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Pharmaceutical company Gilead Sciences, based in Foster City, California, has agreed to pay $97 million to resolve claims that it violated the False Claims Act by illegally using a foundation, Caring Voice Coalition, as a conduit to pay the Medicare co-pays for its own drug, Letairis.

When a Medicare beneficiary obtains a prescription drug covered by Medicare Part D, the beneficiary may be required to make a partial payment, which may take the form of a co-payment, co-insurance, or deductible. Congress included co-pay requirements in these programs, in part, to encourage market forces to serve as a check on health care costs, including the prices that pharmaceutical manufacturers can demand for their drugs. The Anti-Kickback Statute prohibits pharmaceutical companies from offering or paying, directly or indirectly, any remuneration - which includes money or any other thing of value - to induce Medicare patients to purchase the companies’ drugs.

The government alleged that Gilead used Caring Voice Coalition, which claimed 501(c)(3) status for tax purposes, as a conduit to pay the co-pay obligations of thousands of Medicare patients taking Letairis, which is approved to treat pulmonary arterial hypertension. According to the government’s allegations, Gilead used CVC to cover the patients’ co-pays in order to induce those patients’ purchases of Letairis. Gilead knew that the prices it set for Letairis otherwise could have posed a barrier to those purchases.

Gilead routinely obtained data from CVC detailing how many Letairis patients CVC had assisted, how much CVC had spent on those patients, and how much CVC expected to spend on those patients in the future. Gilead allegedly received this information through funding requests, telephone calls, and written reports.

Gilead then used this information to budget for future payments to CVC to cover the co-pays of patients taking Letairis, but not of patients taking other manufacturers’ similar drugs. The government alleged that Gilead engaged in this practice even though it knew it should not receive or use data concerning CVC’s expenditures on co-pays for Letairis. The government also alleged that, to generate revenue from Medicare, Gilead referred Medicare patients to CVC, which resulted in claims to Medicare to cover the cost of Letairis.

"Like its competitors, Actelion and United Therapeutics, Gilead used data from CVC that it knew it should not have, and effectively set up a proprietary fund within CVC to cover the co-pays of just its own drug," said United States Attorney Andrew E. Lelling. "Such conduct not only violates the anti-kickback statute, it also undermines the Medicare program’s co-pay structure, which Congress created as a safeguard against inflated drug prices. During the period covered by today’s settlement, Gilead raised the price of Letairis by over seven times the rate of overall inflation in the United States."

To date, the Department of Justice has collected over $1 billion from eleven pharmaceutical companies (United Therapeutics, Pfizer, Actelion, Jazz, Lundbeck, Alexion, Astellas, Amgen, Sanofi, Novartis, and Gilead) that allegedly used third-party foundations as kickback vehicles. The Department also has reached settlements with four foundations (Patient Access Network Foundation, Chronic Disease Fund, The Assistance Fund, and Patient Services, Inc.) and a pharmacy (Advanced Care Scripts, Inc.) that allegedly conspired or coordinated with pharmaceutical companies on these kickback schemes.
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/ 2020 News, Daily News
Lance Steven Pasalich, 23, was arraigned on multiple felony counts of insurance fraud and grand theft after allegedly defrauding his insurer to receive over $8,600 in disability payments he was not entitled to receive. The alleged scheme could potentially have cost the insurer over $55,000 in claim expenses.

An investigation by the California Department of Insurance revealed Pasalich submitted a workers' compensation claim for a slip-injury he sustained while working for a land management company in Shasta County. Pasalich was working as a seasonal forestry technician responsible for conducting large surveys to prevent wildfires.

Following the injury to Pasalich's knee, his employer's workers' compensation insurer provided him with temporary total disability benefits and treatment to help him return to his job. The insurer instructed Pasalich, multiple times, that he was required to report any additional work or income he earned while receiving disability benefits. Temporary total disability benefits are intended to aid recovering injured workers who need additional time to recover or receive a permanent disability rating.

Investigators followed Pasalich and observed that he secretly resumed working as a forestry technician, but for a different company. Pasalich repeatedly neglected to disclose his resumption of forestry work. By secretly working while receiving disability payments, Pasalich was able to simultaneously receive disability benefits and work income.

The Shasta County District Attorney’s Office is prosecuting this case ...
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/ 2020 News, Daily News
Cal/OSHA has cited six Bay Area employers including hospitals, skilled nursing facilities and a police department for failing to protect their employees from COVID-19. The employers listed below were cited for various health and safety violations including some classified as serious, with proposed penalties ranging from $2,060 to $32,000.

The employers were cited for not protecting workers from exposure to COVID-19 because they did not take steps to update their workplace safety plans to properly address hazards related to the virus.

Several occupational safety and health standards, including Cal/OSHA’s Bloodborne Pathogens Standard adopted in 1992 and the Aerosol Transmissible Diseases (ATD) standard adopted in 2009, address worker protections such as proper respiratory protection when exposure to airborne diseases including COVID-19 may occur in a health care setting.

The ATD standard applies to hospital workers and emergency medical services, as well as workers in skilled nursing facilities, biological laboratories, workers performing cleaning and decontamination, and public safety employees who may be exposed to infectious disease hazards. The employers cited allegedly failed to comply with the ATD standard.

Cal/OSHA claims the Santa Rosa Police Department failed to implement required screening and referral procedures for persons exhibiting COVID-19 symptoms during the month of March 2020, and failed to report to Cal/OSHA multiple serious illnesses suffered by employees who contracted COVID-19. An employee died from COVID-19 after being exposed by another employee who had exhibited signs and symptoms of COVID-19. Cal/OSHA did not learn of the fatality until two weeks after the death.

Cal/OSHA determined that the Gateway Care & Rehabilitation Center skilled nursing facility in Hayward exposed nurses and housekeeping workers to COVID-19 when it failed to follow requirements for providing necessary personal protective equipment.

Sutter Bay Hospitals’ CPMC Davies Campus did not ensure their health care workers in the administrative medical offices and security guards in the emergency department wore respiratory protection. In one incident, a suspect COVID-19 patient underwent a medical procedure in the operating room while medical staff did not have N95 masks or other proper protection.

Cal/OSHA inspectors determined that the Santa Clara Valley Medical Center’s hospital on South Bascom failed to provide effective training for its employees. The Santa Clara Valley Medical Center on North Jackson Avenue was also cited for failing to provide clear communication to their health care workers who were deployed to two skilled nursing facilities. The workers were exposed to COVID-19 suspect and confirmed patients at the Ridge Post-Acute and Canyon Springs Post-Acute facilities. Neither of the skilled nursing facilities trained the deployed health care workers.

Cal/OSHA has created guidance for many industries in multiple languages including videos, daily checklists and detailed guidelines on how to protect workers from the virus. This guidance provides a roadmap for employers on their existing obligations to protect workers from COVID-19 ...
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/ 2020 News, Daily News
Eduardo Medina Ruelas, 46, of Sanger, was arraigned on multiple counts of felony insurance fraud after allegedly defrauding his employer and RISICO Claims Management Co.

Officials claim he collected $38,000 in workers’ compensation insurance benefits and medical treatment he was not entitled to receive.

An investigation by the California Department of Insurance revealed that while working at Pitman Family Farms, Ruelas was injured when he was struck by a forklift on June 13, 2017.

As a result of his injuries, Ruelas was placed on temporary disability and did not return to work. Ruelas continued with follow-up visits to the doctor, complaining of severe and widespread pain throughout his entire back and most of his body. When it was recommended that he return to work on light duty, Ruelas claimed to be unable to work due to the persistent and severe pain.

Surveillance was conducted while Ruelas was off work collecting disability benefits. Ruelas was caught on video visiting a casino, shopping, watering his lawn, and transferring a large piano keyboard from the trunk of his vehicle into another vehicle.

The surveillance footage showed Ruelas participating in activities that contradicted his claims of injury and inability to work.

The Fresno County District Attorney’s Office is prosecuting this case. Ruelas will return to court on October 19, 2020 ...
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/ 2020 News, Daily News
This illustrative case of Brooks v. Corecivic of Tennessee arises in the employment context, and asks whether the workplace conditions inside a detention facility were so unsafe and unhealthy that Plaintiff, Erica Brooks, had no reasonable alternative except to resign, resulting in her wrongful constructive termination from her employment.

Her employer Corecivic, is a private operator of correctional facilities with contracts for services with United States Immigration and Customs Enforcement and the United States Marshals Service. She worked for them as a Detention Officer at the Otay Mesa Detention Center ("OMDC") starting February 3, 2019, and worked in that capacity until her resignation on April 12, 2020.

In her lawsuit against the employer she alleges that her employer "failed to adequately respond to the COVID-19 pandemic," and lists several examples. And claims they support her lawsuit for wrongful constructive termination in violation of public policy, as well as claims for negligent supervision and intentional infliction of emotional distress. She brings her claims to federal court based on diversity jurisdiction, and thus California law applies.

The employer moved to dismiss the Complaint. It argues Brooks has not plead facts supporting the elements of wrongful constructive termination or negligent supervision, and that the negligent supervision and intentional infliction claims are barred by workers compensation exclusivity.

The court ruled that Plaintiff may state a constructive discharge claim based on an alleged failure to maintain a safe work environment. And the Court rejected Defendant's argument that Plaintiff has failed to allege facts sufficient to show a constructive discharge.

The court went on to say that "Although pandemics themselves are generally uncommon events, that does not mean Defendant's response to the pandemic falls outside the risk inherent in the employment relationship. On the contrary, one would expect employers to have some type of protocol in place to deal with this kind of catastrophic event. This is especially so considering Defendant is engaged in the operation and management of detention facilities, which are particularly susceptible to the spread of infectious diseases, such as COVID-19."

Because the obligation to provide a safe and healthy workplace is inextricably part of the compensation bargain, Plaintiff's negligent supervision and intentional infliction of emotional distress claims are barred by workers' compensation exclusivity. Accordingly, the Court grants the motion to dismiss these claims.

Specifically, the Court granted the motion as to Plaintiff's claims for negligent supervision and intentional infliction of emotional distress, and denied the motion as to Plaintiff's wrongful constructive termination claims ...
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/ 2020 News, Daily News
Two doctors, Susan Vergot and Carl Lindblad, were sentenced in a San Diego federal court for participating in a health care fraud scheme that bilked TRICARE - the health care program that covers United States service members - out of tens of millions of dollars by prescribing thousands of exorbitantly expensive compounded drugs to patients they never saw or examined.

Dr. Vergot and Dr. Lindblad were sentenced to 24 and 28 months in custody, respectively. The custodial portion of each defendant’s sentence will be split between prison and home confinement. Each was also sentenced to pay a $15,000 fine.

"This conspiracy inflicted nearly $65 million in actual losses to TRICARE, the health care benefits program relied upon by millions of our military members and their families," said U.S. Attorney Robert Brewer. "It is hard to imagine a more outrageous example of selfish doctors stealing from the U.S. health care system believing they were exempt from providing necessary care."

Compounded medications are specialty medications mixed by a pharmacist to meet the specific medical needs of an individual patient. Although compounded drugs are not approved by the Food and Drug Administration (FDA), they are properly prescribed when a physician determines that an FDA-approved medication does not meet the health needs of a particular patient, such as if a patient requires a particular dosage or application or is allergic to a dye or other ingredient.

According to the sentencing memorandum, as part of this conspiracy a team of individuals worked to recruit and pay Marines, primarily from the San Diego area, and their dependents - all TRICARE beneficiaries - to obtain compounded medications that would be paid for by TRICARE. This information was sent to Choice MD, the Tennessee medical clinic that employed Dr. Vergot and Dr. Lindblad.

Dr. Vergot and Dr. Lindblad then wrote prescriptions for the TRICARE beneficiaries, despite never examining the patients. Once signed by the doctors, these prescriptions were not given to the straw beneficiaries, but sent directly to particular pharmacies controlled by co-conspirators, most often a small pharmacy, The Medicine Shoppe in Bountiful, Utah, which filled the prescriptions and mailed the drugs to the patients in California.

Between November 2014 and June 2015, Drs. Vergot and Lindblad authorized 6,694 prescriptions, for which their co-conspirators billed TRICARE a staggering $89,725,000. Of this amount, over $65 million was for prescriptions written for straw TRICARE beneficiaries in the Southern District of California.

Defendants Vergot and Lindblad are the second and third defendants sentenced in this matter. CFK, Inc., the corporate owner of The Medicine Shoppe, was sentenced previously. A nurse practitioner, Candace Craven, previously pleaded guilty, as have the patient recruiters, including Joshua Morgan, Kyle Adams, Daniel Castro, Jeremy Syto, and Bradely White. All await sentencing.

Jimmy and Ashley Collins, the owners of Choice MD, were charged by Superseding Indictment in June 2020. Their case remains pending ...
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/ 2020 News, Daily News
Contreras Curiel Corporation owns and operates a restaurant, Karina's Mexican Seafood. The restaurant employed Raeanne Angelina Cruz as a server. After working an evening shift, Cruz was fatally injured in a single-car rollover accident.

Cruz left behind a young son, who filed this lawsuit against Contreras Curiel for wrongful death. He alleged Cruz became grossly intoxicated during her shift at the restaurant, based on its practice of allowing and encouraging servers to drink alcohol with restaurant customers.

Contreras Curiel moved for summary judgment on the grounds that his claims were barred by workers’ compensation exclusivity. The trial court denied the motion.

Contreras Curiel petitioned the Court of Appeal for a writ of mandate directing the trial court to vacate its order denying the motion and enter an order granting it. It relies on the same grounds as in the trial court.

The Court of Appeal granted the petition in the unpublished case of Contreras Curiel Corp. v. Superior Court.

Workers’ compensation exclusivity is founded on a presumed compensation bargain, pursuant to which the employer assumes liability for industrial personal injury or death without regard to fault in exchange for limitations on the amount of that liability. The employee is afforded relatively swift and certain payment of benefits to cure or relieve the effects of industrial injury without having to prove fault but, in exchange, gives up the wider range of damages potentially available in tort.

Exclusivity will not apply where an employer engages in conduct that is outside its proper role as an employer or that has a questionable relationship to the worker’s employment.

Such conduct includes certain intentional torts and criminal acts, as well as causes of action whose motive element violates a fundamental public policy of this state.

The evidence, viewed in the light most favorable to her son shows that Contreras Curiel allowed and encouraged its servers to consume alcohol with customers during their shifts.

While this conduct may have been reckless and appears to violate state alcoholic beverage regulations, it is akin to other conduct that creates or exacerbates workplace hazards.

It is not the type of intentional tort or criminal act that removes an employer’s conduct from the scope of workers’ compensation exclusivity. Nor do the claims incorporate a motive element that violates a fundamental public policy of this state, such as racial or gender discrimination ...
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/ 2020 News, Daily News
According to the latest tally by the California Workers Compensation Institute, the number of independent medical reviews used to resolve California workers' compensation medical disputes fell sharply in the first half of 2020.

Under California law every workers’ comp claims administrator must have a Utilization Review program to assure that the care provided to injured workers is supported by clinical evidence outlined in medical guidelines adopted by the state. Most treatment requests are approved by UR, but in 2012 state lawmakers adopted IMR to give injured workers a chance to get an independent medical opinion on treatment requests that UR physicians deny or modify.

IMR took effect for all claims in July 2013 so CWCI began monitoring IMR activity in 2014.

In its latest review, the Institute tallied 70,273 IMR decision letters issued in the first half of 2020 in response to applications submitted to the state, compared to 85,318 letters issued in the first six months of 2019 (-17.6%). Once again, about 40% of the letters included decisions on multiple services, but with the decline in letter volume, the total number of primary service decisions fell by 19.3% from 148,069 in the first half of 2019 to 119,514 in the first half of 2020.

While IMR volume was down, a review of IMR outcomes in the first half of this year noted little change. After reviewing the medical records and other information provided to support a disputed treatment request, IMR doctors upheld the UR physician’s modification or denial of the service in 88.8 percent of the IMRs in the first half of this year compared to the 88.2 percent uphold rate from 2019.

As has been the case since IMR was first adopted prescription drug requests accounted for the largest share of the January through June IMR decisions (39.8 percent), though that percentage is down from nearly half of all IMR disputes prior to the state’s adoption of the opioid and chronic pain treatment guidelines at the end of 2017 and the Medical Treatment Utilization Schedule Prescription Drug Formulary in January 2018.

Even with the guidelines and the formulary, opioids still accounted for 29.2 percent of the 2020 prescription drug IMRs - down only slightly from 30.9 percent in 2019.

Requests for physical therapy; injections; durable medical equipment, prosthetics, orthotics and supplies (DMEPOS); diagnostic imaging; and surgery together comprised 40 percent of the IMRs from the first half of 2020, while all other medical service categories combined accounted for 20.2 percent of the disputed requests. The 2020 uphold rates for the various service categories ranged from 80.1 percent for psych services to 91.3 percent for DMEPOS.

As in the past, a small number of physicians continued to account for most of the disputed medical services that went through IMR this year. The top 10 percent of physicians identified in the IMR decision letters issued in the 12 months ending in June 2020 accounted for 83 percent of the disputed service requests during that period, while the top 1 percent (97 providers) accounted for 40 percent of the disputed service requests.

Additional data and analyses on the IMR data through June 2020 has been published in a CWCI Bulletin, which CWCI members and subscribers will find under the Communications tab at ...
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/ 2020 News, Daily News
Gov. Gavin Newsom signed a new workers' compensation presumption law Thursday, that will expand access to workers' compensation for front-line workers affected by the coronavirus pandemic, and those who encounter an "outbreak" in the workplace.

Senate Bill 1159 creates a rebuttable presumption of infection for people like grocery store employees, health care workers, firefighters and law enforcement officers who believe they contracted the coronavirus at work. The new law also creates a presumption of infection whenever there is a workplace outbreak over a two-week span of time.

SB 1159 is effect immediately as an urgency statute and will remain in effect through Jan. 1, 2023.

SB 1159 imposes an onerous administrative burden on California employers, and their workers' compensation claim administrators.

The third category of presumptions - the outbreak group (L.C. 3212.88) - works administratively by requiring every employer in the state with five or more employees to report information about any employee who tests positive for COVID-19, to their workers' compensation claims administrator within three days.

The workers' compensation claim administrator must use this information to keep a count on COVID-19 testing at each site location, and when the criteria of 4 or more (or 4% of the workforce) in 14 days is met, apply the presumption to the "outbreak group" of cases reported during that 14 day window.

There is a $10,000 penalty for failure to meet the three day reporting requirement or to provide a fraudulent report.

This new law applies "retroactively" to pending claims, which means that employers and claim administrators have to go back in time and collect this data from millions of California employers of more than 5 people immediately. They have 30 calendar days to report on the retroactive claims now that the bill has been signed.

In terms of the employers of first responder employees (L.C. 3212.87 the second group), although L.C. 3212.87 does not have a specific reporting requirement, those .

While for example a peace officer is not in the third "outbreak group" they may work side-by-side with non first responders.

It would appear reasonable that counting positive tests of first responders who work in the same setting as non-first responders would be an obligation in terms of applying the presumption standard to the outbreak group.

Newsom also signed a new law that will require employers to report coronavirus outbreaks to their local public health department within 48 hours and to employees who may have been exposed within one business day.

Assembly Bill 685 also gives the California Division of Occupational Safety and Health (Cal/OSHA) the authority to close a worksite or place of employment that is actively exposing workers to the risk of contracting the virus.

AB 685 will also remain in effect through Jan. 1, 2023.
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/ 2020 News, Daily News
California franchisors and franchisees suffered setback when the legislature rejected a proposed franchise exemption to AB-5 in the recently passed clean up legislation.

When AB-5 was enacted in 2019, to the horror of the franchise industry, it appeared to create a presumption that the franchise business model created an employment relationship between franchisor and franchisee and franchisee’s employees.

The Bill’s sponsors in the Assembly disclaimed any intent to interfere with positive business relationships that allow small businesses, including franchised outlets, to continue and pledged to address the issue in future amendments to the law. The apologetic statement, promising amendments, temporarily calmed the waters.

An early draft of AB-5 amendments included a franchise exemption, but the provision died as amending legislation made its way to enactment. Amplifying the AB-5 adversity is the risk that the Dynamex case, which presaged AB-5, will be applied retroactively, exposing those considered employers under the test codified in AB-5 to years of prior year employment tax exposure.

Franchisors and franchisees will need to again reassess their approach to franchising in California’s AB-5 environment. The lure of access to the fifth largest economy in the world enhances the risks inherent in making the wrong decision.

In a 2019 alert, "New California Law Imperils Franchise Model," written by a member of Fox Rothschild, a 950-lawyer national law firm, the authors noted a few possible actions by franchisors and franchisees in the wake of AB-5, none of them palatable.

The firm said that franchisors and franchisees need to reconsider discouraging choices: (a) bow to pressure and change to an employment model; (b) cling to the franchise model, but redefine obligations and change the financial model; (c) withdraw from California.

Now, with no apparent hope that a franchise business model and AB-5 can co-exist, will franchisors begin the agony of decision-making?

What is the future of the thousands of California franchisees and their tens of thousands of employees in the process? Millions are unemployed in the wake of COVID; is now the time to add thousands more to the ranks?
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/ 2020 News, Daily News
Last July, Novartis agreed to pay over $729 million in separate settlements resolving claims that it violated the False Claims Act. The first settlement pertains to the company’s alleged illegal use of three foundations as conduits to pay the copayments of Medicare patients.. The second settlement resolves claims arising from the company’s alleged payments of kickbacks to doctors. The settlement was entered into in the US District Court for the Southern District of New York.

The total fine and penalty paid for illegal conduct inside the US was over double that paid by Novartis for its conduct outside the US. Novartis settled FCPA violations for foreign bribery for $337 million.

The California Attorney General just announced the trickle down effects, with its $11.8 million settlement against Novartis.

Novartis was accused of violating the federal Anti-Kickback Statute and False Claims Act, as well as the California False Claims Act, by offering payment in the form of cash, meals, and honoraria to healthcare practitioners who spoke at or attended Novartis speaker events, roundtables, speaker training meetings or lunch-n-learns to encourage them to prescribe certain Novartis drug products to recipients of Medicare and Medicaid.

Novartis sales representatives conducted speaker programs and roundtables at some of the most expensive restaurants in the United States, including Masa, Daniel, Gramercy Tavern, II Mulino, Babbo, Peter Luger, Le Bernardin, and Eleven Madison Park in New York City; Charlie Palmer's in Washington, D.C.; Morton's Steakhouse and the Four Seasons in Chicago, Illinois; Joe's Stone Crab in Miami; Abacus, Nobu and the Four Seasons in Dallas; Gary Danko in San Francisco; Patina and Matsuhisa in Los Angeles; Grill 225 in South Carolina; and Commander's Palace in New Orleans.

Some Novartis sales representatives conducted speaker programs and roundtables at venues where the focus was on entertainment, including fishing trips, sporting events, wine tastings, and hibachi tables. Novartis conducted hundreds of events at wineries and golf clubs. Sales representatives also conducted roundtables at Hooters.

The California settlement is a result of a whistleblower case filed in the United States District Court for the Southern District of New York in 2011. As part of the agreement, Novartis is required to pay California $11.8 million, which will be split between the General Fund and Medi-Cal.

This settlement agreement is a part of the work of the California Department of Justice’s Bureau of Medi-Cal Fraud and Elder Abuse (BMFEA). The BMFEA receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award totaling $42,322,848 for Federal fiscal year 2019-20. The remaining 25 percent, totaling $14,107,616 for fiscal year 2019-20, is funded by the State of California ...
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/ 2020 News, Daily News
The Covid-19 pandemic has forced companies to rethink the way people work. To stem the spread of the disease, companies recognized the need to decentralize their staff. Working from home became the new standard. One major corporation after another announced their plans for remote work. Some companies, such as Twitter, provided the chance for staff to work remotely forever.

Maintaining large office spaces in cities, such as New York and San Francisco, is extremely expensive and the taxes are astronomical. Having people work from their own homes or in lower-cost cities is an attractive option for the chief financial officers to shave off large expenditures and save money.

Forbes reports that Stripe, the fast-growing fintech payments company, has an interesting deal for its employees. They could be paid $20,000 to relocate from high-priced cities to lower-cost locations. Sounds good, right? Here’s the catch - the workers who take up the offer will have to take a 10% cut to their compensation.

In addition to Stripe, other companies have made similar-type offers. VMware - a California-based publicly traded software company that provides cloud computing and virtualization software and services - announced that employees who work remotely will get a pay cut if they move out of Silicon Valley to live in less-costly cities.

According to Bloomberg, "employees who worked at VMware’s Palo Alto, California, headquarters and go to Denver, for example, must accept an 18% salary reduction. Leaving Silicon Valley for Los Angeles or San Diego means relinquishing 8% of their annual pay." Rich Lang, VMware’s senior vice president of human resources, offered a positive alternative. When a person relocates and works remotely, they "could get a raise if they chose to move to a larger or more expensive city."

Facebook CEO Mark Zuckerberg vowed to allow his employees to continue working remotely. Zuckerberg said, "We’re going to be the most forward-leaning company on remote work at our scale." Employees will have to tell their bosses if they move to a different location. Zuckerberg forewarned his personnel, saying those who flee to lower-cost cities "may have their compensation adjusted based on their new locations." The chief executive added, "We’ll adjust salary to your location at that point. There’ll be severe ramifications for people who are not honest about this."

Just as there is heated debate over reopening the economy too quickly, there are contradicting actions of leading corporations that reflect a reticence to fully embracing the work-from-home revolution. Google, Amazon and Facebook have recently leased, built or purchased corporate real estate, bucking the remote movement. They are playing it safe by both offering people the chance to work from home, but also expanding their office footprint - in case the work-from-home trend slowly dissipates ...
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/ 2020 News, Daily News
Two California men admitted to participating in a conspiracy to broker patients as part of a multi-state patient scheme in which one of them directed recruiters to bribe drug-addicted individuals to enroll in drug rehabilitation and the other paid referral fees from his rehabilitation center in exchange for those patient referrals.

Dr. Akikur Mohammad, 57, of West Hills, California pleaded guilty to one count of conspiracy to violate the Eliminating Kickbacks in Recovery Act (EKRA). Kevin M. Dickau, 32, of Tustin, California pleaded guilty to one count of conspiracy to commit health care fraud.

According to the Medical Board of California records, Mohammad is a board certified psychiatrist specializing in addiction. He has a private practice seeing mostly patients suffering from addiction or a dual diagnosis of addiction and another psychiatric disorder. In addition to his private practice, he founded two drug rehabilitation facilities, one in Agoura Hills, and the other in Malibu.

EKRA, enacted by Congress in October 2018 as part of a broader package of legislation aimed at combatting the opioid crisis, bars the payment of kickbacks in exchange for the referral of patients to drug treatment facilities. Mohammad’s EKRA conviction is among the first such convictions in the country using the new charge.

Three other individuals have previously pleaded guilty for their roles in the scheme: Peter Costas, of Red Bank, New Jersey, pleaded guilty to conspiracy to commit health care fraud in May 2020; Seth Logan Welsh, of Forest Hill, Maryland, and John C. Devlin, of Baltimore, Maryland, pleaded guilty to the same charge on Sept. 8, 2020.

Dickau, Welsh, Devlin, and their conspirators owned and operated a marketing company in California. They used the marketing company to help orchestrate a scheme in New Jersey, Maryland, California, and other states that involved bribing individuals addicted to heroin and other drugs to enter into drug rehabilitation centers so they could generate referral fees from those facilities. One facility in California that paid such referral fees was owned and operated by Mohammad.

The marketing company maintained contractual relationships with drug treatment facilities around the country, including the one run by Mohammad. The marketing company also engaged a nationwide network of recruiters - including Costas in New Jersey - to identify and recruit potential patients, from New Jersey and other states, who were addicted to heroin or other drugs and who had robust private health insurance.

To convince drug-addicted individuals to travel to and enroll in rehabilitation when they otherwise would not have, Costas and other recruiters offered to bribe them - often as much as several thousand dollars - with the approval of Dickau, Welsh, and Devlin.

Once the patients agreed to enroll in drug rehabilitation in exchange for the offered bribe, Dickau, Welsh, Devlin, and Costas would arrange and pay for cross-country travel to the drug treatment centers in California and other states, in concert with the owners of the facilities themselves, including Mohammad.

Costas would stay in touch with the New Jersey patients at the facilities and specifically instruct them to stay at the facilities long enough to generate referral payments, and he would pass along information to Dickau, Welsh, and Devlin about the patients’ status at the facilities.

Dickau, Welsh, and Devlin would monitor the other patients they brokered by speaking to other recruiters or to the owners and employees of the drug treatment facilities themselves.

Mohammad’s drug treatment facility had a contract with the marketing company. His facility and other facilities typically paid the marketing company a fee of $5,000 to $10,000 per patient referral.

Dickau, Welsh, Devlin, and their conspirators divvied that money among themselves. Costas and other recruiters received approximately half that amount for each patient they brokered. They brokered scores of patients to drug treatment facilities around the country, including the one run by Mohammad, and the conspiracy caused millions of dollars of losses for health insurers.

Dickau faces a maximum potential penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Mohammad faces a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing for both defendants is scheduled for Jan. 20, 2021 ...
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/ 2020 News, Daily News
The average number of visits for Evaluation and Management (E&M) and Physical Medicine services in the California workers’ compensation system has continued to edge down since the enactment of SB 863 in 2012, but with the adoption of the RBRVS fee schedule, evidence-based medicine standards, mandatory Utilization Review and Independent Medical Review, and other reforms, E&M and Physical Medicine payments have increased from 33 percent to 47 percent of the total medical reimbursements in the system.

The finding is one of the results of a new California Workers’ Compensation Institute (CWCI) study that measures changes in the volume and reimbursement of different types of medical services provided to injured workers in the wake of incremental reforms to the California workers’ compensation system enacted over the past 20 years.

The study, based on indemnity claims data from CWCI’s IRIS database, tracks medical service utilization (percent of claims with a given service and the number of visits per claim) and total amounts paid per claim for medical services delivered within the first 24 months of treatment, with results broken out by medical service category (e.g., physical medicine, major surgery, mental health, pharmaceuticals, and clinical lab services which consist primarily of drug testing).

California has enacted multiple legislative and regulatory reforms affecting workers’ comp medical benefit delivery over the past two decades, so the study examines and compares data from claims with initial treatment dates within an 18-year span (2000 through 2017).

Because the study focuses on medical services in the first 24 months of treatment, there were years in which the results were influenced by reforms from multiple periods, so the report highlights changes in medical treatment utilization and payments for claims in which the initial service was rendered during three distinct non-transitional periods: 2000 to 2001 (Pre-2004 reforms); 2004 to 2010 (Post-SB 228 and SB 899); and 2013 to 2017 (Post-SB 863, AB 1244, and AB 1124).

The study also provides data on regional variations in medical services over time, including changes in the average number of E&M services and physical medicine visits, and in the proportion of claims that involved physical medicine. Focusing on the most recent post-reform period, the authors also analyzed four claim characteristics that impact medical service utilization: opioid use; major surgery; the injured worker’s age; and the industry in which they were employed at the time of injury.

Here, for example, the study found that the average age of a California injured worker has increased from 38.9 years in 2000 to 43.9 years in 2017, a notable finding given that the likelihood of having major surgery within the first 24 months of treatment increases with age, and the study shows workers over 40 also have significantly higher E&M and Physical Medicine utilization rates.

The full study has been released in a CWCI Research Note, "Changes in Medical Treatment Trends After 20 Years of Incremental Workers’ Compensation Reform," which includes background on the reforms enacted over the past two decades, plus exhibits and analyses summarizing the results.

Appendices to the report include tables showing the changes in the percentage of indemnity claims that involved services from 12 different medical service categories at 24 months; the mean, median and 95th percentile service counts for the service categories; and the mean, median, and 95th percentile payment amounts for those services.

CWCI members and subscribers can access the report at the CWCI website.
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Workers' compensation premium fraud can range from misclassifying a few workers into safer jobs than what they actually perform, falsely reporting employees as independent contractors, or setting up dummy companies to "hide" employees to keep payroll, and in turn, workers' compensation premiums artificially low.

In yet another case of alleged premium fraud, Felipe Saurez Barocio, 63, of Atwater, owner of Agriculture Services, Inc., and his daughter, Angelita Barocio-Negrete, 33, of Merced, were arraigned on multiple felony counts of insurance fraud. Prosecutors say the company allegedly underreported employee payroll by $11 million in order to fraudulently reduce the business’s premium for workers’ compensation insurance by over $2.5 million.

The California Department of Insurance said that the alleged fraud potentially left employed farm workers without insurance coverage and at financial risk.

State Compensation Insurance Fund filed a suspected fraudulent claim with the California Department of Insurance alleging potential insurance fraud last October.

SCIF reported that Barocio, as owner of a farm labor contracting business, allegedly under reported employee payroll in order to reduce the proper rate of insurance premiums owed to SCIF.

An investigation by the California Department of Insurance revealed that between 2015 and 2019, Barocio and his daughter, who worked as the office manager, provided SCIF with fabricated quarterly employee payroll reports.

The Department discovered a missing $11 million in payroll when they compared the quarterly reports submitted to SCIF to the quarterly reports submitted to the Employment Development Department.

This underreporting of employee payroll resulted in a total loss of $2,582,142 in insurance premiums.

Barocio and his daughter, Barocio-Negrete, will return to court on October 27, 2020. The Merced County District Attorney’s Office is prosecuting this case.

"When businesses illegally underreport payroll and employees they create an unfair advantage that places legitimate businesses at a competitive disadvantage," said Insurance Commissioner Ricardo Lara.

"We all pay the price for insurance fraud through increased costs for services and higher premiums." ...
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/ 2020 News, Daily News
The Los Angeles County District Attorney’s Office announced that a Los Angeles County sheriff’s deputy has been arrested and charged with workers’ compensation fraud.

47 year old Kevin Adams, who lives in Covina, faces one count of workers’ compensation insurance fraud in Superior Court case BA489895.

His arraignment is scheduled for January 11, 2021 at the Foltz Criminal Justice Center, in department 30.

Adams was assigned to the Twin Towers Correctional Facility, Custody Services Division.

The terse announcement by the district attorney's office simply says that he is accused of filing a false workplace injury claim for which he was receiving disability benefits. The alleged fraud began in 2015.

Inmate records show he was arrested around 9 a.m. Monday and released a short time later after being cited.

Adams faces a possible maximum sentence of five years in county jail if convicted as charged.

The case remains under investigation by the Los Angeles County Sheriff’s Department, Internal Criminal Investigations Bureau ...
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/ 2020 News, Daily News
Cal/OSHA has issued citations to frozen food manufacturer Overhill Farms Inc. and its temporary employment agency Jobsource North America Inc. with over $200,000 in proposed penalties to each employer for failing to protect hundreds of employees from COVID-19 at two plants in Vernon.

The employers did not take any steps to install barriers or implement procedures to have employees work at least six feet away from each other and they did not investigate any of their employees’ COVID-19 infections, including more than 20 illnesses and, in the case of Overhill Farms, one death.

According to a report in the Los Angeles times, the move followed the first fines announced for coronavirus safety violations last week. Cal/OSHA cited 11 employers in industries that included food processing, retail, agriculture, meatpacking and healthcare, and proposed penalties ranging from $2,025 to $51,190.

On April 28, Cal/OSHA opened inspections with Overhill Farms and Jobsource after receiving complaints of hazards related to COVID-19. The inspections included visits to two facilities in Vernon where Overhill Farms employees and workers from Jobsource manufacture a variety of frozen foods.

Cal/OSHA said it found hundreds of employees were exposed to serious illness from COVID-19 due to the lack of physical distancing procedures among workers including where they clock in and out of their shift, at the cart where they put on gloves and coats, in the break room, on the conveyor line and during packing operations.

At the larger of the two facilities Cal/OSHA said it identified 330 employees of Overhill Farms and 60 employees of Jobsource were exposed to the virus from the lack of physical distancing. At the smaller facility, Cal/OSHA found 80 Overhill Farms workers and 40 employees of Jobsource did packing operations, worked in the marinating area and processed raw poultry without any distancing procedures or protective barriers in place.

Other violations that put workers at risk of exposure to COVID-19 include the failure by both employers to train employees on the hazards presented by the virus and failure to investigate any of the more than 20 COVID-19 illnesses and one death Cal/OSHA uncovered amongst their employees.

The employers did not adequately communicate the COVID-19 hazards to their workforce, and Overhill did not report a COVID-19 fatality to Cal/OSHA.

The COVID-19 related violations cited at both plants include $222,075 in proposed penalties to Overhill Farms and $214,080 in proposed penalties to Jobsource, with an additional $14,450 in proposed penalties for Overhill Farms for non-COVID related violations.

Cal/OSHA also issued citations to both employers from inspections of two accidents in February, after one worker at each of the two facilities was injured when their hands got caught in unguarded conveyor parts. These accident inspections resulted in citations with $103,780 in proposed penalties to Overhill Farms, including for repeat violations due to a similar accident in 2016, and $29,700 in proposed penalties to Jobsource.

Overhill Farms said that it would contest the agency’s "erroneous" allegations, adding that Cal/OSHA has falsely claimed that the company failed to install Plexiglas dividers.

"The health and safety of our employees is our first priority,” the company said in a statement. “Overhill Farms has not only taken steps in line with the constantly evolving federal, state and local guidance, we have gone above and beyond those recommendations as we developed our employee safety procedures."

Officials with Jobsource said they also planned to dispute the citations.

"We take the health and safety of all of our team members very seriously and we believe that we have not done anything that would endanger anyone in our community," the company said in a statement ...
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/ 2020 News, Daily News
The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) has released the 2019 California Workers’ Compensation Aggregate Medical Payment Trends report comparing medical payment information from 2017 to 2019.

The report is available in the Research section of the WCIRB website.

This report analyzes medical payment and utilization trends by provider type, service locations and service types. The report also includes an analysis on utilization and cost of opioid prescriptions and physical medicine services over time and by region.

Key findings from the report include:

-- Overall medical payments and payments per claim continued to decline in 2019, with pharmaceuticals experiencing continuous sharp declines in medical payments.
-- Physical therapy services experienced the largest increase in the share of medical payments, largely driven by increases in the paid per service.
-- Physical Medicine and Rehabilitation procedures are the fastest growing within all physician services, and use of hematological agents increased more significantly than other therapeutic groups from 2018 to 2019.
-- Urban areas had a higher share of claims involving physical medicine services, while more suburban and rural areas had lower shares.
-- Physician Office remained as the leading Place of Service, accounting for the highest share (55%) of medical payments in 2019. This was mostly driven by its highest share of medical transactions in 2019.
-- Urgent Care Center experienced the largest percentage increase in the share of the medical paid.
-- Paid per transaction increased significantly for Emergency Rooms and Outpatient Hospitals in 2019, yet their transaction shares remained similar to the 2018 level.
-- The share of medical payments for Pharmaceuticals decreased significantly by about 43%, from 6% in 2017 to 3% in 2019.
-- Key drivers of the decrease include legislation and policies intended to restrict inappropriate prescribing, use of CURES database to monitor prescriptions of controlled substances, anti-fraud efforts, and the Drug Formulary.
-- The number of claims involving opioid prescriptions continued to decline significantly.
-- Tulare/Inyo and Bakersfield had the highest share of claims involving opioid prescriptions, while the Silicon Valley area and Los Angeles Basin had the lowest share.
-- The share of total medical transactions for ML104 (the most complex and expensive Medical-Legal evaluation) decreased by 11% in 2019 compared to 2017, while that for -- ML105-106 (testimonies and supplementary evaluations) increased by 4%.
-- The paid per transaction for ML104, ML105-106 and ML100 (missed appointment) continued to increase modestly.

The report was based on WCIRB medical transaction data with transaction dates from January 1, 2017 through December 31, 2019. The medical transaction data does not include: (a) medical payments made directly to injured workers or (b) payments made to any known third-party who may be assigned medical management ...
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According to a story in the Hollywood Reporter, pandemic-related delays on Ben Affleck's latest film Hypnotic have sparked a lawsuit against an insurance company that's refusing to extend the term of coverage without a COVID-19 exception even though the original policy didn't have one.

Hoosegow Productions is suing Chubb National Insurance Company for breach of contract and fraud, among other claims, and is asking a California federal judge for a declaration that Hoosegow is entitled to have the policy’s expiration date extended "in accord with Chubb National’s custom and practice and Chubb National’s express and implied representations" and that the insurer's assertion it has no obligation to extend the coverage and can instead offer a renewal policy containing a COVID-19 exclusion is incorrect.

The film was set to begin principal photography in April, but like countless other Hollywood productions, it was postponed because of the pandemic. Hoosegow reached out to Chubb about an extension and claims it was ignored for two months before the company said the "global Chubb position" was to deny the extension request.

The production company purchased a Film Producers Risk policy for Hypnotic and argues the insurer's long-established policy is that if a production is delayed or disrupted the policy period is extended until the production is completed. But, when Hypnotic was delayed because of the pandemic Hoosegow says Chubb refused to extend the policy and instead offered to "renew" it with more limited coverage.

"Specifically, Chubb National said that the policy would be 'renewed' only with the addition of an exclusion applicable to losses relating to COVID-19, thereby depriving Hoosegow of coverage that it had purchased and that was promised under the existing policy," states the complaint, which is posted in full below.

The policy includes $58 million of production media coverage per occurrence, $58 million of media perils coverage per occurrence and $58 million of declared person coverage per occurrence, according to the complaint. It also provides that Chubb will pay for actual production losses incurred because of the "inability of an essential element or other declared person" to complete their duties, in this case, Affleck and director Robert Rodriguez. According to Hoosegow, the policy term is Oct. 28, 2019, through Oct. 28, 2020, but the end date is merely a formality and the parties understood that coverage would be extended if filming went beyond that date.

"The Policy does not include a virus exclusion, pandemic exclusion, COVID-19 exclusion, or any other similar exclusion," states the complaint. Hoosegow argues that it's custom and practice to extend the expiration date "without any material change or reduction in coverage" and that it was explicitly assured of such in writing by the company's underwriter.

Hoosegow alleges that Chubb is engaging in a "coordinated scheme to wrongfully withhold policy benefits" from its customers across the entertainment industry in an effort to save itself millions of dollars.

A Chubb spokesperson on Thursday sent The Hollywood Reporter this statement: "As a matter of policy Chubb does not comment on pending legal matters." ...
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Anita Vijay, 50, of Sacramento, pleaded guilty to conspiring to pay and receive illegal kickbacks in exchange for Medicare beneficiary referrals and to soliciting kickbacks in exchange for Medicare beneficiary referrals, United States Attorney McGregor W. Scott announced.

According to court documents, Anita Vijay worked as the Social Services Director at a skilled nursing and assisted living facility in Sacramento. In her role, Vijay assisted Medicare beneficiaries in selecting home health care and hospice agencies following their discharge from the facility.

Vijay used her position to steer Medicare beneficiaries to home health agencies in Folsom and El Dorado Hills and a hospice agency in Folsom. In exchange for the referrals, the agencies’ owners paid her and her husband, Jai Vijay, illegal cash kickbacks.

In her plea agreement, Vijay admitted that the agencies’ owners paid her and her husband kickbacks in exchange for the referral of approximately 60 beneficiaries. Medicare paid the agencies approximately $400,000 for services they purportedly provided to the beneficiaries. Because the agencies obtained the referrals by paying kickbacks, they should not have received any reimbursement from Medicare.

This case is a product of an investigation by the Federal Bureau of Investigation and the Department of Health and Human Services’ Office of Inspector General. Assistant United States Attorney Matthew Thuesen is prosecuting the case.

U.S. District Judge Troy L. Nunley is scheduled to sentence Anita Vijay on December 3, 2020.

She faces maximum statutory penalties of five years in prison for the conspiracy charge and ten years in prison for the kickback charge. Anita Vijay also faces a maximum fine of $250,000 or twice the gross loss or gain.

On February 6, 2020, Jai Vijay pled guilty to conspiracy to pay and receive kickbacks in exchange for Medicare beneficiary referrals ...
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/ 2020 News, Daily News