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Dr. Richard Thorp, president of the California Medical Association says that an estimated seven out of every 10 physicians in California are rebelling against the state's Obamacare health insurance exchange and won't participate. Thorp has been a primary care doctor for 38 years in a small town 90 miles north of Sacramento. The CMA represents 38,000 of the roughly 104,000 doctors in California. "We need some recognition that we’re doing a service to the community. But we can’t do it for free. And we can’t do it at a loss. No other business would do that," he said.

According to the story in the Washington Examiner, California offers one of the lowest government reimbursement rates in the country -- 30 percent lower than federal Medicare payments. And reimbursement rates for some procedures are even lower. In other states, Medicare pays doctors $76 for return-office visits. But in California, Medi-Cal's reimbursement is $24, according to Dr. Theodore M. Mazer, a San Diego ear, nose and throat doctor. In other states, doctors receive between $500 to $700 to perform a tonsillectomy. In California, they get $160, Mazer added.

Only in September did insurance companies disclose that their rates would be pegged to California’s Medicaid plan, called Medi-Cal. That's driven many doctors to just say no.

They're also pointing out that Covered California's website lists many doctors as participants when they aren't. "Some physicians have been put in the network and they were included basically without their permission," Lisa Folberg said. She is a CMA’s vice president of medical and regulatory Policy. "They may be listed as actually participating, but not of their own volition," said Donald Waters, executive director of the Alameda-Contra Costa Medical Association. Waters' group represents 3,100 doctors in the East Bay area that includes Oakland, with an estimated 200,000 uninsured individuals. "This is a dirty little secret that is not really talked about as they promote Covered California," Waters said. He called the exchange's doctors list a "shell game" because "the vast majority" of his doctors are not participating.

Independent insurance brokers who work with both insurance companies and doctor networks estimate that about 70 percent of California's 104,000 licensed doctors are boycotting the exchange. Mazer, a past president of the San Diego County Medical Society, agreed, saying, "I cannot find anybody in my specialty in the area that has signed a contract directly with any of these plans. The real question," Mazer added, "is how many doctors have signed up for how many programs, and whether there’s more than 50 percent participation."

Dr. Sherry Franklin, a pediatric endocrinologist at Rady’s Children’s Hospital, San Diego, and at the University of California San Diego Hospital, isn't joining the exchange. Franklin said last summer she "got a letter in the mail letting me know if I wanted to participate with Blue Cross through the exchange, which is different from my regular Blue Cross practice, because they are paying less. They did not tell me how much less. You had to agree or disagree. So, of course, I said no."

For its part, Covered California expects as many as 85 percent of the state’s doctors will join the new exchange. "The Covered California board says we have plenty of doctors, and they allege they have 85 percent of doctors participating," notes Mazer. "But they’ve shown no numbers." The exchange issued a May release making that claim before doctors could respond to a memorandum of understanding from insurers. Most didn't because the MOU lacked reimbursement rates. "When they sent out MOU information and said, ‘Would you be willing to participate?’ earlier this year, most of us said, ‘How about sending us the rates?’ " Mazer recalled. Mazer said that not only are many doctors not participating, but many are also thinking of retiring. "I just turned 55, and a lot of us are kind of going, ‘Maybe there’s something else we can do in the last 10 years,’ because this is just getting too onerous to keep on going."

If a large number of doctors either balk at participating in the exchange or retire, the state’s medical system could be overwhelmed. No one is more aware of this than Alex Briscoe, health director for Alameda County Health Care Services Agency, which includes Oakland. "Enrollment doesn’t mean access, because there aren’t enough doctors to take the low rates of Medicaid," he said. "There aren’t enough primary care physicians, period." Briscoe hopes his eight community health centers can handle the 200,000 uninsured individuals he said reside in his county, but he warned that "there is a doctor shortage. It is going to get worse as more people enter the market." Briscoe professed not to be surprised by the refusal of doctors to participate in Covered California. "It rings true. I’ve been kind of wondering in my head, ‘How are they offering such low premiums?" ...
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/ 2013 News, Daily News
California trial lawyers have renewed their fight to lift the Medical Injury Compensation Reform Act (MICRA) cap on speculative, non-economic damages, presenting ballot language that seeks to more than quadruple the maximum award for non-economic damages to roughly $1.1 million. From Redding to San Diego, canvassers working to support the trial lawyers’ anti-MICRA ballot language have hit the streets, and have reportedly been gathering signatures at an alarming rate.

The Medical Injury Compensation Reform Act (MICRA) of 1975 was a statute enacted by the California Legislature in August 1975 (and signed into law by Governor Jerry Brown in September) which was intended to lower medical malpractice liability insurance premiums for California healthcare providers by decreasing their potential tort liability. MICRA's stated justification, in turn, was to keep healthcare providers as a whole financially solvent, thus lowering the cost of healthcare services and increasing their availability. MICRA's constitutionality was repeatedly challenged during the 1970s and 1980s, but most of it was eventually upheld as constitutional under rational basis review by the Supreme Court of California or the California Courts of Appeal. Almost all of MICRA is still in effect and still part of California law.

A RAND report estimates that defendants' liabilities were reduced by 30% as a result of MICRA. Between 1985 and 1988, malpractice premiums rose 47 percent After 1988, the insurance premiums in California experienced a decrease. It is contested as to whether this decrease was a result of Proposition 103. Proposition 103 enacted Section 1861.01 of the California Insurance Code, which explicitly required the rollback of insurance premiums by "at least 20%"

The perceived success of MICRA in helping California healthcare providers stay financially solvent in turn inspired similar tort reform initiatives in other states. A prominent example was Nevada's Question 3, which was enacted by the voters of that state in 2004 by a 60% majority. Like MICRA, Question 3 set a maximum schedule for attorney's fees, and capped noneconomic damages at a slightly higher number, $350,000. Question 3 was also known as the KODIN Initiative after its main sponsor, Keep Our Doctors In Nevada. KODIN promoted Question 3 by pointing to an alleged trend of Nevada doctors fleeing the state for states with lower malpractice premiums like California. To directly counter KODIN, the Nevada plaintiffs' bar put Questions 4 and 5 on the same ballot, and both 4 and 5 were defeated.

And now, a coalition of consumer advocates, trial lawyers and the nurses union is preparing to gather signatures for a state ballot initiative to raise the state's cap on certain medical malpractice damages. The campaign wants voters to change a 38-year-old California law. A key element would seek to raise the cap from the current amount to about $1 million - and then increase it each year based on inflation.

"We are certainly planning an initiative absent any action legislatively," said Jamie Court, president of the Consumer Watchdog, a Santa Monica advocacy group. "It's pretty clear that we are getting two thumbs down from the Legislature."

Opponents - including 700 organizations representing doctors, hospitals, clinics and insurers - are already on the counterattack. Raising the cap, they contend, would increase medical costs for consumers and the state by billions of dollars a year ...
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/ 2013 News, Daily News
On December 4, 2013 Richard Lopez Escamilla Jr. 47, was sentenced in Kings County Superior Court to one felony count of insurance fraud and was ordered to pay restitution of nearly $4.2 million to SCIF, SeaBright Insurance and the Employment Development Department. Escamilla was also sentenced to serve six years in prison for defrauding two insurance companies by underreporting employee payroll and unemployment insurance tax evasion.

He operated businesses under several names including ROC Harvesting, EC Labor, EC Labor Inc., and ES Labor. He often changed the names of his businesses to pretend to be a new business in order to lower his premiums.

The department of Insurance said that he was accused of illegally reducing his workers comp premiums by underreporting employee payrolls for his farm labor contracting company, as well as misrepresenting previous comp claims for the firm.

"This is a win for California consumers, insurers and taxpayers," said Insurance Commissioner Dave Jones. "This case isn't just about one crook who stole from two insurance companies, business owners across the state end up paying the real price for workers' compensation fraud through higher premiums and those costs are passed to consumers."

The conviction was the result of a joint investigation with the The San Joaquin Valley Premium Task Force, the King's County district attorney's office and the Employment Development Department ...
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/ 2013 News, Daily News
Monterey County District Attorney Dean Flippo announced that a Soledad contractor pleaded guilty Thursday to several charges stemming from conducting businesses without proper licenses or paying required fees.

Lavaki Fale, 45, pleaded guilty to one felony count of fraudulent use of a contractor's license, one misdemeanor count of failing to secure workers' compensation insurance and one misdemeanor count of contracting without a license.

Fale, who was conducting business as Vei Construction and S and JR Construction, will be sentenced Jan. 29. He faces up to three years in prison and thousands of dollars in fines.

In an unrelated case, a Felton-based contractor pleaded guilty Wednesday to two charges related to his roofing business in Monterey County, according to the District Attorney's Office.

Matthew Cunningham, 61, pleaded guilty to one misdemeanor count of failing to obtain workers' compensation insurance and one misdemeanor count of contracting without a license.

He had placed his license into inactive status but continued to advertise his services online.

Cunningham later reactivated his license, purchased the appropriate insurance and became compliant with legal requirements.

He was placed on probation for three years and ordered to pay fines ...
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/ 2013 News, Daily News
Many workers' compensation (WC) claims result in no payment from the WC system, but do lead to increased costs for employee group insurance plans, reports a study in the December Journal of Occupational and Environmental Medicine, official publication of the American College of Occupational and Environmental Medicine (ACOEM).

Nationwide, so-called zero-cost WC claims could cost group health insurance plans more than $200 million per year, according to the study by Abay Asfaw, PhD, and colleagues of the National Institute for Occupational Safety and Health.

The researchers analyzed data on more than 12,000 injured workers who filed for WC insurance from 2002 through 2005. Sixteen percent of the claims were "zero-cost" claims - that is, they resulted in no WC payments. Use of and payments from the employees' group health insurance increased after WC claims. That was so for zero-cost claims as well as claims resulting in payments. But the zero-cost claims were associated with significantly greater increases in costs to group health insurance, after adjustment for other factors. The increase was largest for outpatient care, with an estimated increase of approximately $400 per claim.

"Our national estimated showed that zero-cost WC claims added $212 million in medical bills to group health insurance per year," the researchers write. Because their data may miss some occupational injuries, they suspect the true economic impact is even higher.

The study adds to previous evidence suggesting that non-WC insurance - including not only employee health plans but also public insurance - cover at least part of the costs of work-related injury and illnesses. "If WC provides inadequate coverage - workers will seek treatment using other insurance," Dr Asfaw and coauthors conclude. "Our key finding is that zero-cost WC medical claims have repercussions for other insurance systems and society, and their economic implications are substantial."

This study quantifies and illustrates an employers quagmire. A zero dollar comp claim is not really zero dollars. It is in actuality cost shifting, not necessarily cost saving. Large employers pay the costs of all forms of employee benefits including group health care. For those employers aggressive defense of an AOE-COE issue in the comp forum may produce illusory savings if that cost is simply shifted to another employer funded program. The bigger picture may be a view that an injured worker is a costly problem no matter which of the employer's pockets pays the cost. Thus aggressively rapidly solving the medical issues may be less costly in the long run than a strategy that simply pushes the cost from one employer program to another ...
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/ 2013 News, Daily News
In a Decision dated October 17, 2013, the California Insurance Commissioner approved a number of changes to the California Workers’ Compensation Uniform Statistical Reporting Plan-1995 (USRP), the California Workers’ Compensation Experience Rating Plan-1995 (ERP), and the Miscellaneous Regulations for the Recording and Reporting of Data - 1995 (Misc Regs) effective January 1, 2014. Revised versions of these publications reflecting the Insurance Commissioner’s Decision are now available on the WCIRB website.

In addition, the WCIRB has published updated advisory plan information including updated California Hazard Group Assignments and Loss Elimination Ratios, and updated versions of the California Small Deductible Plan, California Insolvent Insurer Rating Adjustment Plan, and California Basic Underwriting Manual. These advisory plans and supplemental tables are published as a convenience for WCIRB members and do not bear the official approval of the Insurance Commissioner.

Advisory Plans
California Insolvent Insurer Rating Adjustment Plan Effective January 1, 2014
California Small Deductible Plan Effective January 1, 2014
California Large Risk Deductible Plan Effective January 1, 2013
California Retrospective Rating Plan Effective January 1, 2013
California Basic Underwriting Manual Effective January 1, 2014
Related Information
WCIRB Quick Reference Guide 2014
Commissioner Issues Decision on 2014 Rate Filing
Commissioner Issues Decision on Regulatory Filing ...
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/ 2013 News, Daily News
Adrienne Johnson was a professional basketball player who was not employed by a California team, has never resided in California, has played one professional game in California out of 34 games played during the 2003 season, and has suffered no specific injury in California. Upon graduation from Ohio State University, she was drafted by the Cleveland Rockers, a professional basketball team in the Women’s National Basketball Association (WNBA), and played for them for two years. Johnson next played for the Orlando Miracle, which became the Connecticut Sun in 2003. In December 2003, an MRI revealed she had a knee injury, for which she had surgery in 2004. Although Johnson did not play during the 2004 season she signed with the Seattle Storm and practiced with that team in Seattle in 2005. She did not play for that team during the 2005 regular season and has not played in any professional games since the end of the 2003 season.

While playing for the Orlando Miracle, Johnson lived in Orlando, Florida. When her team moved to Connecticut, Johnson moved from Orlando to Hackensack, New Jersey, and she continued to play for that team. At the time of her September 2010 deposition in the workers’ compensation proceeding in California, Johnson resided in Louisville, Kentucky and had been living there for two years.

Johnson sustained an injury to her right knee while playing for the Orlando Miracle in 1999. She had surgery for this injury in Orlando, Florida in 2000. In May 2001, while in training camp in Orlando, Johnson tore her Achilles tendon. She was treated again in Orlando and missed the entire 2001 season. She re-injured her right knee in 2003. Johnson signed a two-year contract with the Connecticut Sun on May 2, 2003. She signed this contract in Hackensack, New Jersey. Her agent was based in Ohio.

Johnson filed a workers’ compensation claim in Connecticut in August 2003 for the injury to her right knee. It was resolved by a settlement resulting in a $30,000 payment to Johnson. Johnson played 34 games in the 2003 season, which was the full season. During that season, she played one game in Los Angeles, California on July 20, 2003.

Johnson filed an application for adjudication of the claim in California against the Connecticut Sun and its workers’ compensation insurer Federal Insurance Company, which is part of the Chubb Group of insurance companies. The Workers’ Compensation Judge (WCJ) awarded disability indemnity., After a petition for reconsideration, the Board rescinded the award and returned the matter to the WCJ for further proceedings to apportion the compensation between the present injury and past injuries for which she already received workers’ compensation benefits in Connecticut. The defendants petitioned for a writ of review, contending that the Board does not have jurisdiction over Johnson’s claim. The Court of Appeal agreed that there was no subject matter jurisdiction in the published opinion of Federal Insurance Company vs WCAB, Adrienne Johnson.

The court reasoned that the issue of personal jurisdiction must be decided before the conflicts of law question. The WCJ’s determination that "[p]laying in even one professional basketball game in California is sufficient to establish jurisdiction" mischaracterizes the issue, which is not one of personal jurisdiction but rather one of whether one or more state compensation laws apply and whether in this case California may provide a forum for the claim. Thus the issue in this case is which state’s workers’ compensation law applies, not which state has personal jurisdiction. The issue may be characterized as a conflicts of law issue, which arises when there are contacts in multiple states.

Whether California’s workers’ compensation law governs depends on the application of the due process clause of the United States Constitution. If an employer or the insurer are subject to workers’ compensation law of a state that does not have a sufficient connection to the matter they are deprived of due process. Also, the determination may depend on the application of the full faith and credit clause of the United States Constitution. That is, if the workers’ compensation law of another state exclusively should apply and California does not have a sufficient contact with the matter, California must, under the full faith and credit clause, accede to the other state to provide a forum. California courts have long focused on the contacts of the employment relationship with California in determining which state’s workers’ compensation law applies. Despite a lack of California authority, it is widely accepted that rights created by the compensation act of one state cannot ordinarily be enforced in another state or in a federal court. Such a principle is justified because workers’ compensation laws involve administrative machinery that will differ from state to state. In some states there is an exception to this rule.

The Court was not, therefore, faced with an issue of which law to apply, but only with whether California’s workers’ compensation law applies in this case. That issue has been framed as one of due process under the 14th amendment of the United States Constitution. If this state lacks a sufficient relationship with Johnson’s injuries, to require the employer to defend the case here would be a denial of due process such that the courts of this state do not have authority to act. This might be referred to as a lack of subject matter jurisdiction.

The court concluded that a single basketball game played by a professional player does not create a legitimate interest in injuries that cannot be traced factually to one game. The effect of the California game on the injury is at best de minimis. Accordingly, California does not have a sufficient relationship with Johnson’s injuries to make the application of California’s workers’ compensation law reasonable. And California law has no obligation to apply the workers’ compensation law of any other state. Thus, as a matter of due process, California does not have the power to entertain Johnson’s ...
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/ 2013 News, Daily News
The California Division of Workers’ Compensation (DWC) and Maximus Federal Services invite injured workers and their designees and advocates to attend a one-hour web training on the Independent Medical Review (IMR) process. This webinar will address the roles of injured workers and their designees in the IMR process, including the planned IMR electronic submission feature.

Pre-registration is required to attend this free webinar meeting, and space is limited to 500 participants. The recorded webinar will be made available afterward for those unable to attend the live presentation.

Please submit questions prior to the webinar by sending an email to by Friday, December 13 ...
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/ 2013 News, Daily News
It's a crime so profitable that even dead people are in on the act. A story in Reuters Health says that a U.S. Senate committee revealed last year that public health insurer Medicare had paid as much as $92 million from 2000 to 2007 for medical services or equipment ordered or prescribed by doctors who were dead at the time. Many had died more than five years before the date when they supposedly ordered or authorized the service.

Healthcare fraud said to cost U.S. taxpayers hundreds of billions of dollars a year has garnered increased attention amid the congressional debate about overhauling the U.S. healthcare system -- especially since President Barack Obama wants to cover some of the cost of reforms by fighting abuse. Yet interviews with several law enforcement and healthcare experts indicate the president may be disappointed. Some fear the focus on fraud may come as too little, too late after years of government complacency and inaction.

Experts like the FBI's John Gillies say the problem has been getting worse all the time, as mob figures and violent criminals are lured by fabulously easy money and relatively light prison sentences into fraud targeting Medicare, the federal health insurer for more than 43 million elderly and disabled Americans. "There are so many schemes involved. Take any aspect of the healthcare industry and there's a fraud going on in there right now," Gillies, special agent in charge of the FBI Miami Division, told Reuters in a recent interview.

Florida has long been known for its unsavory association with cocaine cartels, political shenanigans and swampland real estate deals. Gillies says the state is also now "ground zero for healthcare fraud" since so many elderly Americans have retired to end their days in its famous sunshine. Hardly a week goes by without authorities in Florida reporting another arrest, indictment or conviction for Medicare fraud, which has replaced the drug trade as the crime of choice among many criminals.

The cases often involve multimillion-dollar schemes featuring bogus suppliers of wheelchairs, or other so-called durable medical equipment devices, and sham infusion therapies for the treatment of HIV and AIDs patients. One case filed recently in South Florida included the indictment of 11 members of New York's Bonanno crime family, and prosecutors say the crimes are becoming more elaborate, involving kickbacks, stolen identities and manipulative billing practices. "When we shut down one scheme they just move onto the next scheme," said Gillies, referring to fraudsters perpetrating one of the most lucrative financial crimes in America today. "I do not see it slowing down any time soon," he said.

The FBI estimates that fraud accounts for 3 percent to 10 percent of U.S. healthcare expenditure per year, and Gillies said it could easily cost about $200 billion annually. That is broadly in line with a Thomson Reuters report released on October 26. The report said that in 2007, when the United States spent nearly $2.3 trillion on healthcare and both public and private insurers processed more than 4 billion health insurance claims, fraud was estimated to reach as much as 10 percent of annual healthcare spending. At that rate, due largely to fraudulent Medicare claims, kickbacks for referrals for unnecessary services and other scams, the losses in 2007 would have been more than $220 billion.

The National Healthcare Anti-Fraud Association, an organization of about 100 private insurers and public agencies, estimates that some $60 billion, or about 3 percent of total annual healthcare spending, is lost to fraud. But the Thomson Reuters report said that figure is considered conservative ...
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/ 2013 News, Daily News
Scientists may have found a new treatment that can help people with spinal cord injuries walk better. The research is published in the November 27, 2013, online issue of Neurology®, the medical journal of the American Academy of Neurology.

"About 59 percent of all spinal injuries are incomplete, leaving pathways that could allow the spinal cord to change in a way that allows people to walk again. Unfortunately, usually a person affected by this type of spinal injury seldom recovers the ability to walk normally," said study author Randy D. Trumbower, PT, PhD, with Emory University in Atlanta. "Our research proposes a promising new way for the spinal cord to make the connections needed to walk better."

The research involved 19 people with spine injuries between levels C2 and T12, no joint shortening, some controlled ankle, knee, and hip movements, and the ability to walk at least one step without human assistance. Research team members were based at Emory University, Georgia Institute of Technology and Shepherd Center in Atlanta, the Rehabilitation Institute of Chicago and the University of Wisconsin, Madison.

The participants were exposed to short periods of breathing low oxygen levels, which is called hypoxia. The participants breathed through a mask for about 40 minutes a day for five days, receiving 90-second periods of low oxygen levels followed by 60 seconds of normal oxygen levels. The participants’ walking speed and endurance was tested before the study started, on the first and fifth days of treatment, and again one and two weeks after the treatment ended. The participants were divided into two groups. In one, nine people received either the treatment or a sham treatment where they received only normal oxygen levels. Then two weeks later they received the other treatment. In the other group, the participants received the treatment or sham treatment and then were asked to walk as fast as they could for 30 minutes within one hour of the treatment, then received the other treatment two weeks later.

Those who received just the hypoxia treatment increased their walking speed on a test of walking 10 meters, walking an average of 3.8 seconds faster than when they did not receive the treatment. Those who had the treatment plus walking increased their endurance on a test of how far they could walk in six minutes by an average of 100 meters, which was more than a 250-percent increase compared to those who had the sham treatment plus walking. All participants improved their ability to walk. More than 30 percent of all participants increased their walking speed by at least a tenth of a meter per second and more than 70 percent increased their endurance by at least 50 meters.

"One question this research brings to light is how a treatment that requires people to take in low levels of oxygen can help movement, let alone in those with compromised lung function and motor abilities," said Michael G. Fehlings, MD, PhD, with the University of Toronto in Canada, who wrote a corresponding editorial on the study. "A possible answer is that spinal serotonin, a neurotransmitter, sets off a cascade of changes in proteins that help restore connections in the spine." Trumbower cautions that chronic or sustained hypoxia in untrained hands may cause serious injury and should not be attempted outside the scope of a supervised medical treatment.

The study was supported by the U.S. Department of Defense Spinal Cord Injury Research Program ...
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/ 2013 News, Daily News
The Department of Industrial Relations (DIR) announced an aggregate decrease of approximately $9.587 million (2.19 percent) for the Workers’ Compensation Administration Revolving Fund and other funds for fiscal year 2013/14. The costs required to implement the workers’ compensation reforms of Senate Bill (SB) 863 were partially offset by lien revenue. Slight increases in appropriations for the Division of Occupational Safety and Health and the Division of Labor Standards Enforcement were mitigated by increased reserves in the Subsequent Injuries Benefits Trust Fund and the Uninsured Employers Benefits Trust Fund, as well as one-time balance transfers from the Targeted Inspection Consultation and the Construction Industry Enforcement funds.

Due to the relative sizes in the aggregate insured premium and self-insured paid indemnity pools, the effect of the assessment on insured employers and self-insured employers will differ. The actual increase in fiscal year 2013/14 for self-insured employers is 8.69 percent. Insured employers will receive a reduction in fiscal year 2013/14 of 21.21 percent.

Insurance companies and self-insured employers will receive assessment notices in the mail. The assessments are authorized by Labor Code sections 62.5 and 62.6. In addition to funding the work of the Division of Workers’ Compensation, and partially funding the work of the Divisions of Occupational Safety and Health and Labor Standards Enforcement, assessments also fund anti-fraud efforts by the California Department of Insurance and local district attorneys, pay benefits to injured workers whose employers were illegally uninsured, and provide compensation to injured workers who already had a disability or impairment at the time of injury.

The assessment covers the Workers’ Compensation Administration Revolving Fund, Uninsured Employers Benefits Trust Fund, Subsequent Injuries Benefits Trust Fund, the Workers’ Compensation Fraud Account, Occupational Safety and Health Fund and the Labor Enforcement and Compliance Fund,

Insurers must pay the assessment for policy holders and recover those funds from policy holders through workers’ compensation policy surcharges and assessments. Letters and invoices were mailed to insurers and self-insured employers showing the share of the assessments and surcharges due. Insurers with questions about their letters should call DWC Staff Services Manager Amadeo Urbano at (415) 703-4014 or DWC Analyst Naomi Carter at (415) 557-1020 for more information. Self-insured employers with questions about their letters should call the Office of Self Insurance Plans at (916) 464-7000 and speak with Tina Freese ...
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/ 2013 News, Daily News
New federal law was passed last week that gives U.S. health regulators greater oversight of bulk pharmaceutical compounding and strengthens their ability to track drugs through the distribution pipeline. The Drug Quality and Security Act clarifies the authority of the Food and Drug Administration over compounded medications and creates a new class of compounding manufacturer known as an "outsourcing" facility, which will be able to sell to hospitals in bulk.

The law was prompted by quality control problems that led to a deadly outbreak of fungal meningitis in 2012 traced to a tainted pharmaceutical mixed by a Massachusetts compounding pharmacy. The product has been linked with more than 50 deaths. Following the outbreak, the FDA conducted 31 unannounced inspections in 18 states of other compounding pharmacies, finding conditions that could create a contamination risk in all but one.

FDA Chief Margaret Hamburg asked lawmakers at a Nov. 2012 hearing for more power to regulate compounding pharmacies, saying the agency had to defer to Mass. state authorities by law. "The challenge we have today is that there is a patchwork of legal authorities that oversee the action we can take," Hamburg said at the time.

Besides giving more regulatory powers over compounders, the law authorizes the FDA to develop a national track-and-trace system to secure the pharmaceutical supply chain and minimize opportunities for contamination, adulteration, diversion, or counterfeiting, according to the White House. The law also creates a national set of standards to track pharmaceuticals through the distribution chain to help thwart the introduction of fake medications into the drug supply.

Last year, fake vials of Roche Holding AG's cancer drug Avastin appeared in the United States from Britain, where they were purchased from a Turkish wholesaler.

In the United States, dozens of states have some type of regulation designed to track a drug's pedigree, but the rules are inconsistent. This law is designed to apply a uniform standard nationwide ...
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/ 2013 News, Daily News
United States Attorney André Birotte, Jr. announced that an Orange County-based ambulance company has paid the United States more than $3 million to settle a lawsuit alleging it received overpayments from the Medicare program and other federal health care programs for transporting patients who were not eligible for ambulance transports.

A federal judge in Santa Ana unsealed a lawsuit this month filed under the False Claims Act against ambulance transport company FILYN Corporation, which does business under the name Lynch Ambulance and is based in Anaheim. Lynch Ambulance and two of its principals named in the lawsuit settled the case. On November 7 Lynch Ambulance paid $3.05 million to the United States to resolve allegations that from 2001 through 2007 it regularly billed Medicare and other federal healthcare programs for transporting patients who were not "bed-confined" or whose transports otherwise were not medically necessary. The federal health care programs that paid claims for medically unnecessary transports were Medicare, TRICARE, and the Federal Employees Health Benefits Program.

The settlement resolves a lawsuit filed under the qui tam or "whistleblower" provisions of the federal False Claims Act, which allow private citizens with knowledge of fraud to bring civil actions on behalf of the United States and to share in any recovery. The lawsuit - which was filled by two former Lynch Ambulance employees, Jamie Weatherly and Dawn Lucero - was unsealed after the United States elected to take over part of the case and negotiated the settlement.

Lynch Ambulance has also entered into a Corporate Integrity Agreement with the Department of Health and Human Services. Glenn R. Ferry, Special Agent in Charge for the Los Angeles Region of the Office of Inspector General for the Department of Health of Human Services, said, "Taxpayers shouldn't be on the hook for these expensive and medically unnecessary ambulance trips. Count on federal law enforcement to aggressively investigate and prosecute such actions."

Lynch Ambulance and its principals have resolved this case without admitting any wrongdoing.

The settlement with Lynch Ambulance is the result of an investigation by the United States Department of Health and Human Services, Office of the Inspector General; the Department of Defense, Office of the Inspector General; the Office of Personnel Management, Office of the Inspector General; and the Federal Bureau of Investigation.

This is the second federal case against a Southern California ambulance company this month. The owners and supervisor of Alpha Ambulance Inc. (Alpha), a now-defunct Los Angeles-area ambulance transportation company, have pleaded guilty in connection with an ambulance fraud scheme. The owners of Alpan Ambulance face a ten year sentence ...
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/ 2013 News, Daily News
Aggressive medical care at the beginning of a workers’ compensation claim results in reduced costs, shorter claims duration, and lower litigation rates, according to research from Harbor Health Systems, a One Call Care Management company. The pilot study findings across four categories of injuries showed that the more aggressive approach to care achieved:reductions in claim duration from 13 - 20 percent, reductions in indemnity costs from 19 - 61 percent and reductions in litigation from 7.2 - 16 percent.

The data was presented during a panel discussion at the National Workers’ Compensation and Disability Conference, Las Vegas, on November 21, entitled: "Physicians Speak Out on Whether More Care Early Equals Better Outcomes." Panelists included Douglas Benner, MD, Chief Medical Officer, EK Health, David C. Deitz, MD, Vice President, National Medical Director, Commercial Insurance Strategic Practices, Liberty Mutual Insurance and Greg Moore, MPH, President of Harbor Health Systems, a One Call Care Management Company.

"Our objective was to investigate the differences in overall claims outcomes when comparing aggressive and conservative care in workers’ compensation," said Moore. "We found that when knowledgeable and experienced physicians were allowed to perform some common specific surgical procedures prior to the recommendations of the guidelines, the outcomes improved. We believe that these findings show the importance of integrating best-in-class physicians with the use of evidence-based guidelines. They validate the importance of outcomes-based networks by supporting the concept of working with experienced, proven providers and accelerating care when you can trust the diagnosis."

The pilot study analyzed information from more than 700,000 claims for four procedures: ACL (anterior cruciate ligament) repair, knee menisectomy, shoulder rotator cuff repair, and carpal tunnel injuries.

Harbor Health Systems’ analysis has previously demonstrated that superior performing physicians produce superior outcomes, and utilized this information to develop benchmarking tools that identify these top doctors for inclusion in best-in-class provider networks. This new research project refines the characteristics that distinguish high-performing physicians and the treatment approaches that achieve better results ...
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/ 2013 News, Daily News
The National Insurance Crime Bureau released its third quarter 2013 questionable claims (QC) referral reason analysis. The report examines six referral reason categories of claims - property, casualty, commercial, workers' compensation, vehicle and miscellaneous - for the third quarters of 2011, 2012 and 2013.

Questionable claims 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. The volume of QC referrals can increase or decrease over a given period of time and may be caused by a number of factors, including better reporting by the industry and an increase or decrease in fraudulent activity, etc.

During the first three quarters of 2011, there were 74,944 QCs referred to NICB. During the first three quarters of 2012, that number increased to 87,684 and it increased again during the first three quarters of 2013 to 93,053. Overall, comparing the first three quarters of 2011 to the first three quarters of 2013, the numbers of QCs increased 24 percent

Although most categories of QCs saw increases in the third quarter, only one, the commercial category, posted a decrease. It was down 13 percent in the third quarter from the previous quarter; For a single referral reason, Medical Provider referrals in the Miscellaneous category had the largest increase in volume, as well as the highest percentage increase. Duplicate billing complaints were up 26%, unbundling/upcoding were up 20% and inflated billing referrals were up 17%.

Overall, Workers’ Compensation Questionable Claim referral reasons increased 4% when comparing the First 3 Quarters 2012 to the First 3 Quarters 2013. Disability and False SSN referrals topped the percentage increases with 58% and 40% respectively. Disability referrals had the highest increase of volume in the Workers’ Compensation category when comparing the First 3 Quarters 2012 to the First 3 Quarters 2013; while Claimant Fraud remains the largest Workers’ Compensation referral reason by over 2 ½ times the next highest referral reason ...
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/ 2013 News, Daily News
The California Insurance Commissioner has issued a Decision regarding the WCIRB’s January 1, 2014 Pure Premium Rate Filing approving advisory pure premium rates that average $2.70 per $100 of payroll effective January 1, 2014, which is 6.7% higher than the average filed pure premium rate as of July 1, 2013. The WCIRB in its October 23, 2013 amended Filing proposed advisory pure premium rates that average $2.75 per $100 of payroll.

In justifying approval of the lower rate, the Commissioner's report stated as follows. "The gap between the recommendations of the WCIRB and the Department is due to two differences in the methodology used. First, the WCIRB included in their analysis a portion of the State Compensation Insurance Fund's ("SCIF's") loss adjustment expense. The Department of Insurance did not include SCIF's loss adjustment expenses. Second, the Department of Insurance recommends an additional 2.5% reduction in medical losses due to anticipated savings in SB 863, which the Department projects will result from the new Independent Medical Review process. This additional 2.5% reduction is not reflected in the WCIRB' s recommendation. I agree with the Department that the Advisory Claims Cost Benchmark and pure premium rates should exclude the loss adjustment expense of the State Compensation Insurance Fund and include the Department's additional projected medical loss savings".

The WCIRB filing for January 1, 2014 demonstrates that insurers continue to charge premiums that are very close to the estimated cost of providing benefits and adjusting expenses. At the same time the Commissioner's report noted that insurers once again filed substantially higher manual rates (rates that could be charged to employers). The rates actually charged to employers, however, are substantially lower on average than the filed rates. This is due to a common insurer practice of discounting from the filed rates. The extent to which insurers will discount from the filed rates in the future, however, remains to be seen. Current observations suggest that discounts are shrinking.

The WCIRB testified at the hearing that, over the last year or two, the charged rates have risen at a faster rate than the rise in the pure premium rate. In other words, trends suggest that insurers are beginning to moderate the extent to which they discount from the filed rates. The fact that insurers are substantially discounting their manual rates has helped to keep workers' compensation insurance prices lower,. despite increasing costs. The data suggest, however, that insurers may be recognizing that this trend cannot continue in the face of increasing system costs. Consequently, insurers are now charging higher rates to employers.

Over the past few years, the department of insurance observed that many insurers draw down from their surplus and capital to sustain lower pricing. As I have noted in prior decisions, however, this is a trend that cannot continue indefinitely. Over the last two years, we've observed an increase in premiums as insurers limit the extent to which they discount from their filed rates. The Department of Insurance will continue to closely monitor this trend to ensure that discounting is fair and

At the time this rate increase was evaluated and approved, neither the WCIRB nor the Department of Insurance included the effects of the recent federal court injunction against imposition of the lien filing fee, nor the California Supreme Court ruling in Valdez, nor the estimate by Maximus Federal Services that IMR requests will soon exceed 50,000 per month.

The WCIRB will begin calculating 2014 experience modifications shortly and expects to publish nearly all first quarter 2014 experience modifications by November 27, 2013. When these recent factors have been considered, it may well be that a 6.7% increase is overly optimistic ...
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/ 2013 News, Daily News
Obese employees make more workers’ comp claims, and they make costlier ones than non-obese employees. That conclusion was drawn by Lockton Companies based on its review of several independent studies on employees with high health risks (including obesity, smoking, high blood pressure and limited physical activity) and workers’ comp claims. The Kansas City, Mo., provider of risk management, insurance, and employee benefits consulting services cites three studies that, when taken together, paint a troubling picture, especially of the impact overweight workers can have on workers’ comp claims.

Lockton says that wellness programs, properly designed and implemented, can address this situation by helping obese workers lose weight. But Lockton doesn’t offer any stats on how effective wellness programs are overall in combating obesity. Still, the studies cited offer food for thought.

The University of Michigan Health Management Research Center studied Xerox Corp. employees and confirmed that "employees with high health risks tended to have the highest workers’ compensation costs." Xerox was an early proponent of wellness plans. The UM followed employees for four years and reported that "workers’ compensation costs increased for those employees whose health risks were increasing or high already (e.g., smoking, physical inactivity, hypertension, high cholesterol, and life/job dissatisfaction)."

Lockton also refers to a 2010 study by the National Council on Compensation Insurance which more closely correlated obesity with workers’ comp claims. The data "showed that workers’ compensation claims that included the obesity comorbidity diagnosis incurred significantly higher medical costs than comparable claims without the high health risk. NCCI also discovered that claims for employees identified as 'obese' almost tripled from 2000 to 2009 from 2.4 percent to 6.6 percent," Lockton said.

Lockton then cites a more recent NCCI study testing whether "the lost-time duration of obese claimants is a multiple of non-obese claimants." It was. "According to their findings, obese claimants incurred medical costs 6.8 times higher than non-obese (as defined by body mass index), were twice as likely to file a claim and an indemnity duration that averaged about 13 times higher," Lockton summarized.

Lockton suggests that companies proactively engage HR and employee benefits to better understand the scope and breadth of existing corporate wellness initiatives, as well as how the organization is tracking the effectiveness of those programs. They should also determine how their insurer and/or third party administrator is capturing data on comorbid factors in workers’ compensation claim files and how that information can be incorporated into effective analytics. Finally, companies should collaborate with internal safety, health, and environment professionals (if applicable) to discover how best to integrate employee wellness with workplace safety.

"Effective corporate wellness initiatives have shown to be successful in not only reducing the duration of lost-time workers' compensation claims," said Lockton's Michal Gnatek, author of the report, "but also in promoting healthy behaviors that potentially inhibit unsafe or inattentive workplace behavior." ...
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/ 2013 News, Daily News
The workers’ compensation industry’s results improved in 2012, as evidenced by a combined ratio of 110.3, a seven point decrease from 2011 and the first decline since 2006. The combined ratio is a measure of profitability used by an insurance company to indicate how well it is performing in its daily operations. A ratio below 100% indicates that the company is making underwriting profit while a ratio above 100% means that it is paying out more money in claims that it is receiving from premiums.

While the industry faces challenges such as poor underwriting results, low investment yields and ongoing uncertainty over the impact of healthcare reform, there were positive signs in 2012. Premiums grew for the second straight year, the combined ratio improved (although it remains elevated), and claims frequency declined at a faster rate than severity increased, according to a special report by the A.M. Best Co.

Operating results for A.M. Best workers’ compensation composite also improved in 2012, primarily due to a smaller reported underwriting loss coupled with solid but declining investment earnings. The composite’s 2012 combined ratio of 114.3 is in line with the overall workers’ compensation line underwriting performance. These improved results reflect year-over-year rate increases and growth in payrolls but are offset in part by rising medical costs and the improving, but still relatively weak macroeconomic environment.

Industry results also have benefited from advancements in technology, which enable companies to react more quickly to negative trends. However, without the benefit of higher investment yields that the industry earned in the past, overall earnings have declined ...
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/ 2013 News, Daily News
A report by the Insurance Journal says that a rule proposed by the Centers for Medicare and Medicaid Services contradicts the intent of a recently passed law aimed at requiring CMS to tell insurers how much of a claims settlement involving federal health insurance recipients must be given to CMS. The regulatory process was mandated by passage in January, after years of effort, of the SMART Act, or The Strengthening Medicare and Repaying Taxpayers Act. It deals with mandates for providing timely information to CMS on settlements of lawsuits involving no-fault auto-insurance claims, workers’ compensation claims, and payments under liability insurance, such as auto accidents.

The interim final rule--which means it goes into effect immediately--more than doubles the statutory 120-day period CMS is given under the new law to provide to insurers the portion of the final settlement that insurers will have to give to CMS rather than the claimant. Under the interim final rule, CMS will be given 245 days to process claims submitted by the insurers and other third-party payers, as well as lawyers involved in settlements. The comment letters sent by insurers voiced concern that, contrary to the intent of the law, the proposal doesn’t reflect the fact that when a deal is reached, all parties have certainty within a reasonable period of time.

Among those submitting comment letters are the American Insurance Association, the Risk and Insurance Management Society (RIMS) and the Medicare Advocacy Recovery Coalition (MARC), which includes self-insured employers. RIMS members include a number of municipalities, public school systems, etc.

"In addition to conforming to the requirements of the SMART Act, the CMS proposal also must work within the context of how settlements actually occur, and should promote, rather than delay the settlement of claims. The potential that settling parties would have to wait over half a year to conclude their settlement because of a lengthy MSP process will lead many settlements to breakdown," said John Phelps, RIMS president.

Michele L. Adams, chair of MARC said that the interim final rule designed to implement the SMART Act "is flawed" because it creates a settlement process that is in "direct contradiction to Congress’ clear instruction, exceeds and misconstrues the SMART Act, and fails to address needed regulatory issues," "For all the reasons set forth above, the MARC Coalition urges CMS to withdraw the IFR and reissue a proposed rule upon which all stakeholders can comment," .

The insurers and other interested parties are also concerned that CMS is presenting them with a fait accompli, meaning immediate implementation of the rule, rather than a full notice and comment process, interested parties including insurers, are saying in comment letters ...
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/ 2013 News, Daily News
Doctors who specialize in treating head pain, such as chronic migraines, are the latest to list the procedures and treatments they think have risks or costs that may outweigh the benefits to patients. To come up with the recommendations, Loder and her coauthors asked physician members of the American Headache Society (AHS) to identify tests and treatments they view as being used incorrectly or too often, and which methods of care had benefits too small to outweigh the risks.

According to the report in Reuters Health, the researchers evaluated more than 100 items suggested by AHS members, distilling the list down to five items based on current evidence.

The guidelines advise against imaging the brains of patients who get headaches that have not changed over time.

They also discourage the long-term use of over-the-counter pain pills to treat headaches, and recommend that physicians avoid using certain pain medications - opioids like oxycodone and drugs containing butalbital like Fioricet - for patients who get headaches often.

Finally, physicians should not perform computed tomography, or CT, on a patient with a headache when magnetic resonance imaging, or MRI, is available, except if it’s an emergency, the recommendations state.

The recommendations, Loder said, "are a nice distillation for patients when thinking about their care." Patients and their families can use the guidelines to start a conversation with their doctor about the pros and cons of a given test or procedure.

"In addition to thinking about the good things that may come about from interventions, it’s also important to think about situations in which caution can be used," Loder told Reuters Health.

Labor Code section 4600 provides that medical care provided in workers' compensation cases conform to standards of evidence based medicine that is peer reviewed. While the DWC published Medical Treatment Utilization Schedule (MTUS) is presumed to be correct, it can be overcome by higher quality medical evidence. Thus, utilization review vendors may rely on better guidelines as they review requests for authorization for medical care ...
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/ 2013 News, Daily News