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Pharmacies Remain Opioid Litigation Targets in California Cases

With a $26 billion nationwide settlement in sight over claims that the three largest U.S. drug distributors and Johnson & Johnson helped fuel a nationwide opioid epidemic, state and local governments will soon turn their attention to pharmacies and a handful of drugmakers.

Reuters reports that U.S. state attorneys general are expected to unveil a settlement proposal this week with distributors McKesson Corp (MCK.N), Cardinal Health Inc (CAH.N) and AmerisourceBergen Corp (ABC.N) contributing a combined $21 billion, while Johnson & Johnson would pay $5 billion.

Noticeably absent from the potential $26 billion deal are pharmacy operators including Walgreens Boots Alliance, Walmart Inc , Rite Aid Corp and CVS Health Corp, which have been accused of ignoring red flags that opioid drugs were being diverted into illegal channels.

The deal also would not include drugmakers AbbVie Inc, Teva Pharmaceutical Industries Ltd or Endo International Plc, which have been accused of misleadingly marketing their pain medicines as safe.

The pharmacies and drugmakers have denied the claims, saying rising opioid prescriptions were driven by doctors, that they followed federal law and that the known risks were included in U.S.-approved labels for the drugs.

News of the proposed nationwide settlement came three weeks into a jury trial in New York, and legal experts said upcoming court proceedings will pressure the remaining defendants to reach a deal.

The drugmakers are currently defending themselves at the New York trial and a trial in Orange County, California, and are expected to face another trial in San Francisco along with the pharmacies later this year. The pharmacies, which settled the New York case shortly before trial, also face an October trial in Ohio.

After start of the Orange County case earlier this year, Allergan defense counsel Donna Welch, in her opening statements in front of Judge Wilson, initially threw co-defendants in the opioid litigation “The Pharmacy Chains” under the bus, claiming they were the responsible party in unleashing hundreds of millions of prescription opioids, the “firewall” in mitigating the now defense asserted, non-existent opioid crisis.  This illustration of the “blame others” defense strategy has fewer targets as supply chain participants settle cases, removing opportunities for remaining defendants to shift blame.

Richard Ausness, a law professor at the University of Kentucky, said a settlement this week reduces the groups of defendants in the litigation and makes it harder for the remaining companies to blame others.

Endo is scheduled to go to trial next week to assess damages over a lawsuit brought on behalf of Tennessee counties and an infant allegedly born addicted to opioids, in which a judge has already ruled the company liable. District Attorney General Barry Staubus of Tennessee’s Sullivan County told WHLJ television that the company offered to settle, but the deal would be limited to that case.

Peter Mougey, a lawyer representing the local governments pursuing opioid litigation around the country, said at a news conference to discuss proposed settlements that he was “frustrated” pharmacies were not part of the nationwide deal.

“They’ve had ample time to assess where they are with their liability, and we all have the common goal of trying to end this opioid epidemic,” he said.

The pharmacies did not immediately respond to requests for comment.

CDI Lowers WC Advisory Premium Rates for 11th Time

The California Insurance Commissioner adopted and issued lower rates for workers’ compensation insurance, as businesses continue to recover from the COVID-19 pandemic and rehire workers – reducing the benchmark rate by $.05 to $1.41 per $100 of payroll for workers’ compensation insurance, effective September 1, 2021.

The recommended rate reduction is based on insurance companies’ cost data. The pure premium rate is only advisory, as the State Legislature has not given the Commissioner rate setting authority over workers’ compensation rates.

The newly approved average advisory pure premium rate level of $1.41 approved by the Commissioner is about 24.2 percent lower than the industry-filed average pure premium rate of $1.86 as of January 1, 2021.

This marks the eleventh consecutive reduction to the average advisory pure premium rate benchmark since January 2015.

Last year, the Commissioner resisted calls to add a COVID-19 surcharge to employers’ rates, citing uncertainty over the impact of the pandemic on future workers’ compensation claims and costs. The surcharge would have especially affected employers of farm workers, health care workers, grocery workers, and other front-line workers.

With workers’ compensation claims related to COVID-19 now falling amid the vaccine rollout and public health actions, this year’s pure premium rates again do not include a pandemic factor.

The decision results in an average advisory pure premium rate that is below the $1.50 average rate recommended by the Workers’ Compensation Insurance Rating Bureau of California (WCIRB) in its filing with the Department of Insurance.

The advisory rate was issued after a public hearing that he convened on June 7, 2021 and careful review of the testimony and evidence submitted by stakeholders.

Prime Healthcare Resolves California Kickback Claims for $37.5M

One of the largest hospital systems in the nation and two of its doctors will pay $37.5 million to resolve violations of the False Claims Act and the California False Claims Act. The settlement – which resolved two cases – is a joint resolution with the U.S. Department of Justice and the California Department of Justice.

The United States and California entered into a settlement agreement with the Prime Healthcare Services system; Prime’s founder and Chief Executive Officer, Dr. Prem Reddy; and interventional cardiologist Dr. Siva Arunasalam to resolve alleged violations of the False Claims Act and the California False Claims Act based on kickbacks paid by Prime to Arunasalam for patient referrals.

Prime includes the Ontario-based Prime Healthcare Services Inc., Prime Healthcare Foundation Inc., Prime Healthcare Management Inc., High Desert Heart Vascular Institute (HDHVI), and Desert Valley Hospital Inc.

Under the settlement agreement, Arunasalam will pay $2 million. Reddy has already paid $1,775,000, and Prime has paid $33,725,000. The United States will receive $35,463,057 of the settlement proceeds, and California will receive $2,036,943.

In 2018, Prime and Reddy paid $65 million to settle unrelated allegations of false claims and overbilling.

The settlement resolves allegations that:

– – Prime paid kickbacks when it overpaid to purchase Arunasalam’s physician practice and surgery center because the company wanted Arunasalam to refer patients to its Desert Valley Hospital in Victorville. The purchase price, which was substantially negotiated by Reddy, exceeded fair market value and was not commercially reasonable. Prime also knowingly overcompensated the doctor when HDHVI entered into an employment agreement with him that was based on the volume and value of his patient referrals to Desert Valley Hospital;
– – For approximately two years between 2015 and 2017, HDHVI and Arunasalam used Arunasalam’s billing number to bill Medicare and Medi-Cal for services that were provided by Dr. George Ponce, even though they knew Ponce’s Medicare and Medi-Cal billing privileges had been revoked, and that billing Ponce’s services under Arunasalam’s billing number was improper; and
– – Certain Prime hospitals billed Medi-Cal, the Federal Employees Health Benefits Program, and the U.S. Department of Labor’s Office of Workers’ Compensation Programs for false claims based on inflated invoices for implantable medical hardware. Arunasalam was not implicated in this conduct.

In connection with the settlement, Prime and Reddy entered into a five-year Corporate Integrity Agreement (CIA) with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). The CIA requires, among other things, that Prime maintain a compliance program and hire an Independent Review Organization to review arrangements entered into by or on behalf of its subsidiaries and affiliates.

The civil settlement includes the resolution of claims brought under the qui tam, or whistleblower, provisions of the False Claims Act in two lawsuits filed in federal court in Los Angeles. One suit was filed by Martin Mansukhani, a former Prime executive. The second suit was filed by Marsha Arnold and Joseph Hill, who were formerly employed in the billing office at Shasta Regional Medical Center, a Prime hospital in Redding, California.

Under the qui tam provisions of the False Claims Act, a private party can file an action on behalf of the United States and receive a portion of any recovery. Although the United States did not intervene in these cases, it continued to investigate the whistleblowers’ allegations and helped to negotiate the settlement announced today. Mr. Mansukhani will receive $9,929,656 as his share of the federal government’s recovery.

DWC Restores Limited Services in Local Offices

The Division of Workers’ Compensation announced that as of July 26, 2021, the public counters at all district offices will open for in-person filing, questions, and assistance.

The Return-to-Work Supplement kiosks will also reopen. Information and Assistance officers will be onsite in most offices to answer questions and provide other assistance.

Parties are strongly encouraged to continue to submit documents by the DWC’s e-filing or JET filing system to reduce processing times due to limited DWC in-office staffing.

The Eureka office is now completely virtual as announced in the Newsline dated April 14, 2021, and all documents for cases venued in Eureka that cannot be e-filed or JET filed should be mailed to the Santa Rosa office.

District offices will not hold in-person hearings or accept “walk-through” documents at this time.

Until further notice, DWC will continue to hear all mandatory settlement conferences, priority conferences, status conferences, case-in-chief trials, lien conferences, lien trials, Special Adjudication Unit (SAU) trials and expedited hearings telephonically via the individually assigned judges’ conference lines as announced in Newslines issued on April 3, April 28, May 28, August 12, and September 9, 2020.

Parties may continue to contact the DWC’s call center to obtain assistance via telephone at (909) 383-4522.

Cal. Supreme Court Defines Correct Pay for Working Through Lunch

Loews Hollywood Hotel, LLC employed Jessica Ferra as a bartender. Loews paid Ferra hourly wages as well as quarterly nondiscretionary incentive payments.

For the days when she had to work during lunch or a rest break, her employer paid Ferra only the hourly wage and did not include a percentage of the quarterly incentive.

Ferra filed a class action suit against Loews. Ferra alleged that Loews, by omitting nondiscretionary incentive payments from its calculation of premium pay, failed to pay her for noncompliant meal or rest breaks in accordance with her “regular rate of compensation” as required by Labor Code section 226.7(c).

The trial court granted summary adjudication for Loews on the ground that calculating premium pay according to an employee’s base hourly rate is proper under Labor Code section 226.7(c). The court agreed with Loews that “regular rate of compensation” in section 226.7(c) is “not interchangeable” with the term “regular rate of pay” under section 510(a), which governs overtime pay.

The Court of Appeal affirmed, holding that “regular rate of compensation” in section 226.7(c) and “regular rate of pay” in section 510(a) are “not synonymous, and the premium for missed meal and rest periods is the employee’s base hourly wage.”

The California Supreme Court reversed in the case of Ferra v Loews Hollywood Hotel, LLC.

The question is what the Legislature meant when it used the phrase “regular rate of compensation” in section 226.7(c). Neither the Labor Code nor Wage Order No. 5-2001 defines the term, and the words by themselves may reasonably be construed to mean either hourly wages, as Loews contends, or hourly wages plus nondiscretionary payments, as Ferra contends.

After review of the legislative history and case law, The Supreme Court held that the term “regular rate of compensation” in section 226.7(c) has the same meaning as “regular rate of pay” in section 510(a) and encompasses not only hourly wages but all nondiscretionary payments for work performed by the employee.

This interpretation of section 226.7(c) comports with the remedial purpose of the Labor Code and wage orders and with our general guidance that the “state’s labor laws are to be liberally construed in favor of worker protection.”

It also rejected Loews’s request that the decision be prospectively applied. The decision shall have retroactive effect.

New Award Recognizes Injury Prevention through Design

On July 14, 2021, longtime occupational safety and health expert Fred A. Manuele received the inaugural Prevention through Design (PtD) Award for his outstanding foresight, wisdom, tireless effort and major accomplishments in preventing harm to workers by helping organizations avoid and prevent hazards.

The new PtD award recognizes individuals, teams, businesses or other organizations that have improved worker safety and health by designing-out hazards or contributing to the body of knowledge that enables PtD solutions. The annual award is presented by the National Institute for Occupational Safety and Health (NIOSH), the American Society of Safety Professionals (ASSP) and the National Safety Council (NSC).

PtD aims to prevent or reduce occupational injuries, illnesses and fatalities through the inclusion of prevention considerations in all designs that impact workers. This includes the design, redesign and retrofit of new and existing work premises, structures, tools, facilities, equipment, machinery, products, substances, work processes and the organization of work. In addition to reducing the risk of serious injury and illness, significant cost savings are often associated with hazard elimination and the application of engineering controls to minimize risks.

NIOSH Director John Howard, M.D., praised Manuele’s contributions to the field: “The work spearheaded by Fred Manuele was groundbreaking and inspired the NIOSH Prevention through Design effort. He has worked tirelessly to protect workers though design.”

Manuele is a pioneer in the PtD field. ASSP republished many of his influential professional papers in a book titled, Fred Manuele on Safety Management: A Collection from Professional Safety. Manuele also published numerous occupational safety and health textbooks that always included the need for designing-out hazards and the methods to do so.

“I can’t think of an individual who is more worthy than Fred to receive this first award,” said Deborah R. Roy, ASSP’s immediate past president. “I’ve known him for many years and served as a reviewer of the Prevention through Design standard that Fred guided. No one has been more dedicated or accomplished in this area of workplace safety and health.”

In 1995, Manuele led a focused, 10-year NSC initiative, the Institute for Safety Through Design, which culminated in a textbook he co-authored titled, Safety Through Design. Over the years he has published other textbooks and many scientific papers on safety engineering.

“Fred’s leadership at NSC and beyond has greatly advanced the field of design safety,” said Lorraine Martin, NSC president and CEO. “We thank him for his myriad contributions to worker safety and congratulate him on this well-deserved award.”

In 2007, NIOSH and numerous partners launched a National Prevention through Design Initiative. Manuele volunteered to lead the effort to develop and approve a broad, generic voluntary consensus standard on PtD aligned with international design activities and practice. Under the standards-development arm of ASSP, the ASSP/ANSI Z590.3 Prevention through Design standard was published in 2011, reaffirmed in 2016, and is now under revision to expand its usefulness and impact worldwide.

Manuele has received many honors and awards for his accomplishments. He is an ASSP Fellow and a recipient of the NSC’s Distinguished Service to Safety Award. He is a former board member of ASSP, NSC and the Board of Certified Safety Professionals, where he also served as president and received a Lifetime Achievement Award in 2013. In 2015, the University of Central Missouri presented him with its Distinguished Service Award. In 2016, Manuele received the ASSP President’s Award for his dedication to advancing the practice of safety.

Purdue Pharma Threatens California With “Colossally Idiotic” Sanctions

In 2007, Purdue Pharma paid out one of the largest fines ever levied against a pharmaceutical firm for mislabeling of its product OxyContin, and three executives were found guilty of criminal charges. The company is seen by many as the origination of what became the opioid crisis.

After becoming the target of multiple civil actions across the states, Purdue Pharma, is seeking Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court in the Southern District of New York.

Nine states have yet to agree to the Purdue Pharma bankruptcy plan. They include Connecticut, where the company is headquartered, as well as California, Delaware, Maryland, New Hampshire, Oregon, Rhode Island, Vermont and Washington. The District of Columbia also hasn’t agreed to the deal. They seek further liability from Purdue’s owners. Specifically, the states say individual members of the Sackler family directed marketing that misled the doctors who wrote OxyContin prescriptions and the patients given the addictive painkiller recklessly.

Courthouse News reports that Connecticut Attorney General William Tong had harsh words Friday when attorneys representing the family who owns the bankrupt OxyContin maker Purdue Pharma, threatened a demand for sanctions against four states and the District of Columbia.

Tong said the Sackler’s attorneys sent an email the previous day with a motion for sanctions, complete with about 165 pages of exhibits, against Connecticut, California, Maryland, Rhode Island and the District of Columbia.

In the draft motion, the Sackler family’s attorneys said they sought the sanctions, including fees and reprimands, because the states made allegations that lacked evidence.

One example quoted in the filing is that Connecticut ignored the Sacklers’ demand that it produce documents to back up its allegation that the family engaged in “Knowing Participation in Deception.”

“There is no evidence that Beverly, David, Jonathan or Richard Sackler had any involvement in the drafting or approval of the content of marketing material or what sales representatives said, were authorized to say or prohibited from saying during the Relevant Period,” the draft motion states. Attorneys for the Sackler family wrote that they were serving the draft 21 days before they intended to file it to give the states an opportunity to back up their assertions.

Tong said the Sackler family attorneys withdrew the motion Friday morning “after they got tremendous blowback from a lot of different parties” for the move. In a sharp series of comments, Tong described the withdrawn proposal as a threat against his state, “an organized crime family intimidation tactic” and “colossally idiotic.”

Tong said he made the allegations at issue in a complaint filed more than two years ago, and the last-minute filing was an attempt to pressure the state to accept a settlement proposal. “The Sacklers are trying to use the company’s bankruptcy to shield themselves from liability and from paying what they ought to pay for their role in causing and fueling the opioid crisis,” Tong said.

Injured Landscaper Pleads Guilty in Exaggerated Injury Case

A 24-year-old San Jacinto man who faked an injury to collect tens of thousands of dollars in workers’ compensation insurance funds pleaded guilty Thursday to a felony charge and was immediately sentenced to 24 months probation.

According to the report by, Angel Luis Maces admitted one count of insurance fraud under a plea agreement with the Riverside County District Attorney’s Office, and in exchange for his admission, prosecutors dropped a second related charge.

Superior Court Judge David Gunn certified the terms of the plea deal and imposed the sentence stipulated by the prosecution and defense. In addition to probation, Gunn ordered the defendant to serve 270 days in a sheriff’s work release program and pay victim restitution totaling $76,868.

Maces was arrested in February following a months long investigation by the California Department of Insurance.

According to the DOI, in September 2018, the defendant was employed by a Temecula landscaping company that sent him to Duarte to perform turf upkeep, but while on the job, he told his supervisors that he’d slipped and injured his knee.

Maces filed a workers’ comp claim through his employer’s insurance company after several examinations, at which point he began collecting workers’ compensation benefits.

The insurer suspected in April 2020 that Maces was not as injured as he had told his physician and employer, and the case was referred to the California Department of Insurance for further investigation.

Surveillance during the investigation showed Maces conducting activities that contradicted the physical limitations he described,” the agency stated. “On multiple occasions, Maces was seen not using a cane or crutches, even though he claimed he had to use them 100% of the time because of the injury.”

Investigators claimed that $42,888 in unwarranted benefits were paid.

Pfizer to Pay $345M to Resolve Price Gouging Claims

NPR-KCUR in Kansas City reports that Pfizer Inc. and two other companies have agreed to pay $345 million to resolve long-running litigation over EpiPen price hikes. In 2007 an EpiPen package cost about $100. Today, it costs more than $650 without pharmacy coupons or manufacturer discounts.

EpiPens are auto-injectable devices that deliver the drug epinephrine, which is used to treat life-threatening allergic reactions known as anaphylaxis. Anaphylaxis is most commonly caused by food allergies but can also be caused by insect bites, medications and other substances.

The litigation dates to 2016, when numerous class action lawsuits were filed against Pfizer, Mylan and other defendants alleging they engaged in anticompetitive conduct in connection with their marketing of the EpiPen.

The lawsuits were transferred to federal court in Kansas City, Kansas, because of its geographical centrality. Trial was scheduled to begin this Sept. 7, but if Crabtree approves the settlement, Pfizer and the two other companies proposing to settle – Meridian Medical Technologies Inc. and King Pharmaceuticals Inc. – will be off the hook.

Multiple law firms have been involved in the complex litigation, which featured the production of over 11 million pages of documents and 158 depositions, according to court documents.

In documents filed in federal court in Kansas City, Kansas, the companies asked the court to grant preliminary approval to the settlement, which would end the litigation against the three companies.

The proposed settlement comes just three weeks after U.S. District Judge Daniel Crabtree granted summary judgment to another defendant, Mylan, on the plaintiffs’ racketeering claims and some antitrust claims. But he allowed other antitrust claims against Mylan to proceed to trial.

A Pfizer spokesperson said in an email that the company “denies any wrongdoing and continues to believe its actions were appropriate.

“This resolution reflects a desire by the Company to avoid the distraction of continued litigation and focus on breakthroughs that change patients’ lives,” the spokesperson said.

Rex Sharp, a Prairie Village lawyer representing the plaintiffs, said in an email that his clients were pleased that Pfizer had agreed to the settlement while noting it still requires court approval.

He said the plaintiffs looked forward to trying the remaining claims against Mylan before a jury. Mylan owns the rights to the EpiPen brand, but the devices are manufactured by Pfizer.

LA County Reinstates Mask Mandate After 700% COVID Increase

The Los Angeles County Department of Pubic Health reports that the community transmission of COVID-19 has rapidly increased from Moderate to Substantial, based on the trend in daily new cases of COVID-19.

On June 15, the day of the full reopening, the County saw 210 new cases and today the Los Angeles County Department of Public Health (Public Health) confirms the highest number of new COVID-19 cases since mid-March with 1,537 new cases. Today’s test positivity rate is 3.7%; on June 15, the test positivity rate was around 0.5%.

As a result, the Los Angeles County Health Officer Order will be modified to require masking for everyone while indoors, regardless of vaccination status, as Los Angeles County sees more than a seven-times increase in new cases since the June 15 reopening. Wearing a mask when indoors reduces the risk of both getting and transmitting the virus. This additional layer of protection can help to slow the spread and does not limit business occupancy and operations.

The L.A. County indoor masking requirements for everyone will be effective Saturday, July 17 at 11:59 p.m. Some exceptions will apply, similar to masking requirements that were in place prior to the June 15 reopening.

Tracking the proliferation of the Delta variant is a priority because the Delta variant is more easily spread between people – more than other variants of concern. And while emerging data affirms that fully vaccinated people are well protected from severe infections with Delta variants, people with only one vaccine are not as well-protected, and there is evidence that a very small number of fully vaccinated individuals can become infected and may be able to infect others.

From June 27 to July 3, the number of sequenced Delta variants was 124, 71% of all sequences collected that week. Given that slightly under 4 million residents in L.A. County are not yet vaccinated, the risk of increased spread of this variant within the County remains high.

To date, Public Health identified 1,262,578 positive cases of COVID-19 across all areas of L.A. County and a total of 24,566 deaths. Of the three new deaths reported today, one person that passed away was over the age of 80, and two people who passed were between the ages of 50 and 64. Testing results are available for more than 7,142,000 individuals with 16% of people testing positive. There are 406 people with COVID-19 currently hospitalized and 22% of these people are in the ICU.

As of July 11, more than 10,712,037 doses of COVID-19 vaccine have been administered to people across Los Angeles County. Of these, 5,946,447 were first doses and 4,763,590 were second doses. Among L.A. County residents 16 and over, 69% have received one dose of vaccine and 61% have been fully vaccinated. Among L.A. County seniors 65 and over, 88% have received one dose of vaccine and 78% have been fully vaccinated.

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