Category: Daily News

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.

The Department of Justice has reached 70 settlements involving 457 hospitals in 43 states for more than $250 million related to cardiac devices that were implanted in Medicare patients in violation of Medicare coverage requirements. Twenty-seven California hospitals were included in the settlement: Irvine-based St. Joseph Health System agreed to pay $2.7 million on behalf of 10 affiliated hospitals; Sacramento-based Sutter Health agreed to pay $3 million on behalf of 12 affiliated hospitals; and San Diego-based Scripps Health agreed to pay $5.6 million on behalf of five affiliated hospitals.

An implantable cardioverter defibrillator, or ICD, is an electronic device that is implanted near and connected to the heart. It detects and treats chaotic, extremely fast, life-threatening heart rhythms, called fibrillations, by delivering a shock to the heart, restoring the heart’s normal rhythm.  It is similar in function to an external defibrillator (often found in offices and other buildings) except that it is small enough to be implanted in a patient’s chest. Only patients with certain clinical characteristics and risk factors qualify for an ICD covered by Medicare.

Medicare coverage for the device, which costs approximately $25,000, is governed by a National Coverage Determination (NCD). The Centers for Medicare and Medicaid Services implemented the NCD based on clinical trials and the guidance and testimony of cardiologists and other health care providers, professional cardiology societies, cardiac device manufacturers and patient advocates. The NCD provides that ICDs generally should not be implanted in patients who have recently suffered a heart attack or recently had heart bypass surgery or angioplasty. The medical purpose of a waiting period -40 days for a heart attack and 90 days for bypass/angioplasty – is to give the heart an opportunity to improve function on its own to the point that an ICD may not be necessary. The NCD expressly prohibits implantation of ICDs during these waiting periods, with certain exceptions.The Department of Justice alleged that from 2003 to 2010, each of the settling hospitals implanted ICDs during the periods prohibited by the NCD.

“The settlements announced today demonstrate the Department of Justice’s commitment to protect Medicare dollars and federal health benefits,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida. “Guided by a panel of leading cardiologists and the review of thousands of patients’ charts, the extensive investigation behind the settlements was heavily influenced by evidence-based medicine. In terms of the number of defendants, this is one of the largest whistleblower lawsuits in the United States and represents one of this office’s most significant recoveries to date. Our office will continue to vigilantly protect the Medicare program from potential false billing claims.”

Most of the settling defendants were named in a qui tam, or whistleblower, lawsuit brought under the False Claims Act, which permits private citizens to bring lawsuits on behalf of the United States and receive a portion of the proceeds of any settlement or judgment awarded against a defendant. The lawsuit was filed in federal district court in the Southern District of Florida by Leatrice Ford Richards, a cardiac nurse, and Thomas Schuhmann, a health care reimbursement consultant. The whistleblowers have received more than $38 million from the settlements. The Department of Justice is continuing to investigate additional hospitals and health systems.

In the Angelotti Chiropractic federal constitutional challenge to the 2013 lien activation fee case, the United States Court of Appeals for the Ninth Circuit issued a decision in June holding that the preliminary injunction staying implementation of the lien activation fee should be vacated. The Court of Appeals denied a Rehearing Petition and issued its mandate to the District Court on October 19, 2015.

Under SB863, lienholders were to be afforded until December 31, 2013 to pay lien activation fees. The now vacated preliminary injunction went into effect on November 19, 2013 and the DWC deactivated the payment systems. As a result, lienholders – including lienholders not a party to this action – were unable to pay lien activation fees for 43 days prior to the December 31, 2013 deadline.

At an October 29 status conference in federal court, the parties agree that lienholders should be afforded at least 43 days to pay activation fees after the former payment systems are re-activated and the parties jointly requested that the deadline be made December 31, 2015. And the DWC requested that it be given until November 9, 2015 to reactivate the payment systems.

The Court ordered that the DWC has until November 9, 2015 to re-establish the activation fee payment systems. Any holder of a lien filed prior to January 1, 2013 shall be permitted to pay lien activation fees required by Cal. Lab Code § 4903.06 from November 9, 2015 to December 31, 2015. Any lien filed prior to January 1, 2013 for which the lien activation fee has not been paid on or before December 31, 2015 shall be dismissed by operation of law pursuant to Cal. Lab Code § 4903.06(a)(5). This provision shall have no effect on liens that were dismissed prior to this order.

In the event the payment systems are not re-established by November 9, 2015, or thereafter become non-operational, the December 31, 2015 deadline shall be extended by one calendar day for every day the payment systems are non-operational.

The Justice Department announced that Adventist Health System has agreed to pay the United States $115 million to settle allegations that it violated the False Claims Act by maintaining improper compensation arrangements with referring physicians and by miscoding claims. Adventist is a non-profit healthcare organization that operates hospitals and other health care facilities in 10 states including California.

The allegations arose from two lawsuits filed respectively by whistleblowers Michael Payne, Melissa Church and Gloria Pryor, who worked at Adventist’s hospital in Hendersonville, North Carolina, and Sherry Dorsey, who worked at Adventist’s corporate office, under the qui tam provisions of the False Claims Act. Sherry Dorsey was a former chief operating officer of Physician Enterprise, a division of Adventist Healthcare. The act permits private parties to file suit on behalf of the United States for false claims, and to share in any recovery. The whistleblowers’ share of the settlement has not yet been determined.

Sherry Dorsey worked at corporate headquarters and reported to top Adventist executive. At a meeting with executives in August 2012, Dorsey allegedly raised questions about 85 physicians who were paid above the 90th percentile of Medical Group Management Association benchmarks for their specialties. Many of them were paid $1 million a year, and some got $2 million or $3 million, according to the complaint. “It was humanly impossible for each of the doctors to have work relative value units [RVUs] that would normally be attributed to the work of 5, 6, or 7 full-time doctors in the same field of practice,” the complaint said. Dorsey suggested assessments of the coding and billing practices of the physicians to determine if there were any irregularities, but she allegedly was rebuffed because the audits would be too expensive. Still, Dorsey continued to sound alarms about physician compensation. Adventist allegedly quantified Stark-related overpayments, but didn’t repay them. “She was, in essence, told to play ball, to not raise too much of a fuss about it,” says Atlanta attorney Marlan Wilbanks, who represents Dorsey.

The other complaint filed by Michael Payne, Melissa Church and Gloria Pryor describes how Adventist hospitals pay physicians generously even though their practices lose money. The losses are “tolerated” only because the hospitals track the value of the physicians’ referrals and “know they can more than make up for those losses through the marginal gains in income that the [hospitals realize]” from the referrals for inpatient and ancillary services, the complaint alleged.

There were no subpoenas or depositions on the way to the resolution of two false claims cases. Because Adventist self-disclosed some violations to the Department of Justice, it was given credit for cooperation, and the case moved through with relative speed and no formal litigation,

The cases, United States ex rel. Payne, et al. v. Adventist Health System/Sunbelt, Inc., et al. No. 12-856 (W.D.N.C), and United States ex rel. Dorsey v. Adventist Health System Sunbelt Healthcare Corp., et al., No. 13-217 (W.D.N.C), were handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the Western District of North Carolina and HHS-OIG. The claims settled by this agreement are allegations only, and there has been no determination of liability.