Category: Daily News

An article on the Southern California Public Radio website reports that the Orange County Grand Jury has indicted 15 people – including a major donor to President Barack Obama’s re-election campaign, 10 doctors and a pharmacist – for their alleged involvement in a multi-million dollar workers compensation fraud scheme. The alleged ringleader and two others also face one charge of involuntary manslaughter. The sealed indictment – obtained by KPCC – accuses Obama donor Kareem Ahmed of orchestrating the elaborate operation. According to the filing:

1) Ahmed allegedly hired pharmacists to produce three compounded transdermal creams.
2) Ahmed then paid kickbacks to a number of physicians and chiropractors to prescribe the creams to their workers’ compensation patients.
3) Ahmed then allegedly conspired with the doctors to submit fraudulent workers’ compensation claims.

Ahmed allegedly paid physicians a total of more than $25 million to dispense the compound creams between June 15, 2010, and Dec. 31, 2012, according to the indictment. The amounts individual doctors received between 2010 and 2013 ranged from $600,000 to more than $2.5 million, it alleged. Among those Ahmed allegedly paid were Daniel Capen, M.D. (more than $2.5 million); Andrew Jarminski, M.D. (more than $1.9 million); pharmacist Michael Rudolph (more than $1 million); and Rahil Kahn, M.D. (more than $1 million), according to the indictment.

KPCC tried to reach Capen, Jarminski, Rudolph and Kahn for comment, but they were unavailable.

Ahmed allegedly gave the “‘kickback’ scheme the appearance of legitimacy by requiring the physicians and the pharmacists to sign a contract for purchase of future accounts receivables,” the indictment said.

One of the 44 counts in the indictment charged Ahmed, Rudolph and Jarminski of involuntary manslaughter. It alleged that on or about Feb. 3, 2012, the three “did unlawfully and without malice kill Andrew G. (a minor) … in the commission of a lawful act which might produce death, in an unlawful manner and without due caution and circumspection.” The indictment gave no other details.

Ahmed is president and CEO of Landmark Medical Management, an Ontario firm. In response to a request for comment, his assistant Ladonna Hieber emailed a statement: “Kareem Ahmed and his staff are innocent of all charges that have been alleged. The charges are meritless and we expect full exoneration of any wrongdoing.”

A spokeswoman at the Orange County DA’s office said she cannot comment on the indictment, since it is sealed.

An October 2012 article by Talking Points Memo first raised questions about his alleged business practices. The Orange County DA’s office raided Landmark Medical’s offices last October.

Ahmed was a top donor to Democratic efforts in 2012. He gave more than $1 million, with most of it going to the pro-Obama super PAC Priorities USA Action, according to data compiled by the Center for Responsive Politics.

Once strictly the domain of research labs, gene-sequencing tests increasingly are being used to help understand the genetic causes of rare disease, putting insurance companies in the position of deciding whether to pay the $5,000 to $17,000 for the tests. But, according to an article in Reuters Health, a number of insurers, including Blue Cross Blue Shield, have reacted by putting the brakes on reimbursement. Insurers are demanding proof that the results will lead to meaningful treatments among the estimated 2 million Americans with a serious, undiagnosed disease, still an unlikely prospect in the majority of cases.

Genetics experts say that sequencing more than doubles the chances that families get a diagnosis, and saves spending on multiple tests of single genes. Even if no treatment is found, the tests can also end hugely expensive medical odysseys as parents frantically search for the cause of their child’s furtive illness.  Until the reimbursement issue is resolved, some smaller diagnostics players will likely stay on the sidelines, leaving the field to early adopters of the technology such as Ambry Genetics and Bio-Reference Laboratories’ GeneDx. And families short on resources will be left scrambling for funding.

Howard Jacob was the first to use gene-sequencing tools to unravel the mystery of a rare disease in 2009, leading to a bone marrow transplant that saved a little boy named Nic Volker. Five years later, Jacob’s molecular genetics lab at the Medical College of Wisconsin has done more than three dozen whole genome sequences, a test that reads the more than 3 billion letters that make up the human genetic code. They have sequenced 400 whole exomes, tests that look only at the protein-making segments of DNA known as exons, which represent 2 percent of the genome but account for 85 percent of disease-causing mutations.

Baylor College of Medicine in Houston, Texas, has handled 3,500 exome-sequencing cases since it started offering the test in 2011. A study of its first 250 cases showed whole exome sequencing identified the disease-causing gene in 25 percent of cases. Since the findings were published last October, the rate has increased to 28 percent as the list of known mutations has grown, said Dr. Christine Eng, who directs Baylor’s Whole Genome Sequencing Laboratory. Eng said insurance companies initially paid for most of the tests, but as volume has increased, more claims are getting denied. “There are some companies that are saying out and out, we won’t cover this test.”

Dr. Allen Bale, director of the DNA Diagnostic Lab at Yale School of Medicine in Connecticut, has seen a 500 percent increase in orders for exome sequencing since 2011. The lab does about 750 whole exome tests a year, and there, too, reimbursement is becoming an issue.

Dr. Julie Kessel, who directs coverage policy for Cigna, said sequencing requests were scarcely noticed five years ago. Now, “they’re very, very much on the radar.” Cigna generally does not cover whole genome or whole exome sequencing unless there is a clear clinical reason.

At Aetna Inc, Dr. James Cross, vice president of national medical policy and operations, said sequencing has gotten ahead of the evidence. Traditionally the company has made coverage decisions based on the individual test and whether it affects patient outcomes, he said. “With sequencing, you’ve got a lot of information that we don’t have that kind of evidence around.”

Last August, one of the industry’s biggest players, Blue Cross Blue Shield, issued a report saying exome sequencing might pinpoint the genetic cause of disease in up to half of patients, but only a fraction of those will be able to use that as guidance because treatments don’t exist yet. Since then, Blues plans in Louisiana, North Carolina and Pennsylvania have deemed exome sequencing “investigational,” meaning not eligible for coverage.

Insurers say their objections stem from a lack of evidence that the tests can improve patient care. But, there are some celebrated examples that it can, such as Alexis Beery of California, whose genetic defect left him with health problems similar to cerebral palsy. Genome sequencing led to highly effective treatments to replace the missing neurotransmitters that were causing the symptoms.

The legal difference between a Court of Appeal case that is published, or unpublished is not well known in the workers’ compensation community. The difference is the result of California Rules of Court section 8.1115. This Rule provides that “an opinion of a California Court of Appeal or superior court appellate division that is not certified for publication or ordered published must not be cited or relied on by a court or a party in any other action.” An attorney who refers to an unpublished opinion in a Court subject to the California Rules of Court violates the Rules, and is subject to sanctions. Thus, an unpublished opinion does not set precedent that can be used in similar litigation in a Court subject to the California Rules of Court.

However, the WCAB is not subject to the California Rules of Court. It has its own rules of Practice and Procedure. The WCAB does not have an equivalent to Rule 8.1115. For that reason, litigants can refer to an “unpublished” opinion at the WCAB trial level, and on Reconsideration, but not in cases that move to the Court of Appeal and above. LexisNexis publishes the California Compensation Cases, volumes containing California workers’ compensation Appeals Board decisions and appeals court cases. This publication includes the text of unpublished Court of Appeal opinions, and litigants can use the California Compensation Cases citation to unpublished cases that would otherwise not appear in the Official Reporter of the California Courts. The legal effect of an unpublished opinion in a workers’ compensation case as a result of this Court Rule is somewhat murky.

Last month the Court of Appeal decided in the then unpublished case of The Regents of the University of California v WCAB and Shirley Lappi that Labor Code section 5708 sets forth a general rule authorizing the WCAB to adopt its own “rules of practice and procedures” and specifies that in the conduct of hearings and investigations, the WCAB “shall not be bound by the common law or statutory rules of evidence and procedure.” However, when it comes to the treatment of privileged information specifically, division 8 of the Evidence Code trumps this provision of the Labor Code. Division 8 expressly applies to “any action, hearing, investigation, inquest or inquiry (whether conducted by a court, administrative agency, hearing officer, arbitrator, legislative body, or any other person authorized by law) in which . . . testimony can be compelled . . . .” Moreover, Evidence Code section 910 explicitly overrides any other statute which might otherwise be viewed as limiting application of the “rules of evidence” generally: “The provisions of any statute making rules of evidence inapplicable in particular proceedings, or limiting the applicability of rules of evidence in particular proceedings, do not make this division inapplicable to such proceedings.”

The Court of Appeal concluded that “In light of these provisions, it is clear that while the WCAB is free to adopt rules of practice and procedures which ignore the “rules of evidence” set forth in the Evidence Code, it nonetheless remains bound by the statutory requirements for dealing with privilege found in division 8 of that code, including section 915. As a consequence, the WCAB erred in this case when it ordered an in camera review of the University’s allegedly privileged documents by a special master for the purpose of assessing the merits of that privilege claim.”

Fortunately, the Court of Appeal recognized the importance of this previously unpublished opinion. On June 17, it issued the following order. “The opinion in this matter filed on May 23, 2014, was not certified for publication. Requests have been received to order publication of the opinion and it appears that our opinion meets the standards set forth in California Rules of Court, rule 8.1105(c). The requests are GRANTED. The opinion is ordered published in the Official Reports.”

The decision can now be cited at the WCAB level and above, and has become binding precedent on all lower courts and judges.

The health of the workers’ compensation system in California and statewide economic trends likely to impact the system in the future were among the topics discussed at this months Annual WCIRB Workers’ Compensation Conference in San Francisco. The Conference is an opportunity for WCIRB members and other industry stakeholders to discuss issues of common concern and to hear from leading voices in the California workers’ compensation system.

WCIRB President and CEO Bill Mudge opened the Conference with a “health checkup” on the State’s 101 year old workers’ compensation system from the perspective of injured workers, employers and insurers. Based on Mr. Mudge’s observations, “vital signs” for the California system are mixed.

1) For injured workers, fewer injuries and timely access to care and benefits are balanced by concerns over the level of wage replacement, the problems associated with high rates of long-term opioid use and delays getting back to work.
2) For employers, fewer injuries, numerous insurance choices and a charged rate level that remains approximately 50% below what it was a decade ago are balanced against a litigious, costly and complex workers’ compensation system.
3) For insurers, the size of the workers’ compensation market, pricing flexibility and competition are balanced against volatile insurer results, unpredictable outcomes, and a complex benefit delivery system.

Overall there has been an 83% reduction in claim frequency in the past 50 years. 85% of injured workers who responded to a survey were satisfied with the medical care they received. Yet California has 47% of lost time claims with permanent disability. This ranks as the seventh highest state. California is among the top ten states with longer term opiate use.

A multi-agency task force led by the California Department of Insurance, consisting of more than 100 detectives and investigators focused on curbing California’s underground economy, conducted a sweep across major metropolitan areas statewide issuing more than 60 citations for various violations and six work stop-orders. Investigators also took the opportunity to educate homeowners about their responsibility to verify contractors have a license and workers’ compensation insurance before they hire them.

Homeowners who hire contractors or vendors that do not have proper licenses or workers’ compensation insurance may risk their home and assets if someone is injured on their property or shoddy work results in damage to their home. Many homeowner policies have a criminal activity clause that means the insurance company may not cover damage caused by shoddy work performed by an unlicensed contractor or liability coverage if a worker is injured and the contractor does not have workers’ compensation insurance.

“Homeowners must be aware of their obligation to verify that contractors they hire have proper licenses and valid workers’ compensation insurance,” said Insurance Commissioner Dave Jones. “It is not worth risking your home or other assets because you hired an unlicensed contractor or didn’t take the time to verify their license and insurance coverage. A few minutes spent ensuring your contractor or vendor is following the law is a small investment to protect yourself and your assets.”

At a private home in the Los Angele area investigators found a sub-contractor working on the job site without workers’ compensation insurance. According to detectives, the homeowner was surprised to learn he was responsible for verifying not only the general contractor’s workers’ compensation insurance, which he had done, but also for all sub-contractors. Other violations found among the nearly 100 businesses contacted included no workers’ compensation insurance, no valid contractor’s license, serious safety violations cited by the Division of Occupational Safety and Health, including one with an estimated $20,000 regulatory fine. The Contractors State License Board found six violations, ranging from advertising to safety issues. The Employment Development Department identified 15 possible administrative violations.

“California’s underground economy results in a multi-billion dollar hit to California’s economy,” said Insurance Commissioner Dave Jones. “This fraudulent activity hurts legitimate businesses that play by the rules. The coordinated effort of this multi-agency task force is an ongoing effort to level the playing field by putting a stop to the illegal activities of business owners that cheat the system at the expense of law abiding businesses and consumers.”