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Category: Daily News

Six More Defendants Plead Guilty in Leland Yee Corruption Case

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Former state senator Leland Yee in plea agreement this summer admitted that he traded his political influence for bribes. Yee, among other things, admitted he agreed to influence legislation for would-be medical marijuana businesses in California, an NFL team owner trying to exempt pro athletes from the state’s workers’ compensation laws and a fictitious FBI concocted software firm seeking government technology contracts. He is scheduled to be sentenced on October 21.

Now six more defendants have entered guilty pleas in the case. George Nieh, Leslie Yun, Kevin Sui, Alan Chiu, Yat Wa Pau, and Andy Li all pleaded guilty to a broad range of charges alleged against them in a superseding indictment filed January 29, 2015. The indictment charged the defendants, Leland Yee, and 21 others with illegal conduct stemming from an alleged racketeering operation.

The guilty pleas bring to 10 the number of people who have pleaded guilty to one or more of the charges in the indictment. Unlike earlier pleas, these guilty pleas do not include an admission of guilt with respect to the charge that the defendants conspired to conduct the affairs of an enterprise through a pattern of racketeering activity, in violation of 18 U.S.C. § 1962(d) (RICO conspiracy); yet, the each defendant pleaded guilty one or more of the crimes alleged as part of the RICO conspiracy.

The superseding indictment charged twenty-eight people in all. Eight of the defendants, including the six defendants who pleaded guilty, Raymond Chow, and Kongphet Chanthavong, are scheduled for trial on November 2, 2015, before U.S. District Judge Charles R. Breyer. The charges against the six defendants to which they have not pleaded guilty are still pending.

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Legislature Passes Comp Formulary Bill

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AB-1124 passed the California legislature yesterday, and now awaits the expected signature of Governor Brown in order to become law. According to the author, this bill gives the Administrative Director clear authority to establish a formulary. An effective formulary will control rising prescription drug costs in California’s workers’ compensation system, limit the over-prescribing of highly-addictive opioids, and ensure injured workers get the necessary treatment needed to get back to work.

Drug formularies have proven to be very effective at managing the cost of prescription drugs. Health plans have been using formularies in California for decades and they are commonly accepted as a useful cost control mechanism. They control costs by limiting the utilization of high priced drugs and reducing the price of drugs. Formularies are usually developed by companies known as pharmaceutical benefits managers (PBMs) who design formularies and manage prescription drug benefits for a contracting health plan. At the most basic level a formulary is a list of drugs that a health plan or insurer agrees to cover. However, formularies are not simply arbitrary limits on drug use. Formularies must be broad enough to provide drug treatment options when they are available, and formulary decisions are guided substantially by the scientific evidence regarding individual drugs. However, in most cases there are multiple drugs available to treat a given condition and formularies are constructed to drive treatment choices to the most cost-effective option.

This bill would require the DWC Administrative Director to establish a drug formulary, on or before July 1, 2017, as part of the medical treatment utilization schedule.The Administrative Director would be required to meet and consult with stakeholders, prior to the adoption of the formulary, and publish at least 2 interim reports on the Internet Web site of the DWC. The bill would require the Administrative Director to update the formulary at least on a quarterly basis to allow for the provision of all appropriate medications, including medications new to the market.The bill would require the Administrative Director to establish an independent pharmacy and therapeutics committee to review and consult with the Administrative Director in connection with updating the formulary.

The California Applicants Attorneys Association argued against the law claiming that establishing a formulary is just another in a long line of take-aways from injured workers. Business groups supported this bill and the California Labor Federation supports the concept of a formulary.

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50 Million Americans Report Chronic or Severe Pain

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Nearly 50 million American adults have significant chronic pain or severe pain, according to a new study prepared by National Institutes of Health’s National Center for Complementary and Integrative Health (NCCIH), which appears this month in The Journal of Pain, published by the American Pain Society.

Based on data from the 2012 National Health Interview Survey (NHIS), the study estimates that within a previous three-month period, 25 million U.S. adults had daily chronic pain, and 23 million more reported severe pain. Those with serious pain need and use more health care services and suffer greater disability then persons with less severe pain.

The annual NHIS study is conducted by the U.S. Centers for Disease Control and Prevention (CDC) and surveys tens of thousands of Americans about their overall health and illnesses. The 2012 NHIS studied asked participants about the frequency and intensity of pain experienced in the last 3 months.

The findings also showed that half of individuals with the most severe pain still rated their overall health as good or better, and there were associations between pain severity and race, ethnicity, language preference, gender, and age. Women, older individuals, and non-Hispanics were more likely to report any pain, but Asians less likely. Also, the study showed the impact of gender on pain is influenced by race and ethnicity.

In an NIH news release, Richard L. Nahin, Ph.D., M.P.H., lead epidemiologist for NCCIH and author of the analysis said: “This report begins to answer calls for better national data on the nature and extent of the pain problem. The experience of pain is subjective. It’s not surprising then that the data show varied responses to pain even in those with similar levels of pain. Continuing analyses of these data may help identify subpopulations that would benefit from additional pain treatment options.”

Publication of the NIH study follows the recent “Pain Research Agenda for the 21st Century,” published in December in The Journal of Pain, in which The American Pain Society identifies promising but underfunded approaches to develop new treatments and to help make currently used pain medications safer and more effective. However, APS believes breakthrough new treatments will not become available unless more resources are devoted to pain research. Its Pain Research Agenda states: “The most direct path to achieving dramatic advances in pain treatment is through substantially increased investment in pain research and education, which would enable the pursuit of an aggressive translational pain-research agenda.”

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SB 623 Affirms Rights to UEF and SIF Benefits for Undocumented Workers

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Governor Brown signed SB 623, a new workers’ compensation law that will become effective this January.

According to the author, existing regulations were adopted upon the enactment by the voters of Proposition 187 in 1994, and initiative that restricted the rights of undocumented immigrants in a number of ways. Despite the courts’ subsequent invalidation of that initiative, the regulations at issue in the bill have remained on the books. California regulations still prohibit an undocumented worker from receiving benefits from both the UEBTF and the SIBTF, as the regulations have not been updated since 1998. As such, these regulations have been out of compliance with state law since 2003. It is unknown, however, if this has resulted in the loss of any benefits for undocumented injured workers.This bill was intended to expressly overrule those regulations.

The California Applicants’ Attorneys Association (CAAA) and the California Chamber of Commerce strongly supported SB 623, arguing that SB 623 would clarify current law so that no injured worker is refused benefits from the Uninsured Employers Benefit Trust Fund (UEBTF) and the Subsequent Injuries Benefit Trust Fund (SIBTF) based on their immigration status. CAAA argues that it is time for the out-of-date Division of Workers’ Compensation regulations which allowed undocumented workers from being excluded from these benefits. There was no opposition to this bill shown in the legislative record.

The practical effect of this bill is to state unequivocally that the plain reading of the regulations is not the law. This bill declares the intent of the Legislature to override regulations which prevent undocumented workers from accessing benefits from the UEBTF and the SIBTF Thus the bill adds section 3733 to the Labor Code.

Existing federal law provides that a State may provide that an individual who is not lawfully present in the United States is eligible for any State or local public benefit for which such alien would otherwise be ineligible through the enactment of a State law which affirmatively provides for such eligibility. (8 U.S. Code § 1621(d))

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New Abuse-Deterrent Opioids Enter the Marketplace

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One potentially important step towards the goal of creating safer opioid analgesics has been the development of opioids that are formulated to deter abuse. Abuse-deterrent properties are defined as those properties shown to meaningfully deter abuse, even if they do not fully prevent abuse. The term abuse is defined as the intentional, non-therapeutic use of a drug product or substance, even once, to achieve a desirable psychological or physiological effect. The FDA considers the development of these products a high public health priority.

An example of “abuse-deterrent properties” would be physical barriers that can prevent chewing, crushing, cutting, grating, or grinding of the dosage form. Chemical barriers, such as gelling agents, can resist extraction of the opioid using common solvents like water, simulated biological media, alcohol, or other organic solvents. Physical and chemical barriers can limit drug release following mechanical manipulation, or change the physical form of a drug, rendering it less amenable to abuse. An opioid antagonist can be added to interfere with, reduce, or defeat the euphoria associated with abuse. Substances can be added to the product to produce an unpleasant effect if the dosage form is manipulated or is used at a higher dosage than directed. Certain drug release designs or the method of drug delivery can offer resistance to abuse.

Collegium Pharmaceutical Inc’s experimental opioid painkiller Xtampza moved one step closer to approval this month after a panel of outside advisers to the U.S. Food and Drug Administration unanimously voted in favor of the drug. The FDA panel’s vote of approval for Xtampza is also a positive for other companies developing abuse-deterrent version of painkillers. Pernix Therapeutics Holdings Inc, Egalet Corp, KemPharm Inc, IntelliPharmaCeutics International Inc, Pain Therapeutics Inc and Acura Pharmaceuticals Inc are among the drugmakers developing abuse-deterrent painkillers.

The FDA has already approved Hysingla, made by Purdue Pharma, which also makes OxyContin. Hysingla is a “pure” hydrocodone drug, unlike Vicodin, which contains a combination of short-acting hydrocodone and acetaminophen.

Earlier this year, the FDA approved Targiniq ER, a painkiller that combines oxycodone and naloxone. The naloxone blocks the euphoric effects of oxycodone, making it less appealing to abuse. Targiniq ER, also made by Purdue Pharma, can be crushed and then snorted or injected. If the pills are crushed, the naloxone becomes active.

The FDA recently approved new labeling for the opioid painkiller Embeda that states the drug has abuse-deterrent features. The label will indicate Embeda has properties expected to reduce abuse of the drug when it is crushed and taken orally or snorted. The drug can still be misused if it is swallowed intact. Embeda contains morphine and naltrexone, and comes in extended-release capsules.

“The science of abuse-deterrent medication is rapidly evolving, and the FDA is eager to engage with manufacturers to help make these medications available to patients who need them,” said FDA Commissioner Margaret A. Hamburg, M.D. “We feel this is a key part of combating opioid abuse. We have to work hard with industry to support the development of new formulations that are difficult to abuse but are effective and available when needed.”

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DWC Switch to ICD-10 Should Help MSP Compliance

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The Centers for Medicare and Medicaid Services’ and the California DWC scheduled switch next month to a larger set of medical billing codes could ease Medicare secondary payer compliance for workers compensation claims, according to an article in Business Insurance. Starting Oct. 1, medical providers will switch from ICD-9, which includes about 17,000 diagnosis and procedure codes, to ICD-10, which includes more than 155,000 diagnosis and procedure codes. Many ICD-10 codes also specify the types, locations and severity of conditions and injuries.

Experts say the new codes will have the largest impact on workers comp payers who deal with Medicare secondary payer compliance. “The amount of detail it will provide the workers comp community will be amazing compared to what we’ve been using before,” said Rafael Gonzalez, Tampa, Florida-based vice president of strategic solutions at Helios Settlement Solutions, a unit of pharmacy benefit manager Helios.

The Medicare Secondary Payer Act requires insurers and self-insured employers to notify CMS of any workers comp or liability claim settlement involving a Medicare-eligible individual. CMS can issue liens requiring that settlements be used to reimburse the agency for medical care it paid on a claimant’s behalf, or that payers set aside money to pay for future medical care related to a compensable injury.

Medicare secondary payer experts say workers comp insurers and self-insured employers often are asked to reimburse Medicare for injuries or illnesses unrelated to a workers comp claim because those conditions are lumped in with the claimant’s occupational injury in medical records.

Rita Wilson, CEO of Delray Beach, Fla.-based Medicare secondary payer compliance firm Tower MSA Partners L.L.C., said ICD-10 will be particularly helpful in allowing workers comp insurers and self-insured employers to specify for which injuries they accept responsibility and those that should be paid by Medicare.

“Better accuracy and greater granularity and detail in determining and describing the injury are going to be advantageous for us, the provider community and for the payers,” Ms. Wilson said.

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Siblings Convicted in Sacramento Comp Fraud Case

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A brother and sister have been sentenced after pleading no contest to charges involving workers’ compensation fraud and tax evasion.

The Sacramento County District Attorney’s Office announced that 37 year-old Michael George Mello Jr. pled no contest to felony workers’ compensation insurance fraud and felony tax evasion. His sister, 38-year-old Mary Catherine Rodriguez, pled no contest to misdemeanor tax evasion.

Between July 2010 and July 2013, the defendants made false statements in their worker’s compensation insurance applications and policies by significantly underreporting the number of employees and payroll in their business, Green Valley Landscaping Services. They also failed to take required deductions from their employees’ pay and did not make required contributions to the unemployment insurance fund. In so doing, they cheated their workers’ compensation insurance carriers by $144,672 in premiums and the Employment Development Department (EDD) by $110,462.

Mello was sentenced to 30 days county jail, 5 years formal probation, and ordered to pay $144,672 in restitution to the insurance companies and $110,462 to EDD. Rodriguez was sentenced to 3 years probation, ordered to serve 50 hours of community service, and ordered to pay EDD $110,462 in restitution jointly with her brother.

This case was investigated by the California Department of Insurance’s Fraud Division, the Employment Development Department, and the Department of Industrial Relations.

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Senate Passes Apportionment Limitation Bill

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The California Senate voted 24-15 to approve a bill (AB 305) that would prohibit medical problems primarily affecting women from being considered pre-existing conditions when calculating workers’ compensation benefits. The bill now returns to the Assembly for a final vote.

This bill prohibits apportionment if pregnancy or menopause is contemporaneous with the injured worker’s claimed injury. This bill also requires that breast cancer not be less than the comparable impairment rating for prostate cancer. It also prohibits apportionment in cases of psychiatric injury caused by sexual harassment or any of the conditions listed above if the conditions are contemporaneous with the psychiatric injury.

Senate Floor Amendments of 9/3/15 remove “osteoporosis casually related to menopause” from the list of conditions where apportionment is prohibited.

According to state Sen. Marty Block (D-San Diego), the bill is part of an effort to end gender bias in the workplace. Some proponents of the bill have argued that the AMA Guides are not objective, specifically in the area of gender-specific injuries. Specifically, proponents point to the fact that the AMA Guides rate the removal of female breasts at a WPI of 0%, while the removal of a prostate would rate a 16%-20% WPI, arguing that such a rating shows bias against women.

Opponents argue that AB 305 is an attempt to undermine an employer’s use of apportionment when determining liability for permanent disability awards. Specifically, opponents note that apportionment is more than a decade old and ensures that employers do not need to pay for non-industrial injuries. Further, opponents point to case law and statute which protects injured workers from abusive apportionment, including apportionment on the basis of gender. Opponents further argue that AB 305 will increase litigation, raise indemnity costs on employers, and increase systemic instability and subjectivity.

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AMA Claims Mergers Will Increase Health Costs

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The leading U.S. physicians’ organization said on Tuesday that two proposed mergers of U.S. health insurers worth tens of billions of dollars could lead to higher prices in 17 states for companies that buy insurance for their workers or people who buy their own insurance. Aetna Inc announced plans to buy smaller rival Humana Inc in early July and Anthem Inc agreed to buy Cigna Corp later that month. Both mergers are being reviewed by the U.S. Department of Justice and state insurance officials.

The American Medical Association study focused on the impact on the commercial fully insured and self insured markets, largely made up of employer-based plans. The health insurers also manage plans for Medicare, Medicaid and other government programs not included in the study.

According to the report in Reuters Health, Anthem and Cigna combined would affect competition in 13 states where they sell individual insurance plans and in all 14 states where Anthem currently operates Blue Cross Blue Shield plans, the AMA’s analysis found.

Anthem spokeswoman Kristin Binns said the two companies have limited overlap and the merger would help consumers by allowing the merged company to better manage costs.

An Aetna and Humana merger would raise anti-competitive issues in as many as 14 states overall including Humana’s home state of Kentucky, Texas, Georgia, Utah and Florida, the study said. The majority of Humana’s business is in Medicare Advantage, which is not part of the study.

An Aetna spokeswoman noted that Humana’s focus is on Medicare. “The AMA report focuses on competition in the commercial marketplace, which would not meaningfully change following an Aetna/Humana combination given Humana’s very small commercial business,” spokeswoman Cynthia Michener said.

The American Hospital Association has also made public its analysis of the two deals, saying they would diminish competition.

The Department of Justice will take a hard look at the study, said Mark Ryan, of the law firm Mayer Brown and formerly of the department’s Antitrust Division.

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WCAB Rejects IMR Determination and Orders New IMR

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Norman McAtee sustained industrial injury to his neck, back, psyche and other body parts while working for Briggs and Pearson Construction as a carpenter. On March 30, 2011 he received a stipulated award of I 00% disability and future medical treatment.

McAtee had unsuccessful back surgery, and he has chronic pain. A nerve stimulator was not effective. Thus he has used narcotic analgesics for several years and has tried various formulations, including Duragesic patches which are helpful and improve his functioning.

McAtee appealed a December 2, 2014 IMR determination that modified PTP requests for additional Duragesic. The IMR rationale states that “Guidelines go on to recommend discontinuing opioids if there is no documentation of improved function and pain.” The rationale further states, “within the documentation available for review, there is no indication that the medication is improving the patient’s function or pain (in terms of specific examples of functional improvement and percent reduction in pain or reduce NRS), no documentation regarding side effects, and no discussion regarding aberrant use.” The WCJ denied the appeal, but a WCAB panel reversed in the case of McAtee v Briggs and Pearson Construction.

On appeal, McAtee argued it was shown at trial that the December 2, 2014 IMR determination resulted from plainly erroneous or implied findings of fact as described in Labor Code section 4610.6(h)(5). The WCAB agreed. The !MR findings are mistakes of fact as a matter of ordinary knowledge and not a matter that is subject to expert opinion. The PTP “specifically documents applicant’s improved function and reduced pain with his use of the Duragesic patches.” These indications of improved function,reduced pain with use of the medication, along with documentation concerning potential side effects and aberrant use, show that the contrary !MR findings were mistakes of fact as a matter of ordinary knowledge.

Reconsideration was granted, the decision was reversed, and hereby remanded to the Administrative Director pursuant to Labor Code section 4610.6(i) for Independent Medical Review by a different reviewer.

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