members on the EAC, the committee adopted a policy requiring that the names of the complainant, the WCALJ, and witnesses as well as the specific DWC office where the alleged misconduct occurred be redacted from the copies of complaints reviewed at each meeting.

The committee prepares an annual report of its findings for the year. The latest report was published last March.

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