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Non-utilization of Comp Admissible to Limit Damages in Tort Case

Michael Murdoch was employed as a millwright for Siemens Industry on a construction project at SFO. He was working on a baggage conveyor belt cutting a metal side guard. The conveyor began moving unexpectedly, pulling Murdoch into an opening, where he remained stuck until he was able to pull himself out.

In May 2012, Plaintiffs filed a lawsuit against respondent Brock Solutions for negligence and loss of consortium. The complaint alleged that Brock was the subcontractor responsible for “the design, installation, and programming of the computerized system” that controlled the baggage conveyor system Murdoch was working on when he was injured.

The case was tried in 2014. The jury determined Brock and Siemens were negligent, and their negligence was a substantial factor in plaintiffs’ injuries. The jury awarded plaintiffs $3,895,220, comprised of $2,395,220 in economic damages and $1,500,000 in non-economic damages. The jury allocated 80 percent of the fault to Murdoch, 10 percent to Brock, and 10 percent to Siemens. The court reduced the economic damages by Murdoch’s percentage of fault, and offset settlement payments and workers’ comtpensation benefits Murdoch received before trial.

Plaintiffs moved for a new trial, arguing the jury’s apportionment of fault was against the weight of the evidence. The trial court agreed and granted the motion, concluding Brock’s liability “was significant and in excess of the 10% that the jury apportioned.” Brock appealed and plaintiffs filed a cross-appeal. In Murdoch I, this court affirmed, holding that the trial court did not abuse its discretion in granting the motion for a new trial.

Following a second trial, the jury found that Brock was negligent, but that the negligence was not a substantial factor in causing Murdoch’s injury. In July 2018, the trial court entered judgment in favor of Brock. Murdoch appealed, but the judgment was affirmed in the unpublished case of Murdoch v Brock Solutions.

During the second trial, Murdoch testified that he agreed “the most important rule for anybody working on top of energized equipment is lockout, tagout.” He admitted he had failed to lockout the conveyor belt on the day of the accident at SFO because he thought a Bass Electric employee had done so.

The trial court did not err in permitting a retrial on damages. In their motion for a new trial following the 2014 verdict, plaintiffs requested a new trial rather than a trial only on liability. The August 2014 court order granting the motion did not limit the new trial to the liability issue. Neither did the March 2017 decision of this court affirming the trial court limit the issues on retrial. On April 4, 2018, the eve of the April 9 scheduled trial, plaintiffs unsuccessfully moved in limine to limit the retrial to liability only.

Plaintiffs argue the trial court abused its discretion in allowing evidence regarding Murdoch’s workers compensation benefits, which, they argue, “was offered to argue that Mr. Murdoch’s injuries were not serious based upon his failure to obtain medical care from collateral sources.”

However, plaintiffs cite to no portion of the hearing on the motions in limine where they argued that, if the trial court allowed retrial on damages, the court should exclude evidence regarding Murdoch’s workers compensation benefits due to the collateral source rule.

San Diego Psychiatrist Resolves Opioid Case for $145K

San Diego area psychiatrist Prakash Bhatia, M.D., has paid $145,000 to resolve allegations that he overprescribed opioids. Dr. Bhatia previously owned and operated Progressive Health and Wellness in El Cajon, California, practicing pain medicine.

The settlement stems from an investigation that the Drug Enforcement Administration initiated into whether Dr. Bhatia improperly prescribed opioids to his patients at Progressive Health and Wellness (PHW) in violation of the civil provisions of the Controlled Substances Act.

Pursuant to the Controlled Substances Act, health care providers may write prescriptions for opioids only for a legitimate medical purpose while acting in the usual course of their professional practice.

Based on its investigation, the United States alleged that from March 2013 to December 2017, Dr. Bhatia wrote opioid prescriptions at PHW, including for hydromorphone, morphine, methadone, oxycodone, fentanyl and oxymorphone without a legitimate medical purpose and/or outside the usual course of his professional practice, in violation of the Controlled Substances Act.

The United States alleged that Dr. Bhatia also prescribed these medications in combination with depressant medications (including benzodiazepines and muscle relaxants), which are known to increase the risk of abuse, addiction and overdose.

This matter was handled by Assistant U.S. Attorneys Dylan M. Aste and George V. Manahan of the U.S. Attorney’s Office for the Southern District of California, with the assistance of agents and investigators from the DEA.

The claims resolved by this settlement are allegations only and there has been no determination of liability.

3rd WCAB En Banc Decision Suspends 20 Day Filing Rule

Upon a unanimous vote of its members, the Appeals Board issues this decision as a whole as an en banc decision. The new decision is named “IN RE: COVID-19 STATE OF EMERGENCY EN BANC – NO. 3” and is therefore its 3rd en banc decision suspending or modifying the rules of practice and procedure to adapt to the COVID-19 pandemic.

WCAB Rule 10620 (entitled “Filing Proposed Exhibits”) states in full: “Any document that a party proposes to offer into evidence at a trial shall be filed with the Workers’ Compensation Appeals Board at least 20 days prior to the trial unless otherwise ordered by the Workers’ Compensation Appeals Board.” (Cal. Code Regs., tit. 8, former § 10393(h), now § 10620 (eff. Jan. 1, 2020), emphasis added.)

We will order suspension of the 20 day requirement pursuant to the authority to do so provided by the Rule. WCAB Rule 10670(b) provides in relevant part:

(b) The Workers’ Compensation Appeals Board may decline to receive in evidence:

… (3) Any document not filed 20 days prior to trial, unless otherwise ordered by a workers’ compensation judge or good cause is shown.

(Cal. Code Regs., tit. 8, former § 10622, now § 10670(b)(3) (eff. Jan. 1, 2020).)

In light of the state of emergency, there is good cause to permit receipt into evidence of documents not filed 20 days prior to trial.

Therefore, we will also order suspension of the 20 day requirement in WCAB Rule 10670(b)(3). A workers’ compensation administrative law judge retains the authority to decline to receive documents in evidence as otherwise permitted by WCAB Rule 10670(b) and the law.

This order will remain in effect until further notice.

FDA Raises Safety Concerns Over Ethanol Hand Sanitizers

The Trump administration has tightened restrictions on the use of ethanol in hand sanitizer, citing safety concerns and forcing some suppliers to halt sales at a time of soaring demand, according to sources and documents seen by Reuters.

The crackdown is meant to protect consumers from potentially dangerous impurities in hand sanitizer, but could worsen shortages at a time when households, hospitals and nursing homes need sanitizer to fight the coronavirus pandemic.

The restrictions have dealt a blow to ethanol producers. The industry has invested millions of dollars since last month to ramp up the output of corn-based alcohol sanitizer to offset slumping fuel demand.

Ethanol production has fallen to a record low of 537,000 barrels per day and halved from month-ago levels as gasoline demand has slumped. Fuel demand has dropped by roughly 30% worldwide due to stay-at-home orders.

The U.S. Food and Drug Administration (FDA) on April 15 issued limits on certain chemicals permitted in alcohol-based hand sanitizer, updating temporary guidance it adopted last month as the health crisis deepened and more manufacturers registered to produce hand sanitizer.

Since then, the FDA has notified several ethanol companies that their product does not meet safety standards, forcing them to halt production and cancel supply agreements, according to a source familiar with the matter. The source requested anonymity to speak candidly about the situation.

In one case, the FDA said it had found significant levels of the carcinogen acetaldehyde in ethanol supplied by a company for use in hand sanitizer, according to a recent email exchange seen by Reuters.

“FDA has reviewed your ethanol data and determined that it is not acceptable as an ingredient under the Agency’s temporary hand sanitizer policies,” it wrote.

The FDA told Reuters it decided to update the guidance after reviewing ingredient data supplied by ethanol companies and fielding multiple questions from companies seeking clarification about its temporary production policies.

The agency said in a statement it was committed to “working with manufacturers, compounders, state boards of pharmacy and the public to increase the supply of alcohol-based hand sanitizer available to Americans.”

The FDA did not immediately respond to a request for details on the number of ethanol companies it had notified for failing to meet its April 15 guidance. Its move has drawn criticism from suppliers who say it should further ease its safety standards to ensure hand sanitizer is widely available during the coronavirus outbreak.

Bay Area Victims Duped by Non-Existent $40 N95 Masks

The United States Attorney’s Office for the Northern District of California unsealed charges in a criminal complaint charging Rodney L. Stevenson II with wire fraud for his operation of an e-commerce website that allegedly scammed customers into paying for N95 masks that they never received.

Stevenson, 24, of Muskegon, Michigan, controlled EM General, a Michigan limited liability company created in September 2019.  EM General operated a website that purported to sell an available inventory of “Anti-Viral N95” respirator masks.  An N95 respirator mask is a particulate-filtering facepiece respirator that meets the U.S. National Institute for Occupational Safety and Health N95 standard of air filtration.  N95 masks, which cover the user’s nose and mouth, are required to filter at least 95% of airborne particles.

The complaint alleges that EM General, through its website, falsely claimed to have N95 respirator masks “in stock” and available for sale and shipment during the shortage caused by the COVID-19 pandemic.  Based on these and other representations, customers bought masks from the website, sometimes paying EM General more than $40 or more per mask.  

Stevenson is alleged to have taken several steps to fraudulently make EM General appear to be a legitimate company.  For example, Stevenson invented a fictional Chief Executive Officer, “Mike Thomas,” from whom fraudulent emails were sent, as well as several other fake officers or employees of the company.  

Stevenson also used stock photographs from the internet to create a page depicting this team of fake professional management staff.  After customers made their first purchase, the defendant offered additional masks to those customers at discounted prices.

The complaint describes how four victims paid for, but did not receive, N95-compliant masks.  Three of the four victims reside in the San Francisco Bay Area, including one hospital employee.  

Also described in the complaint are follow-up emails from EM General to customers in which false excuses about supply and shipping issues were made.  Three of the four customers in the complaint never received the promised products at all despite multiple representations that the masks had been shipped.  

The fourth customer paid over $400 on March 2, 2020, for N95 masks represented to be “in stock,” and, after raising several complaints, on March 27, 2020, received cheaply made fabric masks.  The masks, delivered in a white envelope with no return address, did not comply with the N95 standard that EM General purportedly sold.

Stevenson is charged with wire fraud, in violation of 18 U.S.C. § 1343.  A complaint merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt.

Telemedicine Will Have “Big Impact” on Comp in Next Five Years

Mitchell International Inc., headquartered in San Diego, California,  published the results of a survey of about 100 workers’ compensation professionals in the U.S.

It wanted to know what the industry thinks is next in workers’ compensation and how will technology affect our industry in 2020 and beyond? And how does the outlook for technology in our industry compare to the industry’s perspective in 2017, when Mitchell conducted a similar survey?

To find out, it surveyed nearly 100 workers’ compensation professionals at a range of companies, including insurance carriers, third-party administrators, public entities, brokers, and managed care and risk management companies.

The results of the 2020 survey demonstrated that the adoption of technology is now, more than ever, at the forefront of the evolution of workers’ compensation claims management, and is a trend expected to continue and grow into the foreseeable future.

Half of the responding workers’ compensation professionals believe that cost containment is the driving factor for adopting advanced technologies such as artificial intelligence (AI), predictive analytics, telemedicine, wearables, mobile technology and chatbots.

Many respondents believe that telemedicine will have the biggest impact on the industry within the next five years (32%), followed closely by artificial intelligence (30%) and predictive analytics (20%).

Almost all of the 2020 respondents said they have either already adopted (20%) or are at least somewhat likely to adopt (74%) these new advanced technologies within their organization within the next five years. Of the 20% of respondents currently using these technologies, the majority are using predictive analytics, followed by telemedicine and mobile.

Additionally, 33% of respondents said they are currently using claims analytics to make business improvements, and 36% said they are either currently implementing or planning to implement claims analytics in the next five years. Participants also reported that, out of a list of common challenges, the most pressing issues their organizations face today are workflow efficiency (28%), followed by cost containment (19%) and the changing workforce/employee turnover (15%).

It is noted that this survey was undertaken before the COVID-19 pandemic; however, it is anticipated that the trends will continue as reported with an additional emphasis on telemedicine which has proven to be so important for treating injured workers during this time.

Lack of Overlap no Justification for Adding Disabilities

James P. Martinez suffered an admitted cumulative trauma injury to his neck, low back, knees, shoulders and hypertension, while he was employed as a correctional officer for the State of California, Department of Corrections.

The workers’ compensation administrative law judge found he sustained 79% permanent disability. This was based upon adding the disability from applicant’s hypertension to the combined rating of applicant’s orthopedic disabilities.

Defendant contests the WCJ’s rating of applicant’s permanent disability. Defendant contends that substantial medical evidence does not support adding applicant’s permanent disability, and that applicant has not rebutted the presumption favoring the use of the combined values chart (CVC) of the permanent disability rating schedule to rate multiple impairments.

The WCAB agreed, and reversed in the panel decision of Martinez v State of California Department of Corrections.

The DEU rating was a combined 66% orthopedic permanent disability and a 13% hypertension permanent disability, which added together equaled the 79% permanent disability awarded by the WCJ.

Defendant argues that the WCJ erred by instructing the DEU to use the addition method to combine applicant’s WPI ratings, rather than use the CVC, because just as the rating under the AMA Guides is presumed correct, the use of the CVC is presumed to provide the correct permanent disability rating where there are multiple disabilities.

The only reference in the record discussing the basis for the use of the additive method for rating applicant’s hypertension is in Dr. Hyman’s deposition testimony. In his testimony, Dr. Hyman stated that the reason the disability from applicant’s hypertension should be added to his orthopedic disability is due to the absence of overlap between the disabilities.

He explained that applicant’s hypertension does not impair his activities of daily living, and there is no overlap between his orthopedic and internal medicine impairments.

Without more, this does not constitute substantial medical evidence to establish the primacy of the additive method over the use of the CVC, otherwise, the CVC would become irrelevant in any case involving injury to multiple body parts.”

Court Order Prohibits Fake “Ozone Therapy” for COVID-19

A federal court entered a permanent injunction halting a purported “ozone therapy” center in Dallas, Texas, from offering unproven treatments for coronavirus disease (COVID-19), the Department of Justice announced today.

In a civil complaint and accompanying court papers filed in U.S. District Court for the Northern District of Texas, the Department of Justice alleged that the defendants, Purity Health and Wellness Centers and one of the firm’s principals, Jean Juanita Allen, fraudulently promoted so-called ozone therapy as a treatment for COVID-19. The defendants agreed to be bound by a permanent injunction barring them from representing that ozone could be used to treat or cure COVID-19. The order was entered by U.S. District Judge Sam A. Lindsay in Dallas.

“The Department of Justice will not stand by and permit the fraudulent promotion of supposed COVID-19 treatments that do no good and that could be harmful,” said Assistant Attorney General Jody Hunt of the Justice Department’s Civil Division. “We are working with law enforcement and agency partners to stop those who attempt to profit by selling useless products during this pandemic.”

“This defendant preyed on public fear, peddling bogus treatments that had absolutely no effect against COVID-19,” said U.S. Attorney Erin Nealy Cox for the Northern District of Texas. “As we’ve said in past COVID-19 civil cases: the Department of Justice will not permit anyone to exploit a pandemic for personal gain.”

According to court filings, Allen told a caller posing as a potential customer that although ozone could be dangerous, Purity’s treatment was safe even for children, would sanitize anything, and would eradicate viral or bacterial infections.

The court filings alleged that Allen claimed Purity’s ozone treatments – which she asserted would increase oxygen in the blood, making it impossible for viruses to manifest – were 95 percent effective even for someone who had tested positive for COVID-19. She claimed a team of “doctors” had recommended an “ozone steam sauna” for someone with COVID-19.

On Instagram, Purity Health & Wellness claimed ozone was the “only prevention” for COVID-19 and insisted the treatment could “eradicate” the virus. The center also claimed ozone could combat other deadly diseases, including cancer, SARS, and Ebola.

“We will not allow anyone to illegally profit by exploiting the fear and anxiety related to the COVID-19 pandemic,” said FBI Dallas Special Agent in Charge Matthew J. DeSarno. “The FBI and our partners are working together every day to prevent, detect, and dismantle COVID-19 fraud.”

“The FDA will continue to help ensure those who place profits above the public health during the COVID-19 pandemic are stopped,” said Stacy Amin, Food and Drug Administration Chief Counsel. “We are fully committed to working with the Department of Justice to take appropriate action against those jeopardizing the health of Americans with unproven treatments.”

Insurers Say Decline in Elective Surgeries Offset COVID-19 Costs

As Americans delay elective surgeries and avoid doctors and hospitals during the coronavirus pandemic, a report in Reuters Health says that healthcare spending declines have more than offset the added costs of COVID-19 care, insurance executives and experts say, boosting U.S. health insurer profits.

Those gains, however, could be short term, depending on how quickly the coronavirus outbreak subsides and healthcare business begins to return to something close to normal.

UnitedHealth Group Inc, the largest U.S. health insurer, last week posted first-quarter earnings above Wall Street expectations and kept its profit forecast in place for 2020, despite an economy battered by massive layoffs and business shutdowns to slow the spread of the virus.

When Anthem Inc, Humana Inc and Cigna Corp report their first-quarter results this week, Wall Street analysts expect a similar trend. CVS Health, a pharmacy company that owns health insurer Aetna, reports in May.

The costs from COVID-19 are going to be actually very small and more than outweighed by the deferral of elective procedures. The net impact is going to be positive for them,” said Jeff Jonas, portfolio manager with Gabelli Funds.

While extended hospital stays, particularly in intensive care units, can rack up massive bills for individuals, that pales compared to the savings from millions of Americans delaying care. Those savings also outpace the costs to insurers of waiving COVID-19 related co-pays, deductibles, tests and other care, which most insurers have agreed to waive.

Most of the country has been under stay-at-home orders, and many non-emergency care visits and elective procedures have been canceled to help hospitals manage the surge of coronavirus patients.

The largest U.S. for-profit hospital operator, HCA Healthcare Inc, said it has seen a 70% drop in outpatient surgeries so far in April compared with a year ago, while inpatient admissions declined 30%.

Federal authorities have said hospitals could resume more routine care as appropriate, as states begin to ease some social-distancing measures.

It is unclear how quickly that will happen. Much depends on how well contained the coronavirus outbreak is in a specific city or state. Hospitals will also need increased access to coronavirus testing and take additional precautions to help prevent transmission between staff and patients.

Health plans and employers who provide insurance have seen an overall decline in healthcare use of about 30% to 40% excluding COVID-19 patients, according to Tim Nimmer, the global chief actuary at Aon, a benefits company that advises large corporations and health plans.

For each month that this goes on, we are expecting about 1.5% to 2% in annual costs to be reduced,” Nimmer said. “The number one issue is how long will this go on.”

Right now, that drop is outweighing the costs of patients with COVID-19, Nimmer said. Companies with younger, healthy employees are experiencing even less spending.

Based on claims information it has reviewed, Aon said the cost of a hospitalized patient runs from $30,000 to $80,000 while a patient who goes to the hospital and is sent home runs up claims of around $1,500 to $2,500.

Health insurers could largely benefit this year from a more gradual resumption of discretionary and elective care, analysts agreed.

DWC Authors New Regulations for QME and AME Evals

The Division of Workers’ Compensation (DWC) issued its Notice of Emergency Regulatory Action to address the ongoing need for medical-legal evaluations and to prevent a backlog of medical-legal evaluations resulting from stay-at-home orders throughout the state.

These emergency regulations will help injured workers and employers continue to move their workers’ compensation claims towards a resolution and avoid additional and undue delay.

The regulations concern how medical-legal evaluations and payment for those evaluations can occur during this emergency period. Also provided in the regulations are alternative forms of service for required forms related to medical-legal evaluations and reports.

Proposed QME Regulation 36.7 specifies how and under what circumstances the parties may serve documents electronically.

Proposed QME Regulation 78 specifies how and under what circumstances QME, AME and other evaluations may be conducted by telehealth.

The emergency regulations will be filed with the state’s Office of Administrative Law (OAL) on May 4, 2020 and can be found on the DWC website.

OAL has up to 10 days to consider and approve emergency rules. Upon OAL approval and filing with the Secretary of State, such regulations are effective for 180 days.

If during this 180-day period the Division determines the need to readopt the emergency regulations, it may do so for an additional 90 days. For information on the OAL emergency regulatory procedures and to learn how you may comment on these emergency regulations, please visit OAL’s website.

A notice will be posted on the DWC website when these emergency regulations become effective.