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District Attorney Joyce E. Dudley announced that Daniel John Sifuentez, age 31, pled guilty to one felony count of Insurance Code section 1871.4(a)(1), commonly known as Worker's Compensation Fraud. Sifuentez was employed by the Metropolitan Transit District (MTD) as a bus driver.

An investigation conducted by the California Department of Insurance revealed that Sifuentez went to see his physician complaining of a back injury he received while working out in the gym. Three days later Sifuentez filed a claim with the MTD, fraudulently stating that he injured his back on the job. The investigation further revealed that Sifuentez again lied about his pre-existing back injury during his deposition regarding the claim, and told MTD coworkers that he disliked the MTD and "was going to get even with them." Sifuentez received $5,386.89 in disability payments as well as $3,485 in medical benefits before the fraud was discovered and benefits were terminated. The investigation led to his arrest last July. He was charged with two counts of felony Workers’ Compensation fraud, two counts of insurance fraud, and one count of perjury.

"Filing a fraudulent Worker's Compensation Claim or making a false or misleading statement which could affect the way the claim is handled is a felony," noted Deputy District Attorney Gary Gemberling, who prosecuted the case. Gemberling continued, "Additionally, if someone is untruthful during a deposition about a material fact or intentionally fails to disclose a pre- existing injury or medical treatment, they can be prosecuted for Worker's Compensation Fraud." ...
/ 2014 News, Daily News
A new California Workers’ Compensation Institute (CWCI) analysis of closed and resolved work injury claims from accident years 2005 through 2010 finds that statewide, attorneys were involved in 11.6 percent of all claims (including medical-only cases), 38 percent of lost-time claims and 80 percent of permanent disability claims. The study also confirms that the area in and around Los Angeles remains a hotbed for California workers’ compensation litigation, especially compared to Northern California -- including San Francisco and most of the Bay Area -- where attorney involvement rates on lost-time claims are nearly 15 percentage points lower.

Medical-only claims make up about 75 percent of all California workers’ comp claims, but because less than 2 percent of them involve an attorney, and those that do account for less than 1 percent of workers’ comp benefits statewide, the Institute study focuses on a sample of 262,490 closed and resolved indemnity claims with 2005 through 2010 injury dates. These claims, all of which involved either temporary and/or permanent disability payments, accounted for $7.6 billion in total payments - nearly $7.1 billion in medical and indemnity benefits, and another $523 million in allocated loss adjustment expenses (ALAE). A total of 99,913 (38.1 percent) of these indemnity claims involved an applicant attorney, a defense attorney, or both, with paid benefits and expenses on those claims averaging $62,652 ($57,679 benefits + $4,973 ALAE ) which translates to $6.26 billion, or 82 percent of all payments in the indemnity claim sample.

Though the attorney involvement rate for closed and resolved indemnity claims statewide was 38 percent, as in past studies, litigation was more prevalent in the Los Angeles Basin, where 46 percent of all lost-time cases in Los Angeles County involved an attorney. The attorney involvement rate also was above the statewide level in Orange County, Ventura/Santa Barbara/San Luis Obispo Counties, and in the Inland Empire, though it was slightly below the statewide rate in San Diego. In comparison, attorneys were involved in 34 percent of similar cases in San Jose, which was the highest rate in Northern California, while the rate for rest of the Bay Area was 31.4 percent, well below the statewide rate. Limiting the analysis to just permanent disability (PD) claims, the study found attorney involvement rates ranging from a low of 75.2 percent of the Bay Area PD claims to 83.8 percent of the PD claims in Los Angeles County. The study also found Orange and Los Angeles Counties and the Inland Empire have the lowest closure rate for attorney involvement claims in the state, while average claim costs are among the highest.

CWCI has published more details, including regional data on attorney involvement rates, claim payments and closure rates in a report, "Attorney Involvement in California Workers’ Compensation, AY 2005-2010", which is available to CWCI members and nonmember subscribers who log in to the Institute’s website at www.cwci.org ...
/ 2014 News, Daily News
The Division of Workers’ Compensation (DWC) has issued a notice of public hearing to revise the hospital outpatient departments and ambulatory surgical centers fee schedule (HOPD/ASC fee schedule).

The public hearing has been scheduled for 10 a.m., Tuesday, March 11, in the auditorium of the Elihu Harris Building, 1515 Clay Street, Oakland, CA 94612. Members of the public may also submit written comment on the regulations until 5 p.m. that day.

For services rendered before January 1, 2014, the pre-2014 Official Medical Fee Schedule (OMFS) physician fee schedule applied to all covered medical services provided, referred, or prescribed by physicians regardless of the type of facility in which the services were provided.

The OMFS HOPD/ASC fee schedule applies only to facility fees for emergency room visits performed in a hospital outpatient department and surgical procedures performed in a hospital outpatient department or ambulatory surgical center.

Facility allowances for non-surgical procedures and non-emergency room visits rendered to outpatients are determined under the pre-2014 OMFS physician fee schedule. These services include clinic services and diagnostic tests (other than tests that are payable under the OMFS for diagnostic laboratory services).

Given the outdated nature of the pre-2014 OMFS physician fee schedule and the newly adopted OMFS RBRVS-based physician fee schedule, DWC proposes to coordinate the HOPD/ASC fee schedule with the OMFS RBRVS-based physician fee schedule.
The HOPD/ASC fee schedule provides a default payment methodology and an alternative payment methodology for determining the maximum allowable amount for facility fees. Facilities may make an annual election to apply the alternative payment methodology to all of their claims.

Due to changes in licensing requirements of ASCs and the fact that the alternative payment methodology is rarely elected, the proposed amendment would eliminate the alternative payment methodology for services rendered on or after the effective date of the proposed amendments.

The notice, text of the regulations, and a RAND working paper analyzing the impacts of the proposed amendment can be found on the proposed regulations webpage ...
/ 2014 News, Daily News
A psychologist apologized in a Los Angeles federal court for defrauding the federal government with inflated and fraudulent workers compensation claims.

The indictment handed down June 8, 2011 charged clinical psychologist Arnold P. Nerenberg, co-founder of the Whittier-based World Legion of Power bodybuilding organization, with seven counts of mail fraud. The indictment alleged that from June 2000 through April 2008, he submitted fraudulent paperwork to obtain compensation for psychological conditions that were never diagnosed and were reimbursed for medical expenses that were never incurred. According to court documents, Nerenberg billed the U.S. Postal Service for nearly $1 million in bogus medical fees and received about half of that. Also charged in the case are two ex-postal workers, Lois L. Washington, 47, of Inglewood, and Cetric T. Fletcher, 51, of Long Beach. Fletcher allegedly pocketed more than $200,000 as a result of the scheme, while Washington allegedly made more than $145,000.

In some instances, Nerenberg allegedly billed the government for treatment sessions with Washington and Fletcher when records indicate the psychologist was out of the area or out of the country. According to court documents, one of his "patients" was actually an HSI undercover agent posing as a postal worker for whom Nerenberg secured disability pay from the Department of Labor based upon his claimed acute fear of dogs.

Nerenberg said he was grateful federal agents caught him. In an emotional speech, the 72-year-old told the judge he overbilled patients whose costs were covered by the government so he could treat those who could not pay. After his arrest, Nerenberg said a friend told him: "It's too bad you got caught." He said he disagreed. "I think it's too bad I committed the crime. I'm grateful I got caught," Nerenberg said. "I wanted to stop what I was doing, but I was caught in an inner struggle. ... I was grateful for the vigorous federal intervention."

In an agreement with prosecutors, Nerenberg pleaded guilty to one count of fraud. Six other counts were dismissed. He was sentenced to five years' probation with the first 12 months on home confinement and electronic monitoring. He also must pay restitution of $172,754. The two ex-postal workers indicted with Nerenberg in the 2011 case reached plea agreements and were sentenced earlier to probation and restitution.

U.S. District Judge Christina A. Snyder said she considered letters from Nerenberg's family and friends in deciding his sentence. The prosecutor, Assistant U.S. Attorney Rozella Oliver, said she was persuaded that there were mitigating factors weighing in Nerenberg's favor. She agreed home confinement was an appropriate sentence. "Dr. Nerenberg has done far more good than harm," said his attorney, who noted that former patients were in the courtroom to support him. She said he had suffered public humiliation and would probably lose his medical license. "My remorse is profound," said Nerenberg, who spoke of his pain when agents went to interview his former patients. "They came to me for healing, and the harm that came to them - I just couldn't face it," he said, his voice breaking. Nerenberg said he is turning his life around, concluding, "I have not always lived with honor, but I will die with honor."

The judge said she was impressed with Nerenberg's remarks and felt he was sincerely sorry. "But this is a very serious crime, defrauding the government of $172,000, whether with good or bad intentions," Snyder said. She then imposed his sentence.

The California Board of Psychology records do not reflect any disciplinary action against Nerenberg. His license is currently active ...
/ 2014 News, Daily News
The promise of a large landscape project attracted six alleged unlicensed contractors to a Salinas undercover sting operation conducted on January 30, 2014, by the Contractors State License Board (CSLB) with assistance from Monterey County District Attorney's Office investigators.

After giving bids that exceeded the legal $500 limit for unlicensed contracting, suspects were cited for illegal contracting and other charges and ordered to appear in Monterey County Superior Court.

CSLB’s Statewide Investigative Fraud Team (SWIFT) held the operation at a single-family home with a large, empty backyard where investigators requested bids for various landscaping projects. The highest bid received during the sting was $15,000 for new sod and related projects. Suspected unlicensed landscaping operators were found advertising on online bulletin boards, including craigslist.org.

"Professional landscapers are not like gardeners who usually don’t need a contractor license for maintenance or small, low-cost projects," CSLB Registrar Steve Sands said. "You always should check CSLB’s website to see if the landscaper bidding on your job has an active contractor license that is in good standing."

All suspects were cited on misdemeanor charges for contracting without a license (Business and Professions Code section 7028). In California, all home improvement jobs valued at $500 or more (combined labor and material costs) must be conducted by a company or person with a CSLB-issued license. First-conviction penalties for contracting without a license include up to six months in jail and/or up to $5,000 in fines. Penalties escalate with successive violations.

The six also were cited on a misdemeanor charge of illegal advertising (Business and Professions Code section 7027.1). State law requires contractors to place their license number in all print, broadcast, and online advertisements. Those without a license can advertise for jobs valued at less than $500, but the ad must state that they are not a licensed contractor.

Three phony contractors also were cited for requesting an excessive down payment (Business and Professions Code section 7159.5). The legal limit for down payments is 10 percent or $1,000, whichever is less. Often unlicensed contractors fail to obtain workers' compensation insurance for their workers.

Suspects are scheduled for arraignment at 8:15 a.m. on March 13, 2014, in Monterey County Superior Court, 230 Church Street, Salinas ...
/ 2014 News, Daily News
In this Longshore and Harbor Workers' Compensation Act (LHWCA) case, Rick Carter injured his back and neck at work in 1991, and he has been permanently totally disabled since October 1, 1993. In 1996, the parties entered stipulations, and the ALJ awarded Carter disability and medical benefits based on those stipulations. In this protracted case, litigation has continued over disputes involving post award issues.

In the current dispute, Rick Carter appeals to the 9th Circuit Court of Appeals in California from the district court’s order awarding him $14,268.50 in attorneys’ fees and costs on his fee petition in the amount of $22,585.The district court’s selection of a blended hourly rate of $400, combined with its reduction in the number of compensable hours by almost half, from 60.9 to 35 hours, resulted in Carter receiving a 27 percent reduction in fees: from $22,585 to $14,268.50. Carter contends on appeal that the district court erred as a matter of law by reducing the fee award without sufficiently explaining its rationale for the reduction.

The panel in the published opinion of Carter v Caleb Brett LLC held that the district court erred as a matter of law by reducing the fee award without sufficiently explaining its rationale for the reduction. The panel vacated the district court’s order awarding attorneys’ fees and costs, and remanded for the district court to articulate the basis for its fee determination with greater specificity.

When determining a reasonable fee award under a federal fee-shifting statute such as the Longshore Act, a district court must first calculate the lodestar by multiplying the "number of hours reasonably expended . . . by [the] reasonable hourly rate." This Circuit requires that courts reach attorneys’ fee decisions by considering some or all of twelve relevant criteria set forth in Kerr v. Screen Extras Guild, Inc., 526 F.2d 67 (9th Cir. 1975). The Kerr factors are (1) the time and labor required; (2) the novelty and difficulty of the questions involved; (3) the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the "undesirability" of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.

A mere statement that a court has considered the Kerr guidelines does not make a decision within the court’s discretion. Rather, the court must "articulate with sufficient clarity the manner in which it makes its determination." While detailed calculations are not mandated, "something more than a bald, unsupported amount is necessary" to affirm an award of attorneys’ fees. As a general rule, a fee-awarding court that makes a substantial reduction in either documented time or authenticated rates should offer reasonably explicit findings." The district court must also "explain how it arrived at its determination with sufficient specificity to permit an appellate court to determine whether the district court abused its discretion in the way the analysis was undertaken."

The district court’s selection of a blended hourly rate of $400, combined with its reduction in the number of compensable hours by almost half, from 60.9 to 35 hours, resulted in Carter receiving a 27 percent reduction in fees: from $22,585 to $14,268.50. In its fee order, the district court identified the twelve Kerr factors and mentioned two that it considered most relevant: (1) "the disproportionate relationship between the amount of fees incurred($22.585.00) and the amount at stake in the litigation ($3,220.20)"; and (2) that "Carter [did] not bear primary responsibility for the fact that this matter became considerably more protracted than the ‘quick and inexpensive mechanism’ envisioned by the statute." Beyond that very brief discussion, however, the district court offered no other analysis before concluding that "[u]nder the circumstances here, for purposes of fee-shifting, 35 hours of attorney time at a blended hourly rate of $400 is reasonable."

The Court concluded that the district court did not explain its decision to reduce Carter’s fee request with sufficient specificity to allow it to review the reasonableness of the fee award ...
/ 2014 News, Daily News
Employers with large concentrations of employees will find an increasingly difficult workers’ compensation market in 2014 as insurers have begun underwriting policies that contemplate coverage without the financial protections afforded by the federal Terrorism Risk Insurance Program Reauthorization Act (TRIPRA), Marsh said in a new report.

Barring Congressional action, TRIPRA will expire on Dec. 31, 2014, and the uncertainty over its reauthorization has resulted in higher rates and less capacity for employers.

Not only are insurers less willing to underwrite risks with large employee concentrations, some are setting policy expiration dates on 2014 programs to coincide with the anticipated expiration of TRIPRA, effectively pushing the challenges created by the uncertainty on to insurance buyers, Marsh said in its latest Marsh Risk Management Research briefing: Pending TRIPRA Expiration Impacts Workers’ Compensation Industry.

"Several factors have motivated insurers to seek higher workers’ compensation rates and premiums over the last 24 months, including higher claims costs, historical unprofitability and a continued weak interest rate environment," said Christopher Flatt, Workers’ Compensation Center of Excellence leader, Marsh. "These issues are now being compounded by the uncertainty around TRIPRA’s reauthorization, which is contributing to an already challenging market."

"The state-regulatory nature of workers’ compensation prevents insurers from excluding terrorism-related losses, so the only way they can reduce their terrorism exposure and protect their assets is to limit the amount of capacity deployed and raise rates. Starting the renewal process early and providing insurers with a differentiated view of the insured’s terrorism risk profile can help better manage a potentially challenging renewal," Flatt added.

In the report, Marsh notes that providing underwriters with the highest quality of employee-accumulation data to run in their catastrophe models, including for example, the total number of employees working during peak shifts and the percentage of the workforce in the field or telecommuting, will help to ensure carriers have an accurate view of the risk they are considering.

In addition, employers with large concentrations of workers should be prepared to provide insurers with additional detailed information including: employee marital/dependency status; physical security of the building; how access to the building is controlled; management policies around workplace violence, weapons, and employee screenings; and emergency response and crisis management plans and procedures, Marsh noted in the report ...
/ 2014 News, Daily News
Last fall, the National Football League scored a huge victory in California, helping push through a new law barring most professional athletes from filing workers' compensation claims in the state. The NFL, successfully lobbied the state legislature to pass AB 1309, which prohibits athletes who spent most of their careers playing for teams outside California from filing claims in the state. The leagues believed the law could save them from exposure to countless claims from injured athletes. But that win has come at a cost.

The Los Angeles Times reports that publicity from a high-profile battle over the legislation prompted players from around the country to file more than 1,000 injury claims just prior to a September deadline - a huge influx that could cost the nation's top professional sports leagues hundreds of millions of dollars to resolve. In the first two weeks of September, current and retired players filed 569 claims against NFL franchises, 283 claims against Major League Baseball clubs, 113 against National Hockey League teams and 79 against NBA squads. Nearly 70% of the filings include allegations of head or brain injuries caused by repetitive trauma. Most of these athletes appeared to have never played for a California team; they filed claims based on repetitive injuries they say were sustained in part during road games played in the state. It is those claims that are now barred under the new California law.

Among the athletes rushing to beat the deadline were sports legends such as Miami Dolphins quarterback Dan Marino, Baltimore Orioles pitcher Jim Palmer and Houston Rockets center Hakeem Olajuwon, as well as many lesser-known retirees, some suffering serious physical impairment. A number of active players, including San Francisco 49ers standouts Michael Crabtree and Frank Gore, also filed claims.

The six sports leagues affected by the new law - a group that includes Major League Soccer and the Women's NBA - had predicted a jump in filings before the deadline. Still, the size of the increase was surprising. The volume of claims in September was about 10 times higher than average monthly levels since 2011. The workers' compensation data highlights the huge scale of the injury legacy that confronts American professional sports franchises. More than a third of the final batch of claims lodged before the new statute became effective Sept. 15 wouldn't have been affected by the new law, the Times analysis found. Advocates for injured athletes say that the months-long fight over the bill, which drew national attention, helped alert athletes who otherwise wouldn't have known they could seek benefits.

More than three-quarters of the claims filed against NFL teams in the first two weeks of September alleged head or brain injury. Half of baseball players and just over 90% of hockey players made similar claims. An NFL study of past filings found that the average California claim cost teams $215,000 to resolve, a number that could be far higher for players with debilitating brain disease. Unlike other states, California long permitted claims from players who did not play for in-state teams so long as they participated in at least one game or practice here. California also recognizes cumulative injuries incurred over time. And although California has a one-year statute of limitations for claims, that restriction is waived when workers aren't properly notified of their right to file, which was the case with many players for decades. As a result, many athletes with slow-to-develop disease such as dementia turned to California when legal doors in other states had long been shut.

In anticipation of that deadline, workers' compensation attorneys scrambled to find players and file on their behalf. San Diego lawyer Ron Mix squeezed in almost 300 athlete cases in the final month, according to state data. To get through the mountain of paperwork, he said he paid his staff triple overtime and hired numerous temp workers. "We were working 12 to 16 hours a day, seven days a week," said Mix, a former Hall of Fame lineman for the San Diego Chargers.

The Times analysis showed that 363 of the 1,064 claims made in the first two weeks of September listed a California-based team as the employer, indicating they likely didn't need to beat the Sept. 15 deadline. In addition, a number of still-active players filed injury claims, something that rarely occurred in the past because players feared being cut by their teams.

"Everyone wanted to beat the deadline," said Mel Owens, a Laguna Hills attorney and former Los Angeles Ram linebacker. He filed more than 250 claims for athletes in the final push, according to the analysis.

Overall, between February, when the bill was introduced, and Sept. 15, a total of 1,980 athlete claims were filed in California - compared to 1,170 in all of 2012. More claims were filed in that nine-month period than any other year, by far, the analysis found. Although it's impossible to determine how many athletes will be barred from filing under AB 1309, attorney Mix estimates it could top 4,000. In recent months, he said he's gotten calls from about 150 athletes that he had to turn away because they missed the deadline ...
/ 2014 News, Daily News
The Sacramento District Attorney announced the arrest of 11-year veteran California Highway Patrol (CHP) Officer Daniel Cory Clapp, stationed in Lassen County, and his wife, CHP dispatcher Jolea Marie Clapp, on five felony counts of workers’ compensation insurance fraud.

Daniel Clapp filed his workers’ compensation claim based upon injuries he allegedly received during a scuffle while making an arrest on December 27, 2011. Daniel and Jolea Clapp stated to the workers’ compensation doctor that Daniel was unable to drive, lift heavy items, and that pain prevented him from performing his duties as a CHP officer.

The CHP’s Internal Affairs Section, Workers’ Compensation Fraud Investigation Unit, conducted surveillance on numerous occasions and observed Daniel Clapp camp, boat, swim and dive. In addition, he was observed driving for long periods of time and cutting and carrying firewood rounds 18" thick and 24" in diameter. Jolea Clapp often accompanied Daniel Clapp on these pleasure outings and would drive for him while in the local CHP jurisdiction and then change driver positions outside of the jurisdiction.

During medical visits in which Daniel Clapp complained of pain, Jolea Clapp forcefully corroborated her husband’s accounts of disabling pain and his inability to perform physical activities that she was observed seeing him perform. The details of the investigation are documented in the 157 page affidavit and felony complaint prepared in the case.

Both defendants are accused of conspiracy to make false statements in support of a workers’ compensation insurance claim and making false statements about the true extent of Daniel Clapp’s physical activities and abilities in order to obtain benefits. Daniel Clapp is additionally accused of perjury for false statements in a deposition.

The amount of the fraud is in excess of $50,000 and the charges carry a potential state prison sentence of up to 5 years and a $150,000 fine upon conviction. The defendants will appear in Sacramento Superior Court in early February 2014. This case is being prosecuted by the District Attorney’s Insurance Fraud Unit. View Arrest ...
/ 2014 News, Daily News
While working as a deputy sheriff for the Nevada County Sheriff’s Department in mid-August 2011, David Lade injured his right shoulder. At the time of his injury, Lade was working a night shift schedule that entitled him to 5 percent shift differential pay. He had been earning the shift differential since 2004, and the differential was paid regardless of whether he worked, took vacation, used sick leave, or received holiday pay.

He was returned to regular work, but in late January 2012 Lade was placed on modified duty at the direction of his physician. From then until he had surgery in early March, Lade worked light duty on the day shift. From the date of his surgery Lade was again off work. In late April, he returned to work full time but remained on modified duty. Sheriff’s deputies on light duty are typically assigned to the day shift, and Lade was no exception.

While Lade was off work, he apparently received his regular full pay, including the 5 percent shift differential. While he was working on the day shift, however, Lade was not paid the differential. In November 2012, the parties went to trial on whether section 4850 entitled Lade to the shift differential while he was working modified duty on the day shift. As relevant here, section 4850 provides that whenever a sheriff’s deputy "who is employed on a regular, full-time basis, and is disabled, whether temporarily or permanently, by injury or illness arising out of and in the course of his or her duties, he or she shall become entitled, regardless of his or her period of service . . . to a leave of absence while so disabled without loss of salary in lieu of temporary disability payments . . . , if any, that would be payable under this chapter, for the period of the disability, but not exceeding one year, or until that earlier date as he or she is retired on permanent disability pension, and is actually receiving disability pension payments, or advanced disability pension payments pursuant to Section 4850.3." (§ 4850, subds. (a), (b)(4).)

The WCJ decided that Lade was entitled to the shift differential. Relying on Johnson v. Contra Costa County Fire Protection Dist. (1972) 23 Cal.App.3d 868, the WCJ reasoned that the county "could not change Officer Lade’s status [from night shift to day shift] for purposes of [section] 4850 so as to avoid indemnification for the shift pay." The county petitioned the board for reconsideration, arguing (among other things) that the WCJ erred "in granting Labor Code [section] 4850 ‘leave of absence’ benefits while [Lade] was not on a leave of absence and in fact [was] working modified duty." Adopting the report and recommendation of the WCJ, the board denied reconsideration.

The Court of Appeal reversed the WCAB in the published opinion of County of Nevada v WCAB and David Lade.

The Court of Appeal rejected Lade's argument stating "We do not believe section 4850 is reasonably susceptible to the interpretation Lade advances" citing Collins v. County of Los Angeles (1976) 55 Cal.App.3d 594. "Here, the Legislature provided that a public safety worker like Lade, when disabled, is entitled to a leave of absence at full salary instead of temporary disability payments. There is nothing in section 4850 that guarantees a worker anything when he is no longer on a leave of absence and is instead back at work. Moreover, there is nothing in section 4850 that can be reasonably understood to mean that a leave of absence is anything less than being absent from one’s employment."

The WCAB order denying reconsideration was annulled, and the matter was remanded ...
/ 2014 News, Daily News
A doctor and an attorney, the final two defendants in a 19 co-defendant case, have been convicted for their role in the largest medical fraud prosecution in the nation for recruiting thousands of healthy patients to undergo unnecessary and dangerous surgeries to fraudulently bill medical insurance companies. Attorney Roy Chester Dickson, 65, Yorba Linda, pleaded guilty to one felony count of money laundering and one felony count of grand theft with white collar crime sentencing enhancements. In the same case, Dickson was found guilty by a jury Nov. 26, 2012, of two felony counts of filing a false personal tax return and was sentenced Dec. 20, 2012, to two years and eight months in state prison and $41,629 restitution on the tax conviction. He is scheduled to be sentenced for the current convictions Aug. 8, 2014, in Department C-45, Central Justice Center, Santa Ana, and faces a maximum sentence of 14 years in state prison.

Doctor Mario Rosenberg, 66, pleaded nolo contendere Jan. 24, 2014, to two felony counts of insurance fraud and white collar crime sentencing enhancements. He faces a maximum sentence of 10 years in state prison at his sentencing March 28, 2014, in Department C-45.

The defendants in the Unity case participated in a $154 million medical insurance fraud scheme that recruited 2,841 healthy people from all over the country to receive unnecessary surgeries in exchange for money or low cost cosmetic surgery. Insurance companies paid out more than $20 million over a 9-month period. The Orange County Grand Jury examined 1,054 exhibits and heard testimony from 56 witnesses over 28 days, resulting in a 70-page indictment. The indicted defendants include an attorney, accountant, three doctors, and patient recruiters known as "cappers." The recruitment of patients, or "capping," is illegal in California.

Andrew Robert Harnen, 59, Rosemead, Unity’s accountant, pleaded guilty to the court Aug. 16, 2013, to two felony counts of conspiracy, eight felony counts of capping or paying for patient referrals, 30 felony counts of grand theft, 30 felony counts of insurance fraud, 30 felony counts of making false and fraudulent claims, one felony count of filing a false tax return, and white collar crime sentencing enhancements for taking over $2.5 million. Harnen was sentenced to five years and four months in prison. The People advocated for a sentence of 41 years and eight months in state prison. The sentence will be served concurrent to the sentence he received Dec. 20, 2012. The defendant was previously sentenced to prison and ordered $904,780 restitution for his Nov. 26, 2012, conviction by a jury of three felony counts of filing a false tax return and six counts of failing to file tax returns.

Doctor William Wilson Hampton, Jr., 58, Seal Beach, pleaded guilty May 8, 2009, to 47 felony counts including conspiracy, insurance fraud, and capping and was sentenced to 16 years in state prison. Doctor Michael Cheeluen Chan, 68, Cerritos, pleaded guilty Aug. 4, 2011, to the court to 40 felony counts including conspiracy to commit insurance fraud, insurance fraud, aiding and abetting capping with white collar crime sentencing enhancements. He faces a sentence ranging from probation up to 28 years in state prison at his sentencing March 28, 2014, at 9:00 a.m. in Department C-45.

The Unity cappers targeted employees from businesses in 39 states who were covered by PPO insurance plans, affecting more than 1,000 employers whose employees became involved in this scheme. They arranged transportation for the patients, scheduled the surgeries, and coached the healthy "patients" on what to say. In exchange for undergoing surgery, the patients received a cash payment, usually between $300 and $1,000 per surgery, or credit toward a free or discounted cosmetic surgery.

The three doctors charged in this case participated in medical insurance fraud for performing unnecessary medical procedures on healthy people with the knowledge that the patients were being recruited. Doctors Chan, Hampton, and Rosenberg performed a total of 1,037 procedures, resulting in insurance billings exceeding $30 million for the facilities fees alone. Unity received over $5.1 million in payment as a result of the surgeries performed by these doctors. The doctors performed many of the surgeries on Saturdays and Sundays and often performed the same procedures on co-workers or members of the same household on the same day. The doctors ignored basic medical protocols such as: 1) Patients receiving surgeries on consecutive days instead of under one anesthesia; 2) Doctors not meeting the patients prior to operating; 3) Doctors not following up with patients after the procedure was completed; and 4) Doctors not obtaining necessary medical information.

Attorney Dickson went to Unity after having previously managed and represented another surgery center involved in similar illegal activities. He was sanctioned by the federal bankruptcy court for filing a fraudulent bankruptcy claim for a doctor at that surgery center. Dickson was hired by Unity to collect payments from insurance companies and patients. He helped the surgery scheme by creating fraudulent documents to disguise illegal capping activities ...
/ 2014 News, Daily News
The San Diego County District Attorney announced charges against four businesses, their owners and several employees who were indicted on various types of insurance fraud including workers compensation fraud, unemployment fraud and tax evasion

Owners of A1 Patio and Remodeling Experts in Encinitas, Christina Engineering in Escondido, Quality Way Building Maintenance in National City and Rufino’s Landscaping of Escondido were all indicted by the grand jury in December for their roles in bilking insurance companies and the state tax board out of $1.5 million. Fourteen defendants were indicted in December. Of those, four were arraigned on January 6, and the remainder is scheduled to be arraigned this week in San Diego Superior Court . They include Joshua Swarthout, James Hooper, Andrew Curtis, Billy Ray Alsbrook, George Norton, Jacob Kuhn, Pat Gee, Tim Mountney, and Tom Jarvis . If the defendants fail to appear for arraignment, warrants will be issued for their arrest.

When an employee of Russ E. Kubart of A1 Patio and Remodeling Experts.injured himself after falling from a deck at a jobsite, Kubart told the employee to tell medical staff he injured himself at home because Kubart did not have workers ’ compensation insurance. Loss to known victims is $160,000. Ten employees of Christina Engineering were indicted for their roles in receiving unemployment benefits at the same time they were being paid cash to work, which they were encouraged to do by their employer. Loss to known victims is $350,000 . Marcos Castaneda , of Quality Way Building Maintenance was indicted on four counts of felony insurance fraud for his role in intentionally lying about his payroll in order to receive reduced workers compensation premiums. Loss to know victims is $133,921. Rufino Aguiluz and his wife, Maria Foulk of Rufino’s Landscaping , were indicted on several counts of insurance fraud, payroll tax evasion and income tax evasion for their roles in failing to report payroll to various workers’ compensation insurance carriers and tax collectors. Loss to known victims is $952,202.

"These are excellent examples of the variations found within the underground economy that continues to negatively impact the California Workers’ Compensation system" said Donald Marshal, Chair of the California Workers’ Compensation Fraud Assessment Commission . "We can see that the victims of these alleged crimes include injured workers and the citizens of the State who must absorb the costs paid for this criminal activity. Congratulations to the San Diego District Attorney’s Office and the California Department of Insurance for their hard work in disrupting the activities of these suspected criminal enterprises." ...
/ 2014 News, Daily News
Robert Oldham Young, 61 , and Rocio "Rosie" Placensia , 32 , of Valley Center, have been charged with conspiracy to practice medicine without a license and multiple counts of grand theft. Young is a published author of the "The pH Miracle," a diet designed to "alkalinize the body." The charges allege Young and his cohorts ran afoul of the law when he went beyond advocating dietary changes and used intravenous treatments on patients housed on Young’s avocado ranch in Valley Center.

Young runs the "pH Miracle Center" in Valley Center. He advertises health retreats and medical diagnostic services on his website. Although not a medical facility, Young accepted patients, including terminally ill people, and housed them in temporary quarters on his avocado ranch. Young came to prominence after appearances on Oprah, centred on his treatment of Kim Tinkham for breast cancer. Tinkham and Young both claimed that he had cured her, but she died of her disease shortly afterwards. Young received multiple degrees from Clayton College of Natural Health (formerly American College of Holistic Nutrition), a school that lacked accreditation from any accreditation agency recognized by the U.S. Department of Education. These include a Master of Science in nutrition (1993), a D.Sc. with emphasis in chemistry and biology (1995), a Ph.D. (1997) and an N.D. (Doctor of Naturopathy, 1999).

In 1995, Young allegedly drew blood from two women, told them they were ill, and then sold them herbal products to treat these illnesses. He was charged with two third-degree felony counts of practicing medicine without a license, but pled guilty to a reduced misdemeanor charge. Young argued that he had never claimed to be a medical doctor, that the women had entrapped him by asking to be part of his research, and that he "looked at the women's blood and simply gave them some nutritional advice." In 2001, Young was again charged with a felony in Utah, after a cancer patient alleged that Young told her to stop chemotherapy and to substitute one of his products to treat her cancer. Subsequently, when an undercover agent visited Young, he allegedly analyzed her blood and prescribed a liquid diet. The case was taken to preliminary trial, but charges were dropped after the prosecutor stated that he could not find enough people who felt cheated by Young. Young dismissed the arrests as "harassment" and stated that he moved to California because the legal climate there was more tolerant.

Young was arrested this month in San Diego and received 18 felony charges relating to practising medicine without a license, and of theft. According to the Medical Board of California's press release chronically ill patients were paying Young up to $50,000 for his treatments.

In a similar criminal case prosecuted by the District Attorney earlier this year, Keith Barton, a La Mesa man was convicted of multiple counts of practicing medicine without a license and grand theft for offering a bogus cure for HIV and cancer. Barton is awaiting sentencing on February 10 . Barton called himself "Dr. Barton" and promised to cure a woman and her children of HIV. One of the children subsequently died as a result of not receiving effective treatment. The victim paid Barton $18,000 for the treatment. He also advised a woman wi th autoimmune disease to surgically extract all of her teeth and to take an ineffective treatment called "Dendritic Cellular Therapy." This victim paid Barton more than $32,000 for his remedies. Barton is not a licensed medical doctor, osteopath or naturopath but shares his name with a real medical doctor who is licensed in California. Barton used the fact that only his middle name differed from the real Dr. Barton to create the impression that he was a licensed professional.

Previous prosecutions by the Consumer Unit include Kathleen Helms, a San Diego woman who posed as a doctor and offered patients non - FDA - approved DMSO infusions as alternative remedies for autoimmune disorders, and Kurt Walter Donsbach, 75, who pleaded guilty to 13 felony charges, including practicing medicine without a license and selling misbranded drugs ...
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John Larkin, a police officer for the City of Marysville, sustained injuries to his neck, right shoulder, left upper thigh, face, right biceps, and nose. He had less than maximum earnings.

At an expedited hearing on the issue of his appropriate earnings rate and his claim for temporary disability, he claimed that he should be entitled to the benefit of the earnings rates established by Labor Code sections 4458.2 and 3362 which specify maximum earning for volunteer police officers. He claimed that the "plain language" of these statutes supported this conclusion. As relevant to this case, section 4458.2 provides: "If an active peace officer of any department as described in Section 3362 suffers injury or death while in the performance of his or her duties as a peace officer, . . . then, irrespective of his or her remuneration from this or other employment or from both, his or her average weekly earnings for the purposes of determining temporary disability indemnity and permanent disability indemnity shall be taken at the maximum fixed for each, respectively, in Section 4453." Section 3362 provides: "Each male or female member registered as an active policeman or policewoman of any regularly organized police department having official recognition and full or partial support of the government of the county, city, town or district in which such police department is located, shall, upon the adoption of a resolution by the governing body of the county, city, town or district so declaring, be deemed an employee of such county, city, town or district for the purpose of this division and shall be entitled to receive compensation from such county, city, town or district in accordance with the provisions thereof."

Following an expedited hearing, the workers’ compensation judge (WCJ) found that sections 4458.2 and 3362 applied only to active volunteer peace officers, not regularly sworn, salaried peace officers, and therefore did not apply to Larkin. Larkin petitioned the Board for reconsideration of the decision, contending the plain language of the statutes entitled industrially injured peace officers to temporary disability payments at the maximum rate. The Board agreed with the reasoning of the WCJ and denied the petition for reconsideration.

The Court of Appeal affirmed the WCAB in the published case of John Larkin v WCAB and the City of Marysville. In doing so, the Court stated that the outcome of Larkin's interpretation "would be an absurd result.."

The policy underlying these statutes is to encourage public service to these agencies by providing maximum benefits to volunteers injured in providing such service. With respect to volunteer firefighters, the Supreme Court recognized these fictitious earnings were created by the Legislature as it was " ‘[c]ognizant of the public service provided by the volunteer civilian firefighter and the potential loss of his earnings from other employment [and] determined that the usual benefit schedules should not apply but that a fictitious earnings component should be used. The liberal disability compensation program not only serves to counterbalance any sacrifice of earning power made to engage in firefighting activity, but also provides an incentive to engage in an important public service.’ " The same policy considerations apply to providing these fictitious earnings for volunteer peace officers.

The Court of Appeal concluded "to give effect to the statutory policy underlying these statutes, we find that sections 4458.2 and 3362 apply to volunteer peace officers only." ...
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Insurance claims services provider Sedgwick Claims Management Services, Inc. said Monday that private equity giant Kohlberg Kravis Roberts and Co. L.P. (KKR), together with Sedgwick's management, have agreed to acquire a majority stake in the company for about $2.4 billion.The majority stake will be acquired by KKR and Sedgwick's management from the company's current group of investors that includes private equity firms Hellman and Friedman LLC and Stone Point Capital LLC. The transaction is expected to close during the first quarter of 2014.

David North, president and CEO of Sedgwick said, "We couldn't ask for a better partner in the next stage of Sedgwick's evolution. KKR has an exceptional record of investing in financial services companies and will be a valuable strategic resource for our organization. We share a commitment to continued innovation in the claims and productivity management industry."

Last Friday, media reports had indicated that KKR was close to buying Sedgwick for more than $2 billion. Sedgwick will be KKR's second acquisition of a claims service provider in a span of four months. In September 2013, KKR agreed to buy privately-held automotive claims services provider Mitchell International Inc. from private equity firm Aurora Capital Group in a deal reportedly valued at more than $1 billion.

Sedgwick specializes in workers' compensation, disability, FMLA, and other employee absence; managed care, general, automobile, and professional liability, warranty and credit card claims services; fraud and investigation, structured settlements, and Medicare compliance solutions. On an annual basis, Sedgwick handles more than 2.1 million claims and has fiduciary responsibility for claim payments totaling more than $11 billion.

In 2010, buyout firms Stone Point Capital LLC and Hellman and Friedman LLC acquired Sedgwick from Fidelity National Financial Inc. (FNF) as well as private equity firms Thomas Lee Partners L.P. and Evercore Capital Partners for about $1.1 billion. Prior to that, the business was owned by insurance brokerage and risk-management company Marsh and McLennan Companies Inc. (MMC). Hellman and Friedman is a private equity investment firm with offices in San Francisco, New York and London. Since its founding in 1984, it as raised and, through its affiliated funds, managed over $25 billion of committed capital. Stone Point Capital is a private equity firm based in Greenwich, Connecticut. Stone Point serves as the manager of the Trident Funds, which have raised more than $10 billion in committed capital to make investments in the insurance, employee benefits and financial services industries.

KKR said that equity for the investment was provided principally by KKR's North American XI private equity fund. UBS Securities LLC, Deutsche Bank Securities, Morgan Stanley, Mizuho, KKR Capital Markets LLC and MCS Capital Markets LLC provided financing for the transaction. KKR has announced several other billion-dollar acquisitions in recent times. In mid-December 2013, the company agreed to acquire specialty finance company KKR Financial Holdings LLC (KFN) in an all-stock transaction valued at about $2.6 billion. In November, KKR agreed to acquire commercial landscaper Brickman Group Ltd. LLC from Leonard Green and Partners L.P. in a deal valued at $1.6 billion. KKR also said in late September that it agreed to acquire the healthcare unit of Japanese consumer electronics giant Panasonic Corp. (PC) for an equity value of about 165 billion yen, or about $1.67 billion ...
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The Division of Workers’ Compensation (DWC) has announced the winners of the 2014 Carrie Nevans Community Service Award. This year’s award recipient in Southern California is Pamela Foust, Zenith Vice President of Claims. Tom Rankin, State Compensation Insurance Fund Board of Directors and president emeritus of the California Labor Federation, AFL-CIO, is the Northern California recipient. The awards will be presented at the upcoming 21st annual DWC educational conference luncheons.

Pamela Foust has been involved in workers’ compensation since 1978. She was a workers’ compensation judge from 1985 to 2010 before joining Zenith. In 2010 she was awarded a Lifetime Achievement Award from the Executive Committee of the State Bar’s Workers’ Compensation Section for her body of work as an attorney and judge. Her seminal treatise California Lien Claims in Workers’ Compensation Cases transformed how liens claims were litigated.

Tom Rankin is regarded as an authority on workers’ compensation law and unemployment insurance and has been a key participant in every legislative effort to improve the workers’ compensation system since 1983. He has served on the boards of many labor, academic, and research organizations and was the President of the California Labor Federation, AFL-CIO, from 1996 to 2004.

The awards, which began in 2010, were renamed in memory and honor of Carrie Nevans, the acting administrative director who passed away in 2011.

The DWC’s 21st annual educational conference is the largest workers’ compensation training in the state and allows claims administrators, attorneys, medical providers, return to work specialists, employers, and others to learn about the most recent developments in the system as well as ongoing DWC programs. The Los Angeles conference (February 3-4) is nearly sold out: registration is still open for the Oakland training, February 10-11 at the Oakland Marriott City Center Hotel ...
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Lucia Gonzalez was working for Seal Methods, Inc. (SMI) when she was severely injured while loading material onto a die in a power press. She sought damages from SMI in a lawsuit filed under Labor Code section 4558, known as the "power press exception" which allows an employee to "bring an action at law for damages against the employer where the employee’s injury or death is proximately caused by the employer’s knowing removal of, or knowing failure to install, a point of operation guard on a power press, and this removal or failure to install is specifically authorized by the employer under conditions known by the employer to create a probability of serious injury or death." (§ 4558, subd. (b).) The trial court granted SMI’s motion for summary judgment, finding that section 4558 did not apply under the undisputed facts of this case.

The accident occurred while Gonzalez was operating a power press, referred to as Preco Punch Press No. 4. At the time of the accident, Gonzalez was operating the Press in "manual" mode because the material being shaped had to be moved onto and off of the die by hand. The Press was equipped with a two-hand activator system for operation in manual mode; the die would not strike unless the operator used both hands to press buttons located outside the strike zone (the "point of operation"). The purpose of this two-hand activator system was to ensure that the operator’s hands were outside the point of operation during the machine stroke. There was no evidence that SMI bypassed, removed, or tampered with the two-hand activator system on the Press used by Gonzalez. Nevertheless, on March 17, 2011, the Press activated while Gonzalez was loading material onto the die, crushing her hand.

Gonzalez subsequently filed the instant lawsuit for general, special, and punitive damages, alleging that SMI knowingly removed or failed to install a point of operation guard on the Press. SMI moved for summary judgment on the ground that the point of operation guard specified by the manufacturer of the Press - the two-hand activator system - was properly installed and activated, and the manufacturer did not specify or require any other point of operation guard. Gonzalez opposed the motion, contending that the operation manual for the Press requires the use of safety blocks (which are small wooden or metal blocks that are placed in the point of operation to physically prevent the machine from striking) whenever the operator’s hands are in the point of operation, and that those safety blocks constitute a point of operation guard. The trial court found there was no evidence that SMI received any communication from the manufacturer that safety blocks needed to be installed or otherwise attached to the Press, and granted SMI’s summary judgment motion. Gonzalez timely filed a notice of appeal from the resulting judgment.

The Court of Appeal affirmed in the published opinion of Gonzalez v Seal Methods Inc.

Labor Code section 4558 authorizes an injured worker to bring a civil action for tort damages against his or her employer where the injuries were "proximately caused by the employer’s knowing removal of, or knowing failure to install, a point of operation guard on a power press," where the ‘manufacturer [had] designed, installed, required or otherwise provided by specification for the attachment of the guards and conveyed knowledge of the same to the employer." Whether the section 4558 exception applies in this case hinges upon whether a safety block is a "point of operation guard" within the meaning of section 4558. If it is, the determination whether the manufacturer communicated to SMI that safety blocks must be used whenever a worker must manually position material on the die is a question of fact, and the facts are disputed in this case. But if a safety block is not a point of operation guard, section 4558 does not apply and the judgment must be affirmed.

Section 4558 does not define "point of operation guard," but the language of the statute lead the Court of Appeals to conclude that a point of operation guard does not include an unattached device, such as a safety block, that the worker moves into and out of the point of operation. The Court concluded "Although we are sympathetic to Gonzalez, who suffered a horrible injury that might have been prevented had a safety block been used, we are bound by the Supreme Court’s directive to construe the section 4558 exception to the workers’ compensation exclusivity rule narrowly. Read in its entirety, section 4558 applies when an employer fails to attach or removes only those guards or devices, designed to protect workers, that are capable of being permanently installed by the manufacturer or the employer. The kind of safety block at issue in this case, which is not attached to the Press and is moved into and out of the point of operation by the worker, is not such a guard or device." ...
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An employee whistle-blower alleges Prime Healthcare Services, Inc., which boasts its flagship Desert Valley Hospital in Victorville, systematically misdiagnosed and extended stays of patients to collect on lucrative Medicare billings. In an amended False Claims Act lawsuit filed in California federal court June 11 and unsealed last week, the Ontario-based hospital company is accused of overcharging Medicare and Medicaid more than $50 million over three years - a claim which Prime denied this week. While the lawsuit is centered around activities at Alvarado Hospital in San Diego - acquired by Prime in November 2010 - the complaint also names Desert Valley Hospital, several other Prime hospitals and Prime founder and chairman Dr. Prem Reddy.

Prime issued a news release on Tuesday denying that Alvarado Hospital or any of the company’s 24 other hospitals submitted false claims with the Medicare program.

Karin Berntsen - former director of Quality and Risk Management, then Case Management at Alvarado Hospital - contends in the complaint that top Prime executives routinely encouraged hospital staff to admit patients for short stays in favor of outpatient/observation status, regardless of whether the patient’s medical condition warranted it. Berntsen said it was a dubious effort to increase the hospital’s Medicare reimbursement, which is a violation of government rules.Berntsen was employed by PHS in various director roles related to quality and risk management, case management, and performance improvement for Alvarado Hospital, which it acquired in November 2010. She alleges that PHS purchases floundering hospitals and boosts their finances by implementing false claims practices.

Medicare reimbursement is greater for inpatient services than it is for observation services, and roughly 70 percent of patients at Alvarado are covered by Medicare and other federal healthcare programs, according to the complaint.

The complaint alleges that Prime executives also instructed staff to exaggerate patient diagnoses and remove references to observation status on hospital admission forms while eliminating internal oversight into decisions regarding inpatient admissions. Additionally, Reddy is alleged to have altered patient records during a Sept. 6, 2011 instructional exercise and appealed to staff four months earlier to find a reason to make an outpatient an inpatient, according to the complaint. "If the patient is elderly," he allegedly said during a meeting on May 3, 2011, "you should add encephalopathy for a higher payment. You are missing some of these elderly patients. But, be careful ... I don’t want to go to jail, ha, ha, ha."

Berntsen estimates that more than $4 million in billings to government healthcare programs since 2010 were the result of fraudulent patient stays. She further estimated that the alleged fraud likely extended to the company’s 24 other hospitals nationwide, exceeding an estimated windfall of $50 million.

Troy Schell, Prime Healthcare’s general counsel, called the $50-million estimate "speculative nonsense because Ms. Berntsen’s specific allegations are only about Alvarado Hospital, and she clearly had no knowledge about whether other Prime hospitals supposedly operated in a similar manner." Schell said in a written statement that Prime hospitals have been under tight scrutiny ever since a workers union accused them in 2010 of submitting claims for unnecessary admissions. "Prime hospitals have been the subject of numerous government agency audits and investigations," he said, "but none of them have found any significant issues regarding such admissions or the lengths of stay." He also said oversight and quality control programs and reporting at Alvarado Hospital have always been "robust." "It defies common sense that Alvarado Hospital has been engaged in a false claims scheme," he said, "when the entire Prime Healthcare system has been under ... heightened and aggressive regulatory scrutiny for years."

The case is U.S. ex rel. Karin Berntsen v. Prime Healthcare Services Inc. et al., case number 2:11-cv-08214, in the U.S. District Court for the Central Division of California ...
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People wondering how much their new artificial hip will cost probably won't find the answer with their surgeon, according to a new study. According to the article in Reuters, researchers who surveyed 503 orthopedic surgeons found the doctors could only accurately estimate the price of implantable medical devices between 17 and 21 percent of the time. "My suspicion was that knowledge would be low, but I think we were all surprised by how little we knew about the price of the devices we were implanting," Dr. Kanu Okike told Reuters Health. Okike, the study's lead author, worked on the research while at the University of Maryland School of Medicine in Baltimore. He is now an orthopedic surgeon at the Kaiser Permanente Moanalua Medical Center in Honolulu.

Over $150 billion is spent every year on medical devices in the U.S., Okike and his colleagues write in the journal Health Affairs. The devices themselves are often the most expensive part of surgery, according to the researchers. And prices of comparable devices can vary even if they are equally effective. Orthopedic surgeons have been asked to help conserve resources by considering the price of devices, they write. But there are several barriers to that information. For example, some hospitals sign agreements with vendors not to disclose the price they pay for devices and the prices may vary between hospitals and change over time. Also, surgeons don't usually have a need to know the prices.

For the new study, the researchers surveyed 217 senior orthopedic surgeons, known as attendings, and 286 orthopedic surgeons-in-training, known as residents, at seven U.S. academic medical centers. The doctors were asked to estimate the costs of 13 common orthopedic implantable devices, such as a hip implant. They were also asked to estimate the price of three pairs of devices which are considered to be equal in quality but differ in price, like plates used to treat broken bones.

The researchers found that over a third of attendings and three quarters of residents said their knowledge of device prices was "below average" or "poor." Attending surgeons were able to estimate the correct price of the devices - within a 20 percent margin of error - 21 percent of the time. Residents could only estimate the correct price 17 percent of the time. In general, the participants underestimated the cost of the more expensive devices and overestimated the cost of the less expensive devices for the three pairs they were shown. "You systematically don't appreciate the amount that could be saved by choosing the lower cost item," Okike said.

Despite the high rate of inaccurate estimates, more than 80 percent of participants said price should play an important part in the process of selecting devices.

Okike cautioned that the results of the new study may not apply to all surgeons. Those in private practice may know more or less about pricing than the surgeons surveyed. "The results are not surprising that you would have so small a percentage of attendings and residents guess the right price," Jeffrey Lerner, president and CEO of the ECRI Institute in Plymouth Meeting, Pennsylvania, told Reuters Health. Lerner was not involved with the new study but has researched transparency of device prices. "I think there should be price transparency so people can compare costs and quality just as they can when they buy a tomato, house or car," he said. "Comparison is an integral part of non-healthcare and healthcare shopping."

"Surgeons face a number of barriers in learning these prices because of the non-disclosure agreements and lack of transparency," Okike said. "I think the net result of that is just higher costs to the healthcare system." He added, however, that surgeons may become more knowledgeable about prices as accountable care organizations, or ACOs, become more popular and doctors are incentivized to keep costs down. ACOs bring together doctors, hospitals and other players in the healthcare system to care for patients in an effort to bring down costs ...
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Medical, auto and workers’ compensation fraud are expected to be at the forefront of the National Insurance Crime Bureau focus on insurance fraud trends in 2014, according to Chief Communications Officer Roger Morris. The article in the Claims Journal says that the medical and workers’ comp business is where most of the fraud occurs today, Morris said. "The scheme is the same. It’s always been -- continuing treatment, malingering as we call it, without really needing it. That’s why there’s been quite a bit of analysis of provider bills lately," said Morris.

Medical fraud is such a huge business that the NICB established major medical fraud task forces around the country starting in 2002. There will be eight by the end of the year - with the latest one in Chicago. "We focus on strictly the medical component of the auto and the workers’ comp side, and we look at some of the fraud schemes that are being perpetrated particularly in states where there’s no-fault or PIP coverage, personal injury protection coverage, states like Florida, New York, Michigan. We’re seeing some of that move into other states like Minnesota and Kentucky," Morris said.

He said that staged accidents are a big component in PIP states where there is typically a huge industry of organized crime involving cappers, runners, doctors, chiropractors, physical therapists and lawyers. According to Morris, it’s "all in the name of generating claims." Medical fraud in Florida became so pervasive the state began a major crackdown initiative in 2012.

"These states are ripe for fraud, and the criminals that have been doing this in Florida have seen a lot of pressure on them now because of the medical fraud task forces and the law enforcement action that we have had in Florida and recent changes, the tightening of the fraud laws there, the PIP laws. A lot of them are moving their operations or expanding them into states like Minnesota and Kentucky," he said. NICB has held fraud summits in Florida the past two years, as well as in Minnesota last year and in Kentucky last October.

Morris described two common auto insurance fraud scams. "One of the common, pervasive auto scams we see is the crash-and-buy scenario. A person has an accident but doesn’t have the insurance or the right coverage, so they purchase insurance and then wait a day or two and submit a claim saying the accident happened after they bought the policy," he said. "This started very heavily during the recession and continues today, very similar to the hit-while-parked claim -- the insured has an accident, they don’t have the right coverage, or circumstances exist that they don’t want the insurer to know about. They park their car somewhere and they say that when they came back, they found someone had hit it and left, and then they filed a claim," the NICB chief communications officer explained.

Though auto theft is down, according to Morris, law enforcement is seeing an uptick in organized criminal rings that are sophisticated enough to switch vehicle identification numbers (VINs) or export cars illegally. One such ring was recently uncovered in Los Anegles.

"We monitor exports of vehicles. We check the VINs and so forth for Customs and Border Control. We had a ring that was stealing cars from local dealerships, rental agencies or from parking lots, high-end luxury cars, and they were loading them up on ships to be shipped out of the country overseas and labeling them as scrap metal," Morris said. "When we had those containers turned around, every one of those containers -- more than 25 of them -- contained two high-end vehicles that had been stolen and were being shipped out of the country to be sold overseas for a much higher price. I think they sometimes get two or three times the price overseas that they get here." There was also a recent case in New York involving 46 high-end vehicles. The vehicles, worth $2.4 million, were stolen from dealerships and other places and were being VIN-switched and resold to supposedly unsuspecting buyers.

Listen to the podcast with Roger Morris: Fraud Trends in 2014 for more information ...
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