Category: Daily News

The National Insurance Crime Bureau (NICB) released a ForeCAST analysis that examines the impact of fraud associated with durable medical equipment (DME). The report examines questionable claims (QC) referred to NICB during the period from Jan. 1, 2009, through June 30, 2012. QCs are claims that NICB member insurance companies refer to NICB for closer review and investigation based on one or more indicators of possible fraud. A single claim may contain up to seven referral reasons. DME QCs have increased consistently since 2009 with New York (611), Michigan (366), California (63), and Florida (54) posting the most of all the states.

DME, also referred to as Durable Medical Equipment Prosthetics and Orthotics (DMEPOS), home care products, home health equipment/supplies and/or durable medical supplies, is defined as equipment that can withstand repeated use, is primarily and customarily used to serve a medical purpose, generally is not useful to a person in the absence of an illness or injury; and,is appropriate for use in the home.

All requirements of the definition must be met before an item can be considered DME. In addition to meeting the above criteria, a licensed physician must prescribe the DME and prepare a Certificate of Medical Necessity (CMN), also referred to as a Letter of Medical Necessity. The type of medical personnel allowed to order DME will vary from state to state. In some instances, physician assistants, nurse practitioners, and clinical nurse specialists may order DME.

In the 2011 report on National Health Expenditures (NHE), DME spending for 2010 comprised of $37.7 billion or 1.5 percent of total health expenditures (CMS, Office of the Actuary, National Health Statistics Group, 2011). In the 2011-2021 NHE Projections, DME is projected to increase consistently at an average rate of 6 percent. If these projections prove accurate, spending for DME could exceed $50 billion by the end of 2015 (CMS, 2011). For both public and private health care programs, the FBI in 2011 estimated fraudulent billing to be between 3 percent and 10 percent of total health care expenditures. If those percentages are applied to DME spending, estimates of the cost of DME fraud could fall between $1.5 billion and $5 billion in a single year.

The consistent growth of the DME industry, combined with a general lack of required credentials or training in order to distribute DME, provides ample opportunity for unscrupulous individuals and entities intent on defrauding the insurance industry.

Although DME fraud is but a small part of the overall medical fraud perpetrated against insurers and the government, it is most insidious when patients who have been properly prescribed for DME never receive it. Somewhere in the DME processing chain between doctor and patient, the device never gets delivered. Whether it’s diverted to others, lost in bureaucracy or simply pilfered to be sold on the black market, it is an expensive loss to patients, insurers and the governmental loss that all of us ultimately pay for through higher premiums and taxes.

The fraud occurring in the nation’s health care system is widespread and timeless. It is the reason that since 2010, NICB has been working with the Secretary of Health and Human Services, the Attorney General and others in Washington to establish an information and data sharing effort aimed at detecting and preventing insurance fraud at the public and private sector levels. It is also the reason that in July 2012, NICB was named to the Executive Board of the Health Care Fraud Prevention Partnership.

“We said at the time that there is a significant amount of crossover by those committing fraud against Medicare and Medicaid, and also taking advantage of the property and casualty insurance industry,” said NICB President and CEO Joe Wehrle. “This report confirms that and helps us focus our investigative efforts on the areas where this is a growing problem. And at the same time, it is our goal to share information and work with the public and private sectors to identify these schemes and stop them.”

The Division of Workers’ Compensation (DWC) has issued notices of public hearings for the Supplemental Job Displacement Benefit (SJDB) regulations and interpreter services regulations.

The proposed rulemakings are to permanently adopt the emergency regulations which became effective Jan. 1, 2013. A public hearing on the proposed regulations has been scheduled for March 19 at 10 a.m. in the auditorium of the Elihu Harris Building, 1515 Clay Street, Oakland. Members of the public may also submit written comments on the regulations until 5 p.m. on that day.

The SJDB regulations implement SB 863’s changes regarding the amount of the SJDB voucher and the expenses for which it may be used. The proposed regulations administrate the supplement job displacement benefit by providing procedures and forms for those injured on or after Jan. 1, 2013.

The interpreter services regulations define “qualified interpreter for purposes of medical treatment appointments,” add “medical treatment appointments” as an event for which an interpreter is entitled to a fee, and set forth the websites where interpreters who are qualified to interpret at workers’ compensation appeals board hearings and medical treatment appointments can be found.

DWC will consider all public comments, and may modify the proposed regulations for consideration during an additional 15-day public comment period. The notices of rulemaking, text of the regulations, and the initial statements of reasons can be found at the DWC website.

California safety officials ordered Chevron Corp. to pay a record-high fine of nearly $1 million for safety violations that led to a massive fire last summer at a refinery in the San Francisco Bay Area.

According to the report in the Los Angeles Times, after the Aug. 6 explosion at Chevron’s facility in Richmond, Calif., an emergency telephone network advised tens of thousands of people in that city to stay indoors behind closed doors and windows to avoid breathing potentially dangerous sulfuric acid and nitrogen dioxide fumes. About 200 local residents sought medical help, complaining of respiratory problems. In addition, Chevron reported that one of its employees suffered a minor injury.

Cal-OSHA said Wednesday that its investigation of the explosion at a leaking crude refining unit, among other things, showed that Chevron did not follow safety recommendations made by its inspectors in 2002 to replace a corroded pipe that subsequently ruptured and fueled the fire. The company also failed to follow emergency shutdown procedures after the leak was found the day of the fire, the state said.

In all, the state Division of Occupational Safety and Health issued 25 citations against California’s biggest oil company, including 11 “willful serious” and 12 lesser “serious” violations related to the blaze, the state said. The $963,200 fine is the highest in Cal-OSHA history, the agency said.

“Ensuring worker safety is the employer’s responsibility,” said Christine Baker, director of the state Department of Industrial Relations, which oversees Cal-OSHA. “Refineries must take the steps needed to prevent incidents like the August Chevron fire. Failure to do so can pose great dangers to workers, surrounding communities and the environment.”

Chevron said it intends to appeal some of the citations. “Chevron takes our commitment to safe operations seriously,” the San Ramon, Calif., company said in a statement. “Although we acknowledge that we failed to live up to our own expectations in this incident, we do not agree with several of the Cal-OSHA findings and its characterization of some of the alleged violations as ‘willful.'”

The company reported that since the fire it has taken a number of corrective actions to enhance safety, mechanical integrity and management oversight at the third-largest refinery in California, which processes 245,000 barrels of crude oil a day. The damaged refining unit is being repaired and should be back in operation by the end of March, Chevron said.

Chevron’s laxity endangered its neighbors, said state Assemblywoman Nancy Skinner (D-Berkeley), who represents the Richmond area. “The community expects more and demands more of Chevron,” she said. “Chevron needs to step up to the plate.”

Bryan Knittel injured his knee in 2009 while working as an Alameda County Deputy Sheriff. Knittel was unable to perform his duties after the injury, and the County of Alameda (County) paid disability benefits from the date of his injury.

He was classified as temporarily disabled for over two years. For the first year Knittel was disabled, the County paid him benefits pursuant to Labor Code section 4850. Under that section, public safety officers who are disabled in the course of their duties are entitled to a leave of absence without loss of salary for up to one year. After the first year passed, the County paid Knittel “regular” temporary disability indemnity benefits for another year. The County then ceased to pay temporary disability indemnity, citing the 104-week limit on aggregate disability payments for an injury causing temporary disability. (Labor Code 4656, subd. (c)(2).).

Knittel disputed the County’s interpretation of the law and requested a hearing before the Workers’ Compensation Appeals Board (WCAB). At the hearing, the workers’ compensation judge (WCJ) assigned to the matter agreed with Knittel, concluding section 4850 benefits do not “count toward the two-year limitation under Section 4656.” The County filed a petition for reconsideration. The WCAB denied the petition in an order that merely adopted the reasons stated by the WCJ in his report. The County then filed a petition for review. The Court of Appeal in the published opinion of County of Alameda v WCAB and Bryan Knittel reversed the WCAB and remanded the case for further proceedings.

The Court noted that there have not been any prior decisions have interpreted the statutory language of Labor Code 4656, subd. (c)(2) at issue in this appeal.

There is a special benefit for injured public safety officers. Pursuant to section 4850, eligible public safety officers who become disabled while performing their duties are entitled to a one-year leave of absence without loss of salary “in lieu of temporary disability payments” for up to one year. If the disability continues beyond one year, the officer is entitled to an unpaid leave of absence and whatever other benefits that might be available under the workers’ compensation law.

In 2004, as part of a comprehensive reform of the workers’ compensation law, the Legislature enacted a 104-week limit on disability payments for an injury causing temporary disability. The law currently (and at the time Knittel was injured) provides: “Aggregate disability payments for a single injury occurring on or after January 1, 2008, causing temporary disability shall not extend for more than 104 compensable weeks within a period of five years from the date of injury.” (§ 4656, subd. (c)(2).). The question here is the meaning of “[a]ggregate disability payments.” The Labor Code does not define the phrase. The County argued that the phrase also encompasses other disability payments for injuries causing temporary disability, including the salary continuation benefit payable to public safety officers pursuant to section 4850.

The Court of Appeal concluded that “The County’s arguments are persuasive. If section 4850 payments are workers’ compensation benefits, then they are part of the “aggregate” of disability payments when they are paid for an injury causing temporary disability. Knittel received an aggregate of two types of workers’ compensation benefits for his temporary disability: section 4850 salary continuation benefits and temporary disability indemnity. Pursuant to section 4656, subdivision (c)(2), Knittel was entitled to a total of 104 weeks of those combined disability benefits, and he received 52 weeks of section 4850 benefits and 52 weeks of temporary disability indemnity.”The reasoning employed by the WCJ to reach the conclusion that section 4850 benefits are not included in aggregate disability payments is unconvincing.”

The current form of the 104-week limit, subdivision (c)(2) of section 4656, was added by the Legislature in 2007. “Ultimately we agree with the County that the Legislature expressed its intent in the plain language of section 4656, subdivision (c)(2). Given the Legislature’s choice of the words “[a]ggregate disability payments,” we think it is clear that section 4850 benefits paid for an injury causing temporary disability must count toward the 104-week limit absent a specific exclusion. Our conclusion is bolstered by the fact that when the Legislature added subdivision (c)(2), the case authority holding section 4850 payments are workers’ compensation benefits was long standing and well established.”

“It appears the Legislature tried to reach a compromise with subdivision (c)(2) of section 4656 – a year of enhanced benefits for public safety officers under section 4850 followed by a year of temporary disability indemnity. To the extent the law is not working or the compromise is unfair, the parties should bring their concerns to the attention of the Legislature.”

Patriot National Insurance Group, a leading provider of workers’ compensation insurance solutions announced the appointment of Michael McFadden as Regional Vice President for California. As RVP, Mr. McFadden will oversee all marketing and underwriting responsibilities for California, and will be based at Patriot’s western regional office in Woodland Hills, CA.

Steven Mariano, Chief Executive Officer and Chairman of Patriot National Insurance Group said, “Mike’s extensive workers’ compensation background and strong leadership make him the natural choice to lead the California region. We are excited to continue our expansion in California operations.”

Mr. McFadden said, “Since joining Patriot in October of 2011 its been a tremendous experience expanding our west coast regional headquarters. The RVP position will allow me to continue to grow the talent within our operation, which now includes local underwriting presence, while also having personal involvement in the production and distribution channels in the region.”

Before joining Patriot National, Mr. McFadden held various leadership positions at Zenith Insurance Company and was most recently Zenith’s Vice President of Claims for the Los Angeles regional office. Mr. McFadden was also the manager of Organizational Development for RJM Adjusters, Inc. He graduated from University of Phoenix with a degree in Business Management.

Patriot National Insurance Group is an insurance holding company focused on workers’ compensation insurance. Patriot National Insurance Group has two operating subsidiaries- Guarantee Insurance Company and Patriot Underwriters, Inc.