Category: Daily News

Eight medical professionals and associates are charged in federal grand jury indictments with buying and selling patients in a bribery scheme involving $25 million in improper claims for medical services and devices which were then billed to California Workers’ Compensation insurance companies.

FBI agents along with investigators from the California Department of Insurance and the San Diego County District Attorney’s Office served five search warrants and three seizure warrants at locations in San Diego, Chula Vista, National City, Murietta and Los Angeles. Five people plus six corporations, are charged in three federal grand jury indictments with conspiracy and honest services mail fraud. The indictments allege that these players either paid or received tens of thousands of dollars to buy or sell hundreds of patients, without the patients’ knowledge – therefore depriving those patients of their right to their doctors’ honest services.

“Today’s indictments are only the first wave of charges in what we believe is rampant corruption on the part of some physicians and chiropractors in their dealings with the health care system in general, and California’s Workers’ Compensation System in particular,” said U.S. Attorney Laura Duffy. “This criminal network bought and sold patients like cattle,” said District Attorney Bonnie Dumanis.

One of the indictments alleges that Los Angeles radiologist Ronald Grusd paid bribes to a San Diego chiropractor in exchange for patient referrals. The bribes were funneled to the chiropractor via Grusd’s corporation, Willows Consulting, a shell company. The checks were labeled “professional services,” but this was a sham. In order to further hide the illegal kickbacks, checks were allegedly issued to intermediaries – defendants Alexander Martinez and his father, Ruben – through their front companies, “Line of Sight” and “Desert Blue Moon.” The Martinezes allegedly took their “cut” and then, in turn, paid off the chiropractor.

Grusd’s practice, California Imaging Network Medical Group, has clinics in San Diego, Los Angeles, Beverly Hills, Fresno, Rialto, Santa Ana, Studio City, Bakersfield, Calexico, East Los Angeles, Lancaster, Victorville and Visalia.

In another indictment, allegations say a second San Diego chiropractor, Dr. George Reese, with offices on El Cajon Boulevard, referred patients to a Los Angeles area medical service provider (controlled by attorney Lee Mathis, 70, of San Clemente, and Fernando Valdes, 50, of Westminster, president of Foremost Shockwave Solutions ) in return for bribes. The bribes were set by the conspirators at $100 per patient and paid through an intermediary. After taking a cut amounting to $25 per patient, the intermediary would pay the remaining $75 per patient to Reese. Mathis and Valdes were not arrested, but were ordered to appear in court.

Although disguised as “office rent” payments, the illegal bribes were paid in cash during clandestine exchanges in restaurants and parking lots. For example, $6,000 in cash was allegedly delivered to Reese in the parking lot of the Jolly Roger in Oceanside, hidden in a gift bag. Other times, it was passed in envelopes or stashed inside newspapers. According to the indictment, Reese and his codefendants generated and submitted bills to insurers totaling in the tens of millions of dollars. Most of these treatments involved the providing of “Shockwave therapy,” which uses low energy sound waves to initiate tissue repair. Proceeds from the insurance claims generated through this scheme were allegedly paid to Mathis and Valdes.

In the final indictment, a San Diego chiropractor referred patients to a licensed provider of durable medical equipment, Julian Garcia. In return Garcia paid the chiropractor $50 for each patient – in cash, to disguise the kickbacks. Garcia then improperly billed Workers Comp insurers millions for hot and cold packs for patients who had been secured by bribes.

Governor Jerry Brown signed a bill that provides employers with a limited window to correct technical violations in itemized wage statements before being subject to costly litigation. AB 1506 is a bi-partisan effort to strike a balance between protecting the integrity of wage statements and providing relief to employers from potential litigation over minor paperwork violations. The bill, which received unanimous support in both the Assembly and Senate, includes an urgency clause that allowed it to immediately become law after signed by the governor .

In recent years, there have been a number of cases in which employers were sued under the Private Attorneys General Act (PAGA) over minor, hyper-technical violations of existing law. PAGA requires employers to provide accurate itemized wage statements – and allows employees, through an attorney, to file what is called a “representative action” against an employer for any violation of the California Labor Code related to paystubs.

Because PAGA penalties can be high, and the cost of defending them substantial, some employers have opted to settle employee claims rather than contest them in court. And a handful of legal firms around the state have made a lot of money convincing clients to go after their employers for PAGA-related claims.

But AB 1506 now allows employers up to 33 days to cure any alleged technical violation on wage statements. The bill states that if the alleged violation involves the wage statement’s inclusion of the name and address of the employer, or the inclusive dates of the pay period, then the employer shall have an opportunity to “cure” the violation before any PAGA claim may be filed.

AB 1506 was supported by the California Chamber of Commerce, which applauded Gov. Brown’s “fiscal prudence” in limiting “frivolous and potentially devastating” litigation against Golden State employers. “By allowing the employer a limited time period to fix technical violations on an itemized wage statement that does not create any injury to an employee before civil litigation is pursued, AB 1506 will enable an employer to devote its financial resources to expanding its workforce,” said a CalChamber report.

In a new study, WCIRB researchers have documented significant differences in the costs of claims among California regions. The Study found that the Los Angeles region experiences significantly higher claim frequency relative to the rest of California, while the Silicon Valley and San Francisco Bay Area regions experience lower claim frequencies. The Santa Monica – San Fernando Valley region is second, and San Gabriel Valley – Pasadena region is third highest. No opinion was provided to explain these differences.

WCIRB researchers also found that claim severities tend to be higher in the Central Valley and many of the urban coastal areas, but lower in the more remote, rural areas of the state.

The Study involved linking several diverse datasets which allowed the WCIRB to conduct a more refined analysis of geographical differences across California than has previously been possible. The Study examines geographical differences in:

– Indemnity frequency
– Total frequency
– Incurred indemnity on indemnity claims
– Median injured workers’ average weekly wages
– Incurred medical on indemnity claims
– Cumulative injury and occupation disease claims

The Study of Geographical Differences in California Workers’ Compensations Claim Costs and a mapping of nine-digit zip codes to the Study’s regions are available on the WCIRB website in the Research and Analysis section.

The Office of Self Insurance Plans (OSIP) is a program within the director’s office of the Department of Industrial Relations that is responsible for the oversight and regulation of workers’ compensation self-insurance within California. OSIP is also responsible for establishing and insuring that required security deposits are posted by self-insurers in amounts sufficient to collateralize against potential defaults by self-insured employers and groups.

This week OSIP posted proposed regulations to streamline self-insurance procedures and eliminate some existing requirements. A public hearing on the proposed regulations has been scheduled at 10 a.m., Monday, December 21, 2015, in the conference room at the Office of Self Insurance Plans, 11050 Olson Drive, Suite 230, Rancho Cordova, CA 95670. Members of the public may also submit written comments on the regulations until 5 p.m. that day.

The proposed regulation amendments function primarily to update and clarify existing regulations. Several proposed amendments make substantive changes to clarify and simplify the documentation and evaluation of the financial qualifications of self-insureds and to simplify and streamline procedural requirements. Existing requirements pertaining to claims loss history and evaluation of illness prevention program are eliminated as no longer necessary. The rulemaking also updates existing forms, implements new forms in some cases and provides for an online platform for submission of annual forms by self-insureds. The proposed rulemaking does not implement any new reporting requirements and claims not to have an adverse financial impact on California businesses.

The notice and text of the regulations can be found on the proposed regulations page.

An Orange County Social Services Agency (SSA) group counselor has been charged for defrauding over $30,000 from the County of Orange by making fraudulent statements relating to his workers’ compensation claim. Maluelue Tafua, 40, Orange, is charged with two felony counts of insurance fraud and two felony counts of making fraudulent statements. If convicted, Tafua faces a maximum sentence of eight years in state prison. He is out of custody on $20,000 bail.

At the time of the crime, Tafua worked as a group counselor for SSA.

On Jan. 8, 2014, Tafua is accused of claiming that he injured his right shoulder and elbow restraining someone while working at Orangewood Children’s Home. SSA attempted to accommodate his injury by assigning him to modified duties within the work restrictions prescribed by the treating physician. Tafua is accused of going to his doctor and claiming to be unable to use his right arm. SSA could not accommodate that restriction and placed Tafua on temporary total disability.

On June 3, 2014, Tafua is accused of bench pressing 315 pounds in a gym. During a medical appointment with his doctor the following day, Tafua is accused of claiming that his pain had not improved and that he had been complying with his treatment. He is accused of failing to report that he exercised using weights at the gym.

On July 14, 2014, the County began investigating this case after observing inconsistencies in the defendant’s statements, what was observed at the gym, and what activities he told the doctor he was capable of performing. Deputy District Attorney Pam Leitao of the Insurance Fraud Unit is prosecuting this case.