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Walgreens Settles Fake California Pharmacist Case for $7.5M

Pharmacy giant Walgreens has agreed to pay $7.5 million to settle a consumer protection lawsuit, accusing the company of allowing a phony pharmacist to handle over 745,000 prescriptions. The lawsuit was filed and settled on Monday jointly by the Alameda County and Santa Clara County District Attorneys’ Offices in Alameda County Superior Court.

The settlement comes just over a year after the Mercury News revealed a California State Board of Pharmacy investigation alleging Walgreens stores in Fremont, Milpitas and San Jose allowed Kim Thien Le to perform pharmacist duties for more than a decade without ever having a pharmacist’s license.

During Le’s more than 15 years as both an intern pharmacist and a pharmacist, she handled more than 100,000 prescriptions for controlled substances such as oxycodone, fentanyl, morphine, and codeine, officials said.

“Walgreens failed to vet Ms. Le thoroughly when it promoted her to positions requiring a license and failed to make sure that its internal systems were strong enough to prevent an employee from evading them,” a statement from the Alameda County District Attorney’s Office said.

After the state investigation began, Walgreens “undertook a re-verification of the licenses of all our pharmacists nationwide,” Walgreens spokesman Jim Cohn said in an email.

He also noted that Le’s employment with the company ended in October 2017, but did not offer further comment on the settlement, which had been under negotiation between prosecutors and the company.

Under the settlement, Walgreens will also be required to create a verification program, post proof that all of its employees are licensed if their position requires one, conduct annual audits, and submit an annual compliance report to the Alameda County DA’s office, Lin said.

This settlement is not the first legal fallout since the revelations about the investigation came to light.

The California Attorney General’s office in July charged Le with false impersonation, identity theft and obtaining money, labor or property by false pretenses. The case is still pending in Alameda County courts. Le has pleaded not guilty to all charges.

The Walgreens stores involved could have received a range of disciplines for their part in the case, from a reprimand up to suspension or revocation of their pharmacy licenses, officials said previously.

But Becerra’s office ultimately required Walgreens to pay a $335,000 civil penalty and $19,500 to cover the Department of Justice’s investigation costs, and to admit to the truth of the claims in the state board’s investigation, according to State Board of Pharmacy documents reviewed by this news organization.

Teresa Drenick, a spokeswoman for the Alameda County DA’s office, said of the $7.5 million settlement money from Walgreens, the two DA’s offices will split roughly $250,000 to cover investigative costs, while about $250,000 will go to the state’s Consumer Protection Trust.

The remaining $6,992,500 is evenly divided between the two DA’s offices to be used for consumer protection and enforcement in the future.

SCIF Recovers $159K in Criminal Premium Fraud Case

The Monterey County District Attorney announced that Hector Hernandez, a 38-year-old King City resident and owner of Hernandez Roofing, was sentenced to 5 years felony probation for insurance fraud and state tax evasion.

As a term of probation, Hernandez was ordered to pay $159,059.03 in restitution to his workers’ compensation insurance carrier, State Compensation Insurance Fund.

Between 2013 and 2016, Hernandez secured a workers’ compensation insurance policy for his business through the State Compensation Insurance Fund. In order to pay lower insurance premiums, he denied having any employees.

The District Attorney’s Office opened an investigation in February 2016, obtaining building permits showing that Hernandez handled about 96 roofing jobs in a 4 year period.

Interviews of workers and homeowners revealed that he used at least 3 employees for these jobs. Hernandez attempted to conceal the employees and wages by paying cash. Investigators calculated Hernandez defrauded the State Fund of $159,059.00 in premiums.

The District Attorney filed felony charges on January 23, 2018. The charges included intentionally misrepresenting his payroll to obtain a reduced premium – a violation of Insurance Code Section 11880(a).

Hernandez was also charged with payroll tax violations of the Unemployment Insurance Code. He pled guilty to 3 felonies on August 23, 2019.

The case was investigated by Monterey County Workers’ Compensation Fraud Unit Investigators Martin Sanchez and George Costa.

California Awarded $350M in Suit Against Johnson & Johnson

The California Department of Justice sued Johnson & Johnson in May 2016, after a years-long multistate investigation revealed the company had neglected to inform both patients and doctors of possible severe complications from its mesh products and misrepresented the frequency and severity of risks the products posed. The products are permanent surgical implants designed to treat stress urinary incontinence and pelvic organ prolapse in women.

After a nine-week trial, a San Diego Superior Court Judge issued the 128 page Statement of Decision requiring Johnson & Johnson to pay $343.99 million in penalties. Additional injunctive terms may be added after further briefing.

The suit filed by the California Department of Justice is one of several the company has faced worldwide regarding the mesh products.  This judgment marks the first time a court of law has issued findings of fact and ruled that Johnson & Johnson did indeed engage in illegal false and deceptive business practices.

The lawsuit alleged that Johnson & Johnson misrepresented the safety of these products by concealing and misleading consumers about the possibility of serious and irreversible complications caused by mesh, including permanent pain with intercourse, loss of sexual function, chronic pain, permanent urinary or defecatory dysfunction, and potentially devastating impact on overall quality of life.

The ruling notes that “complications could be so severe that mesh removal would be necessary but, unlike other implants, removal is difficult and harmful and can take multiple surgeries; J&J also knew that some of the most severe complications of mesh can be irreversible.”

The Judge also wrote the marketing for the products “repeatedly touted mesh’s benefits while misrepresenting, downplaying, and concealing its potential for serious, long-term complications.”

From 2008 to 2014, Johnson & Johnson sold more than 470,000 pelvic mesh products nationally, including more than 30,000 in California. Worldwide, more than 2 million women have had these mesh products implanted in their bodies.

The court affirmed that Johnson & Johnson and its subsidiaries Ethicon Inc. and Ethicon US LLC, violated California’s Unfair Competition Law and False Advertising Law.

Johnson & Johnson has faced over 35,000 personal injury lawsuits related to its pelvic mesh products. It has settled similar claims with the state of Washington for $9.9 million and with a coalition of 42 other states for $117 million.

215 Biopharma Leaders Pledge to Do a Better Job for Patients

The legendary physician founder of Johns Hopkins, Dr. William Osler, once famously said: “Just listen to your patient; he is telling you the diagnosis.”

Many leaders of the nation’s biopharmaceutical industry claim they are listening to America’s patients, to their families and to their caregivers, who say they find medicines too expensive, and that they have lost trust in our industry.

A group of 215 leaders in the biotechnology and pharmaceutical industries, academia, and life science investors issued aNew Biotechnology and Pharmaceutical Industry Commitment to Patients and the Public.” The coalition is focused on ensuring access to medicines with pricing that reflects innovation and value to patients

The signatories of this New Commitment are holding themselves accountable for ensuring patient access to their products and meeting the highest ethical standards and business practices.

They says they recognize a moral imperative to lead the biopharmaceutical industry towards more responsible business practices; and again, a moral obligation to ensure that medicines reach every person who can benefit from them.

Every signatory to this New Patient Commitment pledges to pricing medicines at launch to reflect innovation, a genuine commitment to achieve broad access for patients, and ensuring that price increases are sustainable and guided by the need for uninterrupted patient access.

They also commit to work with all public and private insurers to find ways to limit or eliminate co-pays and deductibles and to supporting robust market competition through the approval of safe and effective generic and biosimilar medicines after our legitimate patent and regulatory protections expire.

Pharmaceutical company actions that pay generic companies to “delay” entry of generic competition have no place in a system where true competition must be fierce and fair.

They says they will not tolerate companies and other stakeholders who abuse this commitment to patients, or who abuse policies aimed at fairly rewarding innovation in pursuit of short-term financial gain. We will call out bad actors and bad practices.

Comments on the Commitment ranged from the cynical to the hopeful. Most reflected a “wait and see” attitude, and several questioned what such a commitment actually meant in practical terms.

Insurance Industry Reports Varying Results With Data Analytics

Mitchell International released its Industry Trends Report for the fourth quarter of 2019.

The Casualty Edition, “The Power of Advanced Reporting Analytics” has been a hot topic for a few years now, and for good reason. More than half of analytics leaders reported a correlation between their organization’s analytics initiatives and seeing a “significant improvement” in their competitive standing. In the coming year, more than three quarters of that same group plan to expand or modernize their IT infrastructure to support analytics, according to a study from Forbes and Cisco.

In the insurance industry specifically, claims organizations are seeing varying results with their analytics programs. According to a McKinsey report, while more than half of CEOs at a variety of major P&C insurance carriers that they surveyed consider analytics a top priority, only one in six responded that analytics was making a large impact. The reasons for these struggles varied, including lack of alignment with strategic goals, poor integration and adoption or poor data quality.

When analytics is implemented correctly, it can have a significant positive impact on the claims process. As evidenced by the McKinsey study, getting analytics right can be challenging.  The report outlined a few tips on how to use analytics effectively to make improvements in the claims process itself and to support a claims organization’s operations.

Within the claims process, claims organizations should be looking for different ways to highlight actionable insights for adjusters to react to and use throughout the process.

Use analytics to surface key findings in the claim to help give adjusters the full picture so they can improve decision making. For example, technology can help analyze if a claimant has been seeking treatment outside of the set treatment timeline, or if a bill was submitted for treatment that was unrelated to the injury. These types of analytics provide immediate information to adjusters so they can make more informed decisions, ultimately having a direct effect on the claim outcomes.

Implementing predictive analytics into the claims process could help claims organizations to accurately predict the severity of a claim or the types of symptoms typically associated with a type of injury. These types of predictions allow claims organizations to accurately triage claims to the right adjuster or group of adjusters to help make sure the claims are handled appropriately from the start.

Analyzing provider behavior and surfacing key insights for adjusters can help them to understand when a certain provider might be charging above the industry averages on a certain treatments, or treatments that may not be necessary for certain injuries. Questionable billing or treating practices can be further scrutinized by adjusters and nurses, or ultimately referred to the Special Investigations Unit. Implementing these types of provider analytics help claims organizations to be more confident that they are paying a fair amount on claims across the board, and that the injured workers are getting the right treatments.

Bay Area Medical Device CEO Convicted

Lawrence J. Gerrans was convicted by a federal jury of wire fraud and money laundering in connection with a scheme to defraud the medical device company he ran. The verdict issued following a two-week trial.

“The defendant siphoned millions of dollars from the medical device company he was entrusted to run, and then tried to cover up that crime,” stated U.S. Attorney Anderson.

Evidence at trial showed that Gerrans, the president and chief executive officer of San Rafael-based medical device company Sanovas, employed a number of fraudulent methods to siphon funds out of Sanovas.

From January 12, 2015, through March 16, 2015, Gerrans systematically transferred more than $2.6 million from Sanovas to himself and two shell companies he controlled, Halo Management Group and Hartford Legend Capital Enterprises. That money was then used for an all-cash purchase of a luxury home in San Anselmo, at a purchase price of $2,570,000. At least $2.3 million of this money was laundered through Hartford Legend before being paid to the escrow account to purchase the house.

Evidence at trial also showed that Gerrans made false statements to a newly-created board of directors to seek their approval for a lucrative compensation plan and for reimbursement of retirement account funds that Gerrans had liquidated in 2013 and 2014. Evidence at trial showed that Gerrans had used the retirement account funds for personal expenditures, including a Maserati, a diamond ring, and rent on his personal residence, but he told the board of directors he had used the retirement account funds to benefit Sanovas. In another part of the scheme to defraud, evidence also showed that in 2017 Gerrans used a Sanovas corporate credit card for lavish personal expenditures, including a $44,000 vacation timeshare, $12,500 for high-end carpets for his home, and $32,000 to pay the property taxes on his personal residence.

Evidence at trial further showed that Gerrans provided false documents to the FBI during the criminal investigation, and that after he was first charged in the case he violated a court-ordered bond condition, attempted to tamper with a witness, and obstructed justice.

Judge Chen scheduled the defendant’s sentencing hearing for May 20, 2020.

WCAB Claim Tolls Statute of Limitations for FEHA Action

Jay Brome began his employment at the California Highway Patrol in 1996. During his nearly 20-year career he was openly gay. He claims that other officers subjected him to derogatory, homophobic comments; singled him out for pranks; repeatedly defaced his mailbox; and refused to provide him with backup assistance during enforcement stops in the field.

As a result, Brome feared for his life during enforcement stops, experienced headaches, muscle pain, stomach issues, anxiety and stress, and became suicidal by early 2015. In January 2015, he went on medical leave and filed a workers’ compensation claim based on work-related stress.

Brome’s workers’ compensation claim was resolved in his favor on October 27, 2015. He took industrial disability retirement on February 29, 2016, ending his employment with the Patrol.

On September 15, 2016, Brome filed an administrative complaint with the Department of Fair Employment and Housing. He filed a lawsuit the next day, asserting four claims under the Fair Employment and Housing Act for the conduct he alleged in his workers’ compensation claim.

The CHP sought summary judgment, contending Brome’s claims were untimely because he did not file his administrative complaint within one year of the challenged actions, as required under former section 12960, subdivision (d).

However, because the crux of his case concerns circumstances that occurred before his medical leave began in January 2015, he asserted that exceptions to the one-year deadline were applicable. He argued that the filing of his workers’ compensation claim should stop the clock on his one-year filing deadline during the pendency of his compensation claim. The legal doctrine is known as “equitable tolling.”

The trial court granted summary judgment in favor of the Patrol, holding that Brome’s claims were filed after the statute of limitations expired and a reasonable jury could not have concluded they were timely based on an exception to the deadline.

The Court of Appeal reversed in the published case of Brome v California Highway Patrol.

The equitable tolling doctrine operates to suspend or extend a statute of limitations as necessary to ensure fundamental practicality and fairness. In the case of McDonald v. Antelope Valley Community College Dist. (2008) 45 Cal.4th 88, the California Supreme Court held that the deadline for filing an administrative claim under the Act could be tolled while a plaintiff is voluntarily pursuing alternate remedies.

The time for filing a claim pursuant to the Act may be tolled where the plaintiff can establish three elements: timely notice, and lack of prejudice, to the defendant, and reasonable and good faith conduct on the part of the plaintiff.

It will be the jury’s job to reconcile the evidence at trial, and summary judgment was not justified.

Cal/OSHA Reminds Employers to Post Annual Summary

Cal/OSHA is reminding employers in California to post their 2019 annual summary of work-related injuries and illnesses in a visible and easily accessible area at each worksite. The Form 300A summary must be posted each year through April 30.

Instructions and form templates are available for download from Cal/OSHA’s Record Keeping Overview.

The overview gives instructions on completing both the log (Form 300) and annual summary (Form 300A) of work-related injuries and illnesses.

The annual summary must be placed in a visible and easily accessible area at each worksite. Posting helps ensure workers are aware of work-related injuries and illnesses that occurred the previous year. Current and former employees and their representatives are entitled to a copy of the summary or the log upon request.

The 2019 definitions and requirements for recordable work-related fatalities, injuries and illnesses are outlined in the California Code of Regulations, Title 8, sections 14300 through 14300.48. Employers are required to complete and post the Form 300A even if no workplace injuries occurred.

Many employers in California must also comply with electronic submission of workplace injury and illness records requirements by March 2nd each year. Cal/OSHA has posted details on which employers are required to submit the electronic reports as well as other information online.

The California Division of Occupational Safety and Health, or Cal/OSHA, is the division within the Department of Industrial Relations (DIR) that helps protect California’s workers from health and safety hazards on the job in almost every workplace. Cal/OSHA’s Consultation Services Branch provides free and voluntary assistance to employers to improve their safety and health programs. Employers should call (800) 963-9424 for assistance from Cal/OSHA Consultation Services.

Employees with work-related questions or complaints may contact DIR’s Call Center in English or Spanish at 844-LABOR-DIR (844-522-6734).

Charges Filed in $20M Comp Treatment Kickback Scheme

Bradley Dean Groscost, 59, of Westminster, and Felix Koltsov, 57, of Beverly Hills, self-surrendered last week to the Orange County Central Justice Center after being charged with multiple felony counts of insurance fraud, money laundering, and unlawful referrals for allegedly conspiring to bill insurers in excess of $20 million as part of a kickback referral scheme.

From 2014 to 2017, Groscost operated five workers’ compensation clinics in Southern California. Doing business as DSJ MGT, Inc. in Fountain Valley, Groscost controlled treatments, referrals, and medical and financial records at the clinics even though he was not licensed to practice medicine.

The Department of Insurance’s investigation, with the assistance of the National Insurance Crime Bureau, discovered that Groscost allegedly received approximately $2.1 million in kickbacks from Koltsov, owner of LFPS Inc. and Resource Pharmacy Inc., for patient referrals for urine drug screenings and compound cream prescriptions. Koltsov’s companies billed workers’ compensation insurance carriers over $20 million for these claims.

The investigation also revealed that Groscost allegedly failed to report employees to the Employment Development Department (EDD) and paid them as independent contractors. He failed to report over $5.1 million in wages to EDD and as a result, avoided paying over $510,000 in taxes. As of July 5, 2019, Groscost owed EDD over $1.6 million in taxes, penalties, and interest.

“These fraudulent workers’ compensation claims funnel resources away from injured workers and make it more difficult to provide the treatment to those workers who truly need it,” said District Attorney Todd Spitzer. “The Orange County District Attorney’s Office is collaborating with the California Department of Insurance to crack down on workers’ compensation fraud and preserve resources for the truly injured.”

“These co-conspirators allegedly ordered screenings and prescriptions for patients in order to enrich themselves, as part of a kickback referral scheme,” said Insurance Commissioner Ricardo Lara. “By investigating health care fraud, my department is helping keep insurance costs down for all California consumers and businesses.”

This case is being prosecuted by Deputy District Attorney Christine Oh of the Insurance Fraud Unit of the Orange County District Attorney’s Office. Koltsov surrendered to the court on January 22, 2020, and posted bail of $500,000. Groscost surrendered to the court on January 24, 2020, and remains in custody. His bail is set at $500,000.

Non-Opioid “Stem Cell” Pain Treatment Provides Relief

For the first time ever, researchers at the University of Sydney have successfully used human stem cells to produce “pain-killing” neurons. These neurons were then tested on a group of lab mice that were dealing with extreme pain. After just a single treatment, the mice’s pain symptoms were relieved with no side effects.

The research has just been published in the Journal Pain.

Moving forward, scientists will perform additional tests on pigs and other rodents. Then, if all goes well, testing on human patients dealing with chronic pain should begin within the next five years.

These pain-killing neurons could one day serve as a non-addictive, non-opioid pain management option for people all over the world.

“We are already moving towards testing in humans,” says Associate Professor Greg Neely, a leader in pain research at the Charles Perkins Centre and the School of Life and Environmental Sciences, in a release.

“Nerve injury can lead to devastating neuropathic pain and for the majority of patients there are no effective therapies. This breakthrough means for some of these patients, we could make pain-killing transplants from their own cells, and the cells can then reverse the underlying cause of pain.”

Researchers used human induced pluripotent stem cells (iPSC), derived from bone marrow, to create the neurons in a lab setting. Then, the neurons were placed inside the spinal cords of mice dealing with constant neuropathic pain.

“Remarkably, the stem-cell neurons promoted lasting pain relief without side effects,” comments co-senior author Dr Leslie Caron. “It means transplant therapy could be an effective and long-lasting treatment for neuropathic pain. It is very exciting.”

John Manion, the study’s lead author, adds: “Because we can pick where we put our pain-killing neurons, we can target only the parts of the body that are in pain. This means our approach can have fewer side effects.”