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Category: Daily News

Luxury Auction Scheduled as Fraudsters Sit in Jail

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Tranzon Asset Strategies in Irvine has been hired by the Orange County district attorney’s office to sell items owned by Michael Vincent Petronella and his wife, Devon Lynn Kile. The auction will take place at 4 p.m. Oct. 8 in a ballroom at the Wyndham Hotel in Irvine by John Wayne Airport, 17941 Von Karman Ave.

Petronella and wife, Kile, owned three general contracting businesses, including Petronella Roofing in Costa Mesa and Cathedral City. They were arrested in 2009 and eventually convicted of workers’ comp insurance fraud, each receiving 10-year sentences. At the time it was touted as the biggest insurance fraud case in California history.

“State officials and prosecutors say the couple operated a $38 million workers’ compensation insurance-fraud scheme,” the Orange County Register reported in November 2010. The paper quoted prosecutors explaining, “Petronella and Kile declined to pay for employees’ insurance and taxes, and instead used the money for personal expenses, including buying two Ferraris, hundreds of thousands of dollars’ worth of jewelry, and Gucci, Chanel and Burberry handbags and shoes.”

What also made the arrest juicy tabloid fodder was the fact that Kile was being considered for the “Real Housewives” television franchise. So what happen to all this couple’s ill-gotten spoils?

Tiffeny Cook, vice president of Tranzon Asset Strategies says initially vehicles and equipment from Petronella Roofing were sold in 2010. Most of the real estate, a home in Laguna Hills, a condo in Aliso Viejo, a condo in the desert, and the commercial real estate in Cathedral City, were over-leveraged and went back to the lenders.

And the majority of their personal vehicles, including a Bentley, Ferrari and Range Rover, were leased. However, there was a second Ferrari, a 1987 Testarossa, and that will be included in the upcoming auction.

What else can bidders expect? Diamond Jewelry from Winston, including 10-carat diamond ring, diamond bracelets, diamond earrings, diamond necklaces and diamond rings. Watches by Rolex, Cartier, Chopard, Panerai and Breitling. 1987 Ferrari Testarossa US version with passive restraint system, engine type F113A040. 2004 Ford F150 Super Crew 139″ XLT, 2WD, 4.6 Liter V-8 100. Handbags by Louis Vuitton, Balenciaga, Chanel, Gucci, Prada, Versace, Dolce and Gabbana, Burberry and more. Many new and unused 100 Pairs of shoes (size 7.5) by Christian Louboutin, Christian Dior, Dolce and Gabbana, Prada, Manolo Blahnik, Gucci, Jimmy Choo and more, Many new in box and unworn Clothing by Gianni Versace (including vintage), Stella McCartney, Missoni, Mara Hoffman, DVF and more Designer sunglasses and accessories.

From this inventory, it is hard to agree with the adage that crime does not pay – at least for the short term.  But in the longer term, tt may seem true as this couple continues to serve ten long years in a cold prison cell.

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Court of Appeal Limits Olgivie Rating Methods

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Doreen Dahl sustained a cumulative industrial injury in 2005 (pre SB 863) to her neck and right shoulder while employed by Contra Costa County as a medical records technician. She was 49 years old and had worked for the county for over 8 years. Dahl’s vocational experts noted that she has a bachelor’s degree from CSU Hayward and a felony conviction for possession and sale of methamphetamine.

The WPI resulted in a rating of 59 percent disability. However, Dahl sought to rebut the scheduled rating through a vocational expert (Jeffrey Malmuth), and the County sought to counter that with its own expert (Ira Cohen). The WCJ initially awarded the 59% disability pursuant to the Schedule but it was was rejected on reconsideration. The WCJ then assigned Dahl a disability of 79 percent. The WCAB affirmed an increase based upon the Olgivie case in the second award. In doing so, the WCAB again concluded that “complete lack of amenability to vocational rehabilitation” is not “necessary before a LeBoeuf analysis may be properly applied.”

The Court of Appeal rejected the WCAB methodology in the published case of Contra Costa County v WCAB (Dahl) holding “When it devised this new methodology, the WCAB acted in excess of its authority.”

There are three methods to rebut the scheduled rating: 1) a factual error in the application of a formula or the preparation of the schedule, 2) when the injury impairs rehabilitation, and for that reason, the employee’s diminished future earning capacity is greater than the scheduled rating or 3) when a claimant can demonstrate that the nature or severity of the injury is not captured within the sampling of disabled workers used to compute the adjustment factor. The second method however requires that the diminished future earnings is directly attributable to the employee’s work-related injury, and not due to nonindustrial factors such as general economic conditions, illiteracy, proficiency in speaking English, or an employee’s lack of education. This case involved application of the second method.

Under the second method, the WCAB held that Dahl could rebut the scheduled rating by showing the injury impaired her amenability to rehabilitation, even where there was less than total permanent disability. The Court of Appeal responded by saying “We are skeptical of WCAB’s conclusion that an employee may invoke the second Ogilvie rebuttal method where the inability to rehabilitate results in less than a 100-percent permanent disability.” However the Court did not decide the case on that basis. Instead it concluded “There is no evidence that the injury even limited her rehabilitation prospects.”

“In sum, we find WCAB’s approach in this case flies in the face of Ogilvie and the 2004 amendments to the workers’ compensation scheme. Under the 2004 amendments, a claimant’s scheduled rating is presumptively correct. Ogilvie confirmed the Legislature meant what it said, and that claimants may not rebut their disability rating merely by offering an alternative calculation of their diminished future earning capacity.”

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Owner and Foreman Charged With Manslaughter for OSHA Violations

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Cal/OSHA’s criminal investigation into the December 2012 falling death of a 51-year-old carpenter in San Francisco resulted in manslaughter charges by the San Francisco District Attorney against the worker’s employer and foreman. Salvador William Versaggi of Sonoma, owner of Versaggi Construction, along with foreman John Fitt of Sebastopol pleaded not guilty on to the manslaughter charges and two counts of violation of the labor code.

On December 26, 2012, 51 year old Jose Plancarte was assigned to lower a window frame opening in the main stairwell of a residential construction site at 40 Edgehill Way in San Francisco. Plancarte had worked as a carpenter for Versaggi’s company, Versaggi Construction, for 20 years. He built a nailed-bracket scaffold and used two scaffold planks to access the window located more than 18 feet above ground. Plancarte was not wearing fall protection and the scaffold did not have guardrails. He was found unresponsive at the base of the stairwell, having fallen 18.5 feet to the concrete basement floor. Plancarte was transported to San Francisco General Hospital, where he later died from his injuries.

Cal/OSHA’s investigation determined that Versaggi Construction had failed to provide fall protection training to its workers at the site, and that foreman Jim Fitt was aware that Plancarte had cobbled together a prohibited type of scaffolding in direct violation to the employer’s own safety program.

Cal/OSHA’s civil investigation resulted in the issuance of four citations with penalties totaling $25,870 on March 29, 2013, including two citations for serious violations.

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“Lien Finder” Website Created to Clean Up Angelotti Aftermath

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Senate Bill 863 in part was designed to combat an acute “lien crisis” in the workers’ compensation system by imposing a $100 “activation fee” on liens filed prior to January 1, 2013. Angelotti Chiropractic and others sued in federal court challenging the constitutionality of these provisions claiming that SB 863 violates the Takings Clause, the Due Process Clause, and the Equal Protection Clause of the United States Constitution.

The trial court issued a preliminary injunction in plaintiffs’ favor as to the Equal Protection claim, but not as to the other claims. Defendants appealed the district court’s issuance of the preliminary injunction and its denial of the motion to dismiss the Equal Protection claim. The 9th Circuit Court of Appeal reversed last June, and vacated the injunction in the published case of Angelotti Chiropractic Inc. v Christine Baker.

The panel held that the district court properly dismissed the Takings Clause claim because the economic impact of SB 863 and its interference with plaintiffs’ expectations was not sufficiently severe to constitute a taking. The panel further concluded that the lien activation fee did not burden any substantive due process right to court access and also rejected plaintiffs’ claim that the retroactive nature of the lien activation fee violated the Due Process Clause.

The lien claimants file a petition for rehearing in the 9th Circuit Court of Appeal. According to the latest status report filed in the underlying federal action, there is not yet any ruling on the petition.

The California Society Of Industrial Medicine (CSIMS) is the association exclusively representing the private physician practicing occupational medicine in California. In the aftermath of the Angelotti decision, and apparently assuming that the petition for rehearing will be denied, has announced a new website, www.lienactivation.com, to assist lien holders to identify unresolved liens.

According to its website “Pending final resolution of the Angelotti litigation, all unresolved liens filed prior to January 1, 2013 are subject to a $100 lien activation fee. This website will enable you to quickly and easily identify all of your unactivated liens and receive a detailed list via email. It doesn’t matter how or when your liens were filed, or if the name of the lien claimant was misspelled at the time of filing. You can find them all using our simple Lien Finder search tool.”

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CDI, UCSF and Consumer Reports Launch Online Shopping for Docs

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The California Department of Insurance together with the University of California San Francisco (UCSF) and Consumer Reports, announced the launch of California Healthcare Compare, a web-based tool that offers quality and price information in a consumer-focused, easy-to-use website. The tool is now available at HealthcareCompare.insurance.ca.gov and at ConsumerReports.org/CAHealthcareCompare. The California Department of Insurance obtained federal Affordable Care Act grant funds to enhance transparency in healthcare pricing. The CDI then partnered with UCSF and Consumer Reports to create California Healthcare Compare.

California Healthcare Compare allows consumers to compare hospital and medical group quality in the areas of maternity care, hip and knee replacement, back pain, colon cancer screening, and diabetes to help consumers make informed decisions about where to seek care. The site also reveals estimated regional costs for more than 100 different medical procedures or conditions ranging from appendicitis to prostate cancer, illustrating dramatic price differences depending on where you seek care. To enhance consumers’ knowledge of the healthcare system, Consumer Reports provides expert tips and advice on how to navigate the healthcare system.

“Consumer Reports sought out and incorporated feedback from thousands of consumers on issues of navigation and usability, resulting in a tool that makes complex data on quality and cost easy to digest,” said Doris Peter, PhD, Director of the Consumer Reports Health Ratings Center. “Choosing a doctor or hospital shouldn’t be guesswork. By increasing cost and quality transparency in California, the tool gives consumers decision-making power that will ultimately drive marketplace change.”

“This website would not be possible in most states, because the information simply isn’t available,” said R. Adams Dudley, MD, Director of UCSF’s Center for Healthcare Value. “Because of the advocacy of California consumer and business groups and the vision of California’s insurers and providers, we have much more information about quality of care than most states.”

“We know there is wide variation in cost and quality across the state, and this program now allows each of us to better evaluate the doctors and hospitals available to us before we decide where to get care. It’s a key step in the long journey to increased transparency for California consumers,” added David Lansky, Chief Executive Officer of the Pacific Business Group on Health.

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IOM Report Says Diagnostic Errors Cause 10% of Patient Deaths

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Getting the right diagnosis is a key aspect of health care — it provides an explanation of a patient’s health problem and informs subsequent health care decisions. A new report published this month by the Institute of Medicine, Improving Diagnosis in Health Care, is a a continuation of the landmark Institute of Medicine reports To Err is Human: Building a Safer Health System (2000) and Crossing the Quality Chasm: A New Health System for the 21st Century (2001) finds that diagnosis — and, in particular, the occurrence of diagnostic errors — has been largely unappreciated in efforts to improve the quality and safety of health care. The result of this inattention is significant: the committee concluded that most people will experience at least one diagnostic error in their lifetime, sometimes with devastating consequences.

According to the report, diagnostic errors cause about 10 percent of patient deaths. Studies of patient medical records also suggest that 6 percent to 17 percent of “adverse events,” or harms that occur to patients during a hospital stay, resulted from diagnostic errors. And in the current hospital culture, many doctors are not aware of the errors they make. “Diagnostic errors persist throughout all settings of care and continue to harm an unacceptable number of patients.”

The report says that diagnostic errors stem from many causes, including inadequate collaboration and communication among clinicians, patients, and their families; a health care work system that is not well designed to support the diagnostic process; limited feedback to clinicians about diagnostic performance; and a culture that discourages transparency and disclosure of diagnostic errors, which in turn may impede attempts to learn from these events and improve diagnosis.

Collecting such data is challenging because many healthcare settings discourage the disclosure of diagnostic errors, the report said. To address such problems, the committee concluded that improving diagnosis will require collaboration and a widespread commitment to change among health care professionals, health care organizations, patients and their families, researchers, and policy makers. The committee’s recommendations contribute to the growing momentum for change in this crucial area of health care quality and safety.

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Postoperative Telehealth Visits Found Effective in VA Study

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People may happily, and safely, forgo in-person doctors’ visits after surgery by opting instead for talking with their surgeons by phone or video, suggests a small study of U.S. veterans. According to the summary in Reuters Health, most patients preferred the virtual visits and the doctors didn’t miss any infections that popped up after surgery, the researchers report in JAMA Surgery.

“These kinds of methods are really important in the climate we’re in now,” said lead author Dr. Michael Vella, of Vanderbilt University Medical Center in Nashville. “So I think anything you can do to save money, see more patients and improve access to care is really important.” There is interest in so-called telehealth to increase access to healthcare while also decreasing the costs associated with traveling to office visits, Vella and his colleagues write.

Past research has found that telehealth visits may be useful in the treatment of chronic conditions and after surgery, but less is known about patients preferences for these types of visits, they add.

For the new study, the study team evaluated data collected over several months in 2014 from 23 veterans, all but one of them men, who were seen three times after a simple operation that would require only a night or so in the hospital. One visit was via video, the second was via telephone and the third was an in-person office visit. The researchers found that no post-operation infections were missed during the video or telephone visits. “The veterans were very good at describing their wounds,” Vella said. “There was one patient who thought they were having problems, we brought them into clinic and there was an infection.”

Overall, 69 percent of the participants said they preferred a telehealth visit over the traditional in-office visit. Those who preferred the telehealth visit tended to live farther away from the hospital than those who would rather come into the office. “I think (the study) challenges the paradigm that we need to see all patients back for visits,” Vella said.

He cautioned that the study was small, and they can’t say telehealth visits won’t miss problems. The study also can’t assess how telehealth visits would work for patients who have undergone more complex surgeries.

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Safety Shoe Warranty Violates Comp Law

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Chipotle Mexican Grill implemented a Shoes For Crews program in which employees were permitted to buy shoes directly from Shoes For Crews or through a payroll deduction. This is considered a safety program or good safety practice by workers’ compensation carriers. Based on its employees wearing SFC shoes, Chipotle obtained a reduction in its workers’ compensation premiums. Shoes For Crews also extended warranties to Chipotle to cover certain medical expenses in slip and fall related workers’ compensation cases. At one point, Shoes For Crews paid $25,000 to offset the cost of medical bills arising from injuries sustained by Chipotle employees.

Ashante Lewings filed a class action against her employer claiming this program violated a statute which prohibits employers from receiving a contribution from an employee, directly or indirectly, to cover any part of the cost of workers’ compensation.

Chipotle demurred arguing that labor code sections 3751 and 3752 do not prohibit safe workplace programs that are voluntary, nor do they prohibit third party warranty reimbursements. The trial court sustained the demurrer without leave to amend and the class action was dismissed. The court of appeal reversed in the unpublished case of Lewings v. Chipotle Mexican Grill, Inc.

The primary issue is whether Chipotle violated Labor Code section 3751, a statute which prohibits employers from receiving a contribution from an employee, directly or indirectly, to cover any part of the cost of workers’ compensation. The court noted that “Any time Chipotle is self-insured, the warranties directly cover the cost of compensation by paying medical expenses. Any time Chipotle has workers’ compensation insurance, the warranties indirectly cover the cost of compensation by defraying increases in insurance premiums and replacing lost dividends.”

When the employees purchased SFC shoes, they indirectly contributed to the cost of compensation because their purchases resulted in Chipotle receiving warranties from Shoes For Crews designed to offset workers’ compensation medical expenses.

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Companies Convert Old Generic Meds to High Priced “Specialty Drugs”

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The reputation of the biopharmaceutical industry continues to be battered by claims of illegal detailing of drugs or questionable sales and marketing practices. And now a new twist from the hands of Martin Shkreli, the CEO of Turing Pharmaceuticals and a former hedge fund manager. He raised the price of a 60 year old generic drug Daraprim acquired by his company in August from $13.50 to $750 a tablet, overnight.

According to the report in Forbes, Shkreli’s actions are being viewed as typical drug company behavior and yet another example of the industry’s price gouging. Daraprim was originally discovered, developed and manufactured by GlaxoSmithKline (GSK). The Daraprim patent expired decades ago and the drug is now generic, thus allowing others to make it.

However, it is a small product and no real competition has arisen. In 2010, GSK sold the marketing rights for Daraprim to CorePharma. Sales of Daraprim were less than $1 million in 2010 based on a price of about $1/pill. CorePharma raised the price to $13.50, which itself is surprising. But given the importance of the drug and the modest number of prescriptions per year (about 12,700), there was little complaint. However, a series of deals brought Daraprim to Turing Pharmaceuticals and the price was immediately increased to $750 a pill.

Turing’s price increase is not an isolated example. Although some price increases have been caused by shortages, others have resulted from a business strategy of buying old neglected drugs and turning them into high-priced “specialty drugs.”

Cycloserine, a drug used to treat dangerous multidrug-resistant tuberculosis, was just increased in price to $10,800 for 30 pills from $500 after its acquisition by Rodelis Therapeutics. Scott Spencer, general manager of Rodelis, said the company needed to invest to make sure the supply of the drug remained reliable. He said the company provided the drug free to certain needy patients.

Valeant Pharmaceuticals acquired two heart drugs, Isuprel and Nitropress, from Marathon Pharmaceuticals and promptly raised their prices by 525 percent and 212 percent respectively. Marathon had acquired the drugs from another company in 2013 and had quintupled their prices. Another drug, Doxycycline, an antibiotic, went from $20 a bottle in October 2013 to $1,849 by April 2014.

This is not the first time the 32-year-old Shkreli has been the center of controversy. In 2011, Mr. Shkreli started another company, Retrophin, which also acquired old neglected drugs and sharply raised their prices. Retrophin’s board fired Mr. Shkreli a year ago. Last month, it filed a complaint in Federal District Court in Manhattan, accusing him of using Retrophin as a personal piggy bank to pay back angry investors in his hedge fund. Shkreli has denied the accusations. He has filed for arbitration against his old company, which he says owes him at least $25 million in severance.

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Exclusive Remedy Bars Claim for Asbestos Taken Home

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Lario Melendrez worked for Ameron International Corporation in Pasadena for 24 years and was exposed to asbestos while manufacturing pipe products for the company. He died in 2011 of asbestos-related mesothelioma. His wife and children filed a wrongful death lawsuit against Ameron and argued that Mr. Melendrez was exposed to asbestos at work and through waste or scrap pipe that Ameron permitted him to take home for personal projects, such as making flower pots and part of a patio. Ameron argued that workers comp was the exclusive remedy for Mr. Melendrez’s family.

The Superior Court agreed with the employer and granted summary judgment finding that Mr. Melendrez’s death was work-related and the exclusive remedy applied. The family appealed, and the court of appeal sustained the dismissal in the published case of Melendrez v Ameron International Corporation.

The appeals court agreed that although a triable issue of fact exists whether Melendrez’s exposure to asbestos at home arose out of and in the course of his employment with Ameron, that issue is not material to the viability of Ameron’s defense of workers’ compensation exclusivity. “It is undisputed that Melendrez’s exposure to asbestos in his employment with Ameron substantially contributed to his mesothelioma. Therefore, under the contributing cause standard applicable in workers’ compensation law, his mesothelioma is covered by workers’ compensation, and his separate exposure at home does not create a separate injury outside workers’ compensation coverage. Thus, plaintiffs’ lawsuit is barred by workers’ compensation exclusivity.”

The court also upheld an award of $80,719 to be paid by Mr. Melendrez’s family to Ameron for costs and fees as a result of their rejection of a CCP 998 offer to allow judgment in the lower court trial.

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