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California adopted a law to allow the state to develop its own line of generic drugs, a notion designed to address the rising cost of prescription medicines that is straining many government budgets across the U.S.

Earlier this year, Governor Newsom announced a first-in-the-nation plan to lower the cost of prescription drugs by creating Cal Rx - a state-sponsored generic drug label.

Newsom has now signed SB 852, a new law that advances his proposal in January to leverage California’s purchasing power to increase generic drug manufacturing as one solution to the prescription drug affordability crisis.

The new law requires the California Health and Human Services Agency (CHHSA) to enter into partnerships, in consultation with other state departments as necessary to, among other things, increase patient access to affordable drugs.

The new law requires CHHSA to enter into partnerships to produce or distribute generic prescription drugs and at least one form of insulin, provided that a viable pathway for manufacturing a more affordable form of insulin exists at a price that results in savings.

SB 852 requires CHHSA to submit a report to the Legislature on or before July 1, 2023, that, among other things, assesses the feasibility and advantages of directly manufacturing generic prescription drugs and selling generic prescription drugs at a fair price.

The law requires CHHSA to report to the Legislature on or before July 1, 2022, a description of the status of the drugs targeted for manufacture and an analysis of how CHHSA’s activities have impacted competition, access, and costs for those drugs.

The law exempts all nonpublic information and documents relating to this program from disclosure under the California Public Records Act in order to protect proprietary, confidential information regarding manufacturer or distribution costs and drug pricing, utilization, and rebates.

The state has already begun to identify potential target medications and develop a strategic plan to promote state-led generic drug purchasing and manufacturing.

California is also transitioning all Medi-Cal pharmacy services from managed care to direct state payment in 2021, strengthening California’s ability to negotiate better prices with drug manufacturers ...
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/ 2020 News, Daily News
The Division of Workers’ Compensation (DWC) has posted proposed amendments to the Copy Service Fee Schedule to its online forum where members of the public may review and comment on the proposal. The proposed updates to the regulations include:

-- An increase of the flat fee rate for copy services from $180 to $210.
-- Fees will no longer be provided for records from the Workers’ Compensation Insurance Rating Bureau (WCIRB) or the Employment Development Department (EDD).
-- Mandatory billing codes, including proposed new codes for sales tax, and contracted fees.
-- To prevent fraud, each request for records requires a statement from the requesting party that the request was issued in good faith, is not duplicative, and that the records are necessary to the litigation of the claim.

Comments will be accepted on the forum until 5 p.m. on October 8, 2020.
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/ 2020 News, Daily News
Salvador Corona was a warehouse worker employed by California Walls, Inc. dba Crown Industrial Operators. He injured his knees on the job in February 2020. He was placed on modified work and did return to work.

On 03/16/2020 the employer sent all employees home due to the state and local emergency orders related to COVID-19. Applicant did not work for the employer from 03/17/2020 through 05/10/2020, and did not receive any state or federal COVID-19-related benefits.

There was no dispute that the employer did not offer modified or alternate work for the period 03/17/2020 through 05/10/2020, that his condition was not yet permanent and stationary, and that he was available to work.

Applicant sought TD indemnity from Defendant due to the employer not offering modified work during the period 03/17/2020 through 05/10/2020. The employer and Defendant carrier denied those benefits due to COVID-19.

The WCJ awarded the TD benefits and a petition for reconsideration was denied in the panel decision of Corona v. California Walls, Inc. dba Crown Industrial Operators.

The employer contended that its obligation to pay temporary disability ended when applicant returned to work with modified duties and that applicant’s inability to work was caused by the COVID-19 shelter-in-place orders and not the industrial injury.

"Here, we have the unprecedented circumstance of applicant returning to work with restrictions, which the employer accommodated for approximately one month until the COVID-19 shelter-in-place orders, which placed all the employees out of work, including applicant. Applicant was left temporarily disabled with no employment for approximately two months. The issue is whether defendant owes applicant temporary disability benefits for this two-month period."

Here, applicant’s termination from employment was not for cause, or due to his own misconduct, but was due to COVID-19 shelter-in-place orders. As a result, defendant has not met its burden to show that it is released from paying applicant temporary disability benefits during the period in question.

The fact that it was impossible for defendant to offer modified duties to applicant because of the COVID-19 orders is inconsequential.

In Dennis v. State of California (April 30, 2020) 85 Cal.Comp.Cases 389, 406 [2020 Cal. Wrk. Comp. LEXIS 19] (Appeals Board en banc), the WCAB explained that an employer’s inability to offer regular, modified, or alternative work does not release an employer from its obligation to provide a supplemental job displacement benefits voucher.

Similarly, an employer’s inability to accommodate a temporarily disabled employee’s work restrictions does not release it from its obligation to pay temporary disability benefits. "Labor Code section 3202 requires the courts to view the Workers’ Compensation Act from the standpoint of the injured worker, with the objective of securing the maximum benefits to which he or she is entitled."

Here, applicant was temporarily disabled due to an industrial injury and there is no misconduct on the part of applicant to justify the termination of temporary disability benefits. Therefore, applicant is entitled to temporary disability benefits regardless of whether defendant is able to provide modified work.

That defendant is not able to release itself from paying temporary disability benefits because of its inability to provide modified work is inconsequential ...
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/ 2020 News, Daily News
The recent settlement by the Department of Justice (DOJ) with Wheeling Hospital in West Virginia for $50 million is a recent example of a continuation of the practice of hospitals overpaying physicians who are able to refer patients to their hospitals.

There have been numerous other settlements over the years with Beaumont Hospital in Michigan being fined $85 million, Kalispell Regional Healthcare in Montana being fined $24 million, Broward Health in Florida being fined $70 million, and Adventist Health in Florida being fined $119 million just to name a few.

At Wheeling Hospital, two radiation oncologists and one ob/gyn were paid $1.2 million yearly, a cardiologist received $780,000 but only worked three-quarters of the year, and especially egregious, a pain doctor was paid $1.5 million yearly. Arrangements with reimbursement above and beyond the 99th percentile were the norm.

On November 15, 2019, the Department of Justice announced it had reached a settlement with Sutter Health and Sacramento Cardiovascular Surgeons Medical Group Inc. to resolve alleged violations of the Physician Self-Referral Law (PSR Law), commonly known as the Stark Law.

Sutter is a California-based health services provider; Sac Cardio is a Sacramento-based practice group of three cardiovascular surgeons. The total settlement in excess of $46 million includes $30.5 million from Sutter to resolve allegations of an improper financial relationship specific to compensation arrangements with Sac Cardio. Sac Cardio has agreed to pay $506,000 to resolve allegations of duplicative billing associated with one of these compensation arrangements.

Separately, the settlement includes another $15,117,516 from Sutter to resolve self-disclosed conduct principally concerning the PSR Law.

Hospitals know that a surgeon or proceduralist will often bring them more than $3 million in downstream revenue. A family physician will bring the hospital $2 million. Nearly half of all physicians in the country are now employed by hospitals. This is largely fed by downstream revenue. Employed physicians cost the healthcare system significantly more than non-employed physicians. About 70% of the increase in healthcare costs in the last 10 years comes from hospitals.

So why do the hospitals keep making these deals and getting into trouble? Of course when in doubt just follow the money. Hospitals continue to profit by these employed arrangements. But according to an op-ed published in MedPage Today, so do physicians.

"A hospital decides they are not making enough money so they hire physicians paying well above the 90th percentile. All the physicians have to do is refer all their patients "in-house" and are financially incentivized to hit certain benchmarks."

The five most important Federal fraud and abuse laws that apply to physicians are the False Claims Act (FCA), the Anti-Kickback Statute (AKS), the Physician Self-Referral Law (Stark law), the Exclusion Authorities, and the Civil Monetary Penalties Law (CMPL).

Physicians are constantly being reminded not to violate the "Stark Law" and related statutes. When Pete Stark designed these laws, he was directly pointing at independent physicians who were making increased profits by self-referral to their own facilities. Being hired by a hospital that shares their profits with an employed physician is skirting that law in the most unscrupulous manner.
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/ 2020 News, Daily News
Earlier this month, the Beverly Hills Police Department learned criminals were fraudulently obtaining EDD benefits loaded onto EDD debit cards using stolen identities. The monetary value placed on the cards by EDD can be as high as $20,000. Cardholders are able to withdraw up to $1,000 per day, per card.

Suspects have traveled primarily from out of state to obtain these fraudulent EDD cards in California. The suspects will most often have numerous EDD cards in their possession with other people’s identities, along with large amounts of cash. They will then use the cards to lease short-term rentals, rent luxury vehicles, dine at restaurants and purchase high-end merchandise.

The Mercury News reports that In less than two weeks, Beverly Hills Police have found 87 people who are allegedly connected to EDD fraud and identity theft.

Detectives said that they recovered 181 fraudulent EDD cards with a value of over $3.6 million. They also found another $466,000 in case and seven handguns.

"Shoes, clothing, purses. Anything of high dollar value they were spending on EDD cards," said Beverly Hills Police Department Lt. Max Subin. "Eighty percent of the arrestees were from out of state, and they were renting Airbnb’s and renting high end cars." Subin credits alert officers and investigators as well as astute shop owners in Beverly Hills for catching the fraud.

Some of those fraudsters have turned informant, showing investigators just how easy it is to defraud EDD.

"We've had some of those informants actually log onto a computer and show us how easy it is to go on to the website and log on to EDD," said Beverly Hills police Lt. Max Subin. "So yes, they are using names of deceased people, using names of people who are incarcerated, using names of people who have businesses and pretty much they are going into the computer and selecting the card." Subin said many of those names and the associated personal information were simply purchased online.

The Beverly Hills Police Department said it is working with the FBI and the Department of Labor due to the scope of the fraud. Those arrested did not have weapons on them and were booked for identity theft. However, since it is a nonviolent offense, there is no bail due to coronavirus, so they are released.

Meanwhile, Riverside police detectives are investigating a new scam involving unemployment benefits that are fraudulently obtained when thieves apply for the assistance, and then have the benefits mailed to unsuspecting victims' addresses.

Detective Brian Money said in some cases the people at the listed addresses are suspects, but in most cases they're innocent victims completely oblivious as to why the unemployment benefits are arriving in their mailboxes. "We found that a lot of these people are completely not associated with the mail," Money said.

"They don't know why it's going to their address; they don't know who the people are who are listed on the mail." Money said in some cases the scam has led to confrontations when the thieves go to the victims' homes to try to collect the benefits they claim belongs to them.

"We have noticed some recent reports where suspects are going to homes, and demanding this mail, to the point of being threatening to our citizens in Riverside." ...
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/ 2020 News, Daily News
The Travelers Companies, Inc. announced that it is the first insurance carrier to offer its business customers virtual and on-site ergonomic assessments using artificial intelligence (AI).

The new offering combines AI-based technology and ergonomic research to quickly analyze a smartphone video of a worker performing a task and identify movements and postures that could cause injuries.

The software then quantifies the risk and produces a report that assists a Travelers ergonomics professional in developing consultative solutions that help keep workers safe.

"Musculoskeletal injuries, often caused by poor ergonomics or workstation design, can lead to serious health issues that can impair an employee’s ability to perform certain tasks or require them to take time off to recover," said Marty Henry, Senior Vice President of Risk Control at Travelers.

"By using AI, we can reduce the time spent assessing problems from days to hours, enabling our specialists to focus their attention on developing tailored workplace improvements for our customers."

Ergonomic assessments can be used to assist businesses of all sizes in establishing processes that enhance workplace safety. Making appropriate adjustments can help reduce the frequency of common injuries and better control workers compensation costs.

"We understand our customers’ concerns with offering visitors access to their locations during this challenging period," said Mary Ellen Ausenbaugh, Technical Director of Human Factors and Ergonomics at Travelers.

"Enhancing our existing virtual option to enable remote ergonomic assessments using smartphone video is another innovative way that we are helping our customers maintain high levels of safety as we all operate differently." ...
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/ 2020 News, Daily News
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 www.cwci.org ...
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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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/ 2020 News, Daily News