Category: Daily News

Carolyn Bertrand, while employed during the period of 1989 to March 4, 2002, as a counselor by the County of Orange, permissibly self-insured, sustained an industrial cumulative trauma injury to her low back and neck. The case was resolved by way of Stipulated Findings and Award and Order, dated July 20, 2004, finding applicant sustained 38% permanent disability and need for further medical treatment based upon the opinion of the AME, Dr. Wilson. In “other stipulations,” the parties provided that: “Settlement based upon the report of AME Lynn Wilson. Future medical care to be provided pursuant to his opinion. When practical, Applicant will notify Defendant of need for treatment prior to obtaining same. For any future disputes regarding treatment or permanent disability, the parties will return to the A .M .E.”

Applicant filed a Declaration of Readiness to Proceed to Expedited Hearing on April 22, 2014, citing the issue of her entitlement to medical treatment based upon an untimely UR denial and defendant’s failure to forward all relevant medical evidence. In a pre-trial statement prepared May 14, 2014, the parties delineated the issue as whether the 2013 Labor Code section changes creating the IMR process, or the parties’ stipulations, control the resolution of medical treatment disputes.

The WCJ concluded that the language in the parties’ stipulation means that the UR process in Labor Code section 4610 is not applicable to disputes involving medical treatment, as the UR process was in place at the time the parties entered into their stipulations and they knowingly waived that existing legal right by contractually agreeing to a different process to resolve medical treatment disputes. Further, the WCJ found that the subsequent statutory change creating the IMR process to review a contest of a UR decision, does not nullify the parties’ contractual waiver.

The employer sought reconsideration contending that the WCJ’s order to return to the AME misconstrued the parties’ stipulation, and that the intent of the stipulation was to return to the AME in the event of a dispute after the Utilization Review (UR) process, and not to circumvent UR. Defendant asserts, however, that the new Independent Medical Review (IMR) process supersedes the parties’ stipulation to have the AME resolve treatment disputes.

The WCAB concurred with the WCJ that the parties may contractually waive their right to pursue the statutory review processes in favor of submitting disputes over medical treatment to a specified AME, a request for medical treatment must be submitted to UR before a dispute has arisen. The WCAB thus found in the panel decision of Bertrand v County of Orange that the defendant must submit a request for medical treatment to UR before a dispute may be referred to the AME for resolution.

“The WCJ correctly held that the new !MR process for reviewing a UR denial of medical treatment may be waived by the parties’ stipulation to bypass statutory review in favor of submitting their disputes to the AME. The recent change to IMR as the method of review of medical treatment disputes, as provided in Labor Code section 4610.6, does not supersede the parties’ stipulation as defendant argues. A change in law does not relieve a party from a lawfully entered stipulation. (See Fireman’s Fund Insurance Company v. Workers’ Comp. Appeals. Bd. (Allen) (2010) 181 Cal.App.4th 752 [75 Cal.Comp.Cases 1] [CJGA not entitled to void stipulation to pay 50% of medical treatment award after subsequent appellate decisions clarified law that CJGA had no liability.].)”

“However, the WCJ’s view that the parties’ stipulation necessarily avoids the UR process is not persuasive. While the parties’ stipulation provides that they will refer medical treatment disputes to the AME, it does not specify what process they intended to circumvent by that referral. Jn order to implement the parties’ stipulation to have medical treatment disputes referred to the AME, there must be a dispute between the parties over a specific treatment request. For a dispute to exist there must first be a UR denial, otherwise there would be no dispute to refer to the AME.”

O’Neil Watrous suffered serious injuries while operating a Fenn 5F swaging machine in the course and scope of his employment with LeFiell Manufacturing Company. Watrous filed a civil complaint against his employer alleging a violation of Labor Code section 4558, the power press exception to the exclusive remedy of workers’ compensation.

A Fenn 5F swaging machine is used to reduce a larger diameter tube to a smaller diameter. The swaging operation uses a process whereby hammers are actuated within the machine and used against dies that change the shape at the end of the tube. The swaging process compresses the metal so that the end of the tube is smaller in diameter, thicker, and stronger than the rest of the tube. The door had been removed from the Fenn 5F swaging machine that Watrous was operating at the time of the accident. The purpose of the door is for access, and when necessary, to change the dies. The door also functions to hold the dies in place while the power press is in operation. There is an opening in the center of the door to feed the material to be swaged into the bed of the Fenn 5F swaging machine. Instead of the door, a metal pressure plate was held in place by clamps.

Watrous was standing approximately six feet from the Fenn 5F swaging machine at the time of the accident and was removing a tube from the machine following the swaging process. He was injured when a piece of metal hit him in the eye. His 4558 theory was that the tube he was removing from the swaging machine struck the pressure plate assembly, causing the part to be “violently dislodged and launched into [his] eye and occipital lobe.” LeFiell brought its summary judgment motion asserting that the door was not a point of operation guard as a matter of law. Thus, his injury did not fall within the section 4558 exception. The trial court denied the motion and concluded there was a triable issue of fact as to whether a door that was removed from the Fenn 5F swaging machine operated by plaintiff O’Neil Watrous was a point of operation guard. LeFiell filed a petition for writ of mandate challenging an order denying its summary judgment motion. The Court of Appeal reversed in the published opinion of LeFiell v Superior Court.

Section 4558’s exemption from workers’ compensation exclusivity applies, by the statute’s own plain and express terms, only to material-forming machines utilizing a die. Machines using other types of tools to cut material are not within the statute’s application, even if they would meet a regulatory agency’s definition of power press. The Supreme Court in the Rosales decision (22 Cal.4th at p. 286) rejected importing the definition of “power press” promulgated by the Occupational Safety and Health Standards Board (Cal. Code Regs., tit. 8, § 4188, subd. (b)) into section 4558. Section 4558 provides its own definition of ‘power press – a definition that limits the category to machines using dies. Thus the Court of Appeal rejected Watrous’s attempt to import general industry safety regulations into section 4558.

A peremptory writ of mandate issue directing the trial court to vacate its order denying LeFiell’s motion for summary judgment and enter a new and different order granting the summary judgment motion.

On July 31, 2014, a federal jury in Los Angeles found that the former owner of a durable medical equipment (DME) supply company located in Carson, California, was guilty of health care fraud charges relating a 10-year scheme in which Medicare was fraudulently billed more than $8 million for DME that was not medically necessary.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney André Birotte Jr. of the Central District of California, Special Agent in Charge Glenn R. Ferry of the Department of Health and Human Services Office of Inspector General (HHS-OIG) Los Angeles Region, Assistant Director in Charge Bill L. Lewis of the FBI’s Los Angeles Field Office and Special Agent in Charge Erick Martinez of the IRS-Criminal Investigation’s (IRS-CI) Los Angeles Field Office made the announcement.

Olufunke Ibiyemi Fadojutimi, 42, of Carson, California, is a registered nurse and the former owner of Lutemi Medical Supply. He was found guilty after trial of one count of conspiracy to commit health care fraud, seven counts of health care fraud and one count of money laundering. Sentencing will be scheduled at a later date.

The trial evidence showed that between September 2003 and January 2013, Fadojutimi and others paid cash kickbacks to patient recruiters and physicians for fraudulent prescriptions for DME, such as power wheelchairs, that the Medicare patients did not actually need. Fadojutimi and others then used these prescriptions to bill Medicare for the power wheelchairs and other DME. Approximately $8.3 million in false and fraudulent claims were submitted to Medicare, and Medicare paid almost $4.3 million on those claims.

The case is being investigated by HHS-OIG Los Angeles Region, the FBI and IRS-CI Los Angeles Field Office. The case is being prosecuted by Trial Attorneys Fred Medick and Blanca Quintero of the Criminal Division’s Fraud Section, and was previously prosecuted by the Fraud Section’s Jonathan T. Baum.

The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California. The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009, between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,900 defendants who have collectively billed the Medicare program for more than $6 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

As weight loss becomes more about health than vanity, insurers might increasingly be footing the bill for non-surgical reducing methods, researchers say. And they’ll want to know which ones are the best investment. And such might be the case in California workers’ compensation where a weight loss program may be ordered as part of treatment for a physical injury or a pre-surgical recommendation that is delaying the case.

In a new analysis reported by Reuters Health, the popular Weight Watchers program and the drug Qsymia were the most cost-effective strategies to lose weight. If a third-party payer didn’t cover the high cost of Jenny Craig’s food, that would be the most effective plan, the study found. “To me the main message is that there are only a few viable options for weight loss,” Eric Finkelstein told Reuters Health in an email. “(Weight Watchers) and Qsymia currently provide the best bang for the buck but Jenny Craig is most effective.” Finkelstein is the study’s lead author from the Duke-National University of Singapore Graduate Medical School and the Duke Global Health Institute. He’s also worked with Jenny Craig, Weight Watchers and a number of companies that manufacture weight loss drugs.

Insurers and employers are under increasing pressure to cover weight loss strategies for their customers and employees, Finkelstein said. “As such, they care both about the costs and potential benefits,” he said. “To date, no study has been conducted that compares all programs against each other.”

For the new analysis, Finkelstein and his co-author reviewed randomized controlled trials – the “gold standard” of medical research – that evaluated non-surgical weight loss strategies over at least one year. They then paired those results with data on prices to estimate the cost per kilogram of weight loss and cost per “quality adjusted life year,” which is the cost for each year of life gained by using the program or drug. After excluding studies that lasted less than a year or had other problems, their analysis included Weight Watchers and Vtrim, both diet and lifestyle programs, the Jenny Craig meal-replacement program and the drugs Qsymia, Lorcaserin and Orlistat.

The researchers found that the average cost per kilogram (2.2 pounds) lost ranged from about $155 for Weight Watchers to about $546 with the Roche drug Orlistat, which is available by prescription as Xenical or over-the-counter as Alli. The second most cost-effective strategy at about $204 per kilo was Qsymia, a drug from VIVUS, Inc., which provided some support for the study. The Vtrim program was the third most cost-effective strategy per kilo of weight lost, followed by Jenny Craig, the drug lorcaserin – marketed as Belviq by Arena Pharmaceuticals GmbH. Orlistat was the most expensive per kilo.

Insurers and policymakers often prefer to consider treatments based on their cost per quality adjusted life year gained, and typically interventions are considered effective if that cost is less than $50,000. The researchers found that Weight Watchers, at $34,630, was the cheapest program per quality adjusted life year gained. It was followed by Qsymia, which is more effective at fostering weight loss, but more expensive at $54,130 per quality adjusted life year gained.

“As an individual the choice of which to choose should be based on perceived costs and benefits and all may be viable options given (their) benefits that extend beyond (cost-effectiveness) analysis,” Finkelstein said. Those benefits include the taste of food and convenience, for example.

As someone paying for the program, however, he said he would limit his investment to programs proven to work and those that have the participant take on some cost responsibility, such as weight loss success. Finkelstein also cautioned that these results are based on clinical trial results. Participants often receive the programs, food or drugs for free. “Real world results could be better or worse,” he said.

The Workers’ Compensation system in California is more than 100 years old. It covers more than a half million employers and provides benefits to 800,000 injured workers annually. The WCIRB has released the new WCIRB Report on the State of the California Workers’ Compensation Insurance System. The Report, which the WCIRB plans to update annually, summarizes the cost of workers’ compensation insurance based on premiums paid by insured employers, shows how premium dollars are distributed among various system components, and identifies key cost drivers such as frequency and the average cost of claims. The Report also contains a brief summary of how post-Senate Bill No. 863 (2012) costs are emerging compared to initial projections.

Insurer rates have been slowly increasing over the past five years but are not significantly different from the rates charged in the 1970s. A steady long term decline in the frequency of claims has to some extent offset increasing medical and other costs. Yet rates charged in California have been markedly higher than rates charged in other states. The largest component of claims cost is the medical treatment benefit.

Claim frequency was 49.5 claims per 1000 employees per year back in 1991. There has been a steady decrease to 14.2 claims per 1000 employees per year in 2009. This has increased slightly to 16.6 claims per 1000 employees per year estimated for 2014. Note that this slight increase coincided with the onset of the great recession. Geographically, the largest percentage increase during that period was in Los Angeles County where claim frequency increased by 19% between 2009 and 2012 compared to the bay area which showed a 3 percent decrease over the same time frame. California also lead the nation in increase claim frequency during this period. Simply stated, Los Angeles County led the state that led the nation in workers’ compensation claim frequency increases after the commencement of the great recession of 2008. A number of explanations can come to mind as an explanation for this notable phenomena.

California reported medical costs per claim are among the highest in the country with an average cost more than 70% above the median level. This is the result of three factors. The high proportion of indemnity claims involving permanent disability, the longer duration of medical treatment in California, and higher level of medical-legal costs.

Loss adjustment expenses include the costs of the administration of claims, attorney and other legal expenses, the cost of medical cost containment programs, and other court and claims-related expenses. These costs have increased steadily since 2005. Instead of declining after the 2013 enactment of SB 863, these expenses increased by 7% per claim. Loss adjustment ratios are generally higher in California than for the average of other states. One reason is high litigation rates especially in the Los Angeles area and a large number of active liens. The unexpected high frequency of IMRs conducted pursuant to SB 863 is also impacting loss adjustment expenses.

With respect to SB 863, lien savings are emerging at a greater than expected level. However indemnity claim frequency is emerging at a higher rate than projected. The overall long term cost effects of SB 863 have yet to be fully determined.

California combined loss ratios are improving, but remain over 100%. In 2011 the loss ratio peaked at 119% and has now declined to 107%. Insurers can generate a profit with a combined ratio above 100% provided there be a favorable investment climate. However, long term ratios above 110% are not sustainable.