Division of Workers’ Compensation (DWC) Acting Administrative Director Destie Overpeck has appointed Presiding Workers’ Compensation Administrative Law Judge Paige Levy and the Honorable Joyce Cram to serve as members of the Workers’ Compensation Ethics Advisory Committee.

Judge Levy will fill the position designated to be held by a presiding judge and Judge Cram will fill the position of a member of the public outside the workers’ compensation community. Judge Levy is currently the Presiding Workers’ Compensation Administrative Law Judge at the Marina Del Rey District Office and the appointment is effective March 1, 2014. Judge Cram is a retired judge of the Superior Court of Contra Costa County. Her appointment is effective January 1, 2014.

The ethics advisory committee, established in 1995 by Title 8, California Code of Regulations, section 9722, reviews all ethics complaints from the public against workers' compensation administrative law judges.

After its review of complaints, the committee makes recommendations to the administrative director. The committee reviews all complaints anonymously and does not learn the names of either the complainant or the judge complained against. The committee meets quarterly and members serve without compensation.

The regulation provides that the committee mix include: a member of the public representing organized labor; a member of the public representing insurers; a member of the public representing self-insured employers; an attorney who formerly practiced before the Workers' Compensation Appeals Board and who usually represented insurers or employers; an attorney who formerly practiced before the Workers' Compensation Appeals Board and who usually represented applicants; a presiding judge; a workers’ compensation administrative law judge (WCALJ) or retired WCALJ; and two members of the public outside the workers' compensation community.

A judicial ethics complaint form and instructions can be found on the DWC forms page ...

Ronald Calderon, a member of the California State Senate, has agreed to surrendered to federal authorities after being named in a federal grand jury indictment that accuses him of taking tens of thousands of dollars in bribes from a businessman and from people who were associated with a Hollywood film studio, but who were in actuality undercover FBI agents. Ronald Calderon, 56, of Montebello, is charged in a 24-count indictment that was returned last week by a federal grand jury with mail fraud, wire fraud, honest services fraud, bribery, conspiracy to commit money laundering, money laundering and aiding in the filing of false tax returns. The indictment also charges Thomas M. Calderon, 59, also of Montebello, who is Ronald’s brother and a former member of the California State Assembly. Along with his brother, Thomas Calderon is charged in the money laundering conspiracy and with seven substantive counts of money laundering.

Tom Calderon self-surrendered after being informed of the indictment and is expected to be arraigned in United States District Court. Ron Calderon is travelling and has agreed to surrende. Ron Calderon’s arraignment will be Monday afternoon. The indictment describes a scheme in which Ron Calderon allegedly solicited and accepted approximately $100,000 in cash bribes - as well as plane trips, gourmet dinners and trips to golf resorts - in exchange for official acts, such as supporting legislation that would be favorable to those who paid the bribes and opposing legislation that would be harmful to them. The indictment further alleges that Ron Calderon attempted to convince other public officials to support and oppose legislation.

In the first part of the bribery scheme, Ron Calderon allegedly took bribes from Michael Drobot, the former owner of Pacific Hospital in Long Beach, a major provider of spinal surgeries that were often paid by workers’ compensation programs. California law allowed the hospital to pass on to insurance companies the full cost it had paid for medical hardware it used during spinal surgeries. In another case filed this morning, Drobot admitted that his hospital exploited this law, which was often called the "spinal pass-through," by using hardware that had been purchased at highly inflated prices from companies that Drobot controlled and passing this cost along to insurance providers. Drobot allegedly bribed Ron Calderon so that he would use his public office to preserve this law that helped Drobot maintain a long-running and lucrative health care fraud scheme.

While the corruption indictment does not implicate Ron Calderon in the health care fraud scheme, Ron Calderon is charged with taking bribes from Drobot to preserve the spinal pass-through law. The indictment specifically alleges that Drobot bribed Ron Calderon by hiring Calderon’s college-age son to work as a file clerk at his company and paying him approximately $30,000 over the course of three summers. Ron Calderon’s son showed up for only about 15 days of work each summer, according to the indictment, which also accused Ron Calderon of accepting plane trips, golf outings and expensive dinners from Drobot. Ron Calderon allegedly arranged meetings between Drobot and other public officials and helped Drobot attempt to persuade the other legislators to keep the spinal pass-through law in effect.

In another case filed in United States District Court, Drobot has agreed to plead guilty to charges of conspiracy and paying illegal kickbacks. In his plea agreement, Drobot admits paying bribes to Ron Calderon.

In another part of the bribery scheme, Ron Calderon allegedly solicited and accepted bribes from people he thought were associated with an independent film studio, but who were in fact undercover FBI agents. Ron Calderon solicited and accepted bribes in exchange for supporting an expansion of a state law that gave tax credits to studios that produced independent films in California. The Film Tax Credit applied to productions of at least $1 million, but, in exchange for bribes, Ron Calderon agreed to support new legislation to reduce this threshold to $750,000, according to the indictment. The indictment specifically alleges that Ron Calderon agreed to support the new Film Tax Credit legislation in exchange for his daughter being paid $3,000 a month for a job he knew she simply did not perform. According to the indictment, Ron Calderon took several official actions with respect to reducing the threshold for the Film Tax Credit. Ron Calderon signed an official letter indicating that he supported a lower threshold, he met with other state senators to discuss the benefits of lowering the threshold, and he "caused legislation to be introduced in the Senate, which he intended to use as a vehicle to create a separate tax credit," according to the indictment.

In addition to the nearly $40,000 paid to his daughter, Ron Calderon allegedly solicited from the undercover FBI agents payments that included $5,000 for his son’s college tuition and $25,000 to Californians for Diversity, a non-profit political organization operated by Tom Calderon. Both Calderons face money laundering charges for allegedly funneling bribe money through Californians for Diversity and Tom Calderon’s consulting firm, some of which went to Ron Calderon and his daughter. Ron Calderon faces two tax fraud charges for allegedly helping in the preparation of false tax returns that fraudulently claimed business expense deductions in relation to the money his son received from Drobot.

If Ron Calderon were to be convicted of the 24 charges in the indictment, he would face a statutory maximum sentence of 396 years in federal prison. If Tom Calderon is convicted of the money laundering charges alleged in the indictment, he would face a statutory maximum sentence of 160 years in prison. The investigation into the Calderons was conducted by the Federal Bureau of Investigation and IRS-Criminal Investigation ...

The former owner of a Long Beach hospital, whom prosecutors allege paid bribes to state Sen. Ron Calderon, pleaded guilty Friday to charges connected to a massive workers’ compensation scheme that cheated taxpayers out of hundreds of millions of dollars.

The Press Telegram reports that Michael D. Drobot, 69, of Corona Del Mar, was charged by the U.S. Attorney’s Office with orchestrating a conspiracy from 1997 to 2013 in which tens of millions of dollars in illegal kickbacks were paid to doctors, chiropractors, marketers and others who referred patients to the former Pacific Hospital for spinal surgery. "The co-conspirators lined their pockets by ripping off insurance companies to the tune of hundreds of millions of dollars," state Insurance Commissioner Dave Jones said in a statement.

Prosecutors said that Drobot paid $28,000 in bribes to Calderon, D-Montebello, to support legislation delaying or limiting changes in workers’ compensation laws that would have directly affected Drobot’s scheme. The hospital submitted more than $500 million in fraudulent bills between 2008 and last year. Much of the total was paid by the California workers’ compensation system, according to the U.S. Attorney’s Office.

Eric Weirich, deputy commissioner of the enforcement branch of the California Department of Insurance, said in a joint press conference with the U.S. Attorney’s Office that the scheme involved more than 150 insurance companies and is the largest such case in state history. "I assure you, this is the first in many cases to come," Weirich said.

As part of his deal, Drobot agreed to plead guilty to two counts: conspiracy and payment of kickbacks in connection with a federal health care program. He could be sentenced to 10 years in federal prison. Drobot’s attorneys, Janet I. Levine and Jeffrey H. Rutherford of the Los Angeles office of Crowell and Moring, issued a statement Friday saying Drobot "acknowledged and accepts responsibility for his actions. He is providing information to assist the government in its expanding investigations." According to a plea agreement, Drobot offered to pay a kickback of $15,000 per lumbar fusion surgery and $10,000 per cervical fusion surgery directed to his hospital. In some cases, patients lived dozens or hundreds of miles from Pacific Hospital, and closer to other qualified medical facilities. To finance the kickbacks, Drobot inflated the price of implantable devices used during spinal surgeries, knowing that under California law, "medical hardware was considered a ‘pass-through’ cost that could be billed at no more than $250 over what Pacific Hospital paid for the hardware," the plea agreement stated. Prosecutors said Calderon arranged meetings between Drobot and other public officials and helped Drobot’s attempt to keep the pass-through law in effect. SB 863, which closed the loophole, became law on Jan. 1 last year.

Pacific Hospital was sold to Santa Fe Springs-based College Health Enterprises in early October. The facility is now named College Medical Center Long Beach and is managed by American Family Care Hospital Management Inc., which is part of Molina Healthcare. Molina spokeswoman Sunny Yu said her company has not been approached by investigators probing Drobot or others who may be involved in the case. The hospital’s senior management team does not include anyone who worked there when it was still called Pacific Hospital, nor does the hospital currently perform spinal surgeries, Yu said. "There is nothing that carried over," she said. "We’re not even the same business anymore."

The State Compensation Insurance Fund, a provider of workers’ compensation insurance, also has a pending civil suit against Pacific Hospital, which it filed in June. The hospital, Drobot and his son, Michael Drobot Jr., are named among the defendants. Officials from the State Fund said Friday they do not know how the criminal proceedings will affect their case, which is expected to go to trial in February 2015. "“We’re reviewing everything in light of the plea agreement," said Jennifer Vargen, spokeswoman with the State Fund.

An attorney representing Michael Drobot Jr. acknowledged that investigators looked at his client’s activities, but have not charged or indicted the younger Drobot. "The only thing I want to emphasize is that Mr. Drobot Jr. had nothing to do with the indictments or pleas," said attorney Drew Pomerance of the Woodland Hills-based law firm of Roxborough, Pomerance, Nye and Adreani ...

While doctors have sworn to do no harm, the same doesn't seem to be true for the equipment or the networks they use to administer care. According to a new report from the SANS research organization and Norse, medical providers are already succumbing to cyberattacks in droves. The study found 49,917 unique malicious events from the healthcare providers they profiled, and don't worry: it gets worse. The report found that many networked medical devices were easily taken over by hackers. These included radiology imaging software, video conference systems, digital video systems, call contact software, and security systems. Even devices that were meant to help shield organizations, like VPNs, firewalls, and routers, were being hijacked.

According to the article in PC Magazine, the report found that medical devices and software are becoming a favorite target of hackers for launching other attacks -- either on the same network or on other targets. From the report: "Once compromised, these networks are not only vulnerable to breaches, but also available to be used for attacks such as phishing, DDoS and fraudulent activities launched against other networks and victims." "One of the biggest reasons we see the infrastructure for hospitals being used as launching platforms for other cybercrime and hacks is because a lot of these devices are dumb devices," said Norse CTO and co-founder Tommy Stiansen. "They're not desktops or servers, but they're all running Linux." We've already seen how some devices, particularly networked video cameras can be used to gain a foothold on a victim's network and cause all kinds of mayhem.

Despite their capabilities, medical equipment and surveillance cameras aren't considered part of the security architecture, explained CEO and co-founder Sam Glines. "A document that was discovered by our crawlers for a major hospital had the same user name and password for everything," he said. This included life-saving devices like dialysis equipment. Remember that the Internet is still on track to kill you by 2014.

As if to demonstrate the scope of the problem, Stiansen mentioned that they first became interested in this project when they observed credit card information being transmitted by medical devices. "If someone leaves the door open, hackers will come," said Stiansen. In addition to unsecured devices and software used by hospitals is an even bigger problem: stolen medical data. Healthcare providers at all levels have extremely valuable personal data at their disposal, and it's that information that attackers are desperate to get their hands on.The reason, explained Stiansen, is simple: "You can conduct more fraud with it then you could with credit card data." An attacker can quickly monetize medical data, he explained, through avenues like Medicare or prescription fraud. In addition to medical information, the intellectual property and billing information stored by healthcare providers is also at risk.

Beyond the obvious impact on individuals caused by having your data stolen, the report also points out that this fraud drives the price of healthcare even higher. The report cites a Ponemon repot from last year which estimated the cost of insruance and medical fraud at around $12 billion. Obviously, health care organizations need to get serious about securing their networks and devices, even at a basic level. "Consider everything with an IP address to be a critical endpoint," said Glines, who went on to say that stronger password protocols for everything from medical devices to firewalls would improve the situation.

New legislation might also encourage better behavior. Glines pointed to European Union laws that fine companies a percentage of their revenue when a breach occurs or a loss of data takes place. Though HIPAA is intended to provide protection, Norse maintined that compliance simply did not equate security. But there's a role for regular people, too. Stiansen encouraged patients to question their healthcare provider about cybersecurity. Glines agreed saying, "consumers are the ones who have the most to lose. They have the right to ask how their records are maintained and what sort of security procedures are in place." ...

The Division of Workers’ Compensation (DWC) has posted an order adjusting the Physician Services and Non-Physician Practitioner Services section of the Official Medical Fee Schedule to conform to changes made to the Medi-Cal Rates database effective for services on or after February 15, 2014.

Medi-Cal updates its rates file on the 15th of every month, and posts it on the 16th. DWC will be issuing an Administrative Director’s Order every month to adopt the updated Medi-Cal rates file for services effective on or after the 15th of the month. Future routine monthly Administrative Director Orders to adopt the Medi-Cal rates file will be issued without a newsline notification.

Please consult the website for the relevant Medi-Cal rates file by date of service. The order adopting the adjustment, the updated regulations, and the table can be found on the DWC website ...

A 49-year-old local woman was found guilty Tuesday for her role in an elaborate $20-million healthcare fraud scheme that officials say involved Manor Medical Imaging Clinic in south Glendale and pharmacies in and around the San Gabriel Valley. This is the first case in the nation alleging an organized scheme to defraud government health care programs through fraudulent claims for anti-psychotic medications, a type of scheme that investigators say is on the increase around the nation. Court documents outline a conspiracy in which Manor operated a bogus clinic authorized to make claims to Medicare, employed a doctor to write prescriptions, and had close relationships with pharmacies and a fraudulent drug wholesale company that was used to funnel prescription drugs back to the pharmacies participating in the scheme.

Nurista Grigoryan, a Glendale resident, allegedly fraudulently used an American doctor’s name and license number when she saw homeless patients at Manor Medical Imaging Clinic in the 200 block of North Central Avenue, according to a statement from the U.S. Attorney’s Office. Grigoryan, who reportedly only holds an Armenian medical license, allegedly filled out phony prescriptions, which were already signed by physician Kenneth Johnson. He was reportedly paid for allowing his name to be used for the bogus prescriptions.

U.S. District Judge S. James Otero described the defendants as having "preyed upon the poor [and] used them as pawns," according to the statement. Johnson, 47, of Ladera Heights and Artak Ovsepian, 32, of Tujunga were also convicted in the fraud scheme.

The plot involved so-called "prescription harvesting," in which the clinic and other San Gabriel Valley pharmacies allegedly re-billed government healthcare programs repeatedly for expensive anti-psychotic medications, according to a federal criminal complaint. The clinic’s operators funneled prescription drugs back to participating pharmacies and black-market wholesalers, where the drugs were relabeled, repackaged and dispensed again, according to the criminal complaint.

The anti-psychotic medications that are the subject of the fraudulent prescriptions alleged in this case include Abilify, Seroquel and Zyprexa. Ninety-pill bottles of these drugs can bring a pharmacy reimbursements of up to $2,800, which is why there is a wholesale black market for these products where the drugs can be purchased for as little as several hundred dollars.The primary pharmacy involved in the case, Huntington Pharmacy in San Marino, saw a huge spike in claims to Medi-Cal – going from just under $45,000 in 2009 to nearly $1.5 million in 2010 – and the vast majority of claims were the result of prescriptions written by Manor’s in-house doctor, according to the criminal complaint, which alleges that the owners of Huntington Pharmacy were receiving kickbacks and "structuring" cash deposits totaling hundreds of thousands of dollars into their personal and business accounts.

During the three-week trial, federal prosecutors presented evidence showing how patients’ files were doctored to show that they needed medication and they were treated. Employees at the clinic reportedly used stolen identities to create thousands of prescriptions, according to the criminal complaint. They also recruited veterans, low-income seniors and Medicare and Medi-Cal beneficiaries to bill the government for illegitimate services and prescriptions.

Grigoryan and Ovsepian are scheduled to be sentenced on June 9. Johnson is expected to be sentenced on June 30. They face a mandatory two-year sentence for identity theft, but Grigoryan and Johnson also face the maximum sentence of 30 years in federal prison.

The investigation in this case, which was called Operation "Psyched Out," was conducted by the San Marino Police Department; the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse; the United States Food and Drug Administration, Office of Criminal Investigations; IRS - Criminal Investigation; the United States Department of Health and Human Services, Office of the Inspector General; U.S. Immigration and Customs Enforcement; the Glendale Police Department, Organized Crime Team; and the California Department of Health Care Services, Audits and Investigations Branch ...

Artificial disc replacement (ADR), or total disc replacement (TDR), is a type of arthroplasty. It is a surgical procedure in which degenerated intervertebral discs in the spinal column are replaced with artificial devices in the lumbar (lower) or cervical (upper) spine. The procedure is used to treat chronic, severe low back pain and cervical pain resulting from degenerative disc disease. Artificial disc replacement has been developed as an alternative to spinal fusion, with the goal of pain reduction or elimination, while still allowing motion throughout the spine. Another possible benefit is the prevention of premature breakdown in adjacent levels of the spine, a potential risk in fusion surgeries.

Two artificial discs have been approved by the FDA for use in the US: the Charite, manufactured by DePuy for use in the lumbar spine; and the ProDisc, manufactured by Synthes for use in the lumbar spine and cervical spine. They are FDA approved for one-level applications, after clinical trials were said to show patient improvement in motion and pain equivalent to spinal fusion. Two-level disc replacement surgery is considered experimental in the United States, but has been performed in Europe for many years. While these two discs have received FDA approval, some insurance companies in the United States do not cover the surgery, still classifying it as experimental. Effective August 14, 2007, the Centers for Medicare and Medicaid Services (CMS) will not cover Lumbar Artificial Disc Replacement (LADR) for patients over the age of 60, on a national basis. Individual localities regulate the use of the procedure in patients 60 and under. There are several class-action lawsuits pending against the Charite Artificial Disc, and reports of complications with the Pro Disc Artificial Disc implant when used in certain surgical situations.

Artificial disc surgery is still relatively new in the United States, but has been used in Europe for more than 15 years. Now, a Carlsbad California company Aurora Spine Corporation announced that it has received U.S. Food and Drug Administration (FDA) 510(k) clearance for sterile-packed titanium plasma spray coated (TiNano) spinal fusion implants. "This FDA clearance is a major achievement for Aurora Spine. These intervertebral implants are developed to support the entire spine from cervical to lumbar and to accommodate the company's ZIP -Minimally Invasive Interspinous Fusion System portfolio as well as other fusion products on the market," said Trent J. Northcutt, President and Chief Executive Officer of the company.

TiNano is Aurora Spine's unique Titanium Plasma Spray coating on PEEK Interbody implants allowing for bone ingrowth due to its porous structure. TiNano-coated implants provide the advantages of all implant materials, bone-titanium osseo-integration from the titanium coating, as well as the modulus and post-op imaging advantages of PEEK fusion implants. "Patient safety is the most important goal for Aurora Spine and that is the reason for every TiNano coated interbody implant being sterile packed," said Laszlo Garamszegi, Chief Technology Officer of the company. The FDA clearance includes several interbody fusion devices, including configurations for Anterior Cervical (ACIF), Anterior Lumbar (ALIF), Posterior Lumbar (PLIF), Transforaminal Lumbar (TLIF) and Direct Lateral (DLIF) interbody spacers.

A statement issued by The American Association of Orthopaedic Surgeons (AAOS) recommends caution in using the new devices, as the studies behind their approval were not designed to show their superiority, only that they produced results equivalent to existing treatments. The data shows that artificial disc replacement patients, when compared to spinal fusion patients, have a shorter recuperation period following surgery, but research also shows that spinal fusion patients show no better outcomes than patients undergoing physical therapy. The AAOS also states that disc replacement requires a high level of technical skill for accurate placement, and has a significant level of risk if revision surgery is needed. Members of AAOS and the American Association of Neurological Surgeons joined together as the Association for Ethics in Spine Surgery, formed to raise awareness of the ties between physicians and device manufacturers ...

Sergio Rodriguez was employed by Hagemann Meat Company and claims to have sustained an industrial injury while lifting a 70-pound box. of chicken to his low back, and in the form of left inguinal hernia and femoral entrapment neuropathy. The carrier initially denied the injury. .

The WCJ found an injury causing 6% permanent disability with no apportionment, and found that Dr. Keller was applicant's primary treating physician and that the Permanente Medical Group/Kaiser Foundation Hospitals (Kaiser) had provided treatment reasonable and necessary to cure or relieve applicant; from the effects of his industrial injury. The WCJ awarded benefits and ordered defendant to pay Kaiser's lien. Kaiser claimed an outstanding balance of.for $3,050.52. In the Opinion on Decision, he wrote: "As this was a denied case at the time [Kaiser's] services were provided, Kaiser is not limited to the official fee schedule, only their usual and customary fee."

Defendant filed a Petition for Reconsideration which did not contest that Kaiser is entitled to payment for medical services it provided to applicant but argues that Kaiser cannot.recover more than the amount set by the OMFS. The WCAB agreed and reversed in the case ofRodriguez v Hagemann Meat Company and Zenith Insurance Co.

Previously, several writ denied decisions have held that a medical provider is not limited to the OMFS when the injured employee's claim has been denied. (CNA Insurance Companies v. Workers' Comp. Appeals Bd. (Valdez) (1997) 62 Cal.Comp.Cases 1145, 1146 (writ den.) (Valdez); Southern California Edison Co. v. Workers' Comp. Appeals Ed (Wells) (1999) 65 Cal.Comp.Cases 100 (writ den.).) This line of cases originated with Federal Mogul Corp. v. Workmen's Comp. Appeals Bd. (Whitworth) (1973) 38 Cal.Comp.Cases 584 (writ den.) (Whitworth), in which the applicant self-procured treatment after the defendant's insurer did not accept the claim. The Whitworth decision held that the treating surgeon was entitled to the billed amount of his services rather than the amount set by the Official Minimum Fee Schedule, absent evidence that the billed charges were excessive.

The authors point out "Appeals Board panel decisions, including writ denied decisions, are not binding on other panels." and further noted that "More importantly, the statutory basis for the Whitworth decision has changed in the 'intervening years" and .thus chose to re-evaluate this issue.

That minimum fee schedule has since been replaced with an Official Medical Fee Schedule which establishes reasonable maximum fees. (Lab. Code, § 5307.1.) Administrative Rule 9792(c) now sets forth the specific circumstances under which a medical provider may recover more than the amount under the OMFS. "A medical provider or a licensed health c,are facility may be paid a fee in excess of the reasonable maximum fees [under the OMFS] if the fee is reasonable, accompanied by itemization, and justified by an explanation of extraordinary circumstances related to the unusual nature of the services rendered; however, in no event shall a physician charge in excess of his or her usual fee." (Cal. Code Regs., tit. 8, § 9792(c).)

Consistent with the general principle that lien claimants have the burden of demonstrating the reasonableness of the amounts charged, a lien claimant seeking to establish that it should receive payment at its usual and customary rate, above the level set by the OMFS, must present evidence sufficient to satisfy the requirements of Rule 9792(c). In this case they did not.

Commissioner Frank Brass dissented. He concluded that "These policy considerations still hold true today. Nothing in the changes to Labor Code section 5307.1 suggests that the Legislature intended to alter existing law in order to allow defendants the advantage of the OMFS even when they deny claims for injuries that are later determined to be compensable." ...

An insurance salesman was arrested on allegations he stole $30,000 from a San Rafael nonprofit by fraudulently claiming an extra broker's fee. Russell Joseph Sage, 39, of Sacramento is scheduled to be arraigned Thursday in Marin Superior Court, said Chief Deputy District Attorney Barry Borden. Sage is charged with felony theft by false pretenses.

The alleged victim is Center Point Inc., which provides substance abuse rehabilitation and other services. In 2012, Sage sold the nonprofit a $500,000 workers' compensation policy. A broker's fee was included in the structure of the policy, but Sage sent Center Point separate invoices for a commission, according to an affidavit by Deputy District Attorney Tom McCallister, a financial crimes prosecutor in Marin. Center Point paid Sage in two checks of $15,000 each, McCallister said.

Sage was arrested Monday in Yolo County, where he was serving a jail sentence in a different insurance fraud and money laundering case, according to Jonathan Raven, a Yolo County prosecutor. Raven remained in custody Tuesday at Marin County Jail in lieu of $30,000 bail. Sage surrendered his professional licenses last year, according to the California Department of Insurance website. The website reflects a long history of disciplinary issues. On or about April 29, 2004, in Case No. 2:03CR00552-01, in the United States District Court, Eastern District of California, Sacramento, the Department claimed he was convicted of theft of government property, a violation of Title 18, Section 641 of the United States Code, a misdemeanor.

Center Point officials did not respond to a call seeking comment Tuesday.

...

On January 13, the Division of Workers’ Compensation began operations at a satellite to the Oxnard District Office, located at 411 East Canon Perdido in Santa Barbara. The Santa Barbara satellite was opened in order to continue service to the population formerly served by the Goleta District Office, which was closed last December in an effort to consolidate and conserve State resources.

While the Santa Barbara satellite was welcomed for making DWC service locally accessible, the Division has been made aware that the current space cannot accommodate the volume of users. The size of the lobby, hearing room and available parking is particularly insufficient for all parties on conference days, and the crowding is negatively impacting other tenants in the facility. An increase in tenant complaints over the last few weeks have made it clear that the Division must take immediate measures to reduce its impact on the shared facility space. Therefore, beginning on Monday, March 3 all conferences that would have taken place in Santa Barbara will be scheduled on Mondays in Oxnard. The Oxnard District Office, located approximately 38 miles to the south of Santa Barbara, has ample room for all case participants in a typical conference calendar. Recognizing that some applicants may have difficulty travelling to Oxnard, the Division encourages use of Court Call in lieu of personal appearance for attorneys who represent applicants in the Santa Barbara area. DWC will also explore alternatives for unrepresented injured workers, which may include a telephone appearance option to be facilitated by DWC’s Information and Assistance staff.

The Santa Barbara satellite will continue to be used for a limited number of trials and expedited hearings held on Tuesdays, Wednesdays and Thursdays. There will be no hearings scheduled on Fridays, which are termed a "dark day," set aside for judges to work on their decisions. The Information and Assistance Office in Santa Barbara will stay open five days a week.

DWC is actively pursuing a more spacious satellite location in the greater Santa Barbara area, as to remain accessible to those who had frequented the Goleta District Office. "The Division remains committed to serving the County of Santa Barbara," affirmed Christine Baker, Director of Industrial Relations. "In the meantime, we appreciate the community’s patience while we continue to seek a sustainable presence in the area." ...

Many industries, including the workers' compensation claims process involves communications with law firms on a daily basis. The sanctity of the privacy of communications between lawyers and their clients has always been highly protected in every state and at the federal level - at least until now. The New York Times reports that the list of those caught up in the global surveillance net cast by the National Security Agency and its overseas partners now includes American lawyers.

A top-secret document, obtained by the former N.S.A. contractor Edward J. Snowden, shows that an American law firm was monitored while representing a foreign government in trade disputes with the United States. The disclosure offers a rare glimpse of a specific instance in which Americans were ensnared by the eavesdroppers, and is of particular interest because lawyers in the United States with clients overseas have expressed growing concern that their confidential communications could be compromised by such surveillance.

The government of Indonesia had retained the law firm for help in trade talks, according to the February 2013 document. It reports that the N.S.A.’s Australian counterpart, the Australian Signals Directorate, notified the agency that it was conducting surveillance of the talks, including communications between Indonesian officials and the American law firm, and offered to share the information. The Australians told officials at an N.S.A. liaison office in Canberra, Australia, that "information covered by attorney-client privilege may be included" in the intelligence gathering, according to the document, a monthly bulletin from the Canberra office. The law firm was not identified, but Mayer Brown, a Chicago-based firm with a global practice, was then advising the Indonesian government on trade issues. On behalf of the Australians, the liaison officials asked the N.S.A. general counsel’s office for guidance about the spying. The bulletin notes only that the counsel’s office "provided clear guidance" and that the Australian agency "has been able to continue to cover the talks, providing highly useful intelligence for interested US customers."

The N.S.A. declined to answer questions about the reported surveillance, including whether information involving the American law firm was shared with United States trade officials or negotiators. Duane Layton, a Mayer Brown lawyer involved in the trade talks, said he did not have any evidence that he or his firm had been under scrutiny by Australian or American intelligence agencies. "I always wonder if someone is listening, because you would have to be an idiot not to wonder in this day and age," he said in an interview. "But I’ve never really thought I was being spied on."

The 2013 N.S.A. bulletin did not identify which trade case was being monitored by Australian intelligence, but Indonesia has been embroiled in several disputes with the United States in recent years. One involves clove cigarettes, an Indonesian export. The Indonesian government has protested to the World Trade Organization a United States ban on their sale, arguing that similar menthol cigarettes have not been subject to the same restrictions under American anti-smoking laws. The trade organization, ruling that the United States prohibition violated international trade laws, referred the case to arbitration to determine potential remedies for Indonesia. Another dispute involved Indonesia’s exports of shrimp, which the United States claimed were being sold at below-market prices.The Indonesian government retained Mayer Brown to help in the cases concerning cigarettes and shrimp, said Ni Made Ayu Marthini, attaché for trade and industry at the Indonesian Embassy in Washington. She said no American law firm had been formally retained yet to help in a third case, involving horticultural and animal products.

Mr. Layton, a lawyer in the Washington office of Mayer Brown, said that since 2010 he had led a team from the firm in the clove cigarette dispute. He said Matthew McConkey, another lawyer in the firm’s Washington office, had taken the lead on the shrimp issue until the United States dropped its claims in August. Both cases were underway a year ago when the Australians reported that their surveillance included an American law firm. Mr. Layton said that if his emails and calls with Indonesian officials had been monitored, the spies would have been bored. "None of this stuff is very sexy," he said. "It’s just run of the mill."

Most attorney-client conversations do not get special protections under American law from N.S.A. eavesdropping. Amid growing concerns about surveillance and hacking, the American Bar Association in 2012 revised its ethics rules to explicitly require lawyers to "make reasonable efforts" to protect confidential information from unauthorized disclosure to outsiders.Last year, the Supreme Court, in a 5-to-4 decision, rebuffed a legal challenge to a 2008 law allowing warrantless wiretapping that was brought in part by lawyers with foreign clients they believed were likely targets of N.S.A. monitoring. The lawyers contended that the law raised risks that required them to take costly measures, like traveling overseas to meet clients, to protect sensitive communications. But the Supreme Court dismissed their fears as "speculative." Maybe it is not so speculative anymore ...

Los .Angeles. officials wanted to make absolutely sure the city's trash truck drivers would not get caught sleeping in their trucks - a sight sure to enrage taxpayers or possibly attract a TV news camera. So they laid down a set of break time rules prohibiting naps and placing other restrictions on where and how drivers could have lunch. But the Los Angeles Times reports these rules have the city facing a $26-million legal payout, most of it for more than 1,000 trash truck drivers who said they were improperly barred from catching a few winks during their 30-minute meal breaks. The City Council, meeting behind closed doors, moved ahead Wednesday with the payout, designed to end an 8-year-old class-action lawsuit. The drivers would receive an average of $15,000 each in back pay, according to Matthew Taylor, their attorney. He argued that they effectively were required to remain "on duty" - but not paid - during nine years of meal breaks.

Taylor said the no-napping rule created dangers on the road involving heavy city garbage rigs. "It's a hazard to the public if you have commercial truck drivers who are fatigued and are not allowed to take a nap during their breaks," he said. In addition to banning naps, the Bureau of Sanitation also prohibited drivers from congregating in large groups or traveling to locations away from their pickup routes during lunch breaks. Those rules were abandoned last summer.

City lawyers warned council members that they might have to pay as much as $40 million if the court battle over the drivers' work rules continued. A Superior Court judge and a state appeals court panel have already sided with the drivers. "The city does impose duties during meal periods: the duties to stay awake and to avoid congregating," trial court Judge John Shepard Wiley Jr. ruled in 2011. "The drivers are thus subject to the city's control during their meal periods."

Some lawmakers expressed outrage at the rulings, saying the work rules had a legitimate purpose. "I just am appalled that a court can take it upon themselves to assert that we have to retroactively pay [workers] for lunch breaks that were in fact taken by our employees," said Councilman Paul Krekorian, who added that the city's unions signed off on the work rules. Krekorian, who heads the council's Budget and Finance Committee, would not discuss Wednesday's closed-session deliberations. But three other officials familiar with the lawsuit, who asked to remain anonymous because they were discussing a confidential legal matter, told The Times the council voted to go ahead with the $26-million settlement. Those sources said the only opposing votes were cast by council members Joe Buscaino and Mitchell Englander. Both declined to comment.

City officials said the contested work rules were intended to guard the public image of the trash collection service and enhance safety. By limiting the number of workers who could gather in one spot for a meal, the city kept large numbers of oversized trash trucks from being parked together in a single neighborhood or in restaurant parking lots, said Enrique Zaldivar, who runs the sanitation bureau. The no-sleeping rule, Zaldivar said, was imposed to ensure members of the public would not see trash truck drivers asleep in or near their vehicles."It's impossible for the general public to know whether a driver is on duty or not while sleeping, he said. "So we felt it was prudent to not have any sleeping occur when the driver is in public view, or during any time that could be construed as on duty."

The work rule dispute dates back to 2006, when trash truck driver Jose Gravina filed a lawsuit alleging he was routinely denied meal breaks owed after five hours of work. Gravina had been disciplined for napping during his meal break, his lawyer said. Gravina's case received class-action status in 2011, the year he retired. After losing at the trial court level, city lawyers appealed, arguing state meal break regulations do not apply to employees of cities like Los Angeles, which operate under voter-approved charters. An appeals court also sided with the drivers, saying issues of vehicle and public safety trumped any local governance concerns. Councilman Mike Bonin called the court rulings in the case "obscenely ridiculous," saying the image of a city employee in uniform in a city vehicle sleeping would be "an affront" to his constituents. Krekorian said the public would also draw the wrong conclusions upon seeing multiple trash trucks parked outside a restaurant. "It looks as though they're not tending to their duties," he said ...

The Office of Administrative Law approved the new Independent Medical Review (IMR) and Independent Bill Review ( IBR) regulations . Both sets of regulations were filed with the Secretary of State on February 1 2 , 2014 and are effective immediately . Prior to March 1, 2014, any version of the IMR Application form adopted by the Administrative Director under section 9792. 10.2 may still be used.

The final IMR regulations include revisions to the IMR application form and improved instructions .Clarification that IMR determination cannot be based solely on information provided by a UR determination . And provisions for penalties to be assessed against a claims administrator for failure to timely produce medical records

The final IBR regulations include revisions to the forms used by providers to request a second bill review and IBR . Limitations on the consolidation of separate IBR requests to 20 requests . Required index of supporting documentation . And updated versions of the Electronic Medical Billing and Payment Companion Guide a s well as the California Division of Workers’ Compensation Medical Billing and Payment Guide ...

People injured in an accident or at work sometimes file for monetary compensation, and according to some studies those who file tend to have worse long-term health than those who do not. A new survey of Australian accident victims found that claims stress often comes from confusion about the process, delays and related medical assessments. Those who were most stressed by filing a claim tended to have higher levels of disability years later.

According to the article in Reuters Health, study author David M. Studdert of Stanford University in California said past studies have compared people who filed for compensation to people who did not, but those groups might have different types of injuries to begin with. Another aspect to consider is that people who file claims have an incentive to exaggerate their symptoms to receive more compensation for longer. "The novelty of this study was to look within a group of claimants to test whether those who reported experiencing the most stress also had the slowest recoveries," Studdert said. "They did."

He and his colleagues polled a random selection of more than 1,000 patients hospitalized in Australia for injuries between 2004 and 2006. Six years later, 332 of the patients who had filed for workers' compensation or another accident claim told the researchers how stressful the process had been. Claims can take four to five years to conclude, Studdert noted. A third of the claimants reported high stress from understanding the claims process and another third were stressed by delays in that process. A slightly smaller proportion said repeated medical evaluations and concern for the amount of money they would receive were sources of stress.\Negative attitudes from doctors, friends, family or colleagues, on the other hand, did not seem to be common sources of stress.

People with the most stress tended to score higher on a disability scale and have higher levels of anxiety and depression and lower quality of life, the researchers reported in JAMA Psychiatry. "While it's intuitive that the compensation process is going to be stressful for some claimants, what is less clear is whether that stress has a substantial impact on recovery many years after the injury," Studdert said. "We were surprised by the size of the compensation effects on outcomes like level of disability and quality of life - they were fairly strong," he told Reuters Health.

"There is much debate at the moment about the role of ‘systems,' in this case ‘compensation systems' on health outcomes," said Michele Sterling, who studies injuries and rehabilitation at the University of Queensland in Herston, Australia. She was not involved with the current study. "If it can be established which parts of the process cause stress and/or poor outcomes or recovery then the system could look at targeting these specific areas and improve them," Sterling told Reuters Health. "Some insurance regulators are already trying to do this in some areas." This study deals with severe injuries that require hospitalization, and her own research focuses on more minor injuries, she noted, but the relationship between stress and health is likely the same, she said. She has found that posttraumatic stress symptoms predict poor recovery, and that could be worsened by stresses in the claims system, she said.

"Our study joins many others that show the rate of mental health problems among people who are injured is astonishingly high," he said, adding that medical systems are excellent at treating physical injuries but not as good at treating mental conditions Studdert said. "I think the point that needs to be made is that those managing these systems, insurers or workers' compensation boards, or no fault automobile compensation schemes, should realize that they are undermining their own mission of getting workers back on their feet if the process is unnecessarily stressful," said Katherine Lippel, who studies occupational health and safety law at the University of Ottawa in Ontario, Canada and was not involved in the study. The authors suggest that compensation schemes could be redesigned to get the process over with quicker and make it easier for patients to understand, which could alleviate some sources of stress.

Studies such as this one may be a basis to seek apportionment of permanent disability based upon causation. New Labor Code sections 4663, subdivision (a) and 4664, subdivision (a) eliminate the bar against apportionment based on pathology and asymptomatic causes. Thus, under the post SB 899 workers’ compensation system, apportionment of permanent disability shall be based on causation (§ 4663, subd. (a)), and the employer shall only be liable for the percentage of permanent disability directly caused by the injury arising out of and occurring in the course of employment. Creative trial work coupled with a comprehensive forensic presentation may accomplish a persuasive argument to apportion away the effects of stress from the disability after a physical industrial injury ...

A federal judge has ruled he is without authority to decide whether Sacramento County should continue workers’ compensation payments to a former sheriff’s deputy who survived a 2005 helicopter crash that killed two other deputies.

According to the report in the Sacramento Bee, U.S. District Judge Morrison C. England Jr. threw out Eric Henrikson’s lawsuit that claimed the county is not entitled to offset his $26 million recovery from the helicopter’s manufacturer against his workers’ compensation. England ruled that Henrikson "has identified no basis for this court’s jurisdiction over this matter." Henrikson’s arguments against the county’s third party credit rights, including a contention that the county waived those rights because it paid the benefits for five years before stopping last year, "are issues that must be addressed" by the California Workers’ Compensation Appeals Board, the judge said. Contrary to an argument by Henrikson’s lawyers, the judge also ruled that there is nothing in the documents memorializing Henrikson’s settlement with Turbomeca S.A., the French company that manufactured the helicopter’s engine, obligating the county to continue workers’ compensation payments. Henrikson’s lawyers argued that the county waived its credit rights when it agreed to forgo a claim for part of the Turbomeca settlement money.Not so, said Judge England. "The waiver is utterly silent with regard to any impact on separate workers’ compensation proceedings," he wrote in a 12-page order.

Turbomeca has never publicly admitted liability, but it settled two lawsuits accusing it of supplying a defective part that caused the helicopter to slam into a hillside near Lake Natoma on July 13, 2005. The company settled with the families of Joseph Kievernagel and Kevin Blount, the deputies who died in the crash, and with Henrikson. The settlement bars the parties and lawyers from publicly discussing its terms, and the amount of money received by the families of the deceased deputies has never been revealed. The amount Henrikson received was disclosed as a result of his suit against the county. Turbomeca also paid Sacramento County $1.5 million to resolve its suit over various damages alleged to have resulted from the crash.

The incident ended Henrikson’s career in law enforcement. He was 28 at the time and had been with the Sheriff’s Department eight years. He had collected $2 million in workers’ compensation before the county pulled the plug in May on the monthly payments and medical coverage. Kievernagel and Blount were 36 and 29, respectively, when they perished in the crash ...

The Bee reports that Sacramento County Superior Court has swallowed a 23 percent budget cut over the last five years. With 230 of 800 employees gone, the pain is acute in every aspect of court operations. Twenty-five court counter windows have closed. Courts remain open, but the wheels of justice grind so slowly that a lot of people have given up. Statewide, civil filings dropped 43 percent over three years ending in fiscal 2011-12. "Access to justice has been hurt badly, and it affects everybody in the community," said Robert Hight, the court’s presiding judge. In Sacramento, the queue at family court can take seven hours. Small-claims courts are on life support, if they operate at all. And getting a trial date is not a guarantee there will be a courtroom available that day. Some local trials have been continued to a later date multiple times, for months at a time.

The cuts hurt companies large and small, say business advocates. A worker who needs a restraining order but fails to make it to the front of the line will have to go back another day. The attorney whose trial was bumped will have to prepare for trial all over again. "I think some people are giving up," Hight said. Couples frustrated with family court split and don’t file, he said. And some business owners resolve disputes outside the court system. They pay for private alternative dispute-resolution services instead of using the tax-supported justice system.

As stated in a 2009 New York Times editorial, "[A]t some point, slashing state court financing jeopardizes something beyond basic fairness, public safety, and even the rule of law. It weakens democracy itself." Since 2009 when this editorial was published, California trial courts have lost nearly three-quarters of a billion dollars in State General Fund support.

California has the largest judicial system of any state, but it has suffered the deepest financial reduction of any state, according to a new report on the state of the judiciary in Sacramento County. Statewide, the judicial branch has undergone $1 billion in cuts over the last six years. Fifty-one courthouses and 205 courtrooms have closed. After five years of court cuts, there is no fat left in the system. "People lose faith and feel it is no longer open to them," said Tani Cantil-Sakauye, chief justice of the California Supreme Court. "It’s a nefarious way to deny people their rights."

Because the federal Constitution gives priority to criminal cases, state budget cuts have disproportionately affected civil courts where most business cases are filed. A 10 percent cut in court funding translates to a 40 to 50 percent cut in access to justice in civil cases because that’s the only place to cut, said Nancy Drabble, executive director of the California Consumer Attorneys Association. This of course has an adverse effect on Workers' Compensation subrogation efforts. Delays affect both employees and employers, said Allen Zaremberg, president and CEO of the California Chamber of Commerce.

Gov. Jerry Brown’s proposed state budget includes $100 million for trial court operations and $5 million to support the state judiciary. Cantil-Sakauye, chief justice of the California Supreme Court ...

Though parts of the Affordable Care Act have been in place since 2010, key reforms began on January 1, 2014. According to industry experts quoted in a Claims Journal article,,the ACA won’t affect the medical bill payment process; however, insurers will likely see an increase in the cost of medical care for auto accident patients, more subrogation liens from health insurers and the potential for delayed treatment in workers’ compensation claims.

According to a Travelers white paper, The ACA and its Potential Impact on the P/C Industry, some key ACA components expected to affect the P/C industry include:a 15 percent increase in demand for a fixed supply of healthcare services. A potential increase in costs in pharmacy and durable medical equipment (DME) taxes and assessments by 1.5 percent and 2.3 percent respectively. Enhanced electronic record keeping and sharing of medical data among providers.

Michele Hibbert-Iacobacci, vice president of information management and support for San Diego-based Mitchell International, has been with the company since 1994, since they acquired the property/casualty bill review company that she worked for at that time. She described Mitchell’s general predictions for the ACA’s impact on property/casualty lines and workers’ compensation in 2014. "We don’t see any changes in the way bills are paid. However, because of the extensive amount of population predicted that would be joining the health care system that didn’t have it before, it could impede patients from getting care as quickly as they do today," said Hibbert-Iacobacci, emphasizing that for auto injuries, in particular, patients will flock to emergency rooms because they won’t be able to get in to see their primary care physician.

Another prediction, according to the Mitchell exec, is that subrogation is going to become an even bigger deal as more patients become insured. "Today, if you and I get in an automobile accident, we may go to the emergency room, if we have insurance, and usually we get referred to our primary care to start directing our care. They’re being paid by the healthcare [carrier], but the healthcare [carrier] is not going to tolerate that for a very long period of time. They’re going to want their money from the property/casualty insurer," said Hibbert-Iacobacci. Auto is particularly vulnerable because there are policy limits for available just for medical expenses. "We will see that in auto, because auto has the money. They’ve got it there in their pocket. They plan on spending it, up to the policy’s limit, if need be, for the patient. It’ll just be more frequent than it ever was before. The carriers need to really have an expectation that their process of subrogation is going to take more time than it ever did before,"said Hibbert-Ioabacci.
Impact on Workers’ Comp Slow

As far as workers’ compensation, Hibbert-Iacobacci doesn’t think the ACA will have an immediate effect. "In workers’ comp, we do not see an immediate change initially,"she said. During the Casualty Actuarial Society’s (CAS) Ratemaking and Product Management Seminar held last year, Anne M. Petrides, a director and consulting actuary with Towers Watson, noted that greater access to healthcare could lower costs in workers’ compensation if it created a healthier workplace.

Ruth Estrich, chief strategy officer for MedRisk, a company that specializes in return to work treatment programs, thinks the ACA will impact workers’ compensation in two ways. Like Petrides, she said there could be a benefit if injured people turn to their healthcare provider instead of potentially claiming a work injury. On the flip side, Petrides said that if there was a provider shortage or delayed treatment, it could increase costs. Estrich said that if there is a provider shortage, treatment could take longer for the majority of workers’ compensation claimants. "Reducing access to primary physicians could have a significant impact on workers’ comp," said Estrich. Estrich said that given the choice, primary care physicians will treat regular patients before workers’ compensation claimants. That’s due to the necessary authorization for treatment, fee schedules, litigious nature of those types of claims and the extensive paperwork involved ...

Despite efforts by the Obama administration to ease shortages of critical drugs, shortfalls have persisted, forcing doctors to resort to rationing in some cases or to scramble for alternatives, a government watchdog agency said on Monday. At the end of the day, this will translate to increases in medical costs for payment systems including workers' compensation. According to the article in the New York Times, drug shortages have become an all but permanent part of the American medical landscape. The most common shortages are for generic versions of sterile injectable drugs, partly because factories that make them are aging and prone to quality problems, causing temporary closings of production lines or even entire factories. The number of annual shortages - both new and continuing ones - nearly tripled from 2007 to 2012.

The analysis by the United States Government Accountability Office, released Monday, was required by a 2012 law that gave the Food and Drug Administration more power to manage shortages. The watchdog agency was charged with evaluating whether the F.D.A. had improved its response to the problem, among other things. The accountability office concluded that the F.D.A. was preventing many more shortages now than in the past - 154 potential shortages in 2012 compared with just 35 in 2010 - but that the number of shortages has continued to grow.

"We are at a public health crisis when we don’t have the medicines to treat acutely ill patients and we don’t have the basics like intravenous fluids," said Erin Fox, a drug expert at the University of Utah whose data was used in report. The most acute shortage now is that of basic I.V. fluids, she said.

The drug industry rarely spells out the precise reason for a shortage, citing its need to protect competitive trade information. Dr. Douglas C. Throckmorton, a senior F.D.A. official who deals with shortages, said in written testimony released on Monday that 66 percent of production disruptions that led to shortages were caused by quality problems and efforts to fix them.

The 2012 law required that drug companies provide the F.D.A. with a general reason, but Ms. Fox said that it was often not specific enough to understand what was driving the shortage.

Economic factors are also contributing to the shortages. Narrow profit margins are making some drug companies reluctant to invest in fixing old production facilities. Dr. Throckmorton compared aging drug facilities to an old car, which requires significantly more upkeep than a new one. Changes in Medicare reimbursement and the role of group purchasing organizations, which buy drugs on behalf of hospitals, could also be contributing, by further reducing prices.

The F.D.A. said in a statement that it is “committed to the prevention of new drug shortages and the resolution of ongoing drug shortages, which remain a significant public health issue in the United States.” ...

Workers’ compensation and commercial auto risks saw the steepest rate increases in January at +4% compared to the same month in 2013, but the commercial-lines market overall continued its moderating trend, according to MarketScout research summarized in PropertyCasualty 360. MarketScout officially listed January’s composite rate at +3%, the same as December, but CEO Richard Kerr notes, "If we were to post rate changes by fractional increments, you would see the actual increase at 2.55 percent, so the moderation trend continues."

Recapping the previous year, MarketScout notes that 2013 began with a composite rate increase of +5 percent, moderated slightly in July,;ended up at +3 percent at year-end. For January, Kerr says, "Rates for five coverage classes declined 1% as compared to one year ago. No coverage classifications had a rate increase. By account size, half the accounts measured enjoyed premium reductions of 1%. By industry class, four out of seven were down 1%." He explains, "Additional capacity, insurance-linked securities and a more stable economic environment (despite recent stock-market adjustments) are partly responsible for the moderating rate environment."

Both workers’ comp and commercial auto saw 4% rate increases. BOP, general liability and umbrella/excess rates were up 3%. Commercial property, business interruption, professional liability and D&O rates were up 2%. Inland marine, EPLI, fiduciary, crime and surety risks all increased by 1%. Small accounts saw the steepest rate increases at 4%, medium accounts were up 3%, large accounts up 2% and jumbo accounts up 1%. By industry, risks in manufacturing, contracting, service and transportation all saw 4% rate increases. Habitational risks were up 3%, public entity and energy risks were up 2%.

Personal lines rates also moderated in January, up by 2% year-over-year compared to 3% in December. Kerr says, "2013 was a good year for personal lines insurers. We expect continued aggressive pricing, but that will be geographically modified as appropriate. Coastal homeowners continue to enjoy competitive rates because of the lack of windstorm activity in 2013, despite Superstorm Sandy." For January, he adds, "Homes under $1 million in value were assessed a 2% increase, while high-value homes paid an additional 4%. Both metrics were down 1 percentage point from December 2013." Automobile and personal articles were both increased by 2%, a slight reduction for personal articles and the same rate for automobile ...

On September 9, 2013, applicant, Eun Jae Kim, filed an Application for Adjudication of Claim alleging that she sustained cumulative industrial injury to her back and other body parts while working for B.C.D. Tofu House, Inc. (BCD) as a waitress manager. The employer asserted that upon receipt of the claim a "complete MPN package" was sent to applicant on September 18, 2013. However, on September 19, 2013, the next day, a letter was sent to the employee denying liability "as there is no policy in effect at the time of alleged injuries" and also because there was no "medical proof to substantiate whether your alleged injuries were due to your employment with BCD Tofu House." Notwithstanding the denial letter, a delay notice was sent to applicant on September 30, 2013. The delay letter identified "Dr. David Heskiaoff" as primary treating physician, but did not schedule an initial medical evaluation. The next day on October 1, 2013 she was "informed that defendant" had selected Richard Feldman, M.D., as her new primary treating physician and had scheduled an initial evaluation for October 23, 2013.

Applicant at some point thereafter identified non-MPN physician Gabriel Rubanenko, M.D., as her primary treating physician. A WCJ found that that an expedited hearing was "not appropriate" to address defendant’s provision of medical treatment through its MPN because the case was not admitted. As a result, the defendant filed a Declaration of Readiness to Proceed on October 11, 2013, with the following statement: "Claim is in delay mode. Applicant has been advised of treatment within the MPN. Defendant is attempting to provide medical tretment [sic] within the delay period, within the MPN. Applicant’s attorney has selected a non-MPN physician as primary treactmng [sic] physician. Defendant seeks an order for treatment and transfer of care into the MPN, and an order regarding no liability for non-MPN treatment with Dr. Rubanenko."

An expedited hearing was calendered for November 13, 2013, and the attorneys for applicant and defendant appeared at that time. However, the expedited hearing did not go forward. Instead, the case was ordered off calendar by the WCJ, who wrote on the Minutes of Hearing: "As of 11/13/13 defendant confirms that case is not admitted. Not appropriate for [Expedited Hearing]." The employer filed a Petition for Removal. In his Report, the WCJ confirms that the case was taken off calendar "because the [d]efendant confirmed on the day of hearing that it had not admitted or denied liability for the alleged injury, and the 90-day time frame permitted [by section 5402(b)] to make such a decision had not yet elapsed." The logic was that Rule 10252 of the Rules of the Court Administrator, which provides that a party is entitled to an expedited hearing and decision on the issue of "the employee’s entitlement to medical treatment pursuant to Labor Code section 4600" when "injury to any part or parts of the body is accepted as compensable by the employer." (Cal. Code Regs., tit. 8, § 10252.) In sum, the WCJ reasoned that Court Administrator Rule 10252 precluded an expedited hearing on the issue of applicant’s medical treatment in the MPN because defendant had not accepted any part of the claimed injury as compensable even though the 90-day period allowed by section 5402(b) to make such a decision had not yet elapsed.

The WCAB granted the Petition for Removal in the case of Eun Jae Kim v B.C.D. Tofu House and Cypress Insurance Company and concluded that the WCJ erred by ordering the case off calendar instead of proceeding with the expedited hearing. The reasoning given by the WCJ in his Report for not conducting an expedited hearing on November 19, 2013 is incomplete because it does not take into account the amendment of section 5502(b)(2) by Senate Bill 863 to provide for an expedited hearing to address the question of, "Whether the injured employee is required to obtain treatment within a medical provider network..." The amendment to section 5502(b)(2) does not take into account the pre-existing Rule 10252, which requires that at least one part of the body be accepted as industrially injured in order to obtain an expedited hearing. However, to the extent the amendment to section 5502(b) is inconsistent with Rule 10252, the statutory provision prevails. The WCJ also did not address Rule 9767.6(c) of the Rules of the Administrative Director, which requires an employer to provide up to $10,000 of medical treatment within its MPN "until the date that liability for the claim is rejected."

Section 4616.3(a), provides: "If the injured employee notifies the employer of the injury or files a claim for workers’ compensation with the employer, the employer shall arrange an initial medical evaluation and begin treatment as required by Section 4600." Thus, section 4616.3(a), which is one of the MPN statues, requires a defendant to commence treatment within its MPN when the employer receives notice of the injury from the employee, even if the claim has not been accepted or denied and is within the 90-day delay period allowed by section 5402(b).

Accordingly, the WCAB found that the WCJ erred when he decided not to proceed with the expedited hearing on November 13, 2013 as requested by defendant. Instead, the WCJ should have conducted an expedited hearing to determine whether defendant had met its obligation to provide reasonable medical treatment through its MPN pursuant section 5402(c) and as described in Administrative Director Rule 9767.6(c), or whether defendant was liable for the reasonable cost of medical treatment self-procured by applicant ...