Category: Daily News

David Miller is a stickler for safety at the Goodwill stores he runs in central California. So when Applied Underwriters offered his nonprofit a deal on insurance for workplace accidents if he could minimize injuries, he jumped at the opportunity. Even better, Applied was part of Berkshire Hathaway Inc., the firm controlled by Warren Buffett.

But according to the report in the Insurance Journal, these days, he wishes he hadn’t. The contracts Miller signed have turned into a burden for his organization. It paid $1.8 million to cover about 350 employees, many disabled or disadvantaged at 17 locations from Lodi to Visalia. When the nonprofit switched carriers last year, Applied demanded hundreds of thousands of dollars more to fund remaining claims.

“I’m trying to make money in my stores to help people,” said Miller, chief executive officer of Goodwill Industries of San Joaquin Valley. “Instead, I’m writing big checks to an insurance company that I probably don’t even owe.”

Miller’s nonprofit is one of dozens of employers – from a bike-courier service in Manhattan to a linen-supply company in Sacramento – that have sued Applied for deceptive practices. The businesses allege the insurer peddled products regulators hadn’t approved. They complain about being surprised by large bills based on formulas that stacked the deck in the insurer’s favor. California, Vermont and Wisconsin have banned some Applied plans.

The insurer says that its products save employers money and that customers were aware of the terms. Companies that are litigating account for only about one in 400 policies sold, said Jeffrey Silver, Applied’s lawyer. The plans didn’t work out in their favor because they had claims that caused costs to go up, he said. They’re now “taking advantage of a regulatory situation” to avoid paying what they owe. About 90 percent of employers renew, Silver said.

The Berkshire subsidiary agreed to orders by regulators in California, Vermont and Wisconsin to halt some of its sales. But the company continues to press its case in California, its largest market, where it has asked a state court judge to overturn the insurance commissioner’s decision that its plans were illegal.

“It’s an innovative product,” Silver said. “And sometimes when you have an innovative product, regulators take a while to catch up to it. And that’s exactly what we think is happening here.”

As courts weigh these quarrels, this much is clear: It’s a lot of hot water for one of Buffett’s companies. The billionaire, who didn’t respond to requests for comment, tells Berkshire managers that “there’s plenty of money to be made in the center of the court.” In other words, no need to get close to the line, legally or ethically, to make some extra bucks.

Yet Applied has done just that, according to court filings, public records and interviews with more than two dozen business owners, brokers, consultants, attorneys, regulators and former employees of the insurer. Together, they describe a company that profits by enticing employers to make a financial gamble, even though some say they didn’t fully understand the rules.

It’s hard to pinpoint Applied’s profit. The unit accounts for just a sliver of Berkshire’s insurance business, which also includes Geico and contributed about one-fifth of the $24 billion of net income at Buffett’s firm last year. But state regulatory filings show how lucrative Applied’s workers’ comp plans were. Net income at California Insurance, one of the company’s largest subsidiaries, rose to $65.5 million in 2014 from a loss of $4.4 million five years earlier.

Margins were fat, too. The same subsidiary made more than 35 cents on each dollar in premium revenue it collected every year from 2010 to 2014, while workers’ comp insurers in California posted, in aggregate, an underwriting loss, according to the state’s insurance regulator.

Research presented at the ANESTHESIOLOGY® 2016 annual meeting claimed that millions of people take opioids for chronic back pain, but many of them get limited relief while experiencing side effects and worrying about the stigma associated with taking them. The American Society of Anesthesiologists (ASA) is an educational, research and scientific society with more than 52,000 members organized to raise and maintain the standards of the medical practice of anesthesiology.

The presentation noted that more than 100 million people in the United States suffer from chronic pain, and those with chronic low back pain are more likely than patients with other types of pain to be prescribed opioids. Unfortunately, these medications are addictive and can cause side effects, ranging from drowsiness to breathing problems.

“Patients are increasingly aware that opioids are problematic, but don’t know there are alternative treatment options,” said Asokumar Buvanendran, M.D., lead author of the study, director of orthopedic anesthesia and vice chair for research at Rush University, Chicago, and vice chair of the American Society of Anesthesiologists (ASA) Committee on Pain Medicine. “While some patients may benefit from opioids for severe pain for a few days after an injury, physicians need to wean their patients off them and use multi-modal therapies instead.”

In the study, 2,030 people with low back pain completed a survey about treatment. Nearly half (941) were currently taking opioids. When asked how successful the opioids were at relieving their pain, only 13 percent said “very successful.” The most common answer – given by 44 percent – was “somewhat successful” and 31 percent said “moderately successful.” Twelve percent said “not successful.”

Seventy-five percent said they experienced side effects including constipation (65 percent), sleepiness (37 percent), cognitive issues (32 percent) and dependence (29 percent).

Respondents also had concerns about the stigma associated with taking opioids. Forty-one percent said they felt judged by using opioids. While 68 percent of the patients had also been treated with antidepressants, only 19 percent felt a stigma from using those.

A major pharmaceutical company recently agreed to disclose in its promotional material that narcotic painkillers carry serious risk of addiction and not to promote opioids for unapproved, “off-label” uses such as long-term back pain. Researchers also note a lack of solid studies on the effectiveness of opioids in treating back pain beyond 12 weeks.

Patients with chronic low back pain, persistent pain lasting more than three months, should see a pain medicine specialist who uses an approach that combines a variety of treatments that may be more beneficial, said Dr. Buvanendran. These treatments include physical therapy, bracing, interventional procedures such as nerve blocks, nerve ablation techniques or implantable devices, other medications such as anti-inflammatories and alternative therapies such as biofeedback and massage, he said.

Kathleen McKinney injured her neck and other body parts in 2014 while working as a driver for Enterprise Rent a Car. She filed four separate Petitions for Penalties and Sanctions under Labor Code sections 5813 and 5814. The gravamen of applicant’s theory is that when the RFAs were submitted, defendant had in its possession and control medical reports and records germane to each of the four RFAs and failed to provide the same to WellComp, its UR organization for consideration, causing the RFAs to be denied.

The defendant filed an Answer to each of the four Petitions for Penalties and Sanctions. In answer to Petition for Penalties and Sanctions # 1, defendant asserts that the RFA for Diclofenac ER 100 mg #60 was timely denied by Utilization Review (UR). In answer to Petition #2, defendant asserts that the RFA for two boxes of Salonpas was timely denied by UR;  and in answer to Petition #3, defendant contends that the RFA for trigger point injections was timely denied by UR;  and in answer to Petition #4, defendant also asserts that the RFA for Soma 350 mg. #60 was timely denied by UR. With respect to all four Petitions, it claimed that the WCAB lacks jurisdiction over applicant’s claim for penalties and sanctions.

Each of the four UR determinations identify the documentation reviewed by the physician. In each instance, the documentation reviewed was limited to the actual RFA and the treating physician’s contemporaneous progress report. There is no indication that additional records or documents, including the January 8, 2015 MRI results, were provided to the evaluating doctor.

The MRI findings that were not reviewed by UR note “chronic discogenic endplate changes at several levels,” and go on to describe central and neural forarninal narrowing at several levels, as well as “concentric uncovertebral hypertrophy (3 mm) with a superimposed left paracentral disc protrusion” at C4-C5.

The reason given for the non-certification was “[r]equest does not adequately document myofascial pain syndrome.” However the PTP progress reports dated June 4, 2015; June 25, 2015; and July 23, 2015 state that applicant has myofascial pain syndrome.

The WCJ found that defendant acted with bad faith in its handling of four separate Requests for Authorization of Treatment’ (RFA), making it liable for the imposition of sanctions under the provisions of Labor Code2 section 5813. The WCAB disagreed and reversed the sanctions in the panel decision of McKinney v Enterprise Rent a Car.

The significant issues in this case is jurisdiction of the WCAB to award penalties and sanctions despite the fact that UR was timely. In this regard the defendant argued that any dispute over the medical necessity of a particular treatment modality is within the exclusive purview of Independent Medical Review (IMR).

On the issue of jurisdiction, the WCAB disagreed with the defendant and ruled that Labor Code 5813 specifically authorizes the Appeals Board or a WCJ to order a party, a party’s attorney, or both, to pay any reasonable expenses incurred by another party as a result of bad faith actions or tactics that are frivolous or solely intended to cause unnecessary delay. Similarly, if the employer or its insurance carrier unreasonably delay or refuse to pay compensation and/or provide reasonable and necessary medical treatment to the industrially injured worker, section 5814 authorizes an increase in the delayed compensation payment up to prescribed monetary amounts.

The WCJ determined that defendant’s conduct in handling the four RFAs resulted from its willful failure to comply with its obligations under Administrative Director Rule 10109 because it had access to all of applicant’s medical records and diagnostic testing results but did not take the initiative to insure that complete records were provided to the UR doctor.

On this issue the WCAB panel disagreed with the WCJ. It noted that Administrative Director Rules 9785(g) and 9792.6.1(1)(2) require the RFA to include documentation substantiating the need for the requested treatment. The primary treating physician, and not a claims adjustor, is the one who knows what medical records substantiate the requested treatment. The four RFAs submitted by the PTP did include documentation, and presumably, the records and reports the PTP included with each RFA were those, in her expert medical opinion, that supported the recommended treatment.

Therefore, the WCAB cannot say that under these circumstances, defendant’s failure to take the initiative and submit applicant’s complete medical record to the UR doctor was a willful failure to comply with its regulatory and statutory obligations, or an indication of a bad faith tactic that is frivolous or solely intended to cause delay.

BUT the WCAB did not reach the issue of a defendant’s duty in ensuring that there is a complete record review by the UR doctor since, in this case, it was not shown that defendant abrogated its duty in bad faith or by frivolous action solely intended to cause unnecessary delay.

The Personal Care Services program, which exceeded $14.5 billion in fiscal year 2014, is rife with financial scams, some of which threaten patient safety, according to a recent report from the Office of lnspector General at the Department of Health and Human Services.

The report exposes vulnerabilities in a system that more people will rely on as baby boomers age. Demand for personal care assistants is projected to grow by 26 percent over the next 10 years – an increase of roughly half a million workers – according to the U.S. Department of Labor.

“This type of industry is ripe for fraud,” warned Lynne Keilman-Cruz, a program manager at Alaska’s Department of Health and Social Services who has investigated widespread fraud. The risks increase because the care takes place out of view in people’s homes, and because neglected patients may not advocate for their own care.

The OIG report describes a range of rip-offs, some of which involve caretakers caught up in the nation’s opioid epidemic. In one Illinois case, a woman whose nursing license had been suspended for allegedly stealing drugs at work signed up as a caretaker. She billed Medicaid for $34,000 in caretaking services she didn’t provide – including charges made while she was on a Caribbean vacation. In Vermont, a caretaker on probation for drug possession split her paychecks with the patient’s wife – in exchange for stealing the patient’s prescription painkillers, while he lay in visible discomfort.

In other cases, Medicaid beneficiaries colluded in hoaxes, faking disability so they could hire unneeded help.

In some cases, elderly patients were neglected by their own children, who signed up for caretaker payments. In Idaho, a woman was hospitalized for severe dehydration and malnourishment after her son and caretaker, Paul J. Draine, neglected her. Investigators found the home they shared littered with drug paraphernalia. Draine pleaded guilty to fraud and abuse or neglect, and was sentenced to a sober home.

Investigators provided no count of how many cases of fraud and abuse involved relatives, but “it’s fairly common for family members to be the attendants, and it’s fairly common for those same family members to be the ones who are abusing, neglecting, or committing fraud,” said David Ceron, an OIG special agent based in Washington, DC. In California, three-quarters of Medicaid-funded personal assistants are relatives, though some states restrict hiring family members.

In California, a Kaiser Health News investigation last year revealed widespread problems, as well as a lack of training and oversight, in the state’s program, which is the largest in the U.S.

California’s frail elderly and disabled residents increasingly are receiving care in their own homes, an arrangement that saves the government money and offers many people a greater sense of comfort and autonomy than life in an institution. Yet caregivers are largely untrained and unsupervised, even when paid by the state, leaving thousands of residents at risk of possible abuse, neglect and poor treatment, a Kaiser Health News investigation found.

The move from nursing-home to in-home care is part of a massive shift across the nation, driven by cost-cutting and patient preference. In California, at least four times more elderly and disabled residents receive in-home care than live in nursing facilities – a rate that is only expected to rise as baby boomers age. California’s $7.3 billion IHSS program is the largest publicly funded caregiver program in the nation. The caseload has more than doubled since 2001 and now serves about 490,000 low-income clients throughout the state.

Kaiser Health News’ investigation into the IHSS program found that: training for caregivers is minimal and mostly optional. California doesn’t require training for everyone – even in CPR, first aid or preventing injuries. By design, IHSS is not a medical program and caregivers are supposed to confine themselves to tasks such as feeding, dressing or bathing. But some become ad hoc nursing aides, helping to dress wounds and manage medications. The state requires caregivers receive training and authorization from physicians in these cases, but only about one in nine caregivers receives it, officials say.

Counties are also supposed to report to the state “critical incidents” potential neglect, abuse or self-harm requiring immediate action. But reporting practices vary widely, yielding puzzling results. In fiscal year 2012-2013, for instance, not a single critical incident was reported among the 235,000 clients in Los Angeles, Orange and San Diego counties, the three largest in the state. That same year, smaller Sacramento County reported 1,688 incidents – accounting for most of the problems reported statewide.

“There is no evidence indicating that Sacramento County has a disproportionately higher number of critical incidents than other counties,” a Sacramento county spokeswoman said.

It is possible to have CMS approve a Zero Allocation settlement. In such a case, nothing is set aside for payment of future medical care. However the Centers for Medicare and Medicaid Services (CMS) made news last month by purportedly “correcting” their position on zero allocations by adding a new, controversial requirement.

CMS announced on November 1, 2016 , that effective immediately, the Workers’ Compensation Review Contractor (WCRC) will utilize procedures that were previously in effect in reviewing zero MSAs. CMS’s purported “new” position basically adopted a three-part test for a Medicare Set-Aside (MSA) to qualify for a zero allocation: (1) The case or body part in question has been denied throughout the case; (2) There has been no medical or indemnity payment for the denied case or body part; and (3) There is either a finding from a hearing on the merits from a court of competent jurisdiction relieving the carrier of liability or documentation from the beneficiary’s treating physician recommending no future treatment.

In other words, under this new requirement CMS may only approve a zero allocation if a judge has determined that no compensable workers compensation claim exists and no payments were made.

For lack of a better term, a judicial determination “on the merits” would be a trial. Trials in cases that are settled are extremely rare and almost never occur. Seeking to avoid an up or down determination at trial – realizing that both sides have significant risk in a trial – the parties agree to settle a denied claim on a doubtful and disputed basis. If the insurer or employer wins at trial, the case is over. There is no settlement. This makes CMS’s purported requirement of a judicial finding nearly impossible – and certainly irrational – to comply with.

In response to negative feedback from the worker’s compensation community, CMS provided the following announcement on its “What’s New” page:

“CMS recently received inquiries regarding procedural changes in the way that CMS’ Workers’ Compensation Review Contractor (WCRC) reviews proposed zero-dollar Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) amounts. CMS determined changes had transpired without prior notification. Effective immediately, the WCRC will utilize procedures that were previously in effect. CMS continually evaluates all policy and procedures related to WCMSA reviews and will publish any pending changes when or before they go into effect.”

So, for now, CMS is maintaining the status quo when it comes to zero allocation review procedures. Until CMS makes a subsequent announcement, the basic requirements to obtain a zero allocation CMS approval remain as follows:

1) The claim is denied; and
2) No payments, medical or indemnity, have ever been made.

It now appears that CMS tested an additional requirement for zero allocations: that parties obtain an “on the merits” determination in addition to the above-referenced requirements. It ends up that this additional requirement would simply not work in certain jurisdictions or in true disputed settlements.