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Category: Daily News

Riverside Transit Authority Worker Pleads Guilty

A former Riverside Transit Authority worker has pleaded guilty to worker’s comp fraud charges. RTA issued a statement that George Bateman, 46, of Corona pleaded guilty March 7 to one count of insurance fraud, resulting in 180 days in jail and a $5,000 fine. He was sentenced on May 30.

According to the story in the Press Enterprise, Bateman was placed on permanent disability in February 2012 after complaining of neck, shoulder and back pain. DA investigators began monitoring Bateman following his medical leave and reports of fraud. During the investigation, which combined the efforts of both RTA and the DA’s office, Bateman was observed operating his own limousine service, and he was videotaped driving, handling customer luggage, lifting bags of ice, tire rims and cases of water without any sign of restriction. Employees who are on TTD are required to report any outside income. Bateman did not report any income from his limousine business.

Roughly 360 RTA employees are covered by workers’ compensation, which provides for medical treatment and loss of earnings that result from work-related injuries.

“Workers’ compensation fraud is not a victimless crime,”said RTA Chairman of the Board Marion Ashley. “We are committed to detecting and deterring fraud in workers’ compensation by any means possible.”

The Riverside District Attorney’s Office has a designated unit of two deputy district attorneys and six senior investigators who are specially tasked to investigate and prosecute workers’ compensation fraud. Because of the huge impact this type of fraud has on the community it is one of District Attorney Paul Zellerbach’s priorities since he’s been in office.

CMS Publishes 88 Page Workers’ Compensation MSA Guide

CMS published a new 88-page reference guide for Workers’ Compensation Medicare Set-Asides (WCMSAs). The publication’s purpose is to serve as a reference guide for claimants, attorneys, WCMSA consultants and others by consolidating information from previous CMS WCMSA Regional Office (RO) Memorandums and other information on the CMS website. For more comprehensive information, readers are requested to continue to refer to the WCMSA RO Memorandums.

The format of the guide (with version numbers, version history and paragraph numbers) is structured to make it expandable for future updates. This guide is in response to users requests for CMS to provide clearer guidance on the WCMSA program.

This guide was written to help litigants understand CMS’ Workers’ Compensation Medicare Set – Aside Arrangement (WCMSA) amount approval process and to serve as a reference for those electing to submit such proposals to CMS for approval. Submitters of arrangements may include injured workers themselves, their attorneys, Workers’ Compensation Medicare Set-Aside Arrangement agents or consultants, or claimants’ other appointed representatives. This guide reflects information compiled from all WCMSA Regional Office (RO) Memorandums issued by CMS, and from information provided on the CMS website.

A WCMSA allocates a portion of the WC settlement for all future work injury related medical expenses that are covered and otherwise reimbursable by Medicare. When a proposed WCMSA amount is submitted to CMS for review and the individual or beneficiary obtains CMS’approval, the CMS – approved WCMSA amount must be appropriately exhausted before Medicare will begin to pay for care related to the beneficiary’s settlement, judgment, award, or other payment.

The goal of establishing a WCMSA is to estimate, as accurately as possible, the total cost that will be incurred for all medical expenses otherwise reimbursable by Medicare for work-related conditions during the course of the claimant’s life, and to set aside sufficient funds from the settlement, judgment, or award to cover that cost. WCMSAs may be funded by a lump sum or may be structured, such that a fixed amount of funds are provided each year for a fixed number of years.

Any claimant who receives a WC settlement, judgment, or award that includes an amount for future medical expenses must take Medicare’s interest with respect to future medicals into account.  If Medicare’s interests are not considered, CMS has a priority right of recovery against any entity that received a portion of a third party payment either directly or indirectly. Medicare may also refuse to pay for future medical expenses related to the WC injury until the entire settlement is exhausted. These arrangements are typically not created until the individual’s condition has stabilized so that it can be determined, based on past experience, what the future medical expenses may be.

Once the CMS-approved set-aside amount is exhausted and accurately accounted for to CMS, Medicare will pay primary for future Medicare-covered expenses related to the WC injury that exceed the approved set-aside amount.

To view the new WCMSA reference guide, click here.

New FEHA Disability Regulations Directly Impact Work Comp Cases

California’s former Fair Employment and Housing Commission adopted new disability regulations that are in effect as of January 1, 2013. These regulations directly impact workers’ compensation cases by requiring that an employer initiate an interactive process if “an employer or other covered entity becomes aware of the possible need for an accommodation because the employee has exhausted leave under the California Workers’ Compensation Act…” in addition to imposing significant other new obligations on employers related to employees suffering from a work related or non- work related injury/disability.

Floyd, Skeren and Kelly is pleased to announce its 3rd Annual Employment Law Conference, to be held on May 9, 2013 at the Disneyland Hotel, which will feature as keynote speaker, Phyllis Cheng, Director of the California Department of Fair Employment and Housing (DFEH). Ms. Cheng, will review these important new disability regulations including the following key points:

  • A Review of the Expanded Definition of a Disability
  • Examples of Qualifying Physical and Mental Disabilities
  • Clarification on Who is a “Qualified” Individual with a Disability?
  • Heightened Emphasis on Engaging in Interactive Process
  • Clarification on Employer Interactive Process Obligations
  • New Interactive Process Requirements in Work Comp Cases
  • New Reasonable Accommodation Guidelines and Examples
  • Transfer to an Alternative/Vacant Position as an Accommodation
  • New Obligations Related to Job Descriptions
  • New Procedures Related to Medical Certifications
  • Medical Leave of Absence Obligations
  • Termination Issues Related to Disabled Employees

The conference will also include a presentation on the expansive new pregnancy disability regulations, also in effect as of January 2013, in addition to a workers’ compensation case law and legislative update; guidance for employers on avoiding employment related lawsuits; an OSHA update; and, the latest information on social media in the workplace. For more information and registration for the conference, please visit:

WCAB En Banc Decision Clarifies Exemption of Air Ambulance Charges from OMFS

On April 26, 2009, applicant Luis Enriquez was working on a farm when he was gored by a bull, ultimately resulting in his death. Mercy Air Services provided air ambulance services by airlifting Enriquez from the injury site to a hospital in Modesto, a distance of about 26 miles. Mercy billed Zenith in the amount of $11,132.93. Pursuant to AD Rule 9789.70(a), Zenith reimbursed Mercy in the amount of $4,756.42.

Administrative Director Rule 9789.70(a) provides, in relevant part, that “[t]he maximum reasonable fee for ambulance services rendered after January 1, 2004 shall not exceed 120% of the applicable fee for the Calendar Year 2004 set forth in CMS’s Ambulance Fee Schedule, which is established pursuant to Section 1834 of the Social Security Act (42 U.S.C. § 1395m) and applicable to California.” (Cal. Code Regs., tit.8, § 9789.70.)

The workers’ compensation judge concluded that, to the extent it purports to apply to air ambulance services covered by the federal Airline Deregulation Act of 1978 (“ADA”), AD Rule 9789.70 is preempted by federal law. The WCJ therefore found that “on April 26, 2009, [AD Rule 9789.70] did not apply to the provision of air ambulance services[,]” and that “lien claimant Mercy Air Services has established that the reasonable value of its services on behalf of defendant’s employee Luis Enriquez on April 26, 2009 is $11,132.93.” The WCJ ordered Zenith Insurance Company to pay that sum to Mercy.

Zenith petitioned for reconsideration in the case of Luis Enriquez (deceased) v Couto Dairy and Zenith Insurance Company, contending that (1) by making a substantive ruling on preemption, the WCJ exceeded his authority under the California Constitution; (2) the WCJ erred in concluding that AD Rule 9789.70 is preempted by the ADA; and (3) if the ADA preempts Rule 9789.70, it also preempts Labor Code section 4600, in which case Zenith allegedly “owes Mercy nothing.”

An amicus brief and request for an en banc decision was filed by California Shock Trauma Air Rescue and Reach Air Medical Services, two air ambulance companies who allege they have hundreds of pending lien claims similar to Mercy’s.

Article III, section 3.5(c) of the California Constitution declares that “[a]n administrative agency … has no power … [t]o declare a statute  unenforceable, or to refuse to enforce a statute  on the basis that federal law … prohibit[s] the enforcement of such statute  unless an appellate court has made a determination that the enforcement of such statute  is prohibited by federal law …” (Italics added.). The WCAB noted however that “it has no bearing on the Appeals Board’s ability to declare a regulation   preempted by federal law. This is because the provision refers only to an administrative agency’s lack of power “[t]o declare a statute unenforceable[.]” As further discussed below, we are finding preemption of AD Rule 9789.70, a regulation“.

However, the WCAB concluded that Mercy has the burden of showing that it is an air carrier subject to the provisions of the ADA. In order to be considered an “air carrier” under the ADA’s preemption provision, the air ambulance provider must show all of the following: (1) it is a “citizen of the United States undertaking by any means, directly or indirectly, to provide air transportation” (49 U.S.C. § 40102(a)(2); (2) it provides foreign, interstate, or mail transportation by air as a common carrier (49 U.S.C. § 40102(a)(5), (25));13 and (3) it is subject to regulation under 49 U.S.C. §§ 41101 et seq. (Med-Trans Corp., supra, 581 F.Supp.2d at 731-732.) Of course, air ambulance liens do not involve either foreign air transportation or the transportation of mail. Therefore, the essential question is whether the air ambulance “may provide” interstate air transportation.In this case, the record requires clarification as to whether Mercy is an “air carrier that may provide air transportation” within the meaning of the preemption provision of the ADA.

UPS Resolves Federal Charges For Delivery of Painkillers for $40 Million

United Parcel Service agreed to forfeit $40 million to settle a probe into its shipments on behalf of illicit online pharmacies. According to the story in the Wall Street Journal, the deal was the latest move in the U.S. government’s expanding crackdown on illegal sales of prescription painkillers. More than 16,000 people died of opioid overdoses in 2010, according to the Centers for Disease Control and Prevention.

Under the agreement between UPS and the U.S. attorney’s office in San Francisco, the company won’t be prosecuted. The Justice Department said UPS cooperated with investigators and has already made changes “to ensure that illegal Internet pharmacies can no longer use its services to ship drugs.” UPS spokesman Bill Tanner said: “We believe we have an obligation and responsibility to help curb the sale and shipment of drugs sold through illegal Internet pharmacies.” In addition to paying $40 million to the government, the company “has agreed to enhance its compliance policies with respect to Internet pharmacy shippers,” he said.

The Drug Enforcement Administration has also been probing FedEx over similar issues, but FedEx wasn’t part of the settlement announced Friday. The Justice Department said it has been looking into Internet pharmacies’ use of shipping companies between 2003 and 2010.

Last year, a FedEx spokesman called the government investigation “absurd and deeply disturbing,” saying drug agents wanted to “deputize” FedEx delivery workers to catch criminals, which he said wasn’t their job.

After the UPS settlement was announced Friday, FedEx spokesman Patrick Fitzgerald said the company is confident it is complying with federal law. “It is unclear what federal laws UPS may have violated,” he said. The company is ready to support law enforcement and is trying to persuade the DEA to provide a list of suspect pharmacies “so we can immediately shut off shipping services to those pharmacies,” he said.

UPS and FedEx, the nation’s two biggest shipping companies, were served with subpoenas starting more than four years ago, according to their public disclosures. Last year, a lawyer for FedEx said the company was informed by the Justice Department that it could soon face criminal charges. The company said it was innocent and planned to contest any charges.

UPS opted instead to negotiate a settlement. According to court papers filed as part of the settlement, UPS employees had numerous exchanges showing they were aware of legal problems surrounding many Internet pharmacies. As a result, UPS workers were told they couldn’t offer discounted pricing to such customers.

In August 2005, a law-enforcement drug task force in Virginia wrote to UPS security officials expressing concern about the company’s delivery practices there, citing evidence the company was making deliveries in parking lots and roadsides to customers of the Internet pharmacies.”Your drivers and managers already know who these people and locations are,” the letter said. The government said UPS continued to make such deliveries after receiving the letter.

U.C. Irvine Medical Center Settles Fraud Case for $1.2 Million

A federal qui tam whistle-blower lawsuit filed in 2008 by former University of California-Irvine (UCI) Professor and Anesthesiologist Dr. Dennis O’Connor triggered a multi-year investigation by the United States Department of Justice, resulting in an agreement by the California Board of Regents to pay the United States $1.2 Million.

The False Claims Act lawsuit alleged that anesthesia was routinely administered at UCI by Certified Registered Nurse Anesthetists (CRNAs) or residents when there was no supervisory anesthesiologist present or immediately available, in violation of federal regulations. The complaint alleged that, in many instances, the supervisory anesthesiologist would be in a completely different building at the time, and that anesthesia records would be “pre-filled” to make it appear that the anesthesiologist was present. The complaint also alleged that required post-operative evaluations would routinely be performed by unsupervised and/or unlicensed residents, in violation of federal regulations, increasing the likelihood that post-operative complications would be missed.

In the Settlement Agreement with UCI, the United States contended that “it has certain civil claims against the Regents arising out of … the submission of claims by or on behalf of the Regents for payment by the Medicare program and the federal portion of the Medicaid program for anesthesia services performed at UCI in a manner inconsistent with federal healthcare program documentation requirements for those services, or inconsistent with federal healthcare program payment requirements for supervision of residents or CRNAs.” The Regents agreed to pay $1.2 Million to the United States to resolve such claims. UC Regents denied the allegations.

According to the story in the Los Angeles Times, the UCI Medical Center had come under fire in the past for similar accusations. The medical center was placed under state supervision in 2008 because of the anesthesiology department’s “inability to provide quality healthcare in a safe environment,” according to a federal report. Among the most serious failings federal inspectors cited was filling out reports in advance of care.

In 2008, the California Medical Board accused the former head of the anesthesiology department, Peter Breen, of gross negligence and incompetence. Two years later, the medical board gave him a public reprimand for writing that a patient was “stable” and “comfortable” during each phase of the procedure before anesthesia had been administered. Breen was ordered to take ethics and medical record-keeping courses. He also was reprimanded by the Illinois Department of Professional Regulation. Breen, who remains at UCI, did not return phone calls or an email Wednesday.

The UCI statement said “new leadership took over and transformed” the anesthesiology department in 2008, putting in place new training and policies, including “an electronic record keeping system that does not permit the practices alleged.”

O’Connor, who now works at the Veterans Administration Hospital in Long Beach, remains wary of UCI Medical Center. “I won’t go there, and I wouldn’t take my family there,” he said.

The medical center has suffered a number of scandals in the last 18 years. In 1995, fertility doctors were accused of stealing patients’ eggs and embryos and implanting them in other women without permission. In 2005, the hospital shut its liver transplant program after federal funding was withdrawn. The action came after The Times reported that 32 people died awaiting livers, even as doctors turned down organs that later were transplanted elsewhere.

DWC Posts Updated Fact Sheets for Injured Workers

The Division of Workers’ Compensation (DWC) has posted updated fact sheets for injured workers on its website. The updated fact sheets provide injured workers with answers to frequently asked questions about issues affecting their benefits, and include changes mandated by Senate Bill 863.

“The fact sheets help injured workers and other parties understand the sometimes complicated process of workers’ compensation,” said DWC acting Administrative Director Destie Overpeck. “We have updated the fact sheets to reflect the changes made by SB 863.”

The fact sheets cover such topics as temporary disability benefits, permanent disability benefits, supplemental job displacement benefits, and medical care. They are available to employers and insurers who are required to comply with benefit notice regulations.

The updated fact sheets are available for immediate use in English and Spanish.

Feds Fraud Warning Targets Physician Owned Distributorships (PODs)

A federal government watchdog has issued a warning about the risk for fraud when doctors buy an ownership interest in a medical device distributor and then share in its profits from sales to hospitals.

In its March 20 report, the Department of Health and Human Services, Office of Inspector General issued a “Special Fraud Alert” that addresses physician-owned entities that derive revenue from selling, or arranging for the sale of, implantable medical devices ordered by their physician-owners for use in procedures the physician-owners perform on their own patients at hospitals or ambulatory surgical centers (ASCs).

These entities frequently are referred to as physician-owned distributorships, or “PODs.” A “POD” is any physician-owned entity that derives revenue from selling, or arranging for the sale of, implantable medical devices and includes physician-owned entities that purport to design or manufacture, typically under contractual arrangements, their own medical devices or instrumentation. Although this Special Fraud Alert focuses on PODs that derive revenue from selling, or arranging for the sale of, implantable medical devices, the same principles would apply when evaluating arrangements involving other types of physician-owned entities.

PODs are most commonly used in orthopedics.

Longstanding OIG guidance makes clear that the opportunity for a referring physician to earn a profit, including through an investment in an entity for which he or she generates business, could constitute illegal remuneration under the anti-kickback statute. The anti-kickback statute is violated if even one purpose of the remuneration is to induce such referrals.

OIG has repeatedly expressed concerns about arrangements that exhibit questionable features with regard to the selection and retention of investors, the solicitation of capital contributions, and the distribution of profits. Such questionable features may include, but are not limited to: (1) selecting investors because they are in a position to generate substantial business for the entity, (2) requiring investors who cease practicing in the service area to divest their ownership interests, and (3) distributing extraordinary returns on investment compared to the level of risk involved. PODs that exhibit any of these or other questionable features potentially raise four major concerns typically associated with kickbacks – corruption of medical judgment, overutilization, increased costs to the Federal health care programs and beneficiaries, and unfair competition. The OIG does not believe that disclosure to a patient of the physician’s financial interest in a POD is sufficient to address these concerns.

OIG is concerned about the proliferation of PODs. This Special Fraud Alert reiterates our longstanding position that the opportunity for a referring physician to earn a profit, including through an investment in an entity for which he or she generates business, could constitute illegal remuneration under the anti-kickback statute. OIG views PODs as inherently suspect under the anti-kickback statute.

Public Sector Claims Costs Near 10 Year High

Even with the volume of job injury claims reported by California public self-insured entities hovering near a 10-year low last year, total paid and incurred workers’ compensation claim costs for cities, counties and other public agencies in the state remained near their 10-year highs according to a California Workers’ Compensation Institute (CWCI) analysis of data from the Office of Self-Insurance Plans (OSIP).

The OSIP summary of public self-insured data for fiscal year 2011/2012, dated March 5, provides the first snapshot of public self-insured claims experience – including the number of claims, total loss payments and total incurred (paid losses plus reserves) — for the 12 months ending June 30, 2012. The agency compiles the data annually from reports submitted by hundreds of public self-insured entities other than the state itself, including cities and counties, local fire, school, transit, utility and special districts and joint powers authorities. The new summary shows that in FY 2011/2012, these employers provided workers’ compensation coverage to 1.9 million California public workers whose wages and salaries totaled $96 billion for the year.

CWCI compared the latest results to those included in the initial report from the prior year and found almost no change (-0.3%) in the number of employees covered by public self-insured employers. Likewise, overall public self-insured claim frequency held steady at 6.2 claims per 100 employees, with no change in the incidence of either medical-only or indemnity claims. Though claim frequency was unchanged, and last year’s first report claim count was the second lowest tally of the last decade, public self-insured employers’ paid losses for FY 2011/2012 still amounted to nearly $340 million. That total was within 1 percent of the 10-year high recorded in FY 2010/2011 first reports and was nearly $80 million (or about 30%) more than the post-reform low recorded in the FY 2005/2006 first reports.

Calculating the first report average paid losses by benefit type, CWCI found that the $80 million increase in public self-insured loss payments over the past six years is associated with increased claim severity (average loss per claim) as average paid indemnity at the first report rose nearly 30% from a post-reform low $1,112 in FY 2005/2006 to $1,441 on last year’s claims, while over the same period the average paid for medical climbed 32.5% from the post-reform low of $1,073 to $1,422 last year.

The incurred data show a similar pattern, with incurred losses for California public self-insured employers totaling $1.1 billion in the FY 2011/2012 first reports, $244 million (28.6%) more than the post-reform low of $853 million noted in the FY 2005/2006 first reports, even though the number of claims is down. As with the paid loss data, the incurred results indicated that the increase in first report total incurred losses over the past 6 years are associated with rising claim severity, as the average incurred indemnity at first report jumped 19.5% from $3,106 in FY 2005/2006 to $3,713 last year, while average incurred medical at first report on public S-I claims rose more than 36% from $4,065 to $5,539.

CWCI ‘s analysis of the OSIP public self-insured data tracks changes in the volume and frequency of California public self-insured claims, and examines the 10-year trends in the total and average paid and incurred amounts for these claims.

Federal Judge Consolidates NFL Comp Claims

Three lawsuits from former National Football League players who are seeking California workers compensation benefits have been consolidated in U.S. District Court in San Francisco after a request from the NFL and several teams.

According to the story on the Business Insurance website, the cases involve 67 former NFL players who want to vacate a December 2012 arbitration award that requires them to withdraw workers comp claims in California, according to court records. The players played for the Buffalo Bills, Denver Broncos, New York Giants and Philadelphia Eagles.

California law allows NFL players to make a claim in California if they have played at least one game in the state. The plaintiffs argue that the arbitration award violates California and federal law and public policy by waiving their ability to seek workers comp in California, records show.

U.S. District Court Judge William H. Alsup ordered the three cases to be consolidated on March 13. The NFL Management Council and the four NFL teams filed a countersuit on March 8 asking the court to require the players to file any workers comp claims in the state specified by their respective player contracts.

The California comp lawsuits are part of several claims being made against the NFL by former players seeking compensation for injuries suffered on the field. At least 2,400 former players have sued the league over neurological and cognitive problems that they allege were caused by football-related head injuries. Most of the concussion-related cases have been consolidated into multidistrict litigation in the U.S. District Court in Philadelphia. The NFL is expected to use an exclusive remedy defense in those lawsuits.

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