Category: Daily News

Labor Code §§129 and 129.5 require the Audit and Enforcement Unit of the Division of Workers’ Compensation (DWC) to conduct a profile audit review (PAR) for all adjusting locations of California workers’ compensation claims at least once every five years. Performance of the adjusting locations is measured in five areas of claims administration:

1) The payment of accrued and undisputed indemnity
2) The late first payment of temporary disability / first notice of salary continuation
3) The late first payment of permanent disability and death benefits
4) The late subsequent indemnity payments
5) The provision of notices with QME/AME advice.

The administrative director annually establishes profile audit review and full compliance audit (FCA) standards in accordance with Labor Code §§129(b)(1) and (2) and Title 8, California Code of Regulations §10107.1. The 2016 standards are based on the audit results of calendar years 2012 through 2014.

The PAR performance standard for audits conducted in 2016 is 1.51082. Audit subjects with PAR performance ratings of 1.51082 or lower will be required to pay any unpaid compensation, but no penalties will be assessed. If an audit subject’s PAR performance rating is 1.51083 or higher, the audit will expand to a FCA, and an additional sample of indemnity claims will be audited.

The FCA performance standard for audits conducted in 2016 is 1.67880. Audit subjects with an FCA performance rating of 1.67880 or less will be required to pay any unpaid compensation and penalties will be assessed for all violations involving unpaid and late paid compensation. If an audit subject’s full compliance audit performance rating is1.67881 or higher, an additional sample of denied claims as well as the expanded sample of indemnity claims will be audited. Penalties will be assessed for all violations as appropriate pursuant to 8CCR §§10111 through 10111.2.

More information on the performance standards that will be in use for the profile audit reviews and full compliance audits during calendar year 2016 will be posted on the DWC Audit and Enforcement Unit web page.

Despite assertions that the California workers’ compensation medical review and dispute resolution process results in wholesale denial of care for injured workers, a new CWCI analysis shows that about 96% of treatment services are approved and delivered to injured workers, and that the multiple levels of medical review have produced a system with a high degree of consistency for approving care while maintaining the state’s evidence-based medicine standard.

While a means of resolving medical necessity disputes is common to almost all other healthcare delivery systems, including group health and federal programs, workers’ compensation is not like other systems. Co-payments, deductibles and enrollee contractual language, common shared-risk strategies used in group health to manage utilization and cost are precluded by law and antithetical to the original no-fault bargain between employers and employees. From the moment California introduced IMR into the system following the 2012 reforms, debate over the scope, authority and reasonableness of the workers’ compensation medical dispute resolution process intensified. Recent studies have analyzed the various components, and CWCI’s new report expands on those analyses using data from a sample of 5.6 million California workers’ compensation medical services from 2014 and from the nearly 82,000 IMR decision letters issued in first half of 2015. Key findings include:

1) Almost 85% of the 5.6 million medical services in the study sample were paid without being requested in RFAs and undergoing UR for medical necessity. These services were paid based on prior authorization, retrospective authorization or when no RFA was received but the service fell within the claims administrator’s parameters for approval.
2) 15% of the medical services were requested in RFAs and underwent UR. Of these, 60% were accepted by non-physician reviewers who determined that they were medically necessary under the treatment guidelines, and 40% were sent for review by a UR physician. This means that about 6% of the 5.6 million medical services (15% x 40%) were reviewed by a UR physician.
3) The modification/denial rate for the 6% of all treatment services submitted for physician UR was 70%, or 4.3% of all services in the study sample (1.1% were modified and 3.2% were denied).
4) In the first half of 2015, IMR physicians upheld 89.1% of the UR denials and modifications and overturned 10.9%. This is consistent with the 91% uphold rate from CWCI’s study of 2014 IMR outcomes and indicates that the majority of modifications or denials made by UR physicians are in-line with evidence-based medicine.
5) Almost half of the IMR decisions rendered between January and June of 2015 involved disputes over prescription drugs. One-third involved requests for opioids, while 11% involved compounded drugs.
6) The top 10% of physicians involved in IMR disputes (961 treaters) were identified in more than 80% of all IMR determination letters; while the top 1% (97 physicians) were named in 40% of the letters.
7) After taking into account medical services approved without an RFA and without UR, those approved by non-physicians during UR, those approved by UR physicians, and those approved following IMR, the estimated approval rate for all California workers’ comp medical services ranges between 95.7% and 96.1%

The Institute notes that the high level of agreement at the different stages of medical review fulfills the legislative intent of the workers’ compensation reforms to provide injured workers with the most effective medical care through a process that is more objective, transparent and consistent. CWCI has published its study in a Research Update report, “Medical Review and Dispute Resolution in California Workers’ Compensation.”

Cal/OSHA cited Kaiser Foundation Hospitals in Vallejo $149,900 for exposing workers to injury and infection from used needles at the hospital’s collection box for biomedical waste. At least three custodial employees have been stuck by needles while attempting to empty the deposit box, which frequently overflowed and prevented the lid from closing properly. All three employees have been given prophylactic medication to prevent disease or unwanted consequences. The first injury occurred in 2013 and the other two this year.

“Cal/OSHA will always issue citations in cases where employers willfully disregard employee health and safety,” said Cal/OSHA Chief Juliann Sum. “Kaiser should have had safety measures in place before employees were injured.”

Cal/OSHA cited Kaiser for five workplace safety violations of the bloodborne pathogens standard, which requires employers to protect workers from coming into contact with blood or other disease-carrying body fluids. Two of the violations issued to Kaiser are classified as willful serious, as evidence shows that the employer was aware that an unsafe or hazardous condition existed and made no reasonable effort to eliminate the condition. The hazardous conditions were corrected after Cal/OSHA’s inspection.

“Hospital workers are exposed to known hazards on a daily basis, and their employers have a responsibility to recognize these hazards and protect their employees,” said Christine Baker, Director of the Department of Industrial Relations (DIR). Cal/OSHA, officially known as the Division of Occupational Safety and Health, is a division of DIR.

Cal/OSHA’s American Canyon office opened the investigation in June after receiving a complaint. Kaiser members deposit their used needles through a hinged slot on the metal box, which resembles a postal mailbox. The needles fall into an inner plastic disposal box inside to contain biomedical waste. Employees transferred the contents into a larger disposal container for collection by Kaiser’s waste hauling contractor.

Cal/OSHA investigators learned that employees were instructed to clean the box using a broom and dustpan. When those tools proved inadequate, employees had to reach into the box to remove spilled waste, even though needles were often deposited without a protective cap.

Kaiser replaced the kiosk with two larger disposal units following Cal/OSHA’s inspection, and now requires they be monitored every 30 minutes.

Burnout among U.S. doctors is becoming more common and now affects more than half of practicing physicians, according to a new study reviewed by Reuters Health. About 54 percent of U.S. doctors experienced at least one symptom of burnout in 2014, compared to about 46 percent of doctors in 2011, researchers report in Mayo Clinic Proceedings. Overall, the researchers found that doctors are about twice as likely to experience burnout as the average U.S. worker.

“Things are unfortunately getting worse for physicians,” said lead author Dr. Tait Shanafelt, of the Mayo Clinic in Rochester, Minnesota. Through a partnership with the American Medical Association, the researchers invited nearly 36,000 U.S. doctors to take a survey in 2014 and compared the responses to a similar survey from 2011.

Of the 6,880 doctors who responded to the 2014 survey, about 47 percent reported high emotional exhaustion, about 35 percent felt depersonalized or saw less value in their work and about 16 percent felt a low level of personal accomplishment.

Burnout rates varied between specialties, with rates topping 60 percent among doctors in emergency medicine, family medicine, urology, rehabilitation and radiology.

Doctors working in urology, rehabilitation, family medicine, radiology, orthopedic surgery, dermatology, internal medicine, general surgery, pathology, psychiatry and general pediatrics all saw significant increases in burnout rates between 2011 and 2014.

Despite no increase in the number of hours worked, only 41 percent of all doctors said they were satisfied with the balance between their work and personal lives, down from about 49 percent in 2011.

In an editorial, Dan Ariely and Dr. William Lanier of Duke University in Durham, North Carolina, pointed to three main psychological issues in the workplace that likely undermine doctors’ wellbeing: loss of autonomy, mental exhaustion and “asymmetrical rewards” – meaning that success is barely acknowledged while mistakes come with heavy punishments. Shanafelt also pointed to doctors’ heavier workloads and increased clerical responsibilities as examples of potential frustrations.

The study team notes that 75 percent of doctors now work for large healthcare organizations, and meaningful progress toward turning around burnout rates will require work by doctors and their organizations. Dr. Mark Linzer, of Hennepin County Medical Center in Minneapolis, said his research shows that healthcare systems with higher burnout rates also provide less quality care to their patients.

Mitchell G. Cohen M.D. is a board- certified orthopedic surgeon who performed spinal surgeries at Pacific Hospital of Long Beach. He is a resident of Irvine, California, and controls two corporate bank accounts under the names Spine Care Center and Mitchell G. Cohen, M.D. , Inc.

Cohen and his attorney signed a written plea agreement in federal court which has now been unsealed. He plead guilty to a single count which charges him with Subscribing to a False Tax Return in violation of 26 U.S.C. § 7206(1). In exchange, the prosecutor agreed to recommend a two-level reduction in the applicable Sentencing Guidelines. The statutory maximum sentence that the Court can impose for violating Title 26, United States Code, Section 7206(1), is 3 years of imprisonment; a one-year period of supervised release; a fine of $100,000; and a mandatory special assessment of $100.

As part of the plea agreement, Cohen agreed to the statement of facts that recited essentially the following. He accepted illegal kickback payments from Michael D. Drobot and a marketer in exchange for performing spine surgeries at Pacific Hospital. Cohen concealed the illegal kickback payments from his patients and the insurance carriers that paid for the patient’s services. He was paid between approximately $5,000 and $15,000 in kickbacks for every spinal fusion surgery performed at Pacific Hospital and deposited kickback payments primarily into his Spine Care Center bank account. Spine Care Center had no legitimate business purpose other than acting as the recipient entity.

In 2009, 2010, 2011, and 2012, Cohen caused Spine Care Center to file a Corporation Income Tax Return, Form 1120, claiming the illegal kickback payments as gross receipts of Spine Care Center. Cohen knew that the illegal kickback payments were not gross receipts of Spine Care Center, but instead should have been reported as individual income on his Individual Income Tax Return. Thus he failed to report $243, 000 in 2009, $214,100 in 2010, $426,335 in 2011, and $394,611 in 2012. Had he properly reported this income he would have been assessed an additional $402,139 in individual income tax. Thus he agreed to payment of no more than $402,139 restitution for taxes.

In 2012, Drobot and Cohen agreed that Drobot would pay him $15,000 in kickbacks for each posterior lumbar interbody fusion surgery performed at Pacific Hospital, and between $5,000 and $7,500 in kickbacks for each cervical fusion spine surgery performed at Pacific Hospital, provided those surgeries were performed using spinal hardware purchased from International Implants, LLC, a medical device distributor owned by Drobot.

In order to disguise the illegal kickback payments from Drobot Cohen entered into two bogus contracts with Drobot’s business entities. First, a Research, Product Development and Training Agreement where he purported to provide consulting services in exchange for a monthly payment of $25,000. Cohen however, provided few legitimate consulting services. Instead, the payments were purely kickbacks for spinal surgeries.

In addition Cohen entered into an Outsourced Collections Agreement with Pacific Hospital. The Collection Agreement provided that Cohen would assist Pacific Hospital in collecting its fees for spinal surgeries from insurance carriers, and that in return Pacific Hospital would pay Cohen fifteen percent of the total amount collected. In reality the collection was done by Pacific Hospital staff, without assistance from Cohen.

In total, Cohen received approximately $1,645,225 in illegal kickback payments from Drobot and the marketer between 2008 and 2013.

Beginning in or around 2004, Cohen entered into an agreement with California Pharmacy Management (“CPM”), an in-house dispensary management company owned by Drobot, and later another Drobot entity Industrial Pharmacy Management, in which the Dispensary Management Companies purported to manage Cohen’s in-office pharmacy in return for fifty percent of the gross collections resulting from prescriptions filled at defendant’s pharmacy. In reality Cohen was paid varying amounts averaging between $20,000 and $40,000 per month as an inducement to allow the Dispensary Management Companies to operate his in-office pharmacy and to gain access to his patients including, in particular, defendant’s worker’s compensation payments.

As part of the Plea Agreement Cohen agreed to cooperate fully with the US Attorneys Office, the Federal Bureau of Investigation, the United States Postal Service – Office of Inspector General, the Internal Revenue Service, and, as directed by the USAO, any other federal, state, local, or foreign prosecuting, enforcement, administrative, or regulatory authority.

A similar “cooperation” agreement has been made with other physicians, who are likely to be government informants providing information leading to yet further arrests of colleagues in months to come.