Category: Daily News

Governor Brown signed SB 1160 into law on the last day of the legislative session. This bill makes a series of significant, wide-ranging changes to the operation and UR processes, approval of UR processes, and lien filing and collection. This bill expedites medical care at the beginning of an injured worker’s claim, modernizes data collection in the workers’ compensation system, and implements anti-fraud measures in the filing and collection of liens.

Specifically, with respect to UR operation, this bill:

1) Provides that, with respect to medical treatment that is provided through a medical provider network (MPN), a health care organization (HCO), other employer-directed provider, or a pre-designated physician, no prospective UR may be undertaken for the first 30 days of treatment.
2) Provides several exceptions to the “no UR” rule, including surgery, medications not covered by the formulary, psychological treatment, non x-ray imaging, durable medical equipment (DME) if total costs for all DME exceeds $250, and home health care services.
3) Requires any treatment provided within the first 30 days to be reported to the employer or claims administrator – failure by the provider to properly report treatment can lead to revocation of the “no UR” rule.
4) Authorizes an employer to conduct retrospective UR to ensure compliance with evidence-based medicine standards, and if a pattern of non-compliance is discovered, the “no UR” rule could be revoked or the provider removed from the MPN.

With respect to UR Process Approval:

5) Prohibits explicitly an employer or claims administrator from providing a UR organization with financial incentives to deny or modify treatment.
6) Requires financial interest disclosure of UR entities be shared with DWC.
7) Requires any UR organization to be accredited by an entity specified by the DWC, subject to exceptions for certain public entities that have internal systems approved by the DWC. The entity must be independent and non-profit. Until the rules are approved by the AD, the entity will be URAC.
8) Provides authority to the DWC to approve UR processes.

With respect to UR and Medical Guideline Modernization:

9) Requires, through the URAC accreditation process, the availability of peer-to-peer communication in the event of a UR modification or denial.
10)Requires the AD to develop a mandatory electronic system for sharing documents necessary to conduct UR.
11)Adopts new procedures designed to better facilitate delivery of information for purposes of IMR.
12)Establishes an expedited five-day time frame for IMR decisions related to medications on the formulary.
13)Provides that MTUS may be updated with evidence-based medicine standards by an expedited process.

With respect to Anti-Fraud Measures:

14)Requires, for liens filed on or after January 1, 2017, a lien filer to specify in the lien filing the basis upon which the lien is authorized.
15)Requires these same data elements to be added to pre-existing liens, but allows until July 1, 2017, for lien filers to comply.
16)Provides that the failure to comply with the requirements noted above results in a dismissal of the lien with prejudice.
17)Provides that in the event a lien filer is charged with workers’ compensation fraud, Medi-Cal fraud, or Medicare fraud, all liens are stayed pending resolution of the charges.
18)Prohibits, for liens on or after January 1, 2017, any assignment of liens unless the person has ceased doing business in the capacity held at the time the expenses were incurred and has assigned all rights, title, and interest in the remaining accounts receivable to the assignee. The assignment of a lien, in violation of this paragraph is invalid by operation of law.
19)Clarifies existing law on liens assigned between 2013 and 2016 by codifying Chorn v. WCAB (Workers’ Compensation Appeals Board) (2016), 2016 Cal. App. LEXIS 232 and states these amendments to be declaratory of existing law.

Aon Global Risk Consulting, released its biennial Health Care Workers’ Compensation Barometer report, which explores trends in frequency, severity and overall loss rates related to workers’ compensation in the health care industry. The report finds that for the 2017 accident year, health care systems will face a complex environment of emerging risks that will have a direct impact on workers’ compensation.

The report, which analyzed data from approximately 1,600 heath care facilities across the country, found that while the severity of workers’ compensation claims has been increasing at a rate of two percent annually, the frequency of claims is expected to decrease one percent annually. The report also found that the industry should see loss rates increase by a projected one percent.

“As has been the case historically, the health care industry has experienced little volatility in workers’ compensation loss rates and, to augment that, claims frequency continues on a slow and steady decline,” said Martha Bronson, associate director and actuary for Aon Risk Solutions. “However, an aging workforce, safe patient handling issues and workplace violence are all emerging risks that need to be top of mind for the industry.”

Data from Aon’s 2016 Health Care Workers’ Compensation Barometer report finds that workers’ compensation claim costs increase as health care workers age, with the majority of those claims resulting from injuries to the back and shoulders. Fifty three percent of working nurses – a demographic that is the most frequently injured – are over the age of 50. A likely consideration for controlling these types of claims in the future and helping to ensure a healthy and safe workforce is education, specifically mentoring of the younger nursing population. While the report found that 58 percent of respondents have a program that develops younger workers, 61 percent do not have policies or programs that help transition older workers to a different work setting.

Aon’s Health Care Workers’ Compensation Barometer report also provides statistical information on historical frequency, severity, and overall loss rates specific to 11 states. Notably, the report finds that loss rates in California are almost double the countrywide rate and that claims severity is nearly three times that of the countrywide average of $23,950.

While loss prevention was the area of most concern for respondents, safe patient handling policies and controls are also top-of-mind in regards to minimizing risk of injury to health care workers. The report’s findings suggest that focusing on patient handling initiatives and best practices can aid in preventing workers’ compensation claims, thus helping mitigate both concerns. The average cost of a claim for systems that use Safe Patient Handling and Mobility standards is lower versus a facility that does not – $6,000 versus $7,800 – and overall these standards have reduced the incidence of health care worker injuries by up to 95 percent.

An alarming number of survey respondents – 91 percent – have experienced workplace violence in the past three years. However, approximately half of respondents indicate they are prepared for such an incident, with another 27 percent being very prepared. Eighty-one percent of respondents have a formal Workplace Violence Prevention Policy in place.

Dominic Colaizzo, chairman and U.S. Health Care practice leader for Aon Risk Solutions added, “While we recognize these emerging risks that are facing our industry in the year ahead, we also see that health care systems are ahead of the game. They are adhering to standards and utilizing best practices that are no doubt having a direct, positive effect on the number of workers’ compensation claims.”

The Department of Justice announced that Vibra Healthcare LLC, a national hospital chain headquartered in Pennsylvania, has agreed to $32.7 million settlement to resolve claims that Vibra violated the False Claims Act by billing Medicare for medically unnecessary services.

Vibra operates approximately 36 freestanding long term care hospitals (LTCHs) and inpatient rehabilitation facilities (IRFs) in 18 states. Its California facilities include Ballard Rehabilitation Hospital in San Bernardino, Kentfield Hospital in Marin County, Vibra Hospital of Sacramento, San Joaquin Valley Rehabilitation Hospital in Fresno, Vibra Hospital of Northern California in Redding, Vibra Hospital of San Diego and Kentfield Hospital of San Francisco.

LTCHs provide inpatient hospital services for patients whose medically complex conditions require long hospital stays and programs of care. IRFs are intended for patients needing rehabilitative services that require hospital-level care.

The government alleged that between 2006 and 2013, Vibra admitted numerous patients to five of its LTCHs and to one of its IRFs who did not demonstrate signs or symptoms that would qualify them for admission.

Moreover, Vibra allegedly extended the stays of its LTCH patients without regard to medical necessity, qualification and/or quality of care. In some instances, Vibra allegedly ignored the recommendations of its own clinicians, who deemed these patients ready for discharge.

As part of the settlement, Vibra also agreed to enter into a chain-wide corporate integrity agreement with the Inspector General of the U.S. Department of Health and Human Services.

Part of the allegations resolved by this settlement were originally filed under the qui tam or whistleblower provisions of the False Claims Act by Sylvia Daniel, a former health information coder at Vibra Hospital of Southeastern Michigan. Daniel filed her suit in the Southern District of Texas, where one of Vibra’s LTCHs was located. Under the False Claims Act, a private party, known as a relator, can file an action on behalf of the United States and receive a portion of the recovery. Daniel will receive at least $4 million.

This settlement illustrates the government’s emphasis on combating healthcare fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $30.7 billion through False Claims Act cases, with more than $18.5 billion of that amount recovered in cases involving fraud against federal healthcare programs.

This matter was handled by the Civil Division’s Commercial Litigation Branch; the U.S. Attorneys’ Offices for the Southern District of Texas in Houston and for the Western District of Kentucky; and the HHS-OIG. The qui tam case is captioned United States ex rel. Daniel v. Vibra Healthcare, LLC, Civil Action No. 10-5099 (S.D. Tex.).

In California, the Controlled Substance Utilization Review and Evaluation System (CURES) is an electronic tracking program that reports all pharmacy (and specified types of prescriber) dispensing of controlled drugs by drug name, quantity, prescriber, patient, and pharmacy.

The CURES database addresses only part of the problem. According to a 2013 federal survey, two-thirds of the people abusing pharmaceuticals had not been prescribed the drugs – so they wouldn’t have been listed in the database. Nevertheless, CURES can help physicians and pharmacies identify those who are pill-shopping from doctor to doctor, while helping states track down doctors who are overprescribing narcotics.

When California lawmakers created the CURES database to fight prescription drug abuse years ago, they left out an important piece. Although pharmacists were required to list in the database any customers who received potentially dangerous and addictive drugs, doctors weren’t required to check those records before prescribing more pills. State Sen. Ricardo Lara (D-Bell Gardens) introduced a bill that would finally require doctors to do what they should have been doing all along.

And Governor Brown signed SB 482 into law this week. After January 1, the law will require a health care practitioner authorized to prescribe, order, administer, or furnish a controlled substance to consult the CURES database to review a patient’s controlled substance history no earlier than 24 hours, or the previous business day, before prescribing a Schedule II, Schedule III, or Schedule IV controlled substance to the patient for the first time and at least once every 4 months thereafter if the substance remains part of the treatment of the patient.

Any health care practitioner who fails to consult the CURES database is required to be referred to the appropriate state professional licensing board solely for administrative sanctions, as deemed appropriate by that board.

Currently, the Los Angeles Times reports that only about 10% of those who can prescribe these drugs have even signed up to use CURES. The California Medical Assn., the main trade group for doctors, has resisted any mandate on its members to consult the database, arguing that the Legislature shouldn’t meddle in the practice of medicine. Besides, the group says, CURES isn’t ready yet for the avalanche of queries that such a mandate would cause.

The new law addresses the latter by delaying the requirement until the state certifies that CURES has been fully upgraded. As for the former concern, the bill imposes no restrictions on prescribing that state law doesn’t already impose. It simply holds doctors and other prescribers responsible for checking CURES when the potential for pill-shopping is at its highest – for example, when a patient is prescribed a dangerous drug for the first time. That’s not asking much.

Existing law (Health and Safety Code Section 11165.1) required all California licensed prescribers authorized to prescribe scheduled drugs to register for access to CURES 2.0 by July 1, 2016 or upon issuance of a Drug Enforcement Administration Controlled Substance Registration Certificate, whichever occurs later. California licensed pharmacists must have registered for access to CURES 2.0 by July 1, 2016, or upon issuance of a Board of Pharmacy Pharmacist License, whichever occurs later.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) and confidentiality and disclosure provisions of California law cover the information contained in CURES 2.0. Access to CURES 2.0 is limited to licensed prescribers and licensed pharmacists strictly for patients in their direct care; and regulatory board staff and law enforcement personnel for official oversight or investigatory purposes.

Thus, it seems fair to assume that in the near future, workers’ compensation claim administrators should expect to see confirmation from a claimant’s PTP that the CURES database has been reviewed as required by law.

Governor Brown signed SB 1241 by Senator Bob Wieckowski (D-Fremont) which limits employment contract restrictions on choice of law and forum.

As a general matter, arbitrations provide an alternative method of dispute resolution, outside of the courts, wherein a neutral third party, known as the arbitrator, renders a decision after a hearing to which both parties have had an opportunity to be heard.

On March 1, 2016, the Senate Judiciary Committee held an informational hearing on the topic of private or contractual arbitration agreements. In that hearing, many issues facing consumers and employees who are subject to arbitration clauses contained in standardized, take-it-or-leave-it, or “adhesive,” contracts were brought to light.

A package of arbitration bills, of which this bill is one, arose out of the hearing, seeking to address various fairness issues surrounding the rules that govern the conduct and operation of arbitrators and arbitrations in this state.

Of particular relevance to this bill are issues of fairness surrounding choice of law and choice of forum clauses as a condition of non-negotiable consumer and employment contracts, and, specifically, the ability of a seller or employer to require a California consumer or employee to litigate or arbitrate their claims arising out of California in another state, or pursuant to another state’s laws.

Generally speaking, California law does not currently prohibit companies or employers from requiring consumers or employees to agree to a non-California forum or to apply non-California law to resolve their disputes. As a matter of case law, such clauses are valid so long as the California consumer or employee “will not find their substantial legal rights significantly impaired by their enforcement.” (America Online, Inc. v. The Superior Court of Alameda County (2001) 90 Cal.App.4th 1, 21, 23.)

This new law seeks to ensure that California consumers and employees cannot be forced to litigate or arbitrate their California-based claims outside of California, under out-of-state laws, as a condition of a consumer or employment contract.

This new law applies to contracts entered into, modified, or extended on or after January 1, 2017. It prohibits an employer from requiring an employee who primarily resides and works in California, as a condition of employment, to agree to a provision that would require the employee to adjudicate outside of California a claim arising in California or deprive the employee of the substantive protection of California law with respect to a controversy arising in California.

The law also makes any provision of a contract that violates these prohibitions voidable, upon request of the employee, and would require a dispute over a voided provision to be adjudicated in California under California law. The law excepts from these provisions a contract with an employee who was individually represented by legal counsel. These provisions become newly added labor code section 925 on January 1.

SB 1201 may have some effect on the adjudication of workers’ compensation claims. Arbitration clauses and choice of law rules have been written into NFL player contracts, and have been used to defend workers’ compensation claims by these professional athletes. For example, Bruce Matthews played football in the National Football League from 1983 to 2002. On August 5, 2010, an arbitrator ruled that Bruce Matthews could pursue a workers’ compensation claim in California but that the claim must proceed under Tennessee law, if at all. A federal judge in the United States District Court, Southern District of California upheld the arbitrator in the case of National Football League Players’ Association v the NFL.

It is likely that this new law will be tested against the strong federal policy favoring such agreements.