Category: Daily News

California’s sweeping SB 863 workers’ compensation reform is working for the most part, but some of the savings may not materialize thanks to pressure on the system, according to Dave Bellusci, executive vice president, chief operating officer and chief actuary at the Workers’ Compensation Rating Bureau.

According to the report in the Insurance Journal, Bellusci was speaking recently on the state’s workers’ comp system at the Golden Gate Chapter of the Chartered Property Casualty Underwriters Society during the group’s “All Industry Day.” The group held their daylong conference at the Delancey Street Conference Center. Also addressing the large group of insurance professionals at the conference was Alex Swedlow, president and chief executive officer of the California Workers’ Compensation Institute. Both men talked about the state’s workers’ comp reform law, Senate Bill 863, passed at the end of 2012 and implemented last year.

Among the host of changes the bill made was to establish an independent medical review process. IMR takes the process of reviewing cases that were elevated from utilization review away from a process that included judges and other members of the workers’ comp community and puts it in the hands of doctors. The IMR process was projected to produce a savings of $400 million related to administrative costs. However, that was assuming that between 50,000 and 60,000 disputes would make it to IMR each year. But many more cases have been going to IMR, according to Bellusci.  By WCIRB’s estimates more than 14,000 IMR cases are being brought each month, putting the system on pace for more than 170,000 cases for the year. “We think the administrative costs are probably not going to materialize if they stay at this level,” Bellusci said.

According to Swedlow, other than that, the new system seems to be working as intended. Based on the medical treatment utilization schedule or other guidelines, 75 percent of all treatment requests are being approved at the initial level without further review, according to Swedlow. Out of the one-fourth of cases that get elevated for further review, slightly more than 23 percent of the time that treatment is either modified or denied, he said. When it’s all added up, that means less than 5 percent of requests are either modified or denied, Swedlow said.

One trouble spot for Swedlow in both the new and the old systems is that pharmacy costs continue to dominate. According to Swedlow, 43 percent of utilization reviews are over pharmacy spending and more the one-third of IMRs are for pharmacy. Much of the pharmacy spending in workers’ comp comes from physicians prescribing opioids, Swedlow said. According to him, 30 percent of the pharmacy spending goes to Schedule II and Schedule II opioids. Nearly half the Schedule II opioids, like morphine and oxycodone, are being prescribed for minor injuries, Swedlow said, adding that the opioid problem has become worse across the U.S. each year. “This is truly an national epidemic,” he said.

Another epidemic that continues to impact workers’ comp is obesity, which may become a bigger problem for the system he said. Swedlow fears that a decision in June 2012 by the American Medical Association House of Delegates reclassifying obesity as “a disease state” may elevate the cases of injured workers who are obese. With obesity reclassified as a disease, medical providers may feel a greater responsibility to counsel obese patients about their weight, or if treatment for a compensable injury causes significant weight gain, Swedlow said. “We feel thanks to AMA obesity may move from being treated as a comorbidity to a compensable injury,” Swedlow said.

Each year the California Chamber of Commerce releases a list of “job killer” bills to identify legislation that will decimate economic and job growth in California. The CalChamber will track the bills throughout the rest of the legislative session and work to educate legislators about the serious consequences these bills will have on the state.

A number of California Chamber of Commerce-opposed “job killer” bills first identified in 2013 on labor law topics appear to be dead for this year after missing legislative deadlines or being amended.

SB 626 (Beall; D-San Jose) would have resulted in dramatic workers’ compensation cost increases for employers. The bill was pulled from the January 15 hearing agenda for the Senate Labor and Industrial Relations Committee at the author’s request, therefore missing the January 17 legislative deadline for a 2013 bill to pass from policy committee to fiscal committee in the house in which it was introduced. SB 626 would have resulted in employers paying nearly $1 billion in benefit increases to injured workers without an expectation that the increases will be fully offset by system savings.The bill would have distorted the entire balance of the 2012 workers’ compensation reform deal, SB 863 (De León; D-Los Angeles; Chapter 363), that provides injured workers with needed benefit increases, but offsets these increased costs by closing certain loopholes and making California’s workers’ compensation system operate more efficiently with fewer disputes and litigation.

AB 1164 (Lowenthal; D-Long Beach) would have created a dangerous and unfair precedent in the wage-and-hour arena by allowing an employee who claims a wage violation to assert a lien on an employer’s real or personal property, or even a third party’s real or personal property, before any trial or administrative hearing has been held to determine if any wages are actually owed by the employer. AB 1164 was placed on the Assembly Inactive File on January 30, thereby missing the January 31 deadline to pass the house in which it was introduced in 2013.

SB 761 (DeSaulnier; D-Concord) Expansion of Paid Family Leave Program – Would have transformed the paid family leave program from a wage replacement program into a new protected leave of absence that will burden small and large businesses by allowing an employee to file litigation for any alleged retaliation or discrimination as a result of their intent, request, or use of the paid family leave program. The bill has been amended to deal with a different subject.

And now the Chamber has started the “job killer” bills list for 2014. Thus far there is nothing on the horizon of concern for California employers.  The stagnation or removal of the holdover legislation from last year has cleared the deck for this years fight.

A federal investigation into kickbacks allegedly paid by Tenet Healthcare Corp. marks the latest fraud inquiry involving the Dallas-based hospital giant over the last decade. Although not directly related to the current investigation, the company has a number of hospitals in California including many in Southern California. The report in the Dallas News comes as Tenet has tried to reshape its image and operations since 2006, when it reached a $900 million settlement, one of the largest ever, with the U.S. Justice Department to resolve fraud accusations.

The new investigation alleges that four Tenet hospitals in Georgia and South Carolina made improper payments in return for patient referrals. Both investigations also were triggered by whistle-blower lawsuits filed under the U.S. False Claims Act, leading federal authorities to intervene as plaintiffs. The FBI said in its release that the hospitals paid kickbacks to obstetric clinics serving “undocumented Hispanic women.” The money was in exchange for providing labor and delivery services to the patients. The hospitals then falsely billed Medicaid for reimbursements tied to the procedures, the statement said. Anti-kickback laws are designed to prevent financial incentives from interfering with caregivers’ medical judgment.

Tenet officials said in their own statement that transactions with the clinics were proper. They would “vigorously defend against the allegations,” the statement said. The agreements with the clinics provided “substantial benefits to women in under served Hispanic communities,” Tenet said. “By ensuring that pregnant women received prenatal care and appropriate treatment during birth, these programs increased the likelihood of a safe birth and a healthy baby while reducing the overall cost to state Medicaid programs.”

Federal authorities, however, used sharp language to stress the seriousness of the allegations. “Schemes such as this one corrupt the health care system and take advantage of vulnerable patients,” Stuart F. Delery, assistant attorney general for the Justice Department’s civil division, said in the news release. “My office has made the investigation of health care fraud a priority,” said Michael J. Moore, the U.S. attorney for the Middle District of Georgia. “In a time when too many people were struggling to get health care for themselves and their children, Tenet and these hospitals plundered a system set up for those truly in need.”

Tenet operates in 12 states including several hospitals in California such as Los Alamitos Medical Center, Placentia-Linda Hospital, San Ramon Regional Medical Center, Sierra Vista Regional Medical Center in San Luis Obispo, Twin Cities Community Hospital inTempleton and others.Tenet owned Memorial Medical Center of New Orleans in 2005, when 45 bodies were found after the Hurricane Katrina floods. The corporation paid $25 million to settle a suit that accused it of being ill-prepared for the disaster. Tenet denied wrongdoing, saying poor levees and government rescue efforts were to blame. Other Tenet facilities were investigated in the early 2000s on improper billing. Tenet struck its 2006 deal with the government to settle some of the improper billing allegations as well as kickback accusations.

Tenet Healthcare Corporation agreed in August 2013 to pay $54 million to resolve government accusations that doctors at Redding Medical center in Northern California conducted unnecessary heart procedures and operations on hundreds of patients. The settlement was the largest in a case involving what is known as medical necessity fraud, or billing government health programs for tests and treatments that the patient’s condition did not require. The settlement preempts any civil and criminal charges by the Justice Department against Tenet, its hospital division and the hospital itself, which did not admit wrongdoing. Nevertheless, in settling, Tenet signaled it would rather pay a record fine than argue in court that there was a medical reason for the patients to undergo the procedures or operations. The scandal and subsequent federal investigation are described in the book Coronary: A True Story of Medicine Gone Awry by author Stephen Klaidman..

Carlos Razo claimed that while employed as a driver by Las Posas Country Club during the period May 7, 2011 through May 7, 2012, he sustained a cumulative trauma (CT) injury to his psyche, sleep disorder, head, eyes, back, digestive system, hernia, knee, hands and head. After the employer denied the claim, a dispute arose over the panel QME selection process.

At trial the parties stipulated to the facts of the QME process. In the field of internal medicine, an original panel of QMEs initially issued on October 18, 2012. A replacement panel was ordered on November 30, 2012. The replacement panel issued on January 3, 2013. On January 11, 2013, defendant exercised its right to strike a member of the panel. On January 24, 2013, defendant designated one of the other panel members to be the QME. On January 15, 2013, applicant exercised his right to strike a member of the panel. In the field of orthopedics, an original panel of QMEs initially issued on October 18, 2012. A replacement panel was ordered on November 13, 2012. The replacement panel issued on January 3, 2013. On January 11. 2013, defendant exercised its right to strike a member of the panel. On January 14, 2013, defendant designated one of the other panel members to be the QME. On January 15, 2013, applicant exercised his right to strike a member of the panel. The parties further stipulated that all dates with respect to the issuance of the QME panels reflect the dates that were written on the panel forms sent to the parties, and not the receipt dates.

The dispute was submitted on the issues of whether applicant timely exercised the right to strike a member of the panel pursuant to Labor Code section 4062.2(c), and “whether that code section in its 2012 version or … in its 2013 version is applicable[.]” In the May 28, 2013 Findings and Order, the WCJ found that applicant timely exercised his right to strike members from replacement QME internal medicine and orthopedic panels assigned on January 3, 2013. The WCJ applied former section 4062.2(c). In his Opinion on Decision, the WCJ explained that to make a timely strike, applicant had 10 days after assignment of the QME panel on January 3, 2013 plus “three working days,” i.e., until January 16, 2013. Since applicant made his strike on January 15, 2013, it was timely.

The WCAB agreed with the WCJ that applicant’s strike was timely in the panel decision of Razo v Las Posas Country Club. However, it disagreed that former section 4062.2 applies. Instead,it applied section 4062.2 as amended by SB 863.

SB 863 became effective January 1, 2013. However, section 84 of SB 863 states: “This act shall apply to all pending matters, regardless of date of injury, unless otherwise specified in this act, but shall not be a basis to rescind, alter, amend, or reopen any final award of workers’ compensation benefits.” (Stats. 2012, ch 363, § 84.). Because section 4062.2 governs the panel QME process, it is a procedural statute. Therefore, its application in this case is prospective, not retroactive.

The WCAB also held that pursuant to the discussion of Code of Civil Procedure (CCP) I 013 in Messele v.Pitco Foods, Inc. (2011) 76 Cal.Comp.Cases 956 (Appeals Board en bane) (“Messe/e”), that section 4062.2(c) allows a party ten days from the Administrative Director’s assignment of a QME panel, plus five days for U.S. mail, to strike a name from the QME panel. In Messe/e, the Board held that when the first written AME proposal is ”made” by mail or by any method other than personal service, the period for seeking agreement on an AME under former Labor Code section 4062.2(b) is extended five calendar days if the physical address of the party being served with the first written proposal is within California. Thus it construed the phrase in amended section 4062.Z(c), “assignment of the panel by the Administrative Director,” to mean not only assignment but also service of the names of the panel QMEs on the parties by U.S. mail.

The panel was aware that in Alvarado v. Workers’ Comp. Appeals Bd. (2007) 72 Cal.Comp.Cases 1142 (writ den.) the Board panel found CCP section 1013 inapplicable to extend the time for a party to strike a physician’s name from a QME panel because the operative trigger for the time period was not service, but assignment of the panel. The Board stated that “the time limits prescribed by Labor Code § 4062.2(c) run from the date of assignment of the three-member panel, not from service of the panel.” (72 Cal.Comp.Cases at p. 1145.). Alvarado is distinguishable because it involved application of former section 4062.2. which gave the parties a right to strike a name from the panel “within three working days of gaining the right to do so[.]” The statute now provides that each party has 10 days from assignment of the panel and, as construed here, an additional five calendar days for service of the assignment by U.S. mail.

Appellant Chris Fopiano sued applicant attorneys Leonard Stern and Steven Barry for legal malpractice arising out of their representation of Fopiano in a workers’ compensation case. He claimed they improperly waived his right to seek reasonable disability accommodations from his employer. The trial court sustained the attorneys’ demurrer without leave to amend on the ground that the action was time-barred. Fopiano appealed, and the Court of Appeal reversed the dismissal and reinstated the case in the unpublished opinion of Fopiano v. Stern.

Fopiano suffered pulmonary injuries while working for his employer, Eastern Municipal Water District (EMWD). In July 2008, he hired attorneys Stern and Barry to represent him in a workers’ compensation case against EMWD. In January 2011, in the course of their representation of Fopiano, he alleges they waived his right to seek reasonable accommodations for his disability, although Fopiano had never discussed this with respondents, and did not know he possessed such a right. Additionally, Stern allegedly advised Fopiano that if he did not request early retirement, his employer could force him to retire. On March 14, 2011, Fopiano accepted an award of $69,813.62 for his permanent disability and voluntarily retired.

Soon thereafter, on March 25, 2011, Fopiano filed a pre-complaint questionnaire with California’s Department of Fair Employment and Housing (DFEH) to institute a disability discrimination complaint against EMWD. EMWD was afforded an opportunity to respond and denied Fopiano’s allegations of disability discrimination. EMWD asserted that Fopiano was not offered reasonable accommodations for his disability because respondents waived his right to seek reasonable accommodations and indicated to EMWD that Fopiano would instead retire.

Fopiano sued his comp attorneys on May 24, 2012, alleging they committed legal malpractice by waiving his right to seek reasonable accommodations from EMWD that would have allowed him to continue working. His attorneys demurred, arguing the allegations were insufficient to state a cause of action because they failed to allege when Fopiano learned of the attorneys’ wrongful conduct. The trial court sustained the demurrer to an amended complaint without leave to amend, finding Fopiano’s claim was time-barred because the fact that he filed a DFEH pre-complaint questionnaire demonstrated he knew of his attorneys’ malpractice at least by March 2011, which was more than one year before he filed his complaint. Fopiano timely appealed from the resulting judgment of dismissal.

The Court of Appeal reversed. The limitations period for legal malpractice is set forth in Code of Civil Procedure section 340.6, which states, in relevant part: “An action against an attorney for a wrongful act or omission, other than for actual fraud, arising in the performance of professional services shall be commenced within one year after the plaintiff discovers, or through the use of reasonable diligence should have discovered, the facts constituting the wrongful act or omission, or four years from the date of the wrongful act or omission, whichever occurs first. . . .”

The allegations in the second amended complaint did not show Fopiano’s claim was time-barred. Fopiano’s complaint alleged Stern erroneously counseled Fopiano to retire and negligently waived his right to seek reasonable accommodations for his disability. DFEH allegedly informed Fopiano in October 2011 of correspondence between respondents and EMWD in which respondents effected this waiver. Fopiano filed his complaint less than a year later, in May 2012. Assuming these allegations are true,Fopiano discovered respondents’ wrongful conduct within the one-year limitations period.