Category: Daily News

In July, 2012 the State Fund brought an action for violation of the federal Racketeer Influenced and Corrupt Organizations Act (RICO) statute against defendants Alexander Zaks, M.D., Sana Khan, M.D., David Holmes, D.C., and Daniel Reyes, D.C.; their various companies; and State Fund’s own former employee, attorney Bruce Roth. State Fund also asserted a claim for fraud against Dr. Zaks and the Zaks Entities.

In 2001, Dr. Zaks decided to form several businesses in California’s Central Valley that focused on providing medical treatment to the region’s agricultural workers.Dr. Zaks, along with Drs. Holmes and Reyes, formed Accident Help Line Medical Group (AHL) at that time.AHL was staffed with doctors, chiropractors, and other medical professionals, and focused on patients with chronic work-related injuries and associated pain. Zaks also established Millcreek Surgery Center and Alta Surgery Center, ambulatory surgery centers where doctors performed outpatient surgery procedures. Zaks and a partner also owned Reliable Medical Supply, which provided medical equipment to multiple medical providers, including AHL. In 2003 Zaks and partners also created Valley Interpreting, a translation service for patients who spoke limited or no English. Dr. Khan owned the Khan Entities, which conducted diagnostic testing for AHL.

Defendant Bruce Roth, then a senior attorney with State Fund, was assigned to defend State Fund against the Zaks Entities’ WCAB liens. Suspecting possible fraud, Roth led an investigation of the Zaks Entities by no later than 2004. With State Fund’s authorization, Roth made a criminal referral of the case to California’s Department of Insurance. Based on Roth’s referral and other insurance companies’ reports, CDI initiated a fraud investigation of AHL that it dubbed “Operation Chicken.” CDI’s investigation led to indictments of some AHL employees (none of whom are defendants in this case), but the indictments were eventually dismissed.

In January 2006, Roth filed a petition with the WCAB to consolidate the Khan Entities’ and Zaks Entities’ 1,200+ liens against State Fund. From 2006 to 2009, Roth represented State Fund against the Zaks Entities in the WCAB matter. In 2007, the parties stipulated to resolve the WCAB matter in binding arbitration. In October 2009, after losing on several issues before the arbitrator, Roth settled the consolidated case with the Zaks Defendants without first gaining the approval of his manager at State Fund or State Fund’s claims department. Once Roth’s superiors at State Fund learned of the settlement they removed Roth from the case, contacted the Zaks Entities, and disavowed the settlement on the basis that Roth lacked authority to enter into it. State Fund compelled Roth to resign in March 2010.

In April 2010, with the help of outside counsel and without Roth’s involvement, State Fund entered into superseding settlement agreements with the Zaks Entities for substantially the same amount of money as provided for in the 2009 Settlement Memorandum. The centerpiece of the 2012 RICO case was the effect of the 2010 settlement agreements that purportedly released the parties from all claims. SCIF sought to avoid the 2010 agreement based upon various fraud and conspiracy theories.

After three years of litigation and extensive discovery, the Zaks Defendants, the Khan Defendants, and Roth filed three separate motions for summary judgment which was granted. The court stated “The 2010 Settlement Agreements remain binding on the Zaks Entities and State Fund. State Fund has failed to prove the extrinsic fraud or connivance necessary to warrant rescission of those agreements, which were freely entered into by the parties with no involvement from Roth and while State Fund had in its possession all of the evidence about the Zaks Defendants’ allegedly fraudulent lien claims.”

Following the successful summary judgment, the Zachs defendants filed a motion for attorney fees. On July 6, the federal judge awarded them $4,391,277.94 in attorneys’ fees.

In a case that could have ramifications around the country, a lawsuit filed Wednesday alleges that many disabled California workers get less than their due simply because they are women.

“This discrimination exacerbates and expands the pay gap,” Kathryn Eidmann, one of the attorneys who filed the lawsuit in Los Angeles Superior Court, told reporters. “We cannot have true equality between the sexes until the fact of being a woman is no longer a reason to compensate women workers even a penny less for injuries on the job.’’

According to the report in USA Today, the lawsuit alleges that injured female workers in California are denied equal disability benefits because of systemic gender bias. The case was brought against California state agencies that oversee the dispensing of workers’ compensation benefits on behalf of several women injured on their jobs, as well as the 700,000-member Service Employees International Union in California. The plaintiffs are seeking class-action status.

Permanent disability benefits are often reduced, the suit claims, because an injury or condition is linked in part to gender-based “risk factors” like menopause. And the ramifications of some illnesses mostly associated with women, such as breast cancer, are considered less disabling than those that affect men, which can result in a denial of compensation .

One plaintiff, Janice Page, was diagnosed with breast cancer in February 2012 and ultimately underwent a mastectomy. Workers’ comp officials determined that Page, a corrections officer with nearly 30 years in law enforcement, contracted cancer after being exposed to toxins in the course of her work. However, a medical evaluator, adhering to American Medical Association guidelines, said that she had no permanent impairment, and so her insurance company denied her permanent-disability compensation.

Those guidelines give no impairment rating to women who undergo a mastectomy past childbearing age even if they were found to have breast cancer because of work conditions. The impairment rating for a woman who can still bear children is up to 5%. Yet a man whose prostate is removed because of cancer is usually assigned an impairment rating between 6% and 20%, according to the complaint.

“I should not be discriminated against, and have my disability compensation reduced, because of a bias against women,” Page said at the news conference. “It’s not fair for me or my fellow female officers to be penalized because of our gender.'”

In an emailed statement, Christine Baker, director of the Department of Industrial Relations which monitors workers’ compensation claims, called the charges in the lawsuit “misleading and superficial.”

“The Department of Industrial Relations and its Division of Workers’ Compensation take allegations of gender discrimination in the workers’ compensation system seriously,” Baker said. “When the plaintiffs’ counsel sent a demand letter to the department dated April 20, 2016, we investigated the examples they cited. The examples did not support the inflammatory accusations of systemic gender bias in California’s workers’ compensation system, and we requested more information from plaintiffs’ counsel to substantiate their claims.”

Instead of providing more evidence, Baker says, the plaintiffs filed suit. “The department will vigorously defend the workers’ compensation system against these unfounded accusations.”

The suit asks the court to find that such actions violate both federal and state law and to order California’s workers’ comp system to root out gender bias, implementing staff training, monitoring and taking punitive action when discrimination is discovered.

Worker’s Compensation claim administration centers on decisions based upon scientific evidence. Injury AOE-COE opinions are supported by test findings that in turn are purportedly based upon the rigors of medical science. Treatment requests are filtered through the UR and IMR process which is also based upon evidence based medicine. All of this is based upon the assumption that physicians rely on rock solid tried and true science.

Regrettably, this assumption may not always be the case.

Since its beginning more than 20 years ago, functional magnetic resonance imaging (fMRI) has become a popular tool for understanding the human brain, with some 40,000 published papers according to PubMed. Despite the popularity of fMRI as a tool for studying brain function, the statistical methods used have rarely been validated using real data. Validations have instead mainly been performed using simulated data, but it is obviously very hard to simulate the complex spatiotemporal noise that arises from a living human subject in an MR scanner.

To validate the statistical methods commonly in use, researchers in a new study published in the Proceedings of the National Academy of Sciences (PNAS) used real resting-state data and a total of 3 million random task group analyses to compute empirical familywise error rates for the fMRI software packages SPM, FSL, and AFNI, as well as a nonparametric permutation method.

At the end of the study, researchers found that the parametric statistical methods used for group fMRI analysis with the commonly used software packages SPM, FSL, and AFNI can produce FWE-corrected cluster P values that are erroneous, being spuriously low and inflating statistical significance.

So what does this mean in lay terms?

Researchers conclude that this “calls into question the validity of countless published fMRI studies based on parametric clusterwise inference. It is important to stress that we have focused on inferences corrected for multiple comparisons in each group analysis, yet some 40% of a sample of 241 recent fMRI papers did not report correcting for multiple comparisons , meaning that many group results in the fMRI literature suffer even worse false-positive rates than found here.”

With regard to the software, researchers concluded that “a 15-year-old bug was found in 3dClustSim while testing the three software packages (the bug was fixed by the AFNI group as of May 2015, during preparation of this manuscript). The bug essentially reduced the size of the image searched for clusters, underestimating the severity of the multiplicity correction and overestimating significance (i.e., 3dClustSim FWE P values were too low).”

And what about the 40,000 published papers based upon the old software with the “15-year old bug?”

Sadly the authors say that it “is not feasible to redo 40,000 fMRI studies, and lamentable archiving and data-sharing practices mean most most could not be reanalyzed either.” So the results of scientific research in 40,000 published studies that draw conclusions upon fMRI studies are now questionable. That is a considerable amount of “evidence based medicine” that may not be such good evidence after all.

According to a new study.more than 300 companies are marketing unapproved stem cell procedures at more than 500 clinics in the U.S.

Found in embryos, umbilical cord blood and adult bone marrow, stem cells have the potential to develop into any type of specialized cell in the body. Stem cells can be used to help repair areas damaged by disease or injury, according to the U.S. Department of Health and Human Services.

In the U.S., stem cell therapies generally require Food and Drug Administration approval before they can be marketed, and the FDA has only approved one product so far, for blood disorders.

But, according the study summarized in Reuters Health, many clinics in the U.S. now advertise a variety of stem cell treatments that have not been approved, ranging from cosmetic procedures like facelifts and breast enlargement, to therapies for neurological diseases or sports injuries, according to the new study. “Many of these marketing claims raise significant ethical issues given the lack of peer-reviewed evidence that advertised stem cell interventions are safe and efficacious for the treatment of particular diseases,” the researchers write in the journal Cell Stem Cell.

Searching the internet, the researchers found 351 companies marketing unapproved stem cell procedures at 570 clinics in the U.S., most commonly in California, Florida, Texas, Colorado, Arizona and New York.

These procedures are not heavily regulated because they use cells from a patient’s own body. But earlier this year, the FDA issued draft guidelines asserting that the stem cells used in most procedures are drugs and should require a rigorous approval process before they can be used. The draft guidelines will be discussed further at a public hearing in mid-September.

Unapproved stem cell therapies have no conclusive evidence of safety or effectiveness, Turner said. “If you’re thinking about having an unapproved stem cell treatment, there are things you can look for,” he said. “If a place offers one treatment for 30 to 40 diseases, it’s extremely unlikely that it’s going to be effective.”

He said he doesn’t mean to suggest that all uses of stem cells are dangerous or unethical, as approved stem cell treatments for conditions like leukemia can be life-saving.

“It is the wild west, there are lots of clinics making all kinds of promises they can’t necessarily deliver on,” said Mary Ann Chirba, professor of legal reasoning, research and writing at Boston College Law School, who was not part of the new study. “But that’s not to say that all clinicians who are working in this area are charlatans.”

There’s a “clumsy architecture” for regulating emerging therapies, Chirba told Reuters Health by email. “Any responsible person, myself included, wants regulation,” but the rules currently in place are not effective, and the draft FDA guidelines may actually be too restrictive, and make it too difficult for patients to get access to these types of treatment at all, she said.

In the meantime, the FDA cautions on its web site, “If you are considering stem cell treatment in the U.S., ask your physician if the necessary FDA approval has been obtained or if you will be part of an FDA-regulated clinical study. This also applies if the stem cells are your own. Even if the cells are yours, there are safety risks, including risks introduced when the cells are manipulated after removal.”

Medical treatment in the California Workers’ Compensation system is subject to the UR/IMR review process which will use evidence based treatment guidelines as a standard. Certainly, any request for authorization of a stem cell procedure should undergo review.

Insurers helped cheerlead the creation of Obamacare, with plenty of encouragement. Six years later, profit expectations have failed to materialize. Now some insurers want taxpayers to provide them the anticipated profits through lawsuits.

Earlier this month, Blue Cross Blue Shield of North Carolina and Moda Health Plan joined a growing list of insurers suing the Department of Health and Human Services in the U.S. Court of Federal Claims for more subsidies from the risk-corridor program. Congress set up the program to indemnify insurers who took losses in the first three years of Obamacare with funds generated from taxes on “excess profits” from some insurers. The point of the program was to allow insurers to use the first few years to grasp the utilization cycle and to scale premiums accordingly.

As with most of the ACA’s plans, this soon went awry. Utilization rates went off the charts, in large part because younger and healthier consumers balked at buying comprehensive coverage with deductibles so high as to guarantee that they would see no benefit from them. The predicted large windfall from “excess profit” taxes never materialized, but the losses requiring indemnification went far beyond expectations.

In response, HHS started shifting funds appropriated by Congress to the risk-corridor program, which would have resulted in an almost-unlimited bailout of the insurers. Senator Marco Rubio led a fight in Congress to bar use of any appropriated funds for risk-corridor subsidies, which the White House was forced to accept as part of a budget deal. As a result, HHS can only divide up the revenues from taxes received through the ACA, and that leaves insurers holding the bag.

They now are suing HHS to recoup the promised subsidies, Moda Health is seeking $180 million in Patient Protection and Affordable Care Act (PPACA) risk corridors program payments. North Carolina Blue is seeking $147.5 million in payments. Health Republic Insurance Company of Oregon was the first carrier to sue the USA over the USA’s PPACA risk corridors payment programs. Health Republic said it was owed a total of $22.1 million in risk corridors program money for 2014 and 2015, and it sued for about $5 billion in payments on behalf of all affected insurers. Highmark, a big Blue Cross and Blue Shield carrier in Pennsylvania, sued for $223 million in May.

But HHS has its hands tied, and courts are highly unlikely to have authority to force Congress to appropriate more funds. In fact, the Centers for Medicare and Medicaid Services formally responded by telling insurers that they have no requirement to offer payment until the fall of 2017, at the end of the risk-corridor program.

That response highlights the existential issue for both insurers and Obamacare. The volatility and risk was supposed to have receded by now. After three full years of utilization and risk-pool management, ACA advocates insisted that the markets would stabilize, and premiums would come under control. Instead, premiums look set for another round of big hikes for the fourth year of the program. Consumers seeking to comply with the individual mandate will see premiums increase on some plans from large insurers by as much as 30 percent in Oregon, 32 percent in New Mexico, 38 percent in Pennsylvania, and 65 percent in Georgia.

Thus far, insurers still claim to have confidence in the ACA model – at least, those who have not pulled out of their markets altogether. However, massive annual premium increases four years into the program demonstrate the instability and unpredictability of the Obamacare model, and a new study from Mercatus explains why.

The claims costs for qualified health plans (QHPs) within the Obamacare markets far outstripped those from non-QHP individual plan customers grandfathered on their existing plans – by 93 percent. They also outstripped costs in group QHP plans by 24 percent. In order to break even without reinsurance subsidies (separate from the risk-corridor indemnification funds), premiums would need to have been 31 percent higher on average for individual QHPs.