Category: Daily News

The owner and operator of a durable medical equipment (DME) supply company was sentenced to serve five years in prison in connection with a health care fraud scheme involving Latay Medical Services, a DME company based in Gardena, California. Bolademi Adetola, 47, of Harbor City, Calif., was sentenced today by U.S. District Judge George H. Wu in the Central District of California. In addition to her prison term, Adetola was sentenced to serve three years of supervised release and ordered to pay $4,555,198 in restitution.

According to the story in the Imperial Valley News, on March 1, 2013, Adetola was convicted by a jury in federal court in Los Angeles of one count of conspiracy to commit health care fraud and 12 counts of health care fraud. During trial, the evidence showed that Adetola, as the former owner and operator of Latay, fraudulently billed millions of dollars to Medicare for DME that was either never provided to its Medicare beneficiaries or was not medically necessary.

The trial evidence showed that between January 2005 and October 2009, Adetola paid cash kickbacks for fraudulent prescriptions for DME, such as power wheelchairs and hospital beds. The evidence at trial showed that a co-conspirator physician wrote prescriptions for power wheelchairs and other DME that the Medicare beneficiaries did not need and ultimately never used. The co-conspirator physician testified that Adetola paid him cash kickbacks for every fraudulent prescription that he wrote for the DME and that Adetola used his prescriptions to bill Medicare for the power wheelchairs and other DME. Several Medicare beneficiaries testified that they were lured to medical clinics with the promise of a free recliner sofa, only to receive power wheelchairs that they did not need and did not want. According to the testimony, the beneficiaries were unsuccessful in their attempts to reject delivery of the power wheelchairs from Adetola’s supply company.

In addition, the trial evidence showed that Adetola billed Medicare for DME supposedly provided and delivered to Medicare beneficiaries who were deceased at the time of service. One particular claim submitted by Adetola to Medicare showed that the Medicare beneficiary’s death preceded the date the Medicare beneficiary supposedly signed for the service.

As a result of this fraud scheme, Adetola submitted and caused the submission of over $8.4 million in false and fraudulent claims to Medicare, and received over $4.5 million on those claims.

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.

A second health insurer notified state regulators Tuesday that it will stop selling individual policies in California. UnitedHealthcare announced it will no longer offer individual insurance plans after the end of the year. It will focus instead on its core business of group plans for large and small employers. The announcement comes two weeks after Aetna Inc. said it also plans to exit California’s individual insurance market. Both insurers avoided participating in the state exchange that is being established as part of the Affordable Care Act. State Insurance Commissioner Dave Jones says the departure of UnitedHealthcare and Aetna is bad news for consumers. “While both UnitedHealthcare and Aetna have a very small share of California’s individual health insurance market, their departure means less choice, less competition, and more market consolidation by the remaining big three health insurers – Anthem Blue Cross, Blue Shield of California, and Kaiser – which means an increased likelihood of even higher prices from those health insurers downstream,” Jones, a Democrat, said in a statement.

According to 2011 figures compiled by the California HealthCare Foundation, Anthem Blue Cross, Blue Shield and Kaiser have 87 percent of the individual market. Aetna had approximately 60,000 people covered by individual policies as of March 31, 2013, and it projects it will have approximately 50,000 people covered by individual policies at the end of 2013, when the company exits the individual market. United Healthcare, through its subsidiary PacifiCare, had approximately 10,000 individual policyholders late in 2012. Policyholders from both companies have been informed they can keep their existing health insurance until December 31, 2013. Aetna and United Healthcare policyholders will be able to purchase health insurance from other health insurers inside and outside the new California health benefits exchange. Starting Oct. 1, those seeking to buy their own health insurance will be directed to Covered California, the state’s new exchange, where 13 insurance carriers will sell individual policies. Aetna and UnitedHealthcare chose not to participate in the exchange.

A third15-day notice of modification to the supplemental job displacement benefit regulations has been distributed to interested parties and posted to the DWC website. Members of the public are invited to present written comments regarding the proposed modifications to dwcrules@dir.ca.gov by 5 p.m., July 18, 2013. The proposed modifications include changes to Section 10117. “Offer of Work; Adjustment of Permanent Disability.” Subdivision (f) is deleted and the subdivisions were relettered to accommodate the change in order.

Section 10133.31. “Supplemental Job Displacement Nontransferable Voucher for Injuries Occurring on or After 1/1/13” has been changed. Subdivision (f)(5) is amended to allow injured workers to submit written bids from a computer retailer to obtain payment for the purchase of computer equipment because they may not have the funds to purchase the equipment up-front. If the injured worker receives funds based upon submission of a written bid, the injured worker will be required to submit receipts. Failure to submit receipts will result in a $1,000 deduction from the total amount allowable by the voucher.

Section 10133.32. Form DWC-AD 10133.32 “Supplemental Job Displacement Nontransferable Voucher for Injuries Occurring on or After 1/1/13” has also been changed. A separate Request for Purchase of Computer Equipment was added to the form. Injured workers can submit either a written bid from a computer retailer or receipts of purchase. Following the purchase, receipts for the computer equipment must be submitted to the claims administrator.

Finally, in Section 10133.34. “Offer of Work for Injuries Occurring on or After 1/1/13” subdivision (b)(4) was deleted and the subdivisions were renumbered to accommodate the change in order.

The notice, text of the regulations, and forms can be found on the proposed regulations page.

State Fund will begin issuing dividend payments to eligible policyholders in early July. The $100 million dividend will be paid on the 2012 policy year; eligible policyholders will receive approximately 10% of their 2012 estimated annual premium.

“The dividend is a direct result of sound investment returns and improved efficiencies at State Fund,” said Tom Rowe, State Fund President and CEO. “We are committed to helping make California business possible and this dividend supports a brighter future for employers.”

Last year, State Fund declared a $50 million dividend. Since its inception in 1914, State Fund has paid more than $5 billion in dividends to policyholders – a record unparalleled among all California workers’ compensation insurance carriers.

State Fund’s Annual Report for 2012 was released last April. The report shows a significant increase in net income for California’s largest workers’ comp insurer. For 2012, State Fund’s income before dividends totaled $458 million, which was $279 million more than the prior year.

The report also indicates that State Fund reduced annual fixed expenses by $150 million dollars compared to 2009, and expects to achieve annual savings of more than $300 million by the end of 2014. These savings will help State Fund maintain fair pricing and bring value to a larger swath of the available market. State Fund announced a rate reduction of 7% effective March 1, 2013.

State Fund maintained a balanced investment portfolio that was focused on both credit quality and investment yield (99.3% of the $18.2 billion bond portfolio was rated NAIC 1, the NAIC’s highest quality credit class). The weighted average credit quality of the overall bond portfolio was Aa1/AA by Moody’s and Standard and Poor’s, respectively. Book yield at December 31, 2012 was 4.10%, down from 4.43% at December 31, 2011.

A new WCRI study says that prices paid for common hospital outpatient shoulder and knee surgeries vary greatly depending on whether the treatments are paid for through workers’ compensation insurance or employer-sponsored group health plans. In most of the 16 states examined by the Workers Compensation Research Institute, workers’ compensation plans paid more — sometimes a lot more. The 16 states included in the study are California, Florida, Illinois, Indiana, Iowa, Louisiana, Maryland, Massachusetts, Michigan, New Jersey, North Carolina, Pennsylvania, Tennessee, Texas, Virginia and Wisconsin. The payments represent 60 percent of the workers’ compensation benefits paid in the United States.

The amounts paid to health care providers on workers’ compensation claims are often regulated by the states, but in some states, the payments are not regulated, but rather are negotiated between insurers and the health care providers. Five states are classified in the report as unregulated, or “no-fee schedule” states. In three of those states — Iowa, New Jersey, and Virginia — the workers’ compensation treatment costs were exceptionally high.

In Massachusetts and California, which have established fixed payment amounts that hospitals can charge in workers’ compensation cases, the payments were actually lower than payments made through group health plans. The average workers’ compensation payment in Massachusetts for shoulder surgery was $2,636 compared with $4,592 for group health plans. In California, workers’ compensation payments were $5,895, 16 percent lower than group health plans.

In Virginia, workers’ compensation insurers paid $11,321 on average for shoulder surgery, more than twice the $5,279 group health average in that state. In Iowa, workers’ compensation insurers paid $8,586 on average for shoulder surgery, which was 50 percent more than the group health care plans.

The average workers’ compensation payment for shoulder surgery in New Jersey was $7,323. Group health plans paid only $4,583 on average, a difference of $2,740, or 37 percent less.

In two-thirds of the states examined by the nonprofit research group, the workers’ compensation payments were higher than those paid by group health.  Another contributing factor to the particularly high costs paid by workers’ compensation insurers in several states where hospital fees are not regulated is that workers’ compensation insurers have less bargaining power in price negotiations with hospitals than the private group insurers, which represent a much larger portion of the market.