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So.Cal. Chiropractor to Serve 6 Years for $2.2M Fraud

A former Orange County chiropractor was sentenced this week to 70 months in federal prison for stealing from health insurers by fraudulently causing the submission of $2.2 million in billings for chiropractic services never provided, medical diagnoses never given, office visits that never occurred, and medical devices that were falsely prescribed.

57 year old Susan H. Poon, of Dana Point, was sentenced and ordered her to pay $1,379,622 in restitution to her victims. Poon’s chiropractic license was revoked in July 2019, according to the California Department of Consumer Affairs.

At the conclusion of a five-day trial in June 2021, a federal jury found Poon guilty of five counts of health care fraud, three counts of making false statements relating to health care matters, and one count of aggravated identity theft. Jurors deliberated about eight hours over two days before convicting her of all nine felony healthcare fraud charges.

At the time of her arrest, she operated Head 2 Toe Wellness in Rancho Santa Margarita, where prosecutors said she defrauded Anthem and Aetna insurance companies hundreds of times between January 2015 and April 2018.

She was among 34 people charged in 2019 in what authorities described as a multistate investigation into $257 million in fraudulent Medicare and Medicaid billing. Prosecutors pinned $2.2 million of that on Poon by identifying dozens of patients with hundreds of procedures that were simply made up. Not only were the procedures never performed, in many instances, the patients had never seen Poon and didn’t know she was using their identities to get money from insurance companies..

The patients that Poon claimed to have met with and treated were dependents – such as the spouses and children – of Costco Wholesale Corp. and United Parcel Service Inc. employees. Poon obtained the personal identifying information by attending health fairs at various UPS warehouses and Costco locations and soliciting such information from employees.

“[Poon’s] scheme consisted of interdependent moving parts,” prosecutors wrote in a sentencing memorandum. “She lied about visits with, diagnoses of, and treatments given to actual people and their children. She sent fraudulent Durable Medical Equipment (DME) prescriptions – predicated on visits with these patients that never happened – to a DME manufacturer. And she fabricated medical documentation containing the personal identifying information of these ‘ghost’ patients to mislead an auditor.”

In total, Poon billed and caused to be billed approximately $2.2 million through her scheme.

Proposed Department of Insurance Ethics Law Ends Without Vote

Ethics legislation to shine a light on insurance industry influence over decision-making at the Department of Insurance was killed by the Assembly Insurance Committee when members refused to give the bill a vote.

AB 2323 (Levine) would have required the Insurance Commissioner and top-level appointees to publicly disclose meetings and communications with the insurance industry and others seeking to influence Department actions within seven days, and post these reports on the Department website quarterly.

The bill was presented in committee and Assemblymember Wood moved for a vote, but no other committee member seconded the motion. Without a second, the bill did not get a vote.

Another Department of Insurance ethics bill, AB 1783 (Levine), will be heard in the Assembly Elections committee next week. It would amend the Political Reform Act to require individuals hired to represent companies seeking mergers before the Department register as lobbyists and disclose how much they are paid.

The ethics bills follow revelations of a pay-to-play scandal involving campaign contributions and meetings between Insurance Commissioner Ricardo Lara and insurance company representatives seeking to influence Department enforcement actions and a merger.

A Consumer Watchdog investigation in 2019 found that Insurance Commissioner Ricardo Lara took $54,000 in campaign contributions from individuals linked to two insurance companies with matters before the agency. One of them, Applied Underwriters, was being investigated by the Department for overcharging businesses for workers compensation insurance. The Commissioner subsequently intervened in proceedings involving the company, reversing Administrative Law Judge decisions.

Commissioner Lara later admitted that he had met with the President of Applied Underwriters prior to intervening in the proceedings, and, critically, that intervention in the proceedings was discussed, as well as the status of a merger that also required the Commissioner’s approval.

Additionally, throughout the course of a Public Records Act request and ensuing lawsuit that followed the revelations, Consumer Watchdog discovered that other officials at the CDI had undisclosed conversations with representatives of the insurance company, including lobbyists who were secretly promised a $2 million success fee for influencing the merger.

Writing in support of this bill, the Consumer Federation of California believes that “giving the public reasonable access to information about conversations or discussions had by their elected leaders ensures that they can be properly held accountable.”

A coalition of insurance trade groups opposes this bill on several grounds, but the coalition’s primary argument focuses on concerns that this bill is likely to discourage communications between CDI and the industry it regulates.

Although communications between CDI and the industry it regulates currently occur regularly, industry is concerned that publishing the fact of these communications online will have a chilling effect on both sides’ willingness to engage in them. Frequent, constructive conversations between regulators and their licensees are beneficial; these types of communications can resolve potential problems before they occur or stop them shortly after they start. Thus, to the extent the opposition’s fears about this bill’s impact prove accurate, this bill could result in unintended, negative consequences.

“It’s anti-democratic and demonstrates the insurance industry’s capture of the Assembly Insurance Committee that members refused to even allow a vote on a transparency bill that would have shone light on industry influence at the Department of Insurance,” said Carmen Balber, executive director of Consumer Watchdog.

Insurance companies have made $1.5 million in campaign contributions to members of the Assembly Insurance Committee over the last four years, including $231,000 to Committee Chair Tom Daly.

WCIRB Advisory Premium Rate to Increase 7.6% in September

The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) Governing Committee voted to authorize the WCIRB to submit a September 1, 2022 Pure Premium Rate Filing to the California Insurance Commissioner.

The filing will propose advisory pure premium rates that will be on average 7.6 percent above the average approved September 1, 2021 advisory pure premium rates.

The proposed September 1, 2022 advisory pure premium rates, in addition to reflecting the loss experience as of December 31, 2021 excluding COVID-19 claims, also reflect an average 0.5 percent provision for the projected cost of COVID-19 claims to be incurred on policies incepting between September 1, 2022 and August 31, 2023.

In his presentation to the Governing Committee, WCIRB Executive Vice President and Chief Actuary Dave Bellusci noted that the average of the proposed September 1, 2022 advisory pure premium rates are fairly consistent with the average of the advisory pure premium rates proposed by the WCIRB in the September 1, 2021

Pure Premium Rate Filing. Mr. Bellusci noted that, in effect, the increases in loss development and claim frequency over the last year were largely offset by increased estimates of wage inflation.

The WCIRB expects to submit its September 1, 2022 Pure Premium Rate Filing to the California Department of Insurance (CDI) during the week of April 25, 2022. The CDI will schedule a public hearing to consider the filing, and once the Notice of Proposed Action and Notice of Public Hearing is issued, the WCIRB will post a copy in the Filings and Plans section of the WCIRB website.

April 18, 2022 – News Podcast


Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: Law Firm Accused of $5M ADA Shakedown of Small Businesses. San Francisco Scheduled to Start Opioid Lawsuit Trial. Interest Calculation Clarified in Uninsured Employer Restitution Order. After 8 Years of Litigation, Major O.C. Comp Fraud Case Dismissed. Santa Clarita Contractor Arraigned for Premium Fraud. Audit of California State Bar Discipline System Confirms Epic Failures. NSC Helps Employers Build Business Case for Safety Innovation. Largest Hospital Systems Ignoring 2 Year Old Price Transparency Law. Sedgwick Publishes Commentary on Long COVID Claims. AF Group Announces Acquisition of AmeriTrust Group.

Court Broadly Construes “Employment” for Exclusive Remedy

Tashay Lenzy worked as a barista at a Ralphs grocery store in Los Angeles, California. In September 2016, she fell and injured her knee when she was struck by the door of a service elevator in the store where she worked as a coffee barista.

She filed an application for adjudication of her workers’ compensation claim with the Workers’ Compensation Appeals Board in which she listed “Ralphs” as her employer. She settled her claim for a lump sum payment of $50,000. The compromise and release identified Kroger as her employer. The order approving the compromise and release identified the defendant as “The Kroger Company, dba Ralphs Grocery Co.”

While Lenzy’s workers’ compensation claim was still pending, she commenced a civil action for negligence against Ralphs and Thyssenkrupp Elevator Corporation.

Ralphs moved for summary judgment claiming the case was barred by the workers’ compensation exclusive remedy rule. The trial court denied plaintiff’s evidentiary objections and granted Ralphs’ motion for summary judgment.

The summary judgment was affirmed by the Court of Appeal in the unpublished case of Lenzy v Ralphs Grocery Company, (April 2022) B308069.

On appeal, Lenzy contends Ralphs did not carry its initial burden to establish two facts required for summary judgment based on the workers’ compensation exclusive remedy rule: (1) that Ralphs (not just Kroger) was plaintiff’s employer, and (2) that Ralphs (not just Kroger) carried workers’ compensation insurance or possessed a certificate of self-insurance.

Because the Workers’ Compensation Act intends comprehensive coverage of injuries in employment,it defines employment broadly in terms of service to an employer and includes a general presumption that any person in service to another is a covered employee. (§§ 3351, 5705, subd. (a) . . . .) (S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341, 354.

The Court of Appeal resolved these issues by concluding that “Plaintiff’s suggestion that Kroger’s involvement in the resolution of her workers’ compensation claim raises doubts as to the identity of her employer misses the mark because the exclusive remedy rule applies even if she was an employee of both Ralphs and its parent company.

“As to insurance, Ralphs’ initial summary judgment burden was satisfied by plaintiff’s statement that Ralphs was insured in her application for adjudication of her workers’ compensation claim and the order approving her workers’ compensation settlement that identified the defendant as Kroger doing business as Ralphs”

California Closes Troubled COVID-19 Lab and $1.7B Contract

According to a report by CapRadio.com, the Newsom administration has quietly ordered the closure of its central COVID-19 testing laboratory, cutting short a controversial no-bid contract worth up to $1.7 billion with global health care giant PerkinElmer.

In a letter obtained by CapRadio, dated March 31, the California Department of Public Health notified the company that it would terminate the contract in 45 days, as allowed under the agreement. The letter thanked PerkinElmer for its partnership and noted the increased availability of antigen testing and expanded commercial testing options as the reasons for terminating the contract.

The state did not mention the myriad of problems PerkinElmer faced since opening the facility, known as the Valencia Branch Laboratory, in October 2020. The issues were severe enough to threaten the lab’s license status.

The termination marks an unceremonious end to a partnership that Gov. Gavin Newsom hailed as keeping California “on the leading and cutting edge” of COVID-19 response. At the facility’s ribbon cutting, Newsom expressed hopes of expanding on the laboratory’s mission to meet the long term needs of communicable disease response and research.

The contract was set to last through October after the state renewed it late last year, despite criticism of the company’s performance. The laboratory – which the state spent $25 million to build out – will be defunct by mid-May, and its future beyond that is uncertain.

As of November, California paid PerkinElmer $716 million under the agreement, with the Federal Emergency Management Agency reimbursing the state $684 million. CDPH did not respond to CapRadio’s request for updated figures.

The state plans to transition away from its centralized test processing through the Valencia Lab and instead use “a network of commercial testing lab partners,” according to an email, obtained by CapRadio, from CDPH to a testing contractor. Details on this substitute network remain scant.

CDPH declined an interview request and instead provided an emailed statement. “This laboratory was opened in 2020 to rapidly expand the state’s testing capacity, drive down costs, and bridge equity gaps,” the statement reads. “Now, at this point in the pandemic and as part of the SMARTER Plan, testing capacity will be provided through a network of commercial partners rather than the Valencia Branch Laboratory.”

The “SMARTER Plan” is the state’s roadmap for emerging from the pandemic.

But the state’s rationale – in its letter to PerkinElmer and in its statement to CapRadio – did not cite a drop in cases or testing demand. Murray did not respond to follow-up questions seeking clarity on this matter.

PerkinElmer struggled right away with obligations laid out in the contract. Inspectors found “significant deficiencies” during a routine inspection in December 2020, only a couple months after the lab opened.

A series of investigations from CBS13 in Sacramento found laboratory technicians were literally sleeping on the job and staff failed to receive adequate training.

In November 2021, the state released a report detailing its efforts to get the laboratory into compliance after inspections found “multiple deficiencies related to documentation, record keeping, process, and training.” The state notified the company of its intent to impose sanctions on the lab late last year, but ultimately did not pursue the penalties.

The report also said it could not substantiate the findings from CBS13; in response, the station claimed its revelations had been confirmed by inspectors.

WCAB Panel Finds California Jurisdiction for Professional Athlete’s Claim

Allen Levrault claimed to have incurred continuous trauma injuries while employed as a professional baseball player for various teams. His paying history within the CT period was stipulated to be the Milwaukee Brewers June 10, 1996 to February 1, 2002 – – Oakland Athletics February 1, 2002 to October 15, 2002 – – Miami Marlins December 12, 2002 to October 15, 2003  – – and the Seattle Mariners April 14, 2004 to May 18, 2004.  Levrault resolved his claim with the Brewers by way of Compromise and Release for the sum of $3,000.

The WCJ concluded that there was no subject-matter jurisdiction over the Seattle Mariners, and that applicant cannot recover against the Miami Marlins based upon the reciprocity provisions of former Labor Code section 3600.5(b).

Reconsideration was granted in the panel decision of Levrault v Mariners, Marlins et. al. (April 2022) ADJ8763377.

Applicant contends that the WCJ erred in finding reciprocity under section 3600.5(b), because Florida’s reciprocity statute was not in effect at the time of his employment with the Marlins, and also that the WCJ should have admitted medical records submitted after the Mandatory Settlement Conference.

Labor code 3600.5 limits the general principles of WCAB jurisdiction in specific circumstances. Because applicant’s claim was filed prior to September 15, 2013, the relevant subdivision here is former section 3600.5(b).

Because Florida passed its reciprocity statute in 2011, after applicant’s injurious exposure but prior to the filing of his California compensation claim, the parties’ disagreement focuses on whether former section 3600.5(b)’s reciprocity requirements must be satisfied at the time of the injurious exposure, or whether it is sufficient that reciprocity exists at the time a claim is filed.

Here, the plain language of former section 3600.5(b) requires that the conditions for application of the exemption – including the reciprocity provisions of subdivision (b)(1)(A) & (B) – apply “while such employee is temporarily within this state doing work for his or her employer[.]” (former § 3600.5(b)(1), emphasis added.)

Accordingly, the exemption is not applicable to applicant’s claim.This result is in accord with past panel decisions such as in Roberts v. Tampa Bay Lightning (2016) ADJ9065158, 2016 Cal. Wrk. Comp. P.D. LEXIS 404.

Turning to the jurisdiction issue, the WCJ made clear that even if subdivision (b) of section 3600.5 does not apply to applicant’s claim, she would have found the claim barred by Federal Insurance Co. v. Workers’ Comp. Appeals Bd. (Johnson) (2013) 221 Cal.App.4th 1116, because applicant’s employment with the Marlins did not constitute a significant connection or nexus with the State of California.

Here, applicant testified – and defendants do not contest – that he was regularly employed in California during 1998 and 2002 while playing for the Ports and the River Cats, minor league affiliates of the Brewers and the Athletics respectively.

This constitutes a sufficient relationship between applicant’s injuries and the State of California to satisfy the Johnson due process requirement of a significant nexus between applicant’s injuries and this state.

Turning to the issue of the admissibility of post MSC medical reports. the WCJ, the most important reason she decided to find these reports inadmissible was a belief that applicant’s attorney had misled the court about applicant’s ability to appear for the original July 2017 trial date; the WCJ continued the matter as a result of representations from applicant’s attorney that applicant could not travel to California for trial because of his recent surgery, but applicant did in fact travel to California during that very period to obtain the post-surgery QME reports in question.

In resolving this issue the panel stated “Although we sympathize with the WCJ’s frustration at what appears to have been at the very minimum extremely questionable representations from applicant’s counsel, we disagree that the remedy here was to refuse to admit medical evidence that appears undoubtedly relevant to assessing applicant’s level of disability. If the WCJ believed that applicant’s attorney had misled the court in order to obtain a continuance of the trial under false pretenses, the remedy for that was sanctions against applicant’s attorney, pursuant to section 5813.”

Carlsbad Startup Developed 3-D Printed Titanium Spinal Implants

Carlsbad based Med-tech startup Carlsmed has developed patented, machine learning technology that taps a patient’s X-ray and CT scans, along with other information, to design a digital surgical plan to achieve the best spinal alignment.

Carlsmed, in coordination with the surgeon, then produces personalized, 3-D printed titanium implants based on the plan.

According to the report in the San Diego Union Tribune, the “aprevo,” implants target adults with degenerative curvature of the spine and other deformities that can lead to lower back and leg pain, among other things. These conditions affect about 6 million adults in the U.S. – a potential $9 billion market.

The current success rate for spinal surgeries to correct these ailments is not great, said Mike Cordonnier, chief executive and co-founder of Carlsmed. More than a quarter of patients require additional revision surgery within four years of their first procedure.

Conventional spinal implants come in a variety of shapes, and it is up to surgeons to find the best fit through a trial-and-error process. Because Carlsmed’s implants are designed for every patent individually, the company believes it can achieve better spinal alignment outcomes and avoid additional procedures

“Our philosophy is we are designing the optimal surgical plan – and devices for that surgical plan – so it can be the last spine surgery a patient needs,” said Cordonnier.

A couple of years ago, the U.S. Food and Drug Administration cleared Carlsmed’s implants for use in certain spine surgeries.

Then in October, Medicare authorized an additional reimbursement – on top of its standard payout – for hospitals using Carlsmed’s implants.

“It is really a program that is designed to incentivize technology that can improve the standard of care and decrease the cost of care over the lifetime of the patient,” said Cordonnier. “That has been a real door opener for us in starting our commercial rollout to be able to give the hospitals an extra economic incentive to adopt this transformative technology.”

The company plans to use the $30 million in new funding to further expand its hospital base. It brings the total raised by the Carlsbad-based company to $42.5 million since it was founded in 2018.

DFEH Lawyer Quits in Protest of Newsom’s Meddling in Activision Case

As gamemaker Activision Blizzard is embroiled in controversy and legal backlash, the situation surrounding one of the industry’s biggest companies continues to unfold.

The company is currently in the middle of a discrimination lawsuit filed by the state of California, and that case has now taken an unexpected turn. A lawyer for the state of California has announced that she is resigning from her position, citing interference from governor Gavin Newsom as the reason.

The story in the Wall Street Journal claims Newsom’s office fired a lawyer involved in the workplace-misconduct lawsuit against videogame company Activision Blizzard Inc., prompting a second attorney to quit in protest, according to a lawyer representing both attorneys.

The California Department of Fair Employment and Housing Chief Counsel Janette Wipper was told by Mr. Newsom’s office on March 29 that she was being fired, according to a statement from Alexis Ronickher, Ms. Wipper’s attorney. Ms. Wipper’s last day at the department was Wednesday and she is evaluating her legal avenues, including a claim under the California Whistleblower Protection Act, the statement said.

Bloomberg reported Melanie Proctor, assistant chief counsel with California’s Department of Fair Employment and Housing, told staff in a Tuesday email she was resigning in protest over the firing of Janette Wipper, the department’s chief counsel who worked on the Activision lawsuit. Proctor also said Newsom’s office asked for “advance notice” on elements of the litigation.

“As we continued to win in state court, this interference increased, mimicking the interests of Activision’s counsel,” the email said, according to Bloomberg.

Newsom’s spokeswoman Erin Mellon said claims of interference by the governor’s office “are categorically false.”  No other details about Newsom’s alleged interference have been made public. Activision spokesman Rich George did not immediately respond to an email Thursday.

However in a related story, Politico reports that a board member for Activision donated $100,000 to a campaign to stop the 2021 recall of Gov. Gavin Newsom, according to state records

Casey Wasserman, CEO of the Wasserman Media Group, is a director at Activision Blizzard, according to the company’s website, and sits on the board of directors and the board’s nominating and corporate governance committee. Just weeks after the California DFEH filed the July suit against the company, alleging rampant sexual harassment and discrimination against women, Wasserman donated $100,000 to the Stop the Republican Recall of Governor Newsom campaign, according to campaign finance records.

The Activision suit – filed in July 2021 in Los Angeles – comes after two years of investigation conducted by the DFEH. It accuses the “Call of Duty” maker of fostering a “pervasive frat boy” culture where women are paid less for the same jobs that men perform, regularly face sexual harassment, and are targeted for reporting issues. In particular, the suit claims that female employees face “constant sexual harassment,” from “having to continually fend off unwanted sexual comments” to “being groped.” When employees report issues to human resources and management, the suit says, no action is taken.

Activision has refuted many of the suit’s claims and said it has cooperated with the DFEH’s investigation.

Within a couple months of the California agency filing its original suit, the US Equal Employment Opportunity Commission filed its own lawsuit against Activision Blizzard, and agreed to settle it the same day. In March, the company agreed to an $18 million settlement with the federal Equal Employment Opportunity Commission over similar harassment and discrimination allegations.

The DFEH objected to the settlement and its small $18 million fund set up for “eligible claimants.” Among the reasons for the objection were that the settlement involved anyone receiving a portion of that $18 million to sign a waiver giving up their right to collect any other restitution over wrongdoings by Activision.

The DFEH also objected to the settlement arguing that it essentially ordered tampering of evidence relevant to its own case. The original proposed settlement required Activision Blizzard to “remove from the personnel files of each Eligible Claimant any references to the allegations related to sexual harassment, pregnancy discrimination, and/or related retaliation” and reclassify the terminations of anyone fired in retaliation as voluntary resignations.

In return, the federal EEOC accused the state agency of ethics violations because two of the DFEH attorneys looking to give Activision Blizzard more than a slap on the wrist previously had senior roles in the EEOC and led the investigation that resulted in its own lawsuit.

In January 2022, Microsoft announced intentions to buy Activision for an estimated $68.7 billion in an all-cash deal. The Seattle computing giant is expected to inherit the DFEH lawsuit should the deal pass regulation and close later this year.

Battle Lines Drawn Over California Deal With Kaiser Permanente

California counties, health insurance plans, community clinics, and a major national health care labor union are lining up against a controversial deal to grant HMO giant Kaiser Permanente a no-bid statewide Medi-Cal contract as the bill heads for its first legislative hearing Tuesday.

The deal, hammered out earlier this year in closed-door talks between Kaiser Permanente and Gov. Gavin Newsom’s office and first reported by KHN, would allow KP to operate Medi-Cal plans in at least 32 counties without having to bid for the contracts. Medi-Cal’s other eight commercial health plans must compete for their contracts.

Opponents of the KP proposal say they were blindsided by it after having spent months planning for big changes happening in Medi-Cal, which serves more than 14 million Californians. They say the deal would largely allow KP to continue picking the enrollees it wants, and they fear that would give it a healthier and less expensive patient population than other health plans.

Currently, the state allows KP to limit its Medi-Cal membership by accepting only those who have been its members in the recent past, primarily in employer-based or Affordable Care Act plans, and their immediate family members.

Kaiser Permanente said in an emailed statement that, under the terms of the deal, it would take more Medi-Cal patients with high needs and would collaborate with counties and other health plans on patient care.

The deal must win state legislative and federal approval. Opposition to the bill that would codify it, AB 2724, is being spearheaded by Local Health Plans of California, which represents the 16 local, publicly governed Medi-Cal plans that cover most of the 12 million Medi-Cal beneficiaries in managed care. The proposal would make many of them direct competitors of Kaiser Permanente, and they could lose hundreds of thousands of enrollees and millions of dollars in Medi-Cal revenue.

Among them are some of the state’s largest Medi-Cal health plans, including L.A. Care, by far the biggest, with 2.4 million members; and the Inland Empire Health Plan, with about 1.5 million members in San Bernardino and Riverside counties.

In addition, the boards of supervisors of 16 counties had registered their opposition as of April 15, as had the California State Association of Counties, at least two community clinic groups, and the National Union of Healthcare Workers, which represents thousands of KP clinicians.

The other commercial Medi-Cal plans are lying low as they bid for the state’s Medi-Cal business. The two largest, Health Net and Anthem Blue Cross, declined to comment.