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Jose Gutierrez was injured while working for Green Team of San Jose, a waste disposal company. Gutierrez and his spouse initiated a personal injury suit in state court against Defendant McNeilus Truck & Manufacturing, Inc., the designer and manufacturer of the garbage trucks used by Green Team.

Defendant removed the action from California state court to federal court based on diversity of citizenship under 28 U.S.C. §1441(b).

Diversity jurisdiction in civil procedure provides that a United States district court in the federal judiciary has the power to hear a civil case when the amount in controversy exceeds $75,000 and where the persons that are parties are "diverse" in citizenship or state of incorporation, which generally indicates that they differ in state and/or nationality.

Mostly, in order for diversity jurisdiction to apply, complete diversity is required, where none of the plaintiffs can be from the same state as any of the defendants.

Once the case was in federal court, the Plaintiffs’ filed a motion to remand the case back to state court. A remand may be ordered either for lack of subject matter jurisdiction or for any defect in the removal procedure. 28 U.S.C. § 1447(c). Plaintiffs did not dispute that the parties are diverse and the amount in controversy exceeds the jurisdiction $75,000 minimum. Rather, Plaintiffs contend that this is a "nonremovable action" because Plaintiffs’ claims "aris[e] under" California’s worker compensation law.

28 U.S.C. § 1445(c) provides that "[a] civil action in any State court arising under the workmen’s compensation laws of such State may not be removed to any district court of the United States." If section 1445(c) applies, a case is not removable even if it presents a federal question or there is diversity. Humphrey v. Sequentia, Inc., 58 F.3d 1238, 1244 (8th Cir. 1995).

However, the federal judge denied the motion for remand in the case of Gutierrez v McNeilus Truck & Manufacturing, Inc.

Plaintiffs contend that their claims "arise under" California’s workers’ compensation law not because their three claims for negligence, products liability and loss of consortium "arise under" California’s workers’ compensation law, but because California Labor Code section 3852 provides Gutierrez’s employer, Green Team, a right to subrogation.

A civil action ‘arises under’ a state’s workers’-compensation law when the worker’s-compensation law creates the plaintiff's cause of action or is a necessary element of the claim. There is no question that an insurer’s suit under section 3852 to recover workers’ compensation benefits "arises under" California’s workers’ compensation law and is therefore nonremovable.

However, neither Green Team nor the workers’ compensation insurance carrier has sought to intervene. Neither is a party to this action. Plaintiffs anticipate that one or the other will assert their subrogation rights.

Only after a party lawfully intervenes in state court, the plaintiff’s otherwise removable claim can no longer be removed ...
/ 2019 News, Daily News
Kirk Hollingsworth was involved in a fatal accident while working for defendant Heavy Transport, Inc. in June 2016. His wife, Leanne Hollingsworth, and son, Mark Hollingsworth, filed a wrongful death complaint in superior court on January 22, 2018.

Plaintiffs alleged that Heavy Transport did not have workers’ compensation insurance. They also alleged that defendant Bragg Investment Company purported to have merged with Heavy Transport in 1986, but that the two companies had always maintained separate operations. Plaintiffs asserted that Bragg "sought to extend Worker’s Compensation Benefits" to them. Plaintiffs also alleged that defective Bragg equipment contributed to the incident.

On March 14, 2018, Bragg and Heavy Transport filed an application for adjudication of claim with the WCAB. The application listed Bragg as the employer, included insurance information, and noted that a lawsuit had been filed.

Bragg and Heavy Transport demurred to plaintiffs’ complaint. They asserted that Heavy Transport was a fictitious business name for Bragg, and therefore they were the same entity. Bragg had a workers’ compensation policy that covered the accident, so plaintiffs’ action was barred by workers’ compensation exclusivity. The Superior Court overruled the demurrer.

In December 2018 the WCAB determined that the accident had occurred in the course of decedent’s employment. The WCAB then set a hearing for February 19, 2019 to determine if any applicable workers’ compensation insurance covered the incident.

Defendants made an application to the Superior Court that the civil case be stayed until the WCAB determined the insurance issue, which would then determine which tribunal had exclusive jurisdiction. Plaintiffs also had filed a motion with the WCAB to stay those proceedings, but rather than grant the motion, the WCAB set the case for trial before a WCAB arbitrator on June 6, 2019, on the issue of insurance coverage. The Superior Court conceded jurisdiction to the WCAB on the issue of insurance coverage.

Plaintiffs then filed a petition for writ of mandate in the Court of Appeal , and requested an order staying the June 6 arbitration scheduled in the WCAB proceeding. It issued an alternative writ and an order staying the WCAB proceedings, and requested briefing from the parties.

This case presented a relatively simple question: Which tribunal - the superior court or the WCAB - should resolve the questions that will determine whether the superior court or the WCAB has exclusive jurisdiction over plaintiffs’ claims?

The Supreme Court in Scott v. Industrial Acc. Commission (1956) 46 Cal.2d 76, 81, decided this issue in 1956, and held that whichever tribunal exercised jurisdiction first should make the necessary findings to determine which tribunal has exclusive jurisdiction over the remainder of the matter.

The Court of Appeal followed that rule, and found that the trial court erred by deferring to the WCAB to determine jurisdiction in the published case of Hollingsworth et al., v. The Superior Court of Los Angeles County et al., (2019) 84 Cal.Comp.Cases 718.

The WCAB argued the statement in Sea World Corp. v. Superior Court (1973) 34 Cal.App.3d 494, at p. 501 that "[p]recedential jurisdiction" - concurrent jurisdiction to determine exclusive jurisdiction - "may be the subject of waiver by the court having it."

In Sea World the court cited Scott and several similar cases, and noted that "the court where jurisdiction first attaches may yield it, and that it is the right of the court to insist upon or waive its jurisdiction." Here, however, the evidence does not support a finding of waiver or estoppel, and neither the WCAB or defendants assert facts to support such a finding.

To the contrary, from the initiation of the action, plaintiffs and defendants consistently asserted their respective positions regarding jurisdiction, unlike the employer in Sea World. Thus, waiver or estoppel does not compel us to depart from the rule in Scott.

Here, the superior court exercised jurisdiction first. Plaintiffs’ complaint was filed on January 22, 2018, and defendants’ demurrer was filed on March 5, 2018. Defendants’ WCAB application was filed on March 14, 2018. Under Scott, the appropriate tribunal to determine the question of exclusive jurisdiction is the superior court, because that tribunal exercised jurisdiction first ...
/ 2019 News, Daily News
A federal grand jury brought a 14-count indictment against a physician, Edmund Peter Kemprud M.D. charging him with prescribing opioids to patients outside the usual course of professional practice and not for legitimate medical purpose, U.S. Attorney McGregor W. Scott announced.

According to court documents, Kemprud was a physician licensed to practice medicine in California and maintained a medical practice in Dublin and Tracy.

Kemprud is a 1973 graduate of the University of California San Francisco School of Medicine. Medical Board records do not reflect any prior disciplinary matters against him.

Prosecutors say that on 14 occasions between Sept. 6, 2018 and March 13, 2019, Kemprud allegedly prescribed highly addictive, commonly abused prescription drugs, including Hydrocodone, Alprazolam, and Oxycodone - outside the usual course of professional practice and not for legitimate medical purpose.

After Kemprud was arrested he pleaded not guilty at his arraignment. He is due back in court on Jan. 30. If convicted, he faces a maximum statutory penalty of 20 years in prison.

This case is the product of an investigation by the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse Drug Diversion Team, the Drug Enforcement Administration, and the Office of Inspector General for the United States Department of Health and Human Services. Assistant U.S. Attorney Vincenza Rabenn is prosecuting the case ...
/ 2019 News, Daily News
The FDA is approving new drugs so fast that companies are now preparing for a green light months in advance of the scheduled decision date, a pace that’s helping patients with rare or untreatable diseases but raising alarm among consumer advocates.

Global Blood Therapeutics Inc., maker of a new sickle cell disease drug called Oxbryta, built a booth to showcase the medicine at the annual meeting of the American Society of Hematology that begins this weekend -- even though the Food and Drug Administration’s deadline for approval was Feb. 26.

The move paid off: Oxbryta was given the go-ahead by the FDA on Nov. 25, almost three months ahead of schedule, and the branded booth will make its debut at the ASH conference in Orlando, Florida, on Saturday.

Oxbryta’s approval added to a growing number of breakthrough products that have beaten their FDA deadlines by weeks and sometimes months. For normal medicines, the agency typically has 10 months to issue a ruling. For those with exceptional benefits, or that treat conditions with few existing therapies, it offers a priority review that takes just six months. From mid-October to mid-November, the agency approved five medicines in as little as eight weeks.

The shift is emerging as the FDA is approving new drugs at a record pace, and breakthroughs in biotechnology and genetics are enabling drug companies and their scientists to provide more specific data to federal regulators.

But even as drugmakers, investors and patients cheer on the agency’s pace, patient-safety advocates argue that speed comes at a price. Studies show medicines approved on a faster time line are more likely to have safety problems emerge after they become broadly available, while other treatments offer fewer benefits than anticipated.

While the Trump administration has focused on reducing regulation across the U.S., the FDA’s new-found speed had its genesis more than a quarter-century ago. Drugmakers agreed to pay the agency user fees in return for firm deadlines after years of wild guesses. Congress and the FDA layered on programs providing incentives for drug developers to craft products for patient groups with critical unmet needs, especially for rare conditions.

It’s not just speed. The FDA also is approving more drugs, hitting a record 59 new therapies in 2018. Almost three-fourths received a priority review. That, combined with more efficient data collection, is responsible for the faster FDA action, said Aaron Kesselheim, a professor at Harvard Medical School. Companies are also communicating earlier and more often with the agency, which can head off issues at preliminary stages and help them get products through on the first attempt, he said.

Vertex Pharmaceuticals Inc.’s Trikafta, a triple combination of drugs to treat cystic fibrosis, won FDA approval in October, five months earlier than expected. Investors dubbed it an early Christmas gift from the FDA.

Clearance for Novartis AG’s Adakveo, another new medication for sickle cell disease, came in November. It was 62 days ahead of the FDA’s deadline, known as the PDUFA date. BeiGene Ltd.’s Brukinsa was approved three months ahead of schedule for mantle cell lymphoma.
/ 2019 News, Daily News
A dozen years ago, the federal government came down hard on Purdue Pharma, fining the drugmaker and three of its executives a record $634 million for misbranding its blockbuster OxyContin pill as safer and less addictive than other painkillers.

Plaintiff attorneys argue that drug manufacturers continued the aggressive marketing even after the Purdue fine. New details about the marketing campaigns are revealed in the corporate documents and internal emails unsealed in the Cleveland case after a year-long legal fight by The Washington Post and the owner of the Gazette-Mail in Charleston, W.Va.

Drug manufacturers paid doctors and movie stars to promote more aggressive pain treatment. The companies also created campaigns for their sales forces, tying bonuses to opioid sales and holding contests to reward top earners.

As the marketing campaigns unfolded, representatives from industry-funded groups that advocate for pain patients fanned out across the country to speak on TV shows, at conferences and dinners and to doctors at continuing medical education seminars, the court documents show. The groups included the American Pain Foundation and the American Pain Society, which have since gone out of business.

Drug manufacturers have rejected the plaintiffs’ arguments. They said that their sales and marketing teams did not misrepresent the safety of opioids.

But, last August, a judge in a lawsuit in Oklahoma ruled that Johnson & Johnson and its subsidiary Janssen had engaged in "false, misleading, and dangerous marketing campaigns." The company also provided incentives for its sales force. The company produced a PowerPoint presentation that promised prizes for those who sold the highest amounts of Nucynta, an extended-release opioid. The prizes included a Caribbean cruise, “His and Hers” Tourneau watches and a Sony home theater system.

In its statement, Johnson & Johnson said, "In the Oklahoma trial, the State did not produce a single doctor who testified that they were misled by a Janssen marketing communication."

Oklahoma Judge Thad Balkman ultimately ordered Johnson & Johnson to pay $465 million to abate one year’s worth of damage done by opioids in the state. The company is appealing.

The first case in the Ohio lawsuit, involving Summit and Cuyahoga counties, was recently settled for more than $325 million by multiple drug companies, including McKesson Corp., Cardinal Health, AmerisourceBergen, Johnson & Johnson, Mallinckrodt and Teva Pharmaceutical Industries. The remaining 2,500 cases, as well as lawsuits filed by most of the state attorneys general, are still pending.

In the Ohio case, the newly unsealed documents delve deep into the marketing strategies of the companies.

Former FDA commissioner David A. Kessler, a paid expert for the plaintiffs, said in a recently unsealed deposition in the Cleveland case that this "highly sophisticated" and overwhelming marketing of opioids "changed American medicine."

The efforts "range from regional advisory boards to the speaker’s bureaus, to the e-marketing to doctors, to the alternative channels, to the advocacy groups, to the unbranded publication plans," Kessler said, referring to materials that did not disclose they were funded by drug companies.

Kessler said that the paid appearances on television and at conferences usually featured the highest-prescribing doctors and were meant to transform the public perception of opioids and encourage other doctors to prescribe them more freely.
/ 2019 News, Daily News
Access to care is a major concern in all healthcare systems, as well as workers' compensation programs that are mandated to provide local care under MPN rules. Although hospitals can improve financially when they join larger health systems, the merger may also reduce access to services for patients in rural areas, according to a new RAND study reported in a story by Reuters Health.

After an affiliation, rural hospitals are more likely to lose onsite imaging and obstetric and primary care services, researchers report in a special issue of the journal Health Affairs devoted to rural health issues in the United States.

"The major concern when you think about health and healthcare in rural America is access," said lead study author Claire O’Hanlon of the RAND Corporation in Santa Monica, California.

More than 100 rural hospitals in the U.S. have closed since 2010, the study authors write.

"Hospitals in rural areas are struggling to stay open for a lot of different reasons, but many are looking to health-system affiliation as a way to keep the doors open," she told Reuters Health by email. "But when you give up local control of your hospital to a health system, a lot of things can change that may or may not be good for the hospital or its patients."

Using annual surveys by the American Hospital Association, O’Hanlon and colleagues compared 306 rural hospitals that affiliated during 2008-2017 with 994 nonaffiliated rural hospitals on 12 measures, including quality, service utilization and financial performance. The study team also looked at emergency department and nonemergency visits, long-term debt, operating margins, patient experience scores and hospital readmissions.

They found that rural hospitals that affiliated had a significant reduction in outpatient non-emergency visits, onsite diagnostic imaging technologies such as MRI machines, and availability of obstetric and primary care services. For instance, obstetric services dropped by 7-14% annually in the five years following affiliation.

At the same time, the affiliated hospitals also experienced an increase in operating margins, from an average baseline of -1.6%, typical increases were 1.6 to 3.6 percentage points, the authors note. The better financial performance appeared to be driven largely by decreased operating costs.

Overall, patient experience scores, long-term debt ratios, hospital readmissions and emergency department visits were similar for affiliating and non-affiliating hospitals.

"Research on these mergers has been mixed, with some suggestions they are beneficial for the community (access to capital, more specialty services, keep the hospital open) and other evidence that there are costs (employment reductions, loss of local control, increase in prices)," said Mark Holmes of the University of North Carolina at Chapel Hill, who wasn’t involved in the study ...
/ 2019 News, Daily News
Total national healthcare spending in 2018 grew 4.6 percent, which was slower than the 5.4 percent overall economic growth as measured by Gross Domestic Product (GDP), according to a study conducted by the Centers for Medicare & Medicaid Services (CMS).

As a result, the share of the economy devoted to health spending decreased from 17.9 percent in 2017 to 17.7 percent in 2018. Growth in overall healthcare spending has averaged 4.5 percent for 2016-2018, slower than the 5.5 percent average growth for 2014-2015. The growth in total national healthcare expenditures was approximately 0.4 percentage point higher than the rate in 2017 and reached $3.6 trillion in 2018, or $11,172 per person.

According to the report, private health insurance, Medicare, and Medicaid experienced faster growth in 2018. The faster growth for these payers was influenced by the reinstatement of the health insurance tax which was applied to private health insurance, Medicare Advantage, and Medicaid Managed care plans.

-- Private health insurance spending (34 percent of total health care spending) increased 5.8 percent to $1.2 trillion in 2018, which was faster than the 4.9 percent growth in 2017. The acceleration was driven in part by an increase in the net cost of private health insurance.
-- Medicare spending (21 percent of total health care spending) grew 6.4 percent to $750.2 billion in 2018, which was faster than the 4.2 percent growth in 2017.
-- Medicaid spending (16 percent of total health care spending) increased 3.0 percent to $597.4 billion in 2018. This was faster than the rate of growth in 2017 of 2.6 percent.
-- Out-of-pocket spending (10 percent of total health care spending) grew 2.8 percent to $375.6 billion in 2018, which was faster than the 2.2 percent growth in 2017.

Health care spending growth was mixed in 2018 for the three largest goods and service categories - hospital care, physician and clinical services, and retail prescription drugs.

-- Hospital spending (33 percent of total healthcare spending) increased at about the same rate in 2018 as in 2017, growing 4.5 percent and 4.7 percent, respectively, to reach $1.2 trillion in 2018.
-- Physician and clinical services spending (20 percent of total healthcare spending) increased 4.1 percent to reach $725.6 billion in 2018. This was slower than the rate of growth in 2017 of 4.7 percent.
-- Retail prescription drug spending (9 percent of total healthcare spending) grew 2.5 percent in 2018 to $335.0 billion following slower growth of 1.4 percent in 2017.

The 2018 National Health Expenditures data and supporting information will appear on the CMS website ...
/ 2019 News, Daily News
Hospital groups on Wednesday filed a lawsuit to stop the Trump administration’s price transparency rule that requires hospitals to disclose negotiated rates with insurers.

The suit, filed by the American Hospital Association (AHA), among other hospital groups, argues that the Centers for Medicare and Medicaid Services (CMS) rule violates the First Amendment by provoking compelled speech and reaches beyond the intended meaning of "standard charges" transparency in the Affordable Care Act.

The groups filed the suit in the U.S. District Court in Washington and are asking for an expedited decision to prevent hospitals from needing to prepare for the rule if it is ultimately ruled unconstitutional.

The hospitals argue that the efforts and cost required to follow the rule are overreaching as they would be required to release massive spreadsheets with data on negotiated drugs, supplies, facility and physician care prices. The estimated cost to hospitals to follow the rule is between $38.7 million to $39.4 million.

"The burden of compliance with the rule is enormous, and way out of line with any projected benefits associated with the rule," according to the suit.

The suit also alleges the Department of Health and Human Services (HHS) does not have the authority to enforce the rule, according to a release from the AHA.

"Instead of giving patients relevant information about costs, this rule will lead to widespread confusion and even more consolidation in the commercial health insurance industry," Rick Pollack, president and CEO of AHA, said in the release. "We stand ready to work with CMS and other stakeholders to advance real solutions for patients."

The rule, which was finished last month, is part of the Trump administration’s efforts to increase price transparency and to develop more competition within the health care industry, moves which they say would help lower medical costs.

White House officials have said that a lack of cooperation from hospitals on the regulation indicates they are prioritizing themselves over consumers.

"Hospitals should be ashamed that they aren’t willing to provide American patients the cost of a service before they purchase it," HHS spokeswoman Caitlin Oakley said. "President Trump and Secretary Azar are committed to providing patients the information they need to make their own informed health care decisions and will continue to fight for transparency in America’s health care system."

The hospitals say the rule will have the opposite of the intended effect and cause competitors to increase prices to match their rivals to a point where consumers will decide against receiving care.

The Association of American Medical Colleges, the Children’s Hospital Association and the Federation of American Hospitals also signed onto the suit ...
/ 2019 News, Daily News
A recent $93.6 million verdict from an Oregon jury has the potential to bankrupt a union that some describe as one of the strongest and most militant in the United States - the International Longshore and Warehouse Union (ILWU).

The November 4 federal jury award in favor of ICTSI Oregon Inc., the former operator of a Port of Portland terminal, was handed down after allegations of unlawful boycotts carried out by the ILWU-backed dock workers, which caused significant damages to ICTSI’s business.

The employment firm of Fisher Phillips reports that the lawsuit was the last remaining active case out of six separate actions filed in 2012 arising from a labor dispute at Terminal T6 in Portland, Oregon.

The dispute concerned which union was entitled to perform the job of plugging, unplugging, and monitoring refrigerated shipping containers (referred to as the "reefer" jobs) at T6. The ILWU and its local chapter, Local 8, alleged that their collective bargaining agreement required ICTSI to assign the reefer jobs to ILWU members. Conversely, the International Brotherhood of Electrical Workers (IBEW) argued that other contracts required the reefer jobs to be assigned to IBEW members.

In August 2012, the National Labor Relations Board (NLRB) issued a decision awarding the reefer work to IBEW-represented employees. That did not sit well with the Longshore union.

According to ICTSI, the ILWU and Local 8 responded by engaging in unlawful secondary boycott activity, including inciting or encouraging unlawful slowdowns. By "inducing and encouraging" longshoremen "to unnecessarily operate cranes and drive trucks in a slow and nonproductive manner, refuse to hoist cranes in bypass mode, and refuse to move two 20-foot containers at a time on older carts, in order to force or require ICTSI and carriers who call at terminal 6 to cease doing business with the Port,"

ICTSI alleged that the union’s campaign led to the loss of its service contracts with two major shipping companies - which was approximately 98% of its business. The company further alleged that the union’s actions caused it to suffer in excess of $101 million in damages. The former operator filed a civil claim and took the Longshoremen's union to federal court in Oregon to recover these damages.

After a 10-day trial, the jury unanimously found that both the ILWU and Local 8 engaged in unlawful labor practices for a several-year period. The jury further found that the unlawful labor practices were a substantial factor in causing damages to ICTSI and that at no time during the period on question did either the ILWU or Local 8 engage in lawful, primary labor practices. On November 4, the jury awarded ICTSI $93,635,000 due to the ILWU’s and Local 8’s actions.

The jury’s verdict has the potential to bankrupt the ILWU. Each year, unions like the ILWU file must file a form with the Department of Labor called an LM-2 which lists various financial information about the union. The 2018 LM-2 filed by the ILWU national headquarters lists the total assets of the union as just over $8 million - $85 million less than necessary to satisfy the judgment against them.

The union has already said that it intends to oppose the judgment and take legal steps to set aside the judgment. It is also likely that the ILWU will appeal the final ruling. Thus, any bankruptcy filing could be years from now, but it is certainly a realistic possibility ...
/ 2019 News, Daily News
For most of this decade, the average medical cost per indemnity claim in California has declined. Anti-fraud measures by the Department of Industrial Relations (DIR), the California Department of Insurance (CDI), local district attorneys and insurer special investigative units also contributed to the significant reduction in medical costs. As part of this effort, the DIR has, as of August 2019, indicted and/or suspended more than 500 medical providers from participating in the California workers’ compensation system.

In 2018, the WCIRB published a study evaluating the potential impact of medical fraud enforcement.

The 2018 study showed that over 7% of total medical payments were made to Indicted Providers, who rendered more than 4% of the medical services in the second half of 2012. By the second half of 2017, the shares of both medical payments and transactions to these Indicted Providers had fallen by over two thirds.

The WCIRB has now released Treatment Patterns of Medical Providers Indicted for Fraud in California Workers’ Compensation, a follow-up analysis to its 2018 study that evaluated the potential impact of medical provider fraud enforcement.

The new research brief compares the treatment patterns and types of services rendered by indicted/suspended providers (indicted providers) to non-indicted/suspended providers (other providers) as well as the regional variations and differences in treatment levels on cumulative trauma (CT) claims. The WCIRB’s findings include:

The average total medical paid per indicted provider was 10 times higher than other providers between 2013 and 2018, largely because indicted providers treated significantly more injured workers and rendered more services per injured worker.

The shares of medical payments for medical-legal (ML) and medical liens of indicted providers were two to three times higher than other providers. Indicted providers were also paid a significantly higher share for complex office visits and ML evaluations.

Indicted providers in the Los Angeles Basin accounted for about half of indicted providers linked to WCIRB data, but they received more than 90 percent of the medical payments made to these indicted providers. The share of indemnity claims involving CT within the LA Basin was consistently higher for indicted providers between 2013 and 2015, yet the pattern did not hold in 2016 ...
/ 2019 News, Daily News
The California Self-Insurer's Security Fund (SISF) released findings of a study conducted by Bickmore Actuarial. The study compares the overall cost of workers' compensation self-insurance with the cost of traditional workers' compensation insurance. The study examined workers' compensation costs for 14 California self-insured employers across a variety of industries and with different self-insured retentions.

Based on a sample of 14 self-insurers, Bickmore estimated self-insurance savings of 14% to 28% versus full insurance. The average savings are 21%.

The 14 self-insurers that we evaluated are in a variety of industries and retain over $150,000,000 in annual workers’ compensation loss and allocated loss adjustment expense (ALAE), as projected by their independent actuaries. The self-insured retentions (SIRs) of those included in our evaluation range from $250,000 to $2,500,000.

In order to estimate self-insurance savings Bickmore started with projected ultimate loss & ALAE detailed in each self-insurers’ actuarial study, and then we added industry-wide loads for both insurance and self-insurance. The self insurance savings are largely driven by the reduction in commissions, insurance company other acquisition costs, and insurance other/general expenses (including premium tax). For 2017 the California Workers’ Compensation Insurance Rating Bureau (WCIRB) has estimated these costs to total 18% of premium.

The key difference between the low and high savings estimates is the assumed insurance company profit. Historically, California insurance company workers’ compensation profit has been highly variable by year. The low savings estimates assume no insurance underwriting profit. The high savings estimates assume insurance company profit is roughly 10% of premium, which the WCIRB has estimated insurance company profit to be for the 2017 year.

In addition to the costs previously discussed, the study adjusts for the estimated cost of excess insurance purchased by the self-insurer, self insurance assessments from the California Department of Industrial relations (DIR), and charges by the California Self-Insurers’ Security Fund (SISF) ...
/ 2019 News, Daily News
The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) released the 2019 WCIRB Geo Study, which underscores regional differences in claim characteristics across California. The web-based interactive map allows you to quickly view key measures across regions.

The study’s key findings include the following:

-- Even after controlling for regional differences in wages and industrial mix, indemnity claim frequency is significantly higher in the Los Angeles Basin and significantly lower in the San Francisco Bay Area.

-- Regional differences in indemnity claim frequency have been fairly consistent over time and across industries. The LA/Long Beach region has had the highest frequency, and the Peninsula/Silicon Valley region has had the lowest frequency during all available years. The difference between these regions has grown in each of the last two years. Since 2013, the largest improvement in relative indemnity claim frequency is in the Fresno/Madera region, and the greatest deterioration has been in Orange County and the Imperial/Riverside region.

-- Regional differences in severity are more muted than in frequency. Even after controlling for regional differences in industrial mix, limited average incurred on indemnity claims is highest in the San Luis Obispo, Santa Barbara and Ventura regions and lowest in the San Bernardino/West Riverside region.

-- Pharmaceutical costs throughout the state have dropped dramatically over the last several years, and the prevalence of opioid prescriptions for claims with pharmaceutical payments has also dropped dramatically. The largest decreases in pharmaceutical costs have occurred in Southern California regions, which had the highest pharmaceutical spending at the beginning of the study period. This has decreased the differences in pharmaceutical costs across regions over time.

-- The share of cumulative trauma claims as a percent of all claims is much higher in the Los Angeles Basin than in other parts of the state, and that gap has generally widened over time.

-- Both medical-legal costs and paid allocated loss adjustment expenses (ALAE) are significantly higher in the Bakersfield and Los Angeles Basin regions than in the remainder of the state.

-- The share of open indemnity claims has decreased substantially in all regions since 2013. The largest decreases have been experienced in the Los Angeles Basin regions that had the highest initial open indemnity claim shares. These changes have narrowed regional differences over time.

-- Incurred loss development regional differences observed were relatively modest. In general, development appeared higher than average in more urban areas, with the highest in the Los Angeles/Long Beach region and the lowest in the Fresno/Madera region ...
/ 2019 News, Daily News
As required by Section 202 of the SMART Act, CMS is required to annually review its costs relating to recovering conditional payments as compared to recovery amounts.

Since 2017, CMS has maintained its threshold of $750.00 across all Non-Group Health Plan (NGHP) lines of business to include workers’ compensation, general liability, and no-fault insurance.

The threshold means that in scenarios where the Total Payment Obligation to Claimant (TPOC)/settlement amount is $750.00 or less, the claim does not need to be reported and CMS will not require reimbursement of conditional payments.

CMS has again reviewed the costs related to collecting Medicare’s conditional payments and compared this to recovery amounts.

Beginning January 1, 2020, the threshold for physical trauma-based liability insurance settlements will remain at $750. CMS will maintain the $750 threshold for no-fault insurance and workers’ compensation settlements, where the no-fault insurer or workers’ compensation entity does not otherwise have ongoing responsibly for medicals.

This means that entities are not required to report, and CMS will not seek recovery on settlements, as outlined above.

Please note that the liability insurance (including self-insurance) threshold does not apply to settlements for alleged ingestion, implantation or exposure cases. Information on the methodology used to determine the threshold is provided at ...
/ 2019 News, Daily News
When Vinay Prasad, MD, was a resident, strict control of blood glucose for patients in the intensive care unit was considered an important goal. "We really chased tight glycemic control in the medical ICU, but of course, just a few years later, a randomized control trial - NICE-SUGAR - came out showing that that actually led to net harm without benefit," he said.

That's just one example of a medical reversal, which occurs when new and superior research contradicts and supersedes existing clinical practice. It's a phenomenon in which Dr. Prasad, an associate professor of medicine at Oregon Health & Science University and the author of Ending Medical Reversal: Improving Outcomes, Saving Lives, is an expert.

He and a team of colleagues from OHSU published a comprehensive review of randomized clinical trials in the Journal of the American Medical Association, The Lancet, and the New England Journal of Medicine identifying 396 medical reversals.

At least a dozen of these reversals related specifically to emergency medicine, while many others had at least some relationship to emergency care, trauma, and critical care. A few examples:

Mechanical chest compressions with the LUCAS device, in use since 2003 for treating patients in cardiac arrest, was found in the LINC randomized, controlled trial to have no significant effect on survival compared with manual CPR in patients with out-of-hospital cardiac arrest. The ability to achieve ROSC with the mechanical device was inferior to manual chest compression during resuscitation. (JAMA. 2014;311[1]:53)

Early and aggressive intervention with the early goal-directed therapy (EGDT) protocol for ED patients in whom sepsis is suspected was widely adopted after one positive study in 2001. It was later found to confer no added survival benefit compared with usual care and to contribute to increased ICU resource utilization. (JAMA. 2017;318[13]:1233)

The REACT-2 trial found that routine use of an immediate total-body CT scan as part of trauma workup did not reduce in-hospital mortality compared with conventional imaging and selective CT scanning in patients with severe trauma. (Lancet. 2016;388[10045]:673)

Platelet transfusion after acute hemorrhagic stroke associated with antiplatelet therapy was a common practice in the ED (as well as in neurosurgery and stroke units), but the 2015 PATCH study found worsened survival in the platelet transfusion group (68%) compared with the standard care group (77%). (Lancet. 2016;387[10038]:2605) ...
/ 2019 News, Daily News
Eleven drugmakers led by Pfizer and Novartis have set aside a combined $2 billion to invest in gene therapy manufacturing since 2018, according to a Reuters analysis, in a drive to better control production of the world's priciest medicines.

The full scope of Novartis' $500 million plan, revealed to Reuters in an interview with the company's gene therapy chief, has not been previously disclosed. It is second only to Pfizer, which has allocated $600 million to build its own gene therapy manufacturing plants, according to filings and interviews with industry executives.

Gene therapies aim to correct certain diseases by replacing the missing or mutated version of a gene found in a patient's cells with healthy copies. With the potential to cure devastating illnesses in a single dose, drugmakers say they justify prices well above $1 million per patient.

The senior vice president of Pfizer's global gene therapy business, acknowledged drugmakers take a "leap of faith" when they make big capital investment outlays for treatments before they have been approved or, in some cases, even produced data demonstrating a benefit. The rewards are potentially great, however.

Gene therapy is one of the hottest areas of drug research and, given the life-changing possibilities, the FDA is helping to speed treatments to market. It has approved two so far, including Novartis's Zolgensma treatment for a rare muscular disorder priced at $2 million, and expects 40 new gene therapies to reach the U.S. market by 2022.

There are currently several hundred under development by around 30 drugmakers for conditions from hemophilia to Duchenne muscular dystrophy and sickle cell anemia.

The proliferation of these treatments is pushing the limits of the industry's existing manufacturing capacity. Developers of gene therapies that need to outsource manufacturing face wait times of about 18 months to get a production slot, company executives told Reuters. They are also charged fees to reserve space that run into millions of dollars, more than double the cost of a few years ago, according to gene therapy developer RegenxBio.

As a result, companies including bluebird bio, PTC Therapeutics and Krystal Biotech are also investing in gene therapy manufacturing, according to a Reuters analysis of public filings and executive interviews. They follow Biomarin Pharmaceutical Inc, developer of a gene therapy for hemophilia, which constructed one of the industry's largest manufacturing facilities in 2017.

The FDA is keeping a close eye on standards. This comes amid the agency's disclosure in August that it is investigating alleged data manipulation by former executives at Novartis' AveXis unit.
/ 2019 News, Daily News
A spinal surgeon was sentenced to 30 months in federal prison for participating in a long-running health care fraud scheme in which he received at least $5 million in kickbacks for performing hundreds of spinal surgeries. The overall scheme resulted in more than $580 million in fraudulent bills being submitted, mostly to California’s worker compensation system.

Dr. Daniel Capen, 70, of Manhattan Beach, was sentenced by United States District Judge Josephine L. Staton, who also ordered Capen to forfeit $5 million to the United States and pay a $500,000 fine.

Capen, an orthopedic surgeon specializing in spinal surgeries, pleaded guilty in August 2018 to conspiracy to commit honest services fraud, and soliciting and receiving kickbacks for health care referrals.

The kickback scheme centered on Pacific Hospital in Long Beach, which specialized in surgeries, especially spinal and orthopedic procedures. Pacific Hospital’s owner, Michael D. Drobot, conspired with doctors, chiropractors and marketers to pay kickbacks in return for the referral of thousands of patients to Pacific Hospital for spinal surgeries and other medical services paid for primarily through the California workers’ compensation system.

Capen received kickbacks for referring surgeries to Pacific Hospital and also for using medical hardware from a Pacific Hospital-affiliated entity during the spinal surgeries he performed. He also received kickbacks for referring medical services such as urine and drug testing to Pacific Hospital-affiliated entities.

In total, between 1998 and 2013, Capen accounted for approximately $142 million of Pacific Hospital’s claims to insurers, on which the hospital was paid approximately $56 million. Capen admitted to receiving at least $5 million in kickbacks during the course of his crimes.

Drobot is serving a five-year prison sentence for conspiracy and paying illegal kickbacks, and has admitted that he orchestrated a wide-ranging fraudulent kickback scheme where paid more than $50 million in bribes to doctors to steer hundreds of millions of dollars in spinal surgeries to his hospital. Drobot ultimately profited millions of dollars from the scheme. Drobot currently faces additional federal criminal charges for allegedly violating a court forfeiture order by illegally selling his luxury cars.

Seventeen defendants have been charged in connection with the scheme, and 10 of them have been convicted, including Drobot and his son. Another doctor – Timothy James Hunt, 55, of Palos Verdes Estates – was sentenced in late September to two years in federal prison after he admitted taking illegal kickbacks.

The investigation into the spinal surgery kickback scheme was conducted by the FBI; IRS Criminal Investigation; the California Department of Insurance; and the United States Postal Service, Office of Inspector General.

This case is being prosecuted by Assistant United States Attorneys Joseph T. McNally of the Violent and Organized Crime Section, Scott D. Tenley of the Santa Ana Branch Office, Ashwin Janakiram of the Major Frauds Section, and Victor A. Rodgers of the Asset Forfeiture Section ...
/ 2019 News, Daily News
The Division of Workers’ Compensation provided an update on the development of amendments to the Medical-Legal Fee Schedule.

The division is close to finalizing the fee schedule, and intends to begin the rulemaking process by the end of the year and will hold a public hearing in early 2020. The development of the draft amendments included comprehensive review by those who work in and utilize California’s workers’ compensation system.

The division posted proposed amendments in May 2018 and after soliciting proposals and obtaining feedback from the industry, posted a revised proposal last August incorporating input from stakeholders including medical providers, public and private employers, attorneys, insurance carriers, advocates and policymakers.

The division continues to meet with stakeholders as it refines its proposed amendments and fixed fee schedule to improve the quality of medical reports, eliminate complexity factors and increase fees for medical-legal testimony. Updates on the proposed regulation including information on the public hearing will be posted on DWC’s proposed regulations webpage ...
/ 2019 News, Daily News
Deville worked at Exide’s hazardous waste treatment and storage plant in Vernon for 29 years. At that location, Exide recycled automotive batteries, which recovered the lead used in the batteries. Deville was a forklift driver and furnace operator.

On April 24, 2013, the Department of Toxic Substance Control (DTSC) ordered Exide to suspend operations in Vernon because plant operations were causing discharge of illegal amounts of lead into the air, water, and soil.

Before operations at Exide’s Vernon facility were halted, Deville experienced what he calls two "profound" health-related incidents at work. On one occasion, Deville lost consciousness while cleaning one of the facility’s furnaces. On the second occasion, which also arose in connection with cleaning one of the furnaces, Deville felt dizzy, left the furnace, and went to a restroom where he produced a urine stream that he says was black in color.

In June 2016, more than three years after these two alleged incidents and suspension of operations at Exide’s Vernon plant, Deville sued Exide and certain Individual Defendants, alleging unspecified injuries caused by exposure to lead and other hazardous chemicals while working at the Vernon facility.

Deville alleged he was injured by defendants’ collective failure to properly use and store hazardous and toxic substances at the Vernon plant, to disclose fully and accurately the risks presented to human health presented by the chemicals used at the plant, to remediate or clean up contaminants, and to provide proper safety equipment and training.

The Individual Defendants argued, among other things, that all of Deville’s claims were precluded by workers’ compensation exclusivity principles. The trial court sustained the Individual Defendants’ demurrer without leave to amend.

Exide separately demurred to the operative complaint, making the same workers’ compensation exclusivity argument (among others) on which the Individual Defendants had prevailed. The trial court sustained Exide’s demurrer without leave to amend and dismissed the case.

The dismissals were affirmed in the unpublished case of Deville v. Bloch.

The Individual Defendants’ demurrer was properly sustained without leave to amend because the operative complaint alleges the Individual Defendants were acting within the scope of their employment and did not allege any facts that would satisfy the two exceptions to workers’ compensation exclusivity rules when individual defendants (as opposed to an employer) are sued.

Similarly, Exide’s demurrer to the bulk of Deville’s claims was properly sustained because the operative complaint does not adequately allege facts establishing any of the elements of the fraudulent concealment of injury exception to workers’ compensation exclusivity on which Deville relies to maintain his action ...
/ 2019 News, Daily News
Ten California state agencies paid $20 million more for workers’ compensation insurance than they could have had selected a different insurer, according to a California State Auditor’s report published Thursday.

State law allows state agencies to decide how to provide workers’ compensation benefits to their employees. Almost 90 percent of them choose to do so using a master agreement that the California Department of Human Resources (CalHR) negotiated on their behalf with the State Compensation Insurance Fund (State Fund).

Under the master agreement, state agencies reimburse State Fund for the actual cost of workers’ compensation claims, rather than paying for insurance or maintaining a workers’ compensation reserve.

According to CalHR data, nearly 190 agencies provided benefits through the master agreement in fiscal year 2017-18, while 32 agencies opted to purchase insurance from State Fund.

The State Auditor then reviewed the costs of 10 of the 32 agencies that purchased insurance from State Fund in fiscal year 2017-18. It found that each of these agencies consistently paid more in insurance premiums than it would have paid had it provided benefits under the master agreement.

It estimated that from fiscal years 2013-14 through 2017-18, these 10 agencies collectively paid an average of $5.7 million per year in premiums but would have paid an average of less than $1.6 million per year under the master agreement.

In fact, had the 10 agencies used the master agreement, they could have saved the State more than $20 million during the period the Auditor reviewed.

However, CalHR is not required to assist agencies in deciding whether purchasing workers’ compensation insurance or using the master agreement is likely to be more cost-effective for them.

State Fund does not always provide state agencies with enough time to review settlement authorization requests before the mandatory settlement conferences. State Fund must obtain approval from agencies before entering into settlements, unless the agencies have authorized State Fund to settle cases without such preapproval.

State Fund and several of the agencies reviewed indicated that State Fund should provide agencies with 30 days to review settlement requests before the settlement conferences. However, State Fund did not provide agencies with 30 days to respond to the settlement requests for eight of the 15 claims reviewed..

To ensure that all state agencies provide workers’ compensation in the most cost-effective manner, CalHR should provide each agency that purchases workers’ compensation insurance with a cost-benefit analysis every five years that compares the cost of purchasing this insurance through State Fund with the cost of obtaining coverage through the master agreement. State Fund. CalHR agreed to implement this recommendation.

State Fund should create and follow a policy to provide settlement authorization requests to agencies at least 30 days before settlement conferences. State Fund did not agree with the Auditor's recommendation, asserting that it will strive to meet a guideline that State Fund will complete settlement requests at the earliest opportunity ...
/ 2019 News, Daily News
In separate incidents, Miguel Velazquez and Servando Velazquez suffered injuries, and each required Spanish language interpreting services in connection with their medical care. Meadowbrook was the carrier for the claimants’ employers and accepted both claims and administered benefits.

DFS Interpreting, provided interpreter services to each claimant, and timely submitted invoices to Meadowbrook. Meadowbrook issued explanations of review pursuant to Labor Code section 4603.3, explaining that it refused to pay the invoices DFS submitted.

DFS objected to those explanations of review, but did not request a second review pursuant to section 4603.2, subdivision (e) or California Code of Regulations, title 8, section 9792.5.5.

After each underlying case resolved, the cases were consolidated to determine whether DFS properly contested Meadowbrook’s explanations of review, and, if not, whether to award further payment to DFS. The parties stipulated that the interpreters were necessary at all medical treatment appointments, DFS timely submitted the invoices, Meadowbrook timely issued the explanations of review, and DFS objected to the explanations of review but did not request a second review.

The WCJ issued her findings and award and order in favor of DFS, and found that the liens were not barred by its failure to request a second review, because the administrative director had not adopted a fee schedule pursuant to section 4600, subdivision (g).

The WCAB denied the reconsideration petition. It reasoned that the AD had not specifically adopted a fee schedule for interpreters after the Legislature enacted Senate Bill No. 863. Thus, there was not an applicable fee schedule and DFS was not required to submit a request for second review.

The Court of Appeal reversed in the published case of Meadowbrook v WCAB.

The AD adopted Title 8, section 9795.3, entitled "Fees for Interpreter Services" in 1994. The section also describes interpreter fees that "shall be presumed to be reasonable."

There is no requirement that the AD adopt a fee schedule after Senate Bill No. 863 was enacted. Title 8, section 9795.3 is an applicable fee schedule as required by the labor code and regulations.The parties offer no authority establishing that the schedule of fees set out in Title 8, section 9795.3 is not a "fee schedule" such that it qualifies as such under the relevant regulation.

"Because the fee schedule set out in Title 8, section 9795.3 is an "applicable fee schedule" as required by Title 8, section 9792.5.4, we hold that DFS’s liens are barred by its failure to request a second review. Because the WCAB’s interpretation of the law is clearly mistaken, the WCAB’s opinion and decision on reconsideration must be annulled." ...
/ 2019 News, Daily News