The Partners of Floyd Skeren and Kelly a statewide California Workers Compensation and Employment Law Firm have announced the appointment of Jeffery R. Slomann as the Managing Attorney of the firm’s office in Orange, California.

Mr. Slomann will assume the management of the office today, September 1, 2016.

He is a graduate of Chapman University Law School, with an undergraduate degree from U.C. Berkeley and a Masters from Claremont University.

He has been in Workers’ Compensation practice for the last fifteen plus years.

Mr. Slomann was a Partner and Manager of a defense Workers’ Compensation office in Southern California. His legal experience and knowledge of the Workers Compensation defense practice, particularly in the Orange County area ideally suits him to continue the success and growth of this vital part of our Firm.

Please join us in welcoming Jeff to the firm, as he takes over the leadership of the Orange County office ...

In October 2015, Governor Brown signed Assembly Bill 1124 mandating that the California Division of Workers' Compensation (DWC) adopt a prescription drug formulary for the California workers' compensation system. The draft regulations published last week reflect a broad effort by the Division to streamline the delivery of effective care to injured workers by implementing the formulary and the 30-day pass-through utilization review (UR) provisions proposed under Senate Bill 1160 (Mendoza).

Studies by the California Workers' Compensation Institute (CWCI) and the Workers Compensation Research Institute (WCRI) published before the new law estimated that depending on how it was structured and implemented, a state-mandated workers' compensation formulary could save 8 to 42 percent of total drug spend,

At this point it remains to be seen what savings will actually materialize.

But, a new California Workers’ Compensation Institute (CWCI) study uses data from 1.2 million drug prescriptions dispensed to California injured workers in 2014 to model the impact of the draft Medical Treatment Utilization Schedule (MTUS) Drug Formulary released by the Division of Workers’ Compensation last week.

The draft MTUS Drug Formulary List classifies listed drugs as either "Preferred" or "Non-Preferred." If prescribed in accordance with the state’s Medical Treatment Utilization Schedule for outpatient use, Preferred drugs would not have to be authorized through prospective review, while authorization via prospective review would be required before Non-Preferred drugs could be prescribed or dispensed. Drugs not on the formulary’s Preferred or Non-Preferred list, ("Not Listed" drugs), also would require authorization through prospective review prior to prescribing or dispensing. All opioids would be Non-Preferred, but the regulations would allow a limited "first fill" of 7 specific opioids if prescribed or dispensed at an initial visit within 7 days of the injury date and the prescription meets MTUS standards.

To test the impact of the draft MTUS Drug Formulary, the authors determined the percentage of the 1.2 million prescriptions and prescription dollars in the study sample that would fall into the Preferred, Non-Preferred, and Not Listed categories; identified the drug groups that would be most affected; and estimated the effect of the "first-fill" provision.

The model found that Preferred drugs comprise 26.6% of currently prescribed drugs and 22.0% of total drug spend; Non-Preferred drugs make up 57.0% of the prescriptions and 53.1% of the drug spend, while Not Listed drugs made up 16.4% of the prescriptions and 24.9% of the drug spend. The most-prescribed drugs that would be subject to prior review include opioids and certain bulk chemicals found in compound drugs. The model also found that the First Fill policy for the 7 opioids would affect fewer than 5% of current prescriptions.

Based on the preliminary analysis summarized in this report, the proposed formulary represents a significant step forward in achieving the legislative intent of AB 1124. In a follow-up report, the authors will provide a more in-depth analysis of the potential system-wide impact of the proposed formulary on UR and IMR expenses by comparing the specific drugs currently subject to UR and IMR, as well as dispute resolution outcomes, against the MTUS drug list.

CWCI plans a follow-up analysis that will examine the proposed formulary’s impact on system-wide utilization review and independent medical review (IMR) expenses by comparing specific drugs currently subject to UR and IMR and the outcomes of disputes involving those drugs against the formulary drug list. In the meantime, the initial study has been issued as a CWCI Spotlight Report, "California’s Proposed Workers’ Compensation Formulary, Part 1: A Review of Preferred and Non-Preferred Drugs," and is available for free in the Research section at www.cwci.org ...

The Insurance Journal reports that hospital rates for outpatient surgery paid by workers’ compensation vary significantly across states with states with fixed fee schedules having lower surgery costs for injured workers.

Workers compensation costs for injured worker surgery also vary a great deal from Medicare rates for common procedures, reports the Workers Compensation Research Institute (WCRI) in a new study, "Hospital Outpatient Payment Index: Interstate Variations and Policy Analysis, 5th Edition," which looks at 33 states representing 87 percent of the workers’ compensation benefits paid in the country.

The 33 states included in this study represent 87 percent of the workers’ compensation benefits paid in the United States. The states are Alabama, Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Jersey, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wisconsin. Note the 2014 workers’ compensation and Medicare comparison is conducted for 31 states.

The report found that hospital outpatient payments per surgical episode varied significantly across states, ranging from 69 percent below the study-state median in New York to 142 percent above the study-state median in Alabama in 2014, according to Dr. Olesya Fomenko, co-author of the study and economist at WCRI.

The variation in the difference between average workers’ compensation payments and Medicare rates for a common group of procedures across states was even greater - reaching as low as 27 percent (or $631) below Medicare in New York and as much as 430 percent (or $8,244) above Medicare in Louisiana.

Major findings from the study include

1) States with no workers’ compensation fee schedules for hospital outpatient reimbursement had higher hospital outpatient payments per episode compared with states with fixed-amount fee schedules - 63 to 150 percent higher than the median of the study states with fixed-amount fee schedules. Also, in non-fee schedule states, workers’ compensation paid between $4,262 (or 166 percent) and $8,107 (or 378 percent) more than Medicare for similar hospital outpatient services.
2) States with percent-of-charge-based fee regulations had substantially higher hospital outpatient payments per surgical episode than states with fixed-amount fee schedules - 32 to 211 percent higher than the median of the study states with fixed-amount fee schedules. Similar to non-fee schedule states, workers’ compensation payments in states with percent-of-change based fee regulations for common surgical procedures were at least $3,792 (or 190 percent) and as much as $8,244 (or 430 percent) higher than Medicare hospital outpatient rates.
3) Most states with fixed-amount fee schedules and states with cost-to-charge ratio fee regulations had relatively lower payments per episode among the study states. In particular, for states with fixed-amount fee schedules, the difference between workers’ compensation payments and Medicare rates ranged between negative 27 percent (or -$631) and 144 percent (or $2,916).

The analysis captures payments for services provided and billed by hospitals, and it excludes professional services billed by nonhospital medical providers (such as physicians, physical therapists, and chiropractors) and transactions for durable medical equipment and pharmaceuticals billed by providers other than hospitals. The analysis also excludes payments made to ambulatory surgery centers ...

Two doctors who each operated medical offices in Lynwood have been arrested on federal drug charges that allege they issued prescriptions for narcotics and sedatives without a medical purpose. The two doctors were charged by the United States Attorney’s Office in conjunction with an operation conducted by the Torrance Police Department and the Los Angeles District Attorney’s Office that targeted members and associates of the East Coast Crips criminal street gang.

The two doctors - Sonny Oparah, 75, of Long Beach, and Edward Ridgill, 64, of Ventura - surrendered to federal authorities on Friday and were released on bond that afternoon after making their first appearances in United States District Court. Both men were ordered to again appear in federal court for arraignments on September 15.

Two criminal complaints unsealed on Friday charge Oparah and Ridgill with illegally prescribing the powerful painkillers hydrocodone (best known as Vicodin or Norco) and codeine (for example, promethazine with codeine cough syrup, which is known on the street as purple drank), alprazolam (commonly known as Xanax), and carisoprodol (a muscle relaxer best known as Soma). According to the affidavit filed in the cases, Oparah issued nearly 13,000 prescriptions for those drugs in a one-year period between July 2014 and July 2015, and Ridgill issued more than 21,000 such prescriptions in a three-year period between July 2011 and July 2014. All of the prescribed drugs were at or near maximum strength.

The affidavit describes 12 undercover operations during which Oparah or Ridgill sold prescriptions in exchange for cash fees. In most instances, the doctors sold the prescriptions without ever examining the undercover officer or cooperating witness. A medical expert’s independent review of the undercover recordings and seized patient files confirmed that there was no legitimate medical basis for the prescriptions. The expert, writing about Oparah, said his "actions are very alarming" and the evidence reflects "extreme departures from the standard of care," according to the affidavit.

The federal investigation into Oparah and Ridgill showed that they operated cash businesses. Federal authorities made cash seizures from both doctors, and bank records showing that Ridgill deposited $500,000 in cash into his bank accounts over a period of less than three years.

The arrests of Oparah and Ridgill occurred jointly with a sweep that targeted the East Coast Crips street gang in "Operation Money Bags." The charges against gang members and their associates are being unsealed. As described in the federal affidavit, the investigation into Oparah and Ridgill originated when the investigation into the East Coast Crips revealed evidence that "Oparah and Ridgill served as large-scale sources of supply to [gang] members and associates via their issuance of medically unnecessary controlled drug prescriptions."

"These arrests demonstrate DEA’s resolve to target all drug traffickers regardless of their standing in the community," said Anthony A. Chrysanthis, Assistant Special Agent in Charge of the DEA’s Los Angeles Field Division. "With our law enforcement partners, we will continue our pursuit of those that contribute to the opioid addiction crisis and poison our society under the guise of the medical profession."
...

Woodland Hills insurer Health Net Inc. has been fined $340,000 by the Securities and Exchange Commission for developing a severance policy that prohibited employees from collecting whistleblower awards, according to an administrative proceeding filed by the federal agency.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted on July 21, 2010, amended the Securities Exchange Act by adding Section 21F, "Whistleblower Incentives and Protection." The purpose of these provisions was to encourage whistleblowers to report possible securities law violations by providing, among other things, financial incentives and various confidentiality guarantees.

Congress explicitly noted the critical importance of providing financial incentives to promote whistleblowing to the SEC as it determined that "a critical component of the Whistleblower Program is the minimum payout that any individual could look towards in determining whether to take the enormous risk of blowing the whistle in calling attention to fraud." See "The Restoring American Financial Stability Act of 2010" report from the Committee on Banking, Housing, and Urban Affairs (April 30, 2010).

Beginning in August 2011, and continuing through October 2015, Health Net issued voluntary severance agreements that prohibited employees leaving the company from "filing an application for, or accepting, a whistleblower award" from the SEC. Although the agreements noted that employees were not precluded from participating in a federal investigation, by consenting to the severance agreements they waived their right to the monetary recovery typically provided to whistleblowers. Approximately 600 employees signed agreements that contained this language,

The Securities and Exchange Commission accused Health Net violating SEC Rule 21F-17 as a result of its use of this severance agreement. This rule provides that "No person may take any action to impede an individual from communicating directly with the Commission staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement . . . with respect to such communications."

In anticipation of the institution of these proceedings against it by the SEC, Health Net has submitted an Offer of Settlement (the "Offer") which the Commission has determined to accept. It agreed to pay a civil money penalty in the amount of $340,000 to the Securities and Exchange Commission.

Health Net has also agreed that it will make reasonable efforts to contact Health Net former employees who signed the Waiver and Release of Claims from August 12, 2011 to October 22, 2015, and provide them with an Internet link to the order and a statement that Health Net does not prohibit former employees from seeking and obtaining a whistleblower award from the Securities and Exchange Commission..In determining whether to accept the Offer, the Commission has considered this undertaking.

The Los Angeles Times story about this settlement raises the question "Makes you wonder what they were so eager to hide." Health Net was acquired in March by St. Louis managed-care giant Centene for $6.3 billion.

Toni Jaramilla, a Century City lawyer specializing in whistle-blower cases, told the LA Times this case represents merely the latest attempt by businesses to limit what former employees can say about their work experience. An increasingly common provision in employment contracts is the so-called non-disparagement clause, which forbids former employees from criticizing their erstwhile employer ...

Sergius Apostolos Orloff is a seriously injured worker and is confined to a wheelchair. As a result of a work-related spinal cord injury, Orloff suffers from chronic back pain, anxiety disorder, and personality disorder. He was awarded a permanent disability rating of 100 percent on his worker's compensation claim,

He also seemed to have an "attitude" when dealing with others, and has a history of threatening physical harm to those involved in his case.

In this current (fourth) criminal case he was prosecuted (again!) and convicted for threatening Police Officer David Kelley who made contact with him while investigating a citizens complaint that he had made "threats of bodily harm or death." The underlying investigation was triggered by his threats to a CVS pharmacy employee. He appealed this conviction. The Court of Appeal affirmed the trial court this month in the published case of People v Sergius Apostolos Orloff.

But - this was not Orloff's first criminal case for making threats to those involved in his workers compensation claim. in 2003, he suffered a misdemeanor conviction for violating PC section 653m, subdivision (c), after he made annoying or threatening phone calls to his neighbors. In 2008, he was again convicted of the same offense after he placed several increasingly hostile phone calls and sent fax transmissions to representatives of Health Quest Home Care due to his dissatisfaction with their service. He was again placed on probation and ordered to serve 180 days in jail. (The jail sentence was apparently stayed.)

He was on probation for less than one year when he committed the third offenses which involved his threats to Workers' Compensation Judges involved in his case and was an unpublished Court of Appeal decision reported in the Workers' Compensation literature as People v. Orloff (2nd--B211573), 74 Cal. Comp. Cases 1330

Facts of his prior misconduct in the third case, unrelated to the current prosecution, were allowed into evidence and heard by the jury in his fourth case. In the third criminal case Orloff made the threats between 2006 and 2008 while litigating his workers’ compensation claim at the Oxnard WCAB. He telephoned Judge Carrero’s secretary, Belinda Doleman, and left a message "that he was going to get the fxxxxxx judge, that [the judge] better have a policeman available." Later, Orloff left a message for Judge Carrero that "if he didn’t get what he wanted, he was going to jump out of his [wheel]chair and confront Judge Carrero, . . . [and] make Judge Carrero feel what it was like to be him and have a cervical discectomy . . . ." Appellant also said "something to [the] effect" that he was going "to break Judge Carrero’s legs." A few days later, appellant left a message that Judge Carrero, Doleman, and David Brotman, another judge, "were going to meet members of the Russian Mafia" who "were going to make sure [they] did what [appellant] wanted." Appellant said "that he wasn’t going to call anymore because [the judges and the secretary] weren’t going to hear from him and that no one was going to hear from [them] either."

In July of 2008, Orloff pleaded guilty in the third criminal case to one count of making a criminal threat (PC 422), and one count of making annoying telephone calls (PC 653m, subd. (a)).

This fourth prosecution pertained to a 2014 complaint by Dennis Masino worked as a store manager for CVS Pharmacy. His store filled Orloff's prescriptions for pain medication. After several episodes of disruptive behavior, Masino told Orloff that he was no longer welcome at the store and that his prescription would be transferred "to any pharmacist that he wants." But Orloff insisted that Masino had "to give him his medications." Later Masino received two telephone calls from Orloff. In the first call, Orloff said to "expect something when you least expect it." About 90 minutes later, Masino received the second call. Masino said, "This is Dennis. How may I help you?" Orloff replied, "You're dead," and hung up. Masino understood the threat to mean that his "life [was] at risk." Masino knew that Orloff was in a wheelchair. But he considered appellant’s death threat credible because "[a]nybody could carry a gun."

Officer David Kelley had prior police contacts with appellant and was aware of his disability. He was investigating a citizen’s complaint that Orloff had made "threats of bodily harm or death." He telephonically spoke with Orloff. During that conversation, Orloff uttered racial epithets while responding to Kelly's comments, which concluded with a threat "Hey, you’re a fxxxxx’ dead nxxxxx if you keep this sxxx up."

Orloff appeals from the judgment entered after a jury had convicted him in this fourth case of making a criminal threat arising out of the 2014 incidents (Pen. Code, § 422) and attempting, by means of a threat, to deter an executive officer from performing his duties. (§ 69.) The Court of Appeal sustained the fourth conviction in the case of People v Orloff.

The Court of Appeal explained its decision by saying a "person confined to a wheelchair is capable of making a criminal threat. Here the threats were directed to a peace officer and a pharmacy manager. Similar prior threats were directed to workers’ compensation judges. We have compassion for a person confined to a wheelchair. However, pain and suffering does not give license to threaten people."

"The law does not countenance threats of bodily harm against citizens, peace officers, or judges. This is true whether the threats are clear or veiled. Threats against peace officers or judges are directed not only to the individual but also to the public office that the individual occupies. Such threats strike at the heart of government and will not be tolerated. The judgment is affirmed."

This case now sets a precedent for proper conduct of an injured worker while working with claims, physicians, and others who are involved ...

The Division of Workers’ Compensation (DWC) has posted drug formulary draft regulations, including a proposed list of preferred drugs, on its online forum. The goal is to adopt an evidence-based drug formulary, consistent with California’s Medical Treatment Utilization Schedule (MTUS), to augment the provision of high-quality medical care, maximize health, and promote return to work in a timely fashion, while reducing administrative burden and cost.

Assembly Bill 1124 (Statutes 2015, Chapter 525) requires the adoption of an evidence-based workers’ compensation drug formulary into the Medical Treatment Utilization Schedule (MTUS) by July 1, 2017. DWC intends to concurrently adopt updated MTUS clinical topic guidelines to align with the drug formulary. The proposed updated guidelines are created by the American College of Occupational and Environmental Medicine (ACOEM), published by Reed Group, Ltd. The preferred drug list proposed in the draft regulations was created by DWC, in light of evidence-based drug recommendations in the guidelines

The following documents are posted on the forum:

1) Draft formulary regulation text (including preferred drug list)
2) RAND Report: Implementing a Drug Formulary for California’s Workers Compensation Program
3) ACOEM Treatment Guidelines
- - Ankle and Foot
- - Cervical and Thoracic Spine
- - Elbow Disorders
- - Eye
- - Hand, Wrist, and Forearm
- - Hip and Groin
- - Knee Disorders
- - Low Back Disorders
- - Shoulder Disorders

One of the proposed regulations seems to be a strong tool to limit unfettered dispensing of compound medications. Proposed Section 9792.27.9 provides that "Compounded drugs must be authorized through prospective review prior to being dispensed. If required authorization through prospective review is not obtained prior to dispensing, payment for the drug may be denied. When it is necessary for medical reasons to prescribe or dispense a compounded drug instead of an FDA-approved drug or over-the-counter drug that complies with an OTC Monograph, the physician must document the medical necessity in the patient’s medical chart, and in the Doctor’s First Report of Injury (Form 5021) or Progress Report (PR-2.) The documentation must include the patient-specific factors that support the physician’s determination that a compounded drug is medically necessary."

Members of the public may review and comment on the proposals until 5 p.m. on Friday, September 16 ...

A study published this month in BMJ offers additional evidence of a correlation between payments by drug manufacturers to doctors and increased prescriptions for drugs developed by the latter.

The analysis of Medicare’s Open Payments program offers a statistical demonstration of a phenomenon supported by more than 20 years of suggestive data, though the study’s authors point out that most previous studies have relied upon self-reporting to obtain payment and prescribing data. Where a recent study published in JAMA established a link between the free meals pharmaceutical companies offer and increased prescriptions, this new study expands that purview to include payments for speaking and consulting fees, as well as indirect payments for education, or for food and entertainment.

Moreover, the authors see a potential connection between payments made to physicians and "substantial differences in regional prescribing." They conclude that "one additional payment in a region [median value $13] was associated with approximately 80 additional days filled of the marketed drug in the region." As damning as that sounds, the authors caution that their study doesn’t prove the payments actually led to the increased prescribing, and say that their findings should not be interpreted beyond a regional level.

Even absent clear evidence of causation, pharmaceutical companies continue to make payments to doctors, most of whom don’t believe they can be influenced, according to the study.

Reporting by ProPublica undermines this claim, showing the industry’s efforts seem to specifically target physicians already under sanction for unnecessary prescribing. The preponderance of the evidence suggests pharmaceutical companies have a profit motive behind their actions, according to Charles Rosen, co-founder of the Association for Medical Ethics, who told ProPublica, "I think it’s crystal clear that their fiduciary duty is not to educate physicians and make public welfare better. It’s to sell a product."

Pharmaceutical and medical device companies are continuing to pay doctors as promotional speakers and expert advisers even after they’ve been disciplined for serious misconduct, according to an analysis by ProPublica.

One such company is medical device maker Stryker Corp.

In June 2015, New York’s Board for Professional Medical Conduct accused orthopedic surgeon Alexios Apazidis of improperly prescribing pain medications to 28 of his patients. The board fined him $50,000 and placed him on three years’ probation, requiring that a monitor keep an eye on his practice.

Despite this, Stryker paid Apazidis more than $14,000 in consulting fees, plus travel expenses, in the last half of 2015.

Stryker also paid another orthopedic surgeon, Mohammad Diab of San Francisco, more than $16,000 for consulting and travel, even though California’s medical board had disciplined him for having a two-year-long inappropriate sexual relationship with a patient, whose two children he also treated. He was suspended from practice for 60 days, required to seek psychological treatment and given seven years’ probation. He is still required to have a third party present while seeing female patients.

According to the ProPublica investigation Stryker is one of more than at least 400 pharmaceutical and medical device makers that have made payments to doctors after they were disciplined by their state medical boards. ProPublica reviewed disciplinary records for doctors in five states, California, Texas, New York, Florida and New Jersey, and checked them against data released by the Centers for Medicare and Medicaid Services on company payments to doctors. The analysis identified at least 2,300 doctors who received industry payments between August 2013 and December 2015 despite histories of misconduct ...

Six California Department of Insurance officers arrested 62 year old Maria Elena Hernandez before sunrise, cuffed her, and drug her off to the Los Angeles County Jail. She protested that they had arrested the wrong person. It took two months before they confirmed their mistake.

When her 25-year-old son stepped toward the detectives to ask for official paperwork justifying the arrest, an officer pointed a gun at his head, Hernandez and her daughter recounted.

Kincaid, the Department of Insurance spokeswoman, said law enforcement officers are trained to have their weapons drawn from their holsters "until entry has been made and the residence or individuals have been secured in a safe manner."

Her arrest warrant was issued after the California Department of Insurance confused her with an insurance fraud suspect, who had used a false date of birth as well as a first and a last name that matched Hernandez’s.

But it is very difficult to understand how an observant team of peace officers could have made this mistake. They had in their possession a photograph of the real suspect, and it did not match this Maria Hernandez, a common Hispanic name.

Hernandez spent nearly two days in the county’s jail in Lynwood before her family managed to bail her out. Her family now owes $2,000 to a bail bonds company. And Hernandez, who cleaned homes for years but is now retired, faces another bill of $1,470 for a medical exam conducted at the direction of jail staff.

According to the story in the Los Angeles Times, the events that led to her arrest began in the summer of 2013, when a woman made a phone call to Access General Insurance saying she’d been the driver of a car involved in an accident. She identified herself as Maria Mercedes Hernandez, according to investigative records.

An insurance investigator had a hard time tracking the woman down, but when he finally found her at her South Park home, she verbally confirmed that her name was Maria Mercedes Hernandez and said her birthday was May 2, 1954, though she did not produce proof of her identification. After prodding from the investigator, the records show, the woman admitted that she hadn’t actually been in an accident. She’d agreed to say she had been, she explained, after meeting a man at a nightclub who promised to give her a cut of the insurance money.

Before leaving the home, the insurance investigator took the woman’s photo.

When Department of Insurance detectives interviewed the real woman at her home a year later, they said they recognized her from the photo in the case file and said that she, again, identified herself as Maria Hernandez. Greg Risling, a spokesman for the Los Angeles County district attorney’s office, said she had given a fake name and birth date. The spokesman said it was unclear if the woman had picked the name and date of birth at random or if she had deliberately used the arrested woman’s identity.

Exactly how insurance investigators mistook her for Maria Elena Hernandez is unclear. Especially when the photograph did not match.

The Department of Insurance spokeswoman declined to explain, citing an internal investigation being conducted by the agency. The district attorney’s office also declined to detail what led to the mix-up or comment on whether detectives know the suspect’s real identity but said the auto insurance fraud investigation is ongoing.

...

In 2009, James Swoben, a former data manager for California-based SCAN Health Plan, filed a whistleblower complaint against his own employer, and then amended that compliant three times over the next two years to add claims against United Health, HealthCare Partners, Aetna, WellPoint and Health Net.

The Centers for Medicare & Medicaid Services (CMS), administrator of the federal Medicare program, pays Medicare Advantage organizations fixed monthly amounts for each enrollee. CMS calculates the payment for each enrollee based on various "risk adjustment data," such as an enrollee’s demographic profile and the enrollee’s health status, as reflected in the medical diagnosis codes associated with healthcare the enrollee receives. These diagnosis codes are reported by Medicare Advantage organizations to CMS.

Because Medicare Advantage organizations have a financial incentive to exaggerate an enrollee’s health risks by reporting diagnosis codes that may not be supported by the enrollee’s medical records, Medicare regulations require a Medicare Advantage organization, as an express condition of receiving payment, to "certify (based on best knowledge, information, and belief) that the [risk adjustment] data it submits . . . are accurate, complete, and truthful." 42 C.F.R. § 422.504(l), (l)(2).

The gist of Swoben’s complaint is that the defendants - Medicare Advantage organizations United Healthcare, Aetna, WellPoint and Health Net, and HealthCare Partners, a physician group providing health care services to the organizations’ enrollees in exchange for a percentage of the organizations’ capitated payments - performed biased retrospective medical record reviews.

According to Swoben, retrospective reviews by Medicare Advantage organizations typically should identify (and report to CMS) two types of errors in the risk adjustment data previously submitted: (1) diagnosis codes supported by an enrollee’s medical records but not previously submitted to CMS (underreporting errors); and (2) diagnosis codes previously submitted to CMS but not supported by the enrollee’s medical records (over-reporting errors). Identifying and reporting the first type of error is favorable to the Medicare Advantage organization; identifying and reporting the second type of error is unfavorable.

Swoben alleges the defendants conducted one-sided retrospective reviews designed to identify (and report to CMS) solely the first type of error. He alleges these reviews were designed to exaggerate enrollees’ health risks and cause CMS to make inflated capitated payments to the defendants. These actions, Swoben alleges, rendered the defendants’ periodic certifications under § 422.504(l) false, in violation of the False Claims Act, 31 U.S.C. § 3729(a)(1).

The district court dismissed the suit without leave to amend The 9th Circuit Court of Appeals reversed and reinstated the claim in the published case of James M. Swoben v United Healthcare Insurance Co, et. al.

CMS has long made clear that, under § 422.504(l), Medicare Advantage organizations have "an obligation to undertake ‘due diligence’ to ensure the accuracy, completeness, and truthfulness" of the risk adjustment data they submit to CMS and "will be held responsible for making good faith efforts to certify the accuracy, completeness, and truthfulness" of these data.

"When, as alleged here, Medicare Advantage organizations design retrospective reviews of enrollees’ medical records deliberately to avoid identifying erroneously submitted diagnosis codes that might otherwise have been identified with reasonable diligence, they can no longer certify, based on best knowledge, information and belief, the accuracy, completeness and truthfulness of the data submitted to CMS. This is especially true when, as alleged here, they were on notice - based on audits conducted by CMS - that their data likely included a significant number of erroneously reported diagnosis codes." ...

The California Workers’ Compensation Institute has created a new series of research publications, "California Workers’ Compensation Regional Score Cards," which use subsets of data from CWCI’s Industry Research Information System (IRIS) database to measure and analyze various aspects of claims experience within eight regions of the state.

Score Cards for each region will profile claimant characteristics and highlight data compiled from claims filed by residents of the region. Exhibits include distributions of claims within the region broken out by industry sector, premium size; claim type (medical-only, temporary disability, permanent disability); common "nature" and "cause" of injury categories; and primary diagnoses.

Several exhibits, including the percentage of claims with permanent disability; attorney involvement rates; claim closure rates; the top prescription drugs dispensed in calendar year 2014; breakdowns of medical development by Fee Schedule Section at 12 and 24 months post injury; medical network utilization rates; notice and treatment time lags; and the 12-, 24- and 36-month loss development tables compare the results for the specific region against those for all other regions.

Many of the exhibits also provide the combined statewide results, offering a wealth of detailed data not only on workers’ compensation claims experience for the region, but for the entire state.

The first Score Card in the series, released this week, focuses on accident year 2005 - 2015 claims filed by residents of Los Angeles County who, the data show, account for about a quarter of the claims in the state, but nearly a third of all paid losses.

Notably, the Score Card finds a pattern of lower than average first-year payments on the Los Angeles claims, followed by higher losses as the claims age, which tracks with the longer delays in reporting (both to the employer and to the claims administrator), delays in initial treatment, and a higher prevalence of cumulative trauma and non-specific injury claims in Los Angeles County, all of which are documented by the Score Card.

The Institute plans to roll out the Injury Score Card series over the next several months, and all eight Score Cards, along with summary Bulletins, will be posted under Research for CWCI members and research subscribers who log on to www.cwci.org.

Anyone wishing to subscribe to CWCI Research and Bulletins may do so by visiting the Institute’s online Store. The next Score Card will be released next month and will examine claims filed by workers living in the Inland Empire and Orange County ...

The increasing cost of prescription drugs in the United States has become a source of concern for patients, prescribers, payers, and policy makers.

In order to determine the origins and effects of high drug prices in the US market and to consider policy options that could contain the cost of prescription drugs, researchers reviewed the peer-reviewed medical and health policy literature from January 2005 to July 2016 for articles addressing the sources of drug prices in the United States, the justifications and consequences of high prices, and possible solutions.

Their review published in the Journal of the American Medical Association concluded that per capita prescription drug spending in the United States exceeds that in all other countries, largely driven by brand-name drug prices that have been increasing in recent years at rates far beyond the consumer price index.

In 2013, per capita spending on prescription drugs was $858 compared with an average of $400 for 19 other industrialized nations. In the United States, prescription medications now comprise an estimated 17% of overall personal health care services.

The most important factor that allows manufacturers to set high drug prices is market exclusivity, protected by monopoly rights awarded upon Food and Drug Administration approval and by patents. The availability of generic drugs after this exclusivity period is the main means of reducing prices in the United States, but access to them may be delayed by numerous business and legal strategies.

The primary counterweight against excessive pricing during market exclusivity is the negotiating power of the payer, which is currently constrained by several factors, including the requirement that most government drug payment plans cover nearly all products. Another key contributor to drug spending is physician prescribing choices when comparable alternatives are available at different costs.

Although prices are often justified by the high cost of drug development, there is no evidence of an association between research and development costs and prices; rather, prescription drugs are priced in the United States primarily on the basis of what the market will bear.

Drug prices are higher in the United States than in the rest of the industrialized world because, unlike that in nearly every other advanced nation, the US health care system allows manufacturers to set their own price for a given product. In contrast, in countries with national health insurance systems, a delegated body negotiates drug prices or rejects coverage of products if the price demanded by the manufacturer is excessive in light of the benefit provided. Manufacturers may then decide to offer the drug at a lower price. In England and Wales, for example, the National Institute for Health and Care Excellence considers whether a new drug passes a cost-utility threshold before recommending it for coverage by the National Health Service.

In workers' compensation claims, and in other systems, one factor that undermines competition among treatment alternatives is the separate roles of patients, prescribers, and payers: physicians write prescriptions, pharmacists sell medications, and patients or their insurers pay for them. This separation has traditionally insulated physicians from knowing about drug prices or considering those prices in their clinical decision making and can similarly remove many patients with good drug coverage from considering the price of the medications they "purchase."

The most realistic short-term strategies to address high prices include enforcing more stringent requirements for the award and extension of exclusivity rights; enhancing competition by ensuring timely generic drug availability; providing greater opportunities for meaningful price negotiation by governmental payers; generating more evidence about comparative cost-effectiveness of therapeutic alternatives; and more effectively educating patients, prescribers, payers, and policy makers about these choices ...

A feature article on the Risk and Insurance website reports that cell captives have become extremely popular self-insurance tools for companies of various sizes across all sectors, with cell legislation enacted in more than half of U.S. states and cell formations now outstripping stand-alone captive formations in many onshore and offshore captive domiciles.

In its simplest form, a captive is a wholly owned subsidiary created to provide insurance to its non-insurance parent company (or companies). Captives are established to meet the risk-management needs of the owners or members. They are essentially a form of self-insurance whereby the insurer is owned wholly by the insured. Once established, the captive operates like any commercial insurer - i.e., it issues policies, collects premiums and pays claims, but it does not offer insurance to the public - and it is regulated as a captive, rather than as a traditional insurer.

The International Association of Insurance Commissioners (IAIS) defines a captive as "an insurance or reinsurance entity created and owned, directly or indirectly, by one or more industrial, commercial or financial entities, other than an insurance or reinsurance group entity, the purpose of which is to provide insurance or reinsurance cover for risks of the entity or entities to which it belongs, or for entities connected to those entities, and only a small part if any of its risk exposure is related to providing insurance or reinsurance to other parties."

The type of entity forming a captive varies from a major multinational corporation to a nonprofit organization. Captives are held by the vast majority of Fortune 500 companies as an alternative method of risk financing (e.g., Gold Medal Insurance Co. was established by General Mills as a captive and Allstate was originally set up as a captive by Sears & Roebuck Co.). The industries with the greatest number of captives are finance, real estate, construction and manufacturing. Over the past several years, there has been particular growth in areas such as health care, property development and securitization for life insurers. A corporation that forms a captive will normally organize the captive as a subsidiary. Because few companies are in the business of insurance themselves, most captive parents will hire an outside firm, often an insurance company or captive manager, to manage the captive for them.

The captive concept took a while to catch on. It gained momentum in the mid-to-late 1980s during the hard commercial insurance market, when liability coverage was either unavailable or unaffordable for many buyers. Over the past three decades, there has been significant growth in the captive market. Today, there are more than 5,000 captives that do business around the world in a variety of industries, compared to roughly 1,000 in 1980. Almost 3,000 captives are domiciled in the Caribbean; 1,200 captives are domiciled in Europe and Asia; and more than 1,000 captives are domiciled in the United States.

Companies form captives to mitigate their exposure to a wide range of risks. Practically every risk underwritten by a commercial insurer can be provided by a captive. The majority of captives provide mainstream property/casualty insurance coverage such as general liability, product liability, workers’ compensation, director and officer (D&O) liability, auto liability and professional liability (e.g., medical malpractice).

Captives also provide specialized coverage for unusual or hard-to-insure risks (e.g., terrorism risk). Oil companies have used captives to gird against environmental claims related to infrequent but potentially high-cost events. Other types of nontraditional insurance coverage that a captive could underwrite includes credit risk, pollution liability, equipment maintenance warranty and employee benefit risks, including medical benefits, personal accident and, in some cases, whole life insurance.

Captive insurance structures can be classified into three main categories: Single Parent Captives, Group Captives, and Core Cell Captive Insurance Companies also known as Cell Captives or Core Cell Companies. Cell Captives are entities consisting of a core and an indefinite number of cell entities which are kept legally separate from each other. Each cell has dedicated assets and liabilities ascribed to it, and the assets of an individual cell cannot be used to meet the liabilities of any other cell.

Captive Resources L.L.C., a Schaumburg, Ill.-based captive consulting firm, saw nearly $100 million in new premiums last year for the 27 group captives that it advises, said Sandra Duncan, vice president of operations. The member-owned groups include 2,600 companies nationwide in a variety of industries, including manufacturing, distribution, trucking and agriculture. It estimates that the total member-owned group captive market represents $1.3 billion to $1.5 billion in written premiums - about 70% of which has come from companies that joined in the past decade. Recent interest in group captives has been driven by the improving economy, greater credit availability, and a hardening workers comp market, she said ...

Aluma Systems Concrete Construction of California entered into an agreement with Nibbi Bros. Inc. to design and supply the materials for wall formwork and deck shoring at Nibbi Bros. Inc. construction project.

The terms of the Contract included an indemnification provision that required Nibbi to defend, indemnify and hold harmless Aluma against any and all claims, actions, expenses, damages, losses and liabilities, including attorneys fees and expenses, for personal injuries rising from or in connection with this contract "except to the extent such claims, actions, expenses, damages, losses and liabilities are caused by the acts or omissions of [Contractor]..."

Subsequently, two lawsuits were filed by Nibbi employees against Aluma alleging that in August 2011, the employees were injured after a shoring system designed by Aluma collapsed. The Employee Lawsuits alleged the collapse was due to Aluma’s negligence. Aluma tendered the Employee Lawsuits to Nibbi for defense and indemnification, but received no response.

Subsequently, Aluma sued Nibbi for indemnification based on a specific provision in the parties’ contract. The trial court sustained Nibbi’s demurrer to Contractor’s complaint without leave to amend, relying on the allegations in the underlying lawsuit that set forth claims only against Aluma and not against Nibbi the employer. Thus they argued that the exception applied since the allegations claim only "acts or omissions" of Aluma.

The Court of Appeal reversed and remanded in the published case of Aluma Systems Concrete Construction v Nibbi Bros. Inc.

The parties agreed that pursuant to Labor Code section 3864, an employer is only liable to indemnify a contractor pursuant to the terms of the contract. They dispute whether the indemnity provision - which applies to claims and damages in connection with the Contract "except to the extent" they are "caused by the acts or omissions of Aluma - applies to the Employee Lawsuits.

Nibbi argues the Employee Lawsuits allege solely Aluma’s negligence and the indemnification provision therefore does not apply. Aluma argues that the provision may apply because Aluma is jointly and severally liable for all economic damages in the Employee Lawsuits, including any attributable to the negligence of Nibbi or others, as long as Aluma’s negligence is partially responsible.

Because the employees were working for Employer at the time of their injuries, they cannot sue Employer for damages but must pursue benefits through the workers’ compensation system. This limitation on Employer’s liability does not extend to third parties, however, and the employees may sue Contractor for damages caused by its negligence.

Here the indemnification provision applies to "claims: and the Employer argues this indicates the allegations of the Employee Lawsuits control the provision’s application. But the provision also requires indemnification for Contractor’s "damages" and "losses."

The court of appeal concluded that there is "no basis to restrict the damages and losses so indemnified to the allegations of the Employee Lawsuits, rather than to the damages Contractor is ultimately found liable for." ...

A doctor from Pasadena who falsely certified that at least 79 Medicare and Medi-Cal patients were qualified for hospice care because they were terminally ill - when, in fact, the vast majority of them were not dying - has been sentenced to four years in federal prison.

Boyao Huang, 43, was sentenced on Monday by United States District Judge S. James Otero. In addition to the prison term, Judge Otero ordered Huang to pay $1,344,204 in restitution.

At the conclusion of a two-week trial in May, Huang was found guilty of four counts of health care fraud for participating in a scheme related to the Covina-based California Hospice Care (CHC). Between March 2009 and June 2013, CHC submitted approximately $8.8 million in fraudulent bills to Medicare and Medi-Cal for hospice-related services, and the public health programs paid nearly $7.4 million to CHC.

A second doctor who was convicted at trial - Sri Wijegoonaratna, known as Dr. J., 61, of Anaheim, who was found guilty of seven counts of health care fraud - is scheduled to be sentenced by Judge Otero on February 13, 2017.

"This scheme preyed upon dozens of patients and their families who were led to believe that their worst nightmare had come true - that they had life-ending illnesses," said United States Attorney Eileen M. Decker. "Criminals such as the defendants in this case who steal from taxpayers by defrauding the Medicare system and who victimize vulnerable individuals like medical patients deserve significant prison sentences."

In addition to the two doctors, eight other defendants were charged in the scheme and have pleaded guilty to health care fraud charges. Those other defendants include a Placentia woman who purchased CHC in 2007 and operated the facility after being charged and incarcerated in another health care fraud scheme. Priscilla Villabroza, 70, who pleaded guilty in December 2015 to one count of health care fraud, was sentenced in June to eight years in federal prison.

As part of the CHC fraud scheme, Villabroza and her daughter - who was the nominal owner while Villabroza was in custody - paid patient recruiters known as "marketers" or "cappers" to bring in Medicare and Medi-Cal beneficiaries. CHC nurses performed "assessments" to determine whether the beneficiaries were terminally ill and, regardless of the outcome, Wijegoonaratna and Huang certified that the beneficiaries were terminally ill - even though the vast majority of them were not dying. CHC personnel altered medical records in response to Medicare audits to make the beneficiaries appear sicker.

By the time the scheme was shut down in June 2013, Medicare and Medi-Cal had paid millions of dollars for medically unnecessary hospice-related services.

The investigation into California Hospice was conducted by the United States Department of Health and Human Services, Office of Inspector General; the Federal Bureau of Investigation; the California Bureau of Medi-Cal Fraud & Elder Abuse; and IRS Criminal Investigation.

This case is being prosecuted by Assistant United States Attorney Steven M. Arkow of the Major Frauds Section and Assistant United States Attorney Leon W. Weidman, Special Counsel to the United States Attorney ...

The Department of Industrial Relations and its Division of Workers' Compensation reported that $600 million in liens against injured employees' claims for workers' compensation benefits have been filed by convicted or criminally indicted parties from 2011 through 2015.

"While California has made great strides in increasing benefits to injured workers, improving appropriate care and reducing employers' costs, we are pursuing legislation to prohibit criminal and indicted providers from lining their pockets through liens and to address the assignment of liens," said Christine Baker, DIR Director.

California's workers' compensation law allows certain claims for payment of services or benefits provided to or on behalf of injured workers to be filed as a lien against an employer in an employee's claim for workers' compensation benefits. The filing of a lien generates collateral litigation between the lien filer and defendant (insurer or employer) over the validity of the claim and the necessity, extent and value of any services provided. The parties may then settle on an amount due or adjudicate the dispute in a lien trial before the Workers' Compensation Appeals Board.

SB 863 (De León), which took effect on January 1, 2013, included a number of provisions to reduce costs by reducing the volume of lien claims and lien claim litigation in the workers' compensation system, including the reestablishment of lien filing fees to preclude frivolous lien filings, creation of an Independent Bill Review system to remove most billing disputes from litigation, and restrictions on the ability of third parties to collect on assigned lien claims.

Despite these efforts, the 68 businesses comprising the top one percent of lien filers filed more than 273,000 liens totaling $2.5 billion in accounts receivable on adjudicated cases between 2013 and 2015. Two of the business owners are indicted and three others have pled guilty. Legislation is underway to stay liens of physicians or providers who are criminally charged with workers' compensation fraud, medical billing fraud, insurance fraud, and Medicare or Medi-Cal fraud.

Assignments of Accounts Receivables are proving fertile ground for fraud

The assignment of liens by service providers to those who file and collect on liens are, in essence, the buying and selling of injured workers' treatments and fertile ground for presenting fraudulent claims. DIR's review of filing dates indicates that lien claimants tend to wait until after the primary case is settled rather than seeking early resolution of medical necessity. Even if lien claimants - especially those who bundle and buy or sell accounts receivables - only make pennies on the dollar, returns can still be high.

DIR say it is leading an effort to identify and address strategies for improved anti-fraud efforts in the workers' compensation system. DIR and the Department of Insurance convened working groups in June to gather stakeholder input and evidence of fraudulent activity in the system. At the direction of the Secretary of the California Labor and Workforce Development Agency, DIR will be preparing a report on further recommendations to the Governor and the Legislature by no later than Fall of 2016 ...

Former Roseville businessman Gregory J. Chmielewski had what seemed like a brilliant idea: Create an alternative low-cost version of workers’ compensation insurance, at a time when the price for traditional coverage was soaring out of sight in California. Chmielewski was one of a handful of entrepreneurs who thought they could profit from the crisis by partnering with Indian tribes. He convinced the Fort Independence Community of Paiute Indians, in Inyo County, to bankroll a company that would offer discount coverage by using tribal laws to cut through the red tape plaguing the state-run system.

The company they created, Independent Staffing Solutions of Roseville, signed up dozens of clients but fell apart after four years in business. Independent Staffing was unable to pay its bills despite hauling in $225 million in revenue from employers during its brief life.

What went wrong? In a written plea agreement filed in U.S. District Court in Sacramento, Chmielewski said he siphoned $7.3 million from Independent Staffing in order to fund his personal real estate investments.

And last week he was sentenced by U.S. District Judge Garland E. Burrell Jr. to three years and five months in prison for mail fraud in connection with his misappropriation of funds from his insurance business into his own personal accounts for his personal use,

Chmielewski set up a professional employer organization called Independent Management Resources (IMR), later operating under the name Management Resources Group (MRG). He diverted and misappropriated millions of dollars from MRG accounts for his personal use. He caused over $7.3 million to be paid out of MRG’s accounts to other unrelated companies that he controlled. Eventually, the company experienced serious cash flow problems and was forced to cease operations, leaving approximately 117 injured workers with approximately $1.8 million in unpaid claims.

Acting U.S. Attorney Talbert stated: "Many of the victims harmed in this scheme were companies in California’s construction industry, whose employees worked as roofers, general laborers, and other jobs where injuries can occur. The defendant’s actions left many injured workers without the benefits they expected and deserved. Our office is committed to prosecuting large-scale schemes such as this that hurt employers and workers alike."

"The license to operate a business is not a license to steal from those whom you are hired to protect," said Cindy S. Chen, Acting Special Agent in Charge, IRS Criminal Investigation. "The misconduct of Chmielewski harmed those that needed his help during a time they were very vulnerable. Today’s sentence demonstrates IRS Criminal Investigation’s determination to combat financial fraud in all types of schemes."

This case was the product of an investigation by the United States Postal Inspection Service; the Internal Revenue Service, Criminal Investigation; and the California Department of Insurance. Assistant U.S. Attorneys Heiko P. Coppola and André Espinosa prosecuted the case ...

A new study published in the British Medical Journal says that exercise therapy is as effective as surgery for middle aged patients with a common type of knee injury known as meniscal tear (damage to the rubbery discs that cushion the knee joint).

The researchers suggest that supervised exercise therapy should be considered as a treatment option for middle aged patients with this type of knee damage.

According to the story reported in Medical News Today, every year, an estimated two million people worldwide undergo knee arthroscopy (keyhole surgery to relieve pain and improve movement) at a cost of several billion US dollars. Yet current evidence suggests that arthroscopic knee surgery offers little benefit for most patients.

So researchers based in Denmark and Norway carried out a randomized controlled trial to compare exercise therapy alone with arthroscopic surgery alone in middle aged patients with degenerative meniscal tears.

A randomized controlled trial is one of the best ways for determining whether an intervention actually has the desired effect.

They identified 140 adults (average age 50 years) with degenerative meniscal tears, verified by MRI scan, at two public hospitals and two physiotherapy clinics in Norway. Almost all (96%) participants had no definitive x-ray evidence of osteoarthritis.

Half of the patients received a supervised exercise program over 12 weeks (2-3 sessions each week) and half received arthroscopic surgery followed by simple daily exercises to perform at home.

Thigh muscle strength was assessed at three months and patient reported knee function was recorded at two years.

No clinically relevant difference was found between the two groups for outcomes such as pain, function in sport and recreation, and knee related quality of life. At three months, muscle strength had improved in the exercise group. No serious adverse events occurred in either group during the two-year follow-up.

Thirteen (19%) of participants in the exercise group crossed over to surgery during the follow-up period, with no additional benefit.

"Supervised exercise therapy showed positive effects over surgery in improving thigh muscle strength, at least in the short term," say the authors. "Our results should encourage clinicians and middle aged patients with degenerative meniscal tear and no radiographic evidence of osteoarthritis to consider supervised structured exercise therapy as a treatment option."

How did this situation - widespread practice without supporting evidence of even moderate quality - come about, ask two experts in a linked editorial? "Essentially, good evidence has been widely ignored," say Teppo Järvinen at the University of Helsinki and Gordon Guyatt at McMaster University in Canada.

"In a world of increasing awareness of constrained resources and epidemic medical waste, what we should not do is allow the orthopaedic community, hospital administrators, healthcare providers, and funders to ignore the results of rigorous trials and continue widespread use of procedures for which there has never been compelling evidence," they conclude.

Medical care under the California workers' compensation system is based upon evidence based medicine. One would hope that the UR and IMR process has physicians who are aware of the findings of these studies when they make a decision to allow or turn down a request for treatment ...

Osteoarthritis (OA), also known as degenerative joint disease, is a condition in which cartilage - the tissue that protects the end of each bone in a joint - wears away, causing the underlying bones to rub together. This can cause pain, swelling, and poor joint movement.

As the condition worsens, the bones may lose shape. Additionally, growths called bone spurs may arise, and bits of bone and cartilage can break off and float around the space in the joint. This can trigger an inflammatory response that exacerbates pain, as well as cartilage and bone damage.

OA is the most common form of arthritis in the United States, affecting around 27 million American adults. While the condition can arise in all age groups, it is most common among people aged 65 and older.

There is no cure for OA, only therapies that can help manage symptoms. These include pain and anti-inflammatory medications, such as nonsteroidal anti-inflammatory drugs (NSAIDs) and corticosteroids. In some cases, joint surgery may be required.

Osteoarthritis is often a factor in workers' compensation orthopedic claims, especially claims based on a continuous trauma theory. While it is true that OA may be aggravated by work factors, at the same time the permanent disability benefit can be apportioned to causation.

An now a new medical study reveals new information about the causation of OA.

A report in Medical News Today says that researchers have uncovered evidence that cellular senescence - whereby cells stop dividing - is a cause of osteoarthritis, and they suggest targeting these cells could offer a promising way to prevent or treat the condition.

Cellular senescence is the process by which cells stop dividing. Senescent cells accumulate with age and can cause severe damage to tissues and organs, contributing to a number of age-related diseases.

Study co-author Dr. James Kirkland, director of the Robert and Arlene Kogod Center on Aging at Mayo Clinic in Rochester, MN, and colleagues publish their findings in The Journals of Gerontology, Series A: Biological Sciences and Medical Sciences.

"Osteoarthritis has previously been associated with the accumulation of senescent cells in or near the joints, however, this is the first time there has been evidence of a causal link. We believe that targeting senescent cells could be a promising way to prevent or alleviate age-related osteoarthritis. While there is more work to be done, these findings are a critical step toward that goal."

The concept that there is a relationship between degenerative joint disease and aging is not new. However, apportionment to the aging process is difficult in litigation when faced with arguments that the aging process alone as a causative factor is "speculative." However, adding an understanding of the cellular mechanism behind degenerative joint disease to the apportionment argument in litigation weighs in on the side that any speculation is now less likely ...

Juan Pablo Beltran filed an Application alleging he sustained an industrial cumulative trauma injury to his head and back due to repetitive heavy work while employed as a laborer by Structural Steel Fabricators. The employer denied applicant's claim based upon the affirmative defense that applicant did not report the injury prior to his termination for cause.

The parties submitted a walk through Compromise and Release Agreement settling applicant's claim for $12,500.00, which included his potential entitlement to a Supplemental Job Displacement Benefit voucher. Upon receipt of the Compromise and Release Agreement, the WCJ suspended action on the settlement agreement and set the matter for trial, noting on March 24, 2016, that the parties may not settle or commute the Supplemental Job Displacement Benefit voucher. The WCJ then reset the matter for a status conference after defendant filed a Petition for Removal.

According to the WCJ's Report and Recommendation on Petition for Reconsideration, the WCJ requested defendant strike the language that applicant was not entitled to a Supplemental Job Displacement Benefit voucher. When defendant would not agree, the WCJ approved the Compromise and Release Agreement with the additional language, "Parties may not settle or commute SJDV per LC §4658.7(g) CCR§10133.31 (h)."

The WCAB granted reconsideration in the panel decision of Juan Pablo Beltran v Structural Steel Fabricators and SCIF.

In 2012 the Legislature passed SB863 which amended the provisions of workers' compensation law pertaining to Supplemental Job Displacement Benefits, which replaced vocational rehabilitation benefits that were terminated in 2004. A provision was added prohibiting the settlement or commutation of a claim for the Supplemental Job Displacement Benefit voucher. According to the Assembly Floor Analysis, the prohibition on settlement of the Supplemental Job Displacement Benefit voucher was to prevent the "cashing out" of the retraining voucher.

Defendant argues on reconsideration that where there is a good faith dispute as to the compensability of a claim of injury, the parties should be permitted to settle applicant's entitlement to the Supplemental Job Displacement Benefit voucher, analogizing to the situation which existed with respect to the settlement of vocational rehabilitation benefits that was addressed in Thomas v. Sports Chalet (1977) 42. Cal.Comp.Cases 625 [Appeals Board En Banc].

The prohibition against settlement of the Supplemental Job Displacement Benefit voucher is analogous to the prohibition against settlement of vocational rehabilitation benefits, which Thomas held could be resolved in a Compromise and Release Agreement only when a serious and good faith issue exists, which if resolved against the applicant would defeat all right to compensation.

Here, an injured worker's entitlement to the Supplemental Job Displacement Benefit voucher is conditioned upon both the acceptance of liability for a claimed industrial injury by the employer and the existence of permanent partial disability, or a determination of these issues after trial. Where an employer denies liability and raises an affirmative defense that could potentially defeat all right to compensation, a prohibition on settlement of the Supplemental Job Displacement Benefit voucher would require a trial to determine injury and the existence of permanent partial disability in every case. The Board in Thomas recognized that this would result in "effectively doing away with settlements," despite the existence of good faith disputes that could totally bar recovery.

Accordingly, we hold that, as in Thomas, where the trier of fact makes an express finding based upon the record that a serious and good faith issue exists to justify a release, a compromise and release agreement may be: approved by the Board which will relieve the employer from liability for the Supplemental Job Displacement Benefit voucher ...