Category: Daily News

There seems to be relentless constitutional challenges to legislative limits to the ever expanding worker’s compensation system. California has seen this play out in the Stevens case which has been resolved in favor of the constitutionality of the SB 863 IMR process. Similar constitutional battles against legislative reform to the rising costs of workers’ compensation coverage are being waged in courtrooms nationwide. These battles seem to define the trend of what might be expected in the industry in the near future.

In a major victory for injured workers and stinging defeat for businesses, the Florida Supreme Court on Thursday struck down a law limiting attorney’s fees in workers’ compensation cases. The story reported in the Miami Herald says that the 5-2 ruling is a setback for business groups who say legal fees drive up the cost of workers’ compensation insurance and threaten Florida’s economy and they must seek help from a reliably pro-business Legislature. The long-awaited decision puts pressure on lawmakers to call a special session in an election year to referee a high-stakes battle between Republican-aligned businesses and Democrat-leaning law firms, two deep-pocketed rivals that are among the biggest contributors to legislators’ political campaigns.

The case before the high court involves a Miami man, Marvin Castellanos, who suffered head, neck and shoulder injuries while working for Next Door Company, a maker of doors and door frames in Miami. The company waged an aggressive defense, but Castellanos won and received benefits of $822.70. His lawyer, who worked on the case for 107 hours, sought a fee of $36,817.50. He received a fee of $164.54, the equivalent of $1.53 per hour under a fee system the Legislature approved in 2009. Under that law, attorneys who successfully represent injured workers are paid 20 percent of the first $5,000 in benefits obtained and 15 percent of the next $5,000 in benefits.

But the question is not only how the fees are calculated, but also who pays the fee. When litigation is filed in Florida for workers’ compensation medical care or wages, the defendants have thirty days to provide the benefit voluntarily. After that point, they become responsible for payment of the fee associated with any benefits provided as a result of the suit. This is commonly called a “prevailing party” fee shifting provision. The Castellanos case involves a fee that was to be paid by the employer, unlike California where it is paid out of the worker’s benefits.

Writing for the majority, Justice Barbara Pariente said the law violates workers’ due process rights under the state and U.S. Constitution because it prevents challenges to the “reasonableness” of legal fees in workers-compensation cases. “Without the likelihood of an adequate attorney’s fee award, there is little disincentive for a carrier to deny benefits or to raise multiple defenses, as was done here,” Pariente wrote. “Virtually since its inception, the right of a claimant to obtain a reasonable prevailing party attorney’s fee has been central to the workers’ compensation law.” By replacing the former “reasonable” standard with a sliding scale of legal fees, Pariente said, “the Legislature has thus eliminated any consideration of reasonableness.”

Workers’ compensation rates in Florida are regulated by the Office of Insurance Regulation, run by Kevin McCarty, who has resigned effective May 2 but who has offered to stay on with no permanent successor in place. “Limiting attorney’s fees has been an important factor in reducing workers’ compensation rates,” McCarty said. “A legislative remedy will be required to prevent significant increases in rates, and we look forward to working with all parties affected to bring about a sensible solution.”

The effect on rates businesses pay for workers’ comp insurance will be clearer in about a month when the National Council on Compensation Insurance, a federal clearinghouse, is expected to submit a proposed rate filing with McCarty’s office. The impact on Florida’s workers compensation system costs is expected to be significant, said Chris Bailey, a spokesman for NCCI.

Class action litigation has been pending for nearly a year against Berkshire Hathaway Homestate Insurance Company, its wholly owned subsidiary Cypress Insurance Company, Zenith Insurance Company, the defense lawfirm of Knox Ricksen, LLP, and others.alleging that the defendants illegally “hacked” confidential information about workers’ compensation claimants to use to defend claims pending before the WCAB. This month a second class action has been filed in federal court against essentially the same parties. The new case has received some media attention. However, it does not seem that the second case adds anything new to the factual basis for the first alleged case.

The first federal case was filed by Hector Casillas in June 2015. His second amended complaint was filed in March 2016. He files this as a class action pursuant Federal Rule of Civil Procedure 23. He alleges he was a client of the law firm of Reyes & Barsoum LLP to litigate a worker’s compensation claim.

One of the defendants, Palmdale based HQSU Sign Up Services, Inc. is the centerpiece of the compromised data. HQSU is allegedly paid a pre-negotiated flat fee to provide “administrative services” for clients unable to come to an attorney’s office due to physical, financial, or transportation limitations, and to.assist attorneys signing a retainer agreement and filling out an In-Take Packet with personal information. HQSU then uploads the documents to its allegedly username and password-protected website. Attorneys using this service upload and download other documents to HQSU servers. Casillas alleges that HQSU failed to provide adequate or responsible protections against unlawful access and failed to report the hacking activity so it is sued in the class action along with the carriers.

The alleged “hacking” of the HQSU files was first suspected during an in-chambers hearing in a worker’s compensation case before Presiding Judge Paige Levy. The case was being defended by Knox Ricksen. Knox Ricksen’s attorneys allegedly revealed they had Mr. Casillas’ attorney-privileged In-Take Packet. The attorney first allegedly responded to questions by Judge Levy that it was obtained from the HQSU “website” but later said he did “not know” where it came from. Levy ruled it was attorney client privileged and ordered it to be returned.

Allegedly the downloading of documents from HQ Sign Up compromised approximately 32,500 intake sheets, in addition to the Casillas documents. Plaintiff’s experts have allegedly discovered that the documents were obtained by a “directory traversal attack.” Directory traversal is an HTTP exploit which allows attackers to access restricted directories and execute commands outside of the web server’s root directory. On the other hand, Zenith has argued HQSU intake packet materials were obtained using a Google search of the claimant’s name and thus “were found in the public domain.”

In a motion by Zenith to be dismissed, it’s attorneys claim that the case was before Judge Levy because “Knox petitioned the WCAB for an order allowing certain discovery that Knox asserted may show that a “runner” or “capper” had procured Casillas as a Reyes client and Casillas had fabricated or exaggerated his claimed injuries. Reyes opposed, arguing that the discovery was derived from attorney-client privileged information contained in Reyes’s “In-Take Packet” for Casillas. (One would assume from this motion that Zenith believed HQSU Sign Up Services was suspected of running and capping injury cases for lawyers). In any event Zenith was not involved in the Casillas workers’ compensation case and asks to be dismissed.

Another motion recently filed by defendants seeks to strike the class action allegations claiming Casillas violated Central District local rule 23-3 which requires a motion for class certification to be filed “[w]ithin 90 days after service of a pleading purporting to commence a class action” which expired last October. Casillias replied that the local rule is discretionary, and asks for more time.

An now a second federal complaint has been filed by Adela Gonzalez seeking class action status against the same carriers and others. Gonzalez was also a client of Reyes & Barsoum LLP in connection with a workers’ compensation claim. The facts of the second case are essentially similar to the Casillas second amended complaint. Nothing new is alleged what was not previously claimed. The second case is in its infancy, and no responsive documents have yet been filed by any defendants. Gonzalez does not specifically allege how her case was compromised other than as part of the entire scheme.

At the moment, the controversy seems to essentially be a claim by a client of an applicant lawfirm that approximately 33,000 “In-Take Packets” completed by HQSU Sign Up Services, Inc. were “hacked” by a conspiracy of insurance carriers using a “a directory traversal attack” to download these confidential records that were protected by attorney client privilege from HQSU in violation of law.

On the other hand, the defendants suspect and claim that HQSU was really a runner or capper organization soliciting injury claimants for lawfirms, and that they had approximately 33,000 records of litigants on an insecure website that Google regularly indexed. A Google search of any of the claimants by name in these records would lead to file on the HQSU website that could be downloaded by anyone without hacking anything and thus were in the “public domain.” Since HQSU is a party to this case, no doubt discovery will prove or disprove its status as a runner or capper organization.

It has been one of the pharmaceutical industry’s most closely watched experiments: does ending kickback payments to doctors undermine drug sales?  GlaxoSmithKline, the British drugmaker, believes it has proved that raising the ethical bar on marketing practices doesn’t necessarily reduce competitiveness.

GSK Chief Executive Andrew Witty said better-than-expected 2016 first quarter results coincided with a period where the entire group had operated under a new policy that bans payments to doctors who speak on behalf of GSK. “It convinces us that the moves we’ve made are both good for our business and also good for improving the reputation of the industry,” Witty told reporters.

GSK, which was fined nearly $500 million in 2014 for bribing doctors in China, is the first drug company to implement such a broad clampdown on payments to prescribers and competitors are watching closely to assess the commercial fallout.

The former head of the Chinese division of GlaxoSmithKline was charged with corruption in connection with the bribery scandal in which GSK paid off doctors and government officials. In the prior six years Mark Reilly and some of his associates allegedly spent an approximate sum of $480 million on hospitals and its employees, in order to increase the sales of GSK pharmaceuticals in China. Shortly after the allegations against the pharmaceutical company were made public their sales in the Chinese market fell 61%.

GlaxoSmithKline announced it would stop paying doctors for promoting its drugs and scrap prescription targets for its marketing staff – a first for an industry battling scandals over its sales practices, and a challenge for its peers to follow suit. Britain’s biggest drugmaker also said it would stop payments to healthcare professionals for attending medical conferences as it tries to persuade critics it is addressing conflicts of interest that could put commercial interests ahead of the best outcome for patients.

The Chinese authorities were not only investigating GlaxoSmithKline; big international pharmaceutical companies like Novartis International AG, AstraZeneca PLC, Sanofi S.A., Bayer AG und Eli Lilly and Company have also been subjected to greater scrutiny.

In China, GSK’s business is still struggling, with sales down 28 percent in the first quarter, due to disposals of some products and lower prices, but Witty said he expected GSK to return to growth in China in the second half of 2016.

In the United States, the industry’s biggest market by far, many companies have run into conflicts over improper sales tactics and GSK reached a record $3-billion settlement a few years ago with the U.S. government over charges that it provided misleading information on certain drugs.

AstraZeneca said in 2011 it was scrapping payments for doctors to attend international congresses but others, until now, have not followed suit and GSK’s actions go further.

The shift is pragmatic to a certain extent, since many decisions about which drugs to use are now taken centrally by big insurers and governments, based on cost-effectiveness measurements, rather than by individual doctors.

Marissa Gonzalez-Ornelas injured both her knees in 2004 while working as a counselor for the County of Riverside.

In 2015, her treating physician submitted a request for authorization to provide her with Synvisc injections in both knees. Defendant submitted the request to UR, and a UR decision issued denying authorization. She appealed the UR denial to IMR. An IMR determination issued denying authorization. She timely appealed the IMR determination to the WCAB pursuant to Labor Code section 4610.6(h).

The WCJ denied applicant’s IMR appeal based upon the finding that “[t]here is no clear and convincing evidence that the determination was procured by fraud,” and “[there is no clear and convincing evidence that the determination was the result of a plainly erroneous finding of fact, which erroneous finding is a matter of ordinary knowledge, and not a matter subject to expert opinion.” The WCAB reversed the WCJ in the panel decision of Gonzalez-Ornelas v County of Riverside.

The !MR reviewer wrote that denial of authorization was because, “[t]here is no documentation that the patient failed conservative therapies” and “[t]here is no documentation that the patient is suffering from osteoarthritis or severe osteoarthritis that did not respond to conservative therapies.” These statements by the IMR reviewer are directly contradicted by what is set forth in Dr. Jackson’s December 30, 2014 notes which were in the IMR file.

Page four of the December 30, 2014 progress notes by Dr. Jackson states that applicant complained of pain in both knees at that time and that x-rays of the knees showed “some medial compartment arthritis and minimal patella-femoral arthritis.” On page five of the notes, Dr. Jackson provides a diagnosis that includes “primary osteoarthritis of the right knee … primary osteoarthritis of the left knee” and “unilateral post-traumatic osteoarthritis” of both knees. (Id.) Dr. Jackson further documents in his notes that applicant had left knee surgery “with no real decrease in her symptoms,” but that she did have “definite benefit” with Synvisc injections in both knees over the years, writing on page five that applicant “has undergone treatment on a very conservative basis which has been complicated by her morbid exogenous obesity which also would have precluded any significant intervention other than simple conservative measures as have been done.” (Id.) Dr. Jackson opined that applicant will eventually need bilateral total knee replacements, but that Synvisc injections will help her symptoms until surgery and that Synvisc is recommended because applicant “does not do well with cortisone.” (Id.)

The WCAB panel concluded that “Denying authorization based upon a finding that there is “no documentation” when such documentation is, in fact, in the possession of the IMR reviewer is “a plainly erroneous express or implied finding of fact [as] a matter of ordinary knowledge based on the information submitted for review … and not a matter that is subject to expert opinion” as described in section 4610.6(h)(5). It is also an action taken “without or in excess of the administrative director’s powers” as described in section 4610.6(h)(I). The !MR appeal should have been granted by the WCJ on both those grounds.”

“Contrary to the view expressed by the WCJ in her Report, expert opinion is not needed in order to determine that the IMR decision in this case is defective. It is within the realm of ordinary knowledge to conclude that it was error for the IMR reviewer to state that there is “no documentation” when such documentation is part of the record, as in this case. It is also within the realm of ordinary knowledge to determine from the face of the IMR decision that the use of the injections is recommended by the ODG for people who suffer from osteoarthritis in their knees, like applicant.”

The panel ordered the Administrative Director to “provide a new IMR of the treatment forthwith in accordance with section 4610.6(i) and this decision. As part of the new IMR, the ODO should be applied based upon the documentation in the record, which as discussed above, appears to support the provision of the Synvisc injections.”

Nearly three years ago, the N.F.L. and lawyers for thousands of retired football players agreed to resolve lawsuits brought by former players who alleged that the NFL failed to inform them of and protect them from the risks of concussions in football. The District Court approved a class action settlement that covered over 20,000 retired players and released all concussion-related claims against the NFL. Objectors have appealed that decision to the United States Court of Appeals for the Third Circuit, arguing that class certification was improper and that the settlement was unfair.

The huge case had its birth in California. In July 2011, 73 former professional football players sued the NFL and Riddell, Inc. in the Superior Court of California. The NFL removed the case to federal court on the ground that the players’ claims under state law were preempted by federal labor law. More lawsuits by retired players followed and the NFL moved to consolidate the pending suits before a single judge for pretrial proceedings which was granted. The cases ultimately ended up in a federal court for the Eastern District of Pennsylvania as a multidistrict litigation.

Under the settlement, retired players or their beneficiaries are compensated for developing one of several neurocognitive and neuromuscular impairments or “Qualifying Diagnoses.” This award is subject to several offsets, that is, awards decrease: (1) as the age at which a retired player is diagnosed increases; (2) if the retired player played fewer than five eligible seasons; (3) if the player did not have a baseline assessment examination; and (4) if the player suffered a severe traumatic brain injury or stroke unrelated to NFL play.

The Monetary Award Fund is uncapped and will remain in place for 65 years. Every retired player who timely registers and qualifies during the lifespan of the settlement will receive an award. If, after receiving an initial award, a retired player receives a more serious Qualifying Diagnosis, he may receive a supplemental award.

Of the over 20,000 estimated class members (the NFL states that the number exceeds 21,000), 234 initially asked to opt out from the settlement and 205 class members joined 83 written objections submitted to the District Court. Before the fairness hearing, 26 of the 234 opt-outs sought readmission to the class. After the District Court granted final approval, another 6 opt-outs sought readmission. This leaves 202 current opt-outs, of which class counsel notes only 169 were timely filed.

This appeal principally presents two questions – whether the District Court abused its discretion (1) in certifying the class of retired NFL players and (2) in concluding that the terms of the settlement were fair, reasonable, and adequate. Objectors (95 in all) have filed 11 separate briefs totaling some 500 pages addressing these questions.

On April 18, the Court of Appeals approved the settlement in the 69 page decision. After reviewing the case and all of the arguments submitted by the objectors, the Court concluded. “It is the nature of a settlement that some will be dissatisfied with the ultimate result. Our case is no different, and we do not doubt that objectors are well-intentioned in making thoughtful arguments against certification of the class and approval of this settlement. They aim to ensure that the claims of retired players are not given up in exchange for anything less than a generous settlement agreement negotiated by very able representatives. But they risk making the perfect the enemy of the good. This settlement will provide nearly $1 billion in value to the class of retired players. It is a testament to the players, researchers, and advocates who have worked to expose the true human costs of a sport so many love. Though not perfect, it is fair. In sum, we affirm because we are satisfied that the District Court ably exercised its discretion in certifying the class and approving the settlement.”