Category: Daily News

J. Michael Nolan has announced his retirement as president of the Oakland-based California Workers’ Compensation Institute (CWCI) effective May 1, 2013. The Institute’s Board of Directors has named Alex Swedlow, CWCI’s Executive Vice President for Research, as his successor.

“We knew this day would eventually arrive, and extend our sincere appreciation to Michael for all his contributions to CWCI, its members, and the California workers’ compensation system” said Tom Rowe, President and CEO of State Compensation Insurance Fund and chairman of the CWCI Board. “Under Michael’s steady and insightful leadership, CWCI has remained an indispensable resource for our members and the industry by generating reliable data that helps them make informed business decisions, track industry trends, and analyze key issues in the industry. Michael is leaving us in a very good place, and we thank him for his many years of service.”

Mr. Nolan joined the Institute in June 2001 as successor to former president, Ed Woodward. His career in the insurance industry spans more than 40 years, including 10 years at Argonaut Insurance, where he served as Senior Vice President, General Counsel and Secretary. During his time with the Institute, Mr. Nolan served on a number of government and private advisory committees, including working groups of the California Division of Workers’ Compensation, the Commission on Health and Safety and Workers’ Compensation, the Department of Insurance, the California Workers’ Compensation Insurance Rating Bureau and RAND Corporation. Additionally, Mr. Nolan periodically testified on workers’ compensation issues at public hearings of the California State Legislature and administrative agencies, including last year’s workers’ compensation reform hearing that culminated in the enactment of the 2012 reform bill (SB 863).

“My years with CWCI have been some of the most rewarding of my career,” said Mr. Nolan. “I am thankful for the great opportunities I had with CWCI and look forward to its continued success under Alex Swedlow, who brings impressive credentials and deep industry expertise.” Following his retirement from CWCI and a short sabbatical, Mr. Nolan intends to re-enter the workers’ compensation industry or corporate-regulatory law field.

Effective April 2 Mr. Swedlow will become the fourth President at CWCI in almost 50 years. Mr. Swedlow formally joined CWCI in November 2000 as Executive Vice President of Research, where he focused on data development and research on cost drivers, evidence-based medicine, opioid utilization, litigation and alternative dispute resolution, access to care, return-to-work and key performance indicators of the 2002-2004 and 2012 California workers’ compensation reforms.

Prior to that, Mr. Swedlow was an independent consultant to CWCI from 1988 to 1999, working to enhance data collection and research on topics including medical and indemnity benefit development, 24-hour coverage and medical treatment utilization, and cost drivers. In 1998, he served as the Systems Architect and Project Manager for the Industry Claims Information System (ICIS) Project, which has since grown into one of the largest and most vital transactional data warehouses in the California workers’ compensation system. Mr. Swedlow is an active participant in industry advisory committee work and frequently speaks at regional and national conferences and forums.

“I’m thrilled to take on this new responsibility and lead CWCI in its next chapter,” said Mr. Swedlow. “As CWCI looks to its next 50 years, we have an opportunity to further establish our role as a critical but objective industry resource.”

CompWest Insurance Company has announced the appointment of Gene J. Simpson as vice president of Underwriting and Marketing. Simpson recently joined CompWest’s senior management team and is responsible for company-wide underwriting and marketing practices. In this position, Simpson coordinates the development and implementation of company underwriting and marketing programs; manages and directs the execution of all sales plans and production initiatives; as well as the research, strategy and implementation of new markets.

Simpson most recently served as vice president of Workers’ Compensation Product Management for Seabright Holdings, Inc. Prior to that, he served as vice president of General Liability and Product Line Manager for Liberty Mutual Insurance and for 11 years in a variety of capacities for Safeco Insurance Company, including assistant vice president of Product Development,; assistant director of Workers’ Compensation; commercial manager of National Programs and commercial underwriter of Multiline and Workers’ Compensation.

Simpson graduated from Western Washington University with a Bachelor of Science in applied mathematics and holds the designations of Chartered Property Casualty Underwriter (CPCU) and Certified Insurance Counselor (CIC). Simpson is an active member of his community, participating in various fundraising efforts to support several charitable organizations with a particular interest in Susan G. Komen for the Cure.

The San Bernardino County District Attorney reports that Maria Arrieta, 51, of Victorville, has been charged with multiple counts of workers’ compensation insurance fraud and perjury.

In June 2010, Arrieta was injured as a result of her duties at McDonald’s Hamburger Restaurant. She was treated for burns to her hands and released.

“Sometime later, Ms. Arrieta filed a fraudulent workers’ compensation claim alleging that she slipped and fell at work while removing a case of meat from the freezer on the same day and had injured her foot,” said Jose Guzman, Senior Investigator assigned to the case. “However, she made no mention to the physician who was treating her hand of her slip and fall accident which allegedly occurred earlier the same day as the hand injury.”

According to Guzman, approximately nine days earlier to the incident, Arrieta had been seen by her primary care physician and told him that she had sustained her foot injury at home and not at work. Arrieta was ultimately diagnosed with a non-work related medical condition for which she is seeking workers’ compensation benefits.

In Aug. 2010, Arrieta was examined by a specialist in Podiatric Medicine, a Qualified Medical Examiner (QME). “The QME reviewed the medical history questionnaire completed by Arrieta, who advised the doctor that she injured her foot at home on her day off from work,” said Guzman. “Again, she made no mention of the injury being work-related.”

The QME submitted Employment Development Department (EDD) paperwork indicating a non-work related injury. Arrieta later obtained a workers’ compensation attorney who filed a claim for her in May 2011, alleging the slip and fall foot injury. The insurance company then referred the case to the District Attorney’s Office, Workers’ Compensation Insurance Fraud Unit in Oct. 2011 for a fraud investigation.

On Feb. 11, 2013, the District Attorney’s Office Workers’ Compensation Insurance Fraud Unit filed criminal charges against Arrieta for knowingly filing a fraudulent workers’ compensation claim to obtain benefits for a non-work-related injury. Arrieta was taken into custody the next day by District Attorney Investigators at the Santa Ana Workers’ Compensation Appeals Board, while awaiting a hearing in her workers’ compensation case. Arrieta was transported to West Valley Detention Center in Rancho Cucamonga and booked.

Arrieta is scheduled to be arraigned April 18 in Victorville Superior Court. If convicted as charged, she faces 19 years in County Prison. Deputy District Attorney Scott Byrd will prosecute this case.

This week state Senator Jim Beall introduced S.B. 626  – a bill that would roll back many of the provisions of newly enacted S.B. 863.

Theoretically, last year’s S.B. 863 was a “balanced” bill that sought to both reduce costs and increased benefits. The balanced approach was forced by Governor Brown who vetoed one sided legislation the previous year that sought to unwind portions of Governor schwarzenegger’s S.B. 899.  His veto messages asked the legislature to pass a balanced measure that had some benefit for California employers. Thus, the political climate, up until this year, was a state legislature that clearly wanted to grow the benefits of the Worker’s Compensation system, balanced by a Governor who considers the impact of increasing a hostile business climate.

However, the November election may have changed that political climate. The Democratic Party has controlled the California Legislature for a nearly unbroken stretch of 42 years. Yet control goes only so far: it takes two-thirds of the Legislature to enact a host of important legislation in this state, meaning that even the diminished Republican Party has been able to easily frustrate Democratic ambitions. But with a swell of electoral victories in November, the Democratic Party has now crossed that boundary and controls two-thirds of both the Senate and the Assembly, giving it the kind of unfettered power that no party has had here for 80 years. With the exception of a few brief lapses caused by vacancies, Democrats could hold a supermajority at least through the end of the decade. A supermajority can override the Governor’s veto, and indeed can even call a constitutional convention and re-write the California constitution placing the new version before the voters for final approval.

With the new political climate in mind, S.B. 626 may have a fighting chance for passage this legislative session. Here are the key provisions.

S.B. 863 prohibits a chiropractor from being the treating physician after the employee has received the maximum number of chiropractic visits. S.B. 626 would delete that provision and would instead provide that a chiropractor may remain the patient’s primary treating physician even if additional treatment has been denied as long as the he complies with specified reporting requirements of workers’ compensation law..

Currently, physicians who perform utilization review or the new IMR process need not be licensed in California. S.B. 626 would revise these provisions to require that medical treatment utilization reviews and independent medical reviews be conducted by physicians or medical professionals who hold the same California license as the requesting physician. The bill would delete the requirement that independent medical review organization keep the names of the reviewers confidential in all communications with entities or individuals outside the independent medical review organization.

S.B. 863 prohibits a workers’ compensation administrative law judge, the appeals board, or any higher court from making a determination of medical necessity contrary to the determination of the independent medical review organization.S.B. 626 would delete that provision and allow disputed medical issues to proceed to litigation after the IMR process.

And S.B. 863 limited the AMA Guide add-ons for psychiatric injury, sleep disorder or sexual dysfunction in cases that were initially a physical injury. S.B. 626 would delete the prohibition on increases in impairment ratings for psychiatric disorder.

The destiny of S.B. 626 will not be known until at least August, the end of the current legislative session. Nonetheless, there is little if any political headwind in the way. It is not inconceivable that S.B. 626 in some form will become law.

Two former owners of a Los Angeles-area medical equipment wholesale supply company pleaded guilty this week to conspiring with their customers to defraud Medicare. Rajinder Singh Paul, 69, and Baljit Kaur Paul, 65, of Redlands, Calif., each pleaded guilty before U.S. District Judge Percy Anderson in the Central District of California to one count of conspiracy to commit health care fraud.

The Imperial Valley News reports that Rajinder and Baljit Paul admitted that they were the president and vice president, respectively, and shareholders of AHPK Inc., a medical equipment wholesale supply company located in Redlands and Ontario, Calif., and formally known as Major’s Wholesale Medical Supply Inc. The Pauls later sold Major’s Wholesale Medical Supply Inc. to Major’s Wholesale Medical Supply LLC (collectively, “Major’s”) and, according to court documents, remained employed at Major’s Wholesale Medical Supply LLC as consultants until they were terminated in February 2009.

During the time the Pauls either owned or worked as consultants for Major’s, Major’s sold durable medical equipment (DME) almost exclusively to customers who owned and operated DME supply companies, according to court documents. A majority of Major’s customers were Medicare providers and relied on Medicare to make money, which they did by billing Medicare for the DME that they purchased from Major’s.

One of the more popular items of DME that the Pauls sold at Major’s were power wheelchairs. Court documents indicate that to attract customers, the Pauls sold power wheelchairs to Major’s customers wholesale for between $850 to $1,000 each. Major’s customers, however, billed these power wheelchairs to Medicare at a rate of between $3,000 to $6,000 per wheelchair.

The Pauls admitted they knew that Major’s customers were dependent on Medicare for their revenue, and that Major’s customers could not pay Major’s unless Medicare paid the customers first. To foster customer loyalty, the Pauls engaged in a variety of conduct over a period of six years that helped Major’s customers defraud Medicare, including by providing Major’s customers with false inventory purchase agreements that showed they had higher credit limits than they really did. Major’s customers submitted these false inventory purchase agreements to Medicare to prove, as required by Medicare, the ability to purchase the volume of DME they billed.

The Pauls also admitted they provided Major’s customers with backdated invoices, knowing customers were billing Medicare for power wheelchairs and DME before the customers actually purchased or delivered the equipment. The Pauls admitted that by backdating these invoices, they provided Major’s customers with the paper trail the customers needed to prove to Medicare that they had both purchased the DME and purchased it before they submitted their claims to Medicare. According to court documents, the Pauls backdated or falsified invoices for more than 100 different customers.

Court documents indicate that two of many customers who conspired with the Pauls to defraud Medicare owned and operated a number of fraudulent DME supply companies in the Los Angeles area, including one customer who used “straw” or nominee owners to operate the customer’s companies. The Pauls admitted they provided these two customers with false inventory purchase agreements and backdated invoices that the customers used to defraud Medicare. The Pauls admitted that as a result of their conduct, these two customers were able to use their fraudulent DME supply companies to submit approximately $16,662,143 in false claims to, and receive approximately $9,743,609.42 in ill-gotten reimbursement payments from, Medicare.

At sentencing, scheduled for July 8, 2013, the Pauls each face a maximum penalty of 10 years in prison and a $250,000 fine.

This case is being prosecuted by Jonathan T. Baum of the Criminal Division’s Fraud Section. The case was investigated by the FBI, HHS-OIG, and Cal DOJ and 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.