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DWC Posts 2014 Annual WCJ Ethics Report

The Division of Workers’ Compensation has posted the 2014 ethics advisory committee’s (EAC) annual report on its website. The committee is a state committee independent of the Division of Workers’ Compensation. The EAC is charged with reviewing and monitoring complaints of misconduct filed against workers’ compensation administrative law judges (WCALJs, or judges). The committee is required to make a public report each year summarizing activities in the previous calendar year. The 2014 annual report may be viewed or downloaded at the DWC website.

As civil servants, the WCALJs are not subject to review by the California Commission on Judicial Performance, the agency which is responsible for investigating misconduct complaints directed at judges serving on the Supreme, Superior and Appellate courts. The EAC’s authority and duties are set forth in the California Code of Regulations, title 8, sections 9722 through 9723.

Any person may file a complaint with the EAC. Complaints must be presented in writing and the EAC will accept anonymous complaints. The EAC considered a total of 39 of the 45 new complaints it received in the calendar year of 2014, in addition to 3 complaints pending from 2013. The complaints set forth a wide variety of grievances. A substantial portion of the complaints alleged legal error not involving judicial misconduct or expressed dissatisfaction with a judge’s decision.

An illustrative case is item eleven in the report which pertains to a defense attorneys complaint about a WCJ who “alleged that the judge harassed the parties and exceeded the scope of the judge’s authority.” In this case the judge refused to approve a Compromise and Release with the represented applicant. The “harassment” allegedly occurred when “the judge wrote to the parties a total of five letters regarding the status of the case. The parties were not on calendar, however, the judge continued to write. Complainant complained that on the judge’s own motion, the judge set a status conference for March of 2014 as parties did not respond to the judge’s letters.”

Following its review of the investigation, the Committee recommended further action. The report does not specify what that action was.

CWCI Says No Reduction in IMR Volume

A new analysis of 2015 independent medical review (IMR) outcomes shows there was no significant reduction in IMR volume in the first quarter of this year, even though the independent medical reviewers continue to concur with the utilization review (UR) physician’s denial or modification of treatment in about 90 percent of the cases.

The CWCI analysis compares data from 33,909 IMR determination letters issued in the first three months of this year in response to applications submitted to the state after a utilization review (UR) physician modified or denied a requested medical service to similar data from the 137,781 IMR decisions issued in 2014.

State legislators who enacted IMR expected the volume of requests would decline following an initial learning curve as doctors, attorneys and others involved in the process became familiar with the types of treatment that would meet the evidence-based medicine standards and be approved through UR and IMR, but the new data indicate that after more than 2 years, IMR volume has yet to subside.

A review of the IMR decisions issued in the first quarter shows that after reviewing the patient’s records and any additional information provided in support of the request, the IMR physicians upheld the UR doctor’s modification or denial of the service 89 percent of the time, nearly matching the 91 percent uphold rate from 2014.

The mix of services submitted for IMR also showed little change, as prescription drugs again topped the list, accounting for 48 percent of the first quarter IMR decisions (vs. 45 percent in 2014), with the UR denial or modification upheld in 92 percent of those cases. Requests for prescription drugs, physical therapy, durable medical equipment, injections and diagnostic tests and measurements together accounted for ¾ of all services submitted for IMR in the first quarter, though requests for surgery, which accounted for 4.4 percent of the IMR cases (vs. 4.7 percent in 2014) surpassed diagnostic tests and measurements as the fifth most common type of service submitted for IMR, even though the uphold rate for modifications or denials of surgical requests held steady at 89 percent.

The first quarter IMR results also show that a relatively small number of physicians continue to account for the majority of the disputed medical services, as the top 10 percent of physicians named in IMR decision letters (516 providers) accounted for 70 percent of the IMR requests, though that was down from 83 percent last year, while the top 1 percent of physicians (52 providers) accounted for 28 percent of the disputed service requests in the first quarter, down from 44 percent last year.

In addition, the study documents continued geographic variation, with 38 percent of the first quarter IMR decision letters addressed to Los Angeles County recipients – 1.5 times the proportion of claims that come from that region, whereas in all other regions of the state the percentage of IMR decisions was either in line with or disproportionately low relative to the percentage of claims from the region.

CWCI has published more details on the first quarter IMR outcomes in a Spotlight Report, “California Workers’ Compensation Independent Medical Review: 1st Quarter 2015 Outcomes,” which CWCI members and subscribers can access in the research section of the Institute’s website.

CDC Says Heroin Deaths Quadrupled – 96% Abuse Prescription Drugs

Heroin overdose deaths in the United States nearly quadrupled between 2002 and 2013, fueled by lower costs as well as increased abuse of prescription opiate painkillers, U.S. health officials said on Tuesday. The report found that heroin use increased by 63 percent from 2002 to 2013. In 2013, roughly 517,000 people reported that they had used heroin in the last year, a 150 percent increase from 2007. As many as 8,200 people died from heroin overdoses in 2013 alone.

Such medicines, which include Vicodin, OxyContin and Percocet, increase individuals’ susceptibility to heroin addiction, Dr. Thomas Frieden, director of the U.S. Centers for Disease Control and Prevention, told Reuters.

“Everything we see points to more accessible, less-expensive heroin all over the country,” Frieden said of the joint report by the CDC and the U.S. Food and Drug Administration which analyzed national survey data on drug use from 2002 to 2013.

The report found that nearly all people (96 percent) who use heroin also use multiple other substances, and that the strongest risk factor for heroin abuse is prescription opiate abuse. In recent years people in nearly every demographic group are using the drug more: For example, heroin use has doubled among women.

According to the report, individuals who abuse prescription opiates have a 40 times greater risk of abusing heroin. The increased use has fueled sharp increases in overdose deaths.

Frieden said reversing the trend will require an “all-society response” to improve opioid prescribing practices and expand access to effective treatment, increasing the use of drugs such as naloxone to reverse drug overdoses and working with law enforcement partners such as the Drug Enforcement Administration to disrupt the supply of heroin.

He said doctors are prescribing “way too much of these medications, and the result of it is large numbers of people who are addicted.”

So Much for Evidence Based Medicine – Drug Makers Fake the Evidence

You don’t have to look very far to get head-bangingly upset about the current state of medical and scientific research. Pfizer (maybe) hid evidence that Zoloft use by pregnant women caused heart defects in babies. GlaxoSmithKlein paid $3 billion in fines for a) generating a fake journal article saying Paxil was safe for kids b) paying doctors lavish speaker fees and using sham advisory boards to promote Wellbutrin for off-label use and c) failing to report that Avandia, a diabetes drug, could potentially cause heart problems. Merck, for its part, is currently being accused of lying about the efficacy of its mumps vaccine in order to maintain its market monopoly on the drug.

And you can’t necessarily just go straight to the source and trust an article in a “peer reviewed” journal either. Who can you trust? Well, the truth is out there. Here’s where to start.

Part of the delight of the public interest website Retraction Watch is that it exposes the many weird things that scientists study. Outer space dentistry? Check. Rabbit hepatitis? Check. The nutritional value of mushrooms? Yep. So that’s pretty fun, but then the less fun part is why are those guys lying about this stuff?.

It is generally believed that retractions help maintain the purity of science, help with the integrity of individual scientific journals and the whole of the scientific literature, and, when properly enforced, help keep scientists from bending the rules regarding scientific misconduct and publication. Yet several articles have appeared in the library literature concerning the fate of retracted articles. When researchers in one study tracked the fate of retracted, invalid articles they found that, after retraction, completely retracted articles were cited a total of 733 times.

Research misconduct became a public issue in the United States in 1981 when then Representative Albert Gore, Jr., chairman of the Investigations and Oversight Subcommittee of the House Science and Technology Committee, held the first hearing on the emerging problem. The hearing was prompted by the public disclosure of research misconduct cases at four major research centers in 1980. Some twelve cases of research misconduct were disclosed in this country between 1974-1981. Congressional attention to research misconduct was maintained throughout the 1980s by additional allegations of research misconduct and reports that the National Institutes of Health (NIH), universities, and other research institutions were inadequately responding to those allegations.

Congress took action in 1985 by passing the Health Research Extension Act. The Act, in part, added Section 493 to the Public Health Service (PHS) Act. Section 493 required the Secretary of Health and Human Services to issue a regulation requiring applicant or awardee institutions to establish “an administrative process to review reports of scientific fraud” and “report to the Secretary any investigation of alleged scientific fraud which appears substantial.”

Medical Fraud – When You Think It Can’t Get Worse, It Does!

A Michigan doctor who misdiagnosed patients with cancer and then bombarded them with unnecessary treatments will have to face his victims – who lost their health, savings and trust – at an emotional sentencing hearing that opened Monday.

Disabled auto worker Robert Sobieray is among those who plan to be in the Detroit courtroom when Dr. Farid Fata learns his fate for using patients as cash cows, telling some of them they were deathly ill with diseases they didn’t actually have. In 2010, Fata diagnosed Sobieray with a rare blood cancer and subjected him to monthly infusions of chemotherapy and three weeks of radiation – expensive treatments that he said made his teeth fall out and his body twitch uncontrollably.

After Fata was arrested in 2013 and charged in what a prosecutor said was the “most egregious” case of health-care fraud in U.S. history, Sobieray went to a different oncologist and learned that he’d never even had cancer.

Federal prosecutors are seeking a 175-year sentence for Fata, who pleaded guilty to fraud in September, admitting he raked in millions from insurance companies for needless treatments at seven clinics in eastern Michigan. Fata, who lived in a sprawling mansion in ritzy Oakland Township and ran seven upscale clinics across eastern Michigan, declined to comment through his attorneys. The sentencing memorandum drafted by his lawyers is under seal.

The breadth of Fata’s misdeeds was laid bare last month in a sentencing memo from prosecutors, who revealed for the first time that a total of 553 people allegedly got unnecessary treatment – amounting to 9,000 injections or infusions that cost insurance companies and patients millions.

While Fata told healthy patients they were sick, he sold false hope to the terminally ill in an effort to convince them to keep buying treatments that would not extend their lives, authorities charged. “Some of these terminal patients never knew they were dying because of Fata’s lies,” prosecutors wrote in a sentencing memo. The government says that Fata didn’t just lie to his patients – he bullied them to keep them from finding out the truth.

In requesting a 175-year sentence, prosecutors compared Fata to Ponzi schemer Bernard Madoff, who was sentenced to 150 years even though he was in his 70s. “In many ways, he is worse than Madoff, in that he wreaked damage on not only his victims’ bank accounts, but their bodies,” they wrote.

Healthy Workplace Healthy Family Act of 2014 Now In Effect

The Department of Industrial Relations reminds employers of the labor law requirement to notify their workers in writing about their rights under the Healthy Workplace Healthy Family Act of 2014 (Assembly bill 1522) – California’s new paid sick leave law – that took effect on July 1, 2015.

All employers were required to post a notice about the new law in a conspicuous place at the worksite beginning January 1, 2015. More information on the requirements of the new law is available on the DIR website, including a Frequently Asked Questions page that was posted in February 2015.

Most employees must be individually notified: Employers must provide most employees with individual notices detailing their rights to paid sick leave per Labor Code sections 2810.5 and 246(h), even in situations where the employer’s policy exceeds the state provisions. Employees that fall within the following groups are not required to receive individual notification, per Labor Code section 2810.5(c) if they are:

1) Directly employed by the state, city, county, special district;
2) Exempt from payment of overtime or the Industrial Welfare Commission wages;
3) Covered by a valid collective bargaining agreement.

Notification template: Employers can print and complete a template available on the Labor Commissioner’s website in English, Spanish or Vietnamese, and provide it as an individual notification to each of their employees. Employers can also provide this same information in a notice of their own creation.

Delivery of notification: The notice can be submitted with the employee’s next wage payment after July 1, 2015. It can be printed on a detachable part of the paycheck itself or attached to the paycheck as a separate document. Alternatively, the notice can be handed to employees or mailed to them by Wednesday, July 8, 2015.

Employers and workers can refer to DIR’s webpage for more information on the new law, including a recorded training webinar and presentation slides, as well as FAQ’s. DIR has also produced a short video on the new law.

Shyp Reclassifies Its On-Demand “Independent Contractors”

The call for broader protections for on-demand workers is getting louder. And some companies are listening.WIRED reports that Shyp, a San Francisco-based startup that picks up, packages, and ships items on demand, said that it’s converting its couriers from independent contractors to full-fledged employees. The move, announced in a blog post by CEO Kevin Gibbon, makes Shyp one of the few on-demand companies to boast a workforce made up entirely of employees.

“This move is an investment in a longer-term relationship with our couriers, which we believe will ultimately create the best experience for our customers,” Gibbon writes. “We want to provide our couriers with additional supervision, coaching, branded assets and training, which can only be done with employees, so a shift is needed.”

According to Gibbon, while its van drivers and warehouse workers have been classified as W-2 employees all along, its couriers – workers who actually interact with the customers, picking up their items meant for shipping – were previously classified as independent contractors. This shift would convert all couriers into employees.

Shyp’s workforce of van drivers, warehouse workers, and couriers will consist of a mix of full-time and part-time employees, the company told WIRED. Newly classified W-2 couriers will get workers’ compensation and vehicle reimbursement as well as unemployment, Social Security, and Medicare. Additional benefits such as healthcare will be available to full-time workers.

Shyp’s move comes at a time when the debate around how to properly classify workers for on-demand companies is heating up. As startups like Uber and Instacart go mainstream, so has awareness – and criticism – of the so-called 1099 economy on-demand companies foster. These startups typically employ freelance contractors, a status they pitch as desirable because the work is relatively undemanding and flexible. (Instacart recently began offering its shoppers an option to convert from contractor to part-time; Uber is fighting a class-action lawsuit accusing the company of misclassifying its drivers as contractors.)

Shyp for its part is growing fast. After launching in San Francisco last year, it now has operations in New York City, Miami, and Los Angeles and plans to expand to Chicago soon. The number of packages shipped by Shyp has grown nearly 500 percent since closing its first round of funding, the company says, and its customer base is growing by more than 20 percent month over month

ACE Buys Chubb for $28.3 Billion

Insurer ACE Ltd. agreed to buy Chubb Corp. for $28.3 billion in cash and stock, creating one of the biggest property-casualty insurance companies in the world. The Wall Street Journal says that the deal comes as property-casualty insurers are facing pressure from what most people view as a stroke of good luck: relatively modest hurricane claims since 2012, the year of superstorm Sandy. With fewer claims checks being sent to individuals and businesses, insurers’ capital bases are growing, and their stepped-up competition with each other to put that capital to work is depressing prices.

This is one of several multibillion-dollar insurance tie-ups since late last year, most recently Tuesday’s announcement of an $18 billion combination of insurance broker Willis Group Holdings PLC and consulting firm Towers Watson and Co. Conditions are ripe for more big deals, analysts say.

The ACE deal, announced by both companies Wednesday, is one of the largest of the year and the biggest among life and property-casualty insurers on record. ACE is adding one of the most well-known names in the U.S. insurance industry. New Jersey-based Chubb is a leading provider of homeowners’ insurance to wealthy Americans through its Masterpiece coverage. ACE also targets high-net-worth customers in its personal-insurance business. Both companies have large operations selling insurance to midsize businesses.

Combined, the companies will have shareholder equity of nearly $46 billion and cash, investments and other assets of $150 billion.

ACE was formed in the Cayman Islands in 1985 by 34 blue-chip U.S. companies to provide then-hard-to-find excess-liability and directors-and-officers coverage. It expanded in 1999 when it acquired the property-casualty-insurance business of Cigna Corp. as that company was narrowing its focus to health insurance. Last year, ACE earned $2.9 billion with $17.8 billion in net premiums written.

Chubb, which operates in 25 countries, last year reported a profit of $2.1 billion on $12.6 billion in net premiums written.

The combined company will be based in Switzerland, as ACE is.

Former Senator Yee Pleads Guilty In Comp Related Corruption Case

Former state Sen. Leland Yee faces up to 20 years in prison and a $250,000 fine after a deal in federal court Wednesday in which he pleaded guilty to one felony count of racketeering. “Today’s news turns the page on one of the darker chapters of the Senate’s history,” Senate President Pro Tem Kevin de León (D-Los Angeles) said in a statement. The pleas entered Wednesday by Yee; his political fundraiser and consultant Keith Jackson; Jackson’s son, Brandon Jackson; and sports promoter Marlon Sullivan bring an end to one of two cases connected to a massive federal probe that initially targeted a Chinatown figure known as “Shrimp Boy,” now accused of organized crime activities.

According to the report in the Los Angeles Times, the case, with 29 defendants lumped into a single indictment (one had since died) and eventually split into two cases, has produced 9 million pages of documents and countless hours of audio recordings. Prosecutors alleged that Yee can be heard in the recordings speaking bluntly about granting legislative favors in exchange for campaign contributions, first for his failed 2011 bid for San Francisco mayor and later for his aborted run for secretary of state.

“We gotta drag it out, man. We gotta juice this thing,” the indictment quoted Yee as telling an undercover agent who claimed to be connected to an NFL team that wanted to “help” Yee in exchange for his vote on a worker’s compensation bill affecting the athletes. Among the other charges, Yee admitted to conspiring to extort several individuals who, at the time, had an interest in pending legislation extending the state athletic commission and changing the workers’ compensation program for professional athletes.

Yee, who spared himself a trial where those sealed recordings and others would have been publicly shared, received no assurance that his prison sentence, which is scheduled to be handed down on Oct. 21, would fall below the 20-year maximum spelled out in federal guidelines. By pleading guilty to racketeering, Yee admitted that he “knowingly and intentionally agreed with another person” to take part in an enterprise, commit at least two offenses and affect state commerce.

The plea agreement is the culmination of a stunning political collapse for Yee, who spent more than a decade in the Legislature and was running for secretary of state when he was arrested in March 2014. Days later, he was suspended from the Senate with pay, and he served the remaining months of his term in exile.

Cities End Work Release Program Over Comp Liability Risks

The cities of Victorville and Adelanto have opted to divorce from the San Bernardino County Sheriff’s Work Release program after being asked to provide medical treatment for inmate workers injured on the job – a shift in liability they deemed too dangerous. The story reported in the Daily Press says the key cause for the cities’ concerns is that they may be held liable for all workers’ compensation benefit obligations and expenses for injured workers. According to Victorville City Manager Doug Robertson, this responsibility represents a stark departure from the past, when the Sheriff’s Department would have handled the administration of the claim, including legal or medical expenses. “Our biggest concern is that an inmate worker could go from earning nothing for working all day to realizing a pretty hefty claim amount if they were injured on the job,” Robertson said.

In February, Victorville informed sheriff’s officials that they would be terminating their agreement when new deals apparently shifted the liability from the county to the city. The city of Adelanto also opted not to renew its deal earlier this month for the same reason. At its core, Victorville’s hesitation comes from not wanting to incentivize injuries.

Having participated since 1991 in the program, which allows inmates to serve time through manual labor, the city recently had used 20 to 30 workers on the weekends for tasks including pulling weeds and aiding code enforcement. But Robertson said the liability shift is akin to 20 to 30 potential windfalls every week, a risk he called “huge.”

To fill the void left by the loss of inmate workers, the city recently included nearly $200,000 in its budget for part-time hours. Robertson said the known cost, despite a higher initial investment, is worth it if only to get rid of the liability.

Representing the Victor Valley as the vice chair on the county’s Board of Supervisors, 1st District Supervisor Robert Lovingood said the cities’ exodus from the program has not gone unnoticed. “We want to see the return of the program,” Lovingood said. “We believe we want to restore this. This is something, again, we’ve been paying attention to.”

But not all municipalities are flinching after the change. “The Town has chosen to continue our contract with the Sheriff’s Department for the use of inmate labor,” Apple Valley spokeswoman Kathie Martin said. “In weighing the cost of bearing the worker’s comp burden with the value provided as a labor source, it still makes good business sense to continue.” Martin said Apple Valley runs a lean organization that needs the supplemental workforce provided by inmate workers, who clean the animal shelter, maintain grounds, repair roads and also clean illegal dumping sites on weekends.

Hesperia spokeswoman Rachel Molina said their contract with the Sheriff’s Department actually already included provisions for the city to provide workers’ compensation insurance for the inmates, so the new contract “did not present a significant change.”

Grand Terrace, which traces its program participation back to 1987, also opted to renew a deal this year despite acknowledging it would not know the incurred costs of the liability shift for at least a year.

Still, it remains unclear how many other cities, like Victorville and Adelanto, might be turned off by the change and how possible subsequent program dropouts could affect the program as a whole.