Ontario California based Prime Healthcare Services and its nonprofit arm, Prime Healthcare Foundation, have faced multiple lawsuits along with angry employee unions in communities where it works or is taking over hospitals.

Federal prosecutors have intervened in a whistleblower lawsuit against Prime Healthcare Services Inc. and the system’s CEO that alleges emergency department physicians were pressured to admit patients who did not need inpatient care, according to the Justice Department.

The lawsuit targets 14 hospitals owned by Prime in California. The whistleblower lawsuit was brought by Karen Berntsen, the former director of quality and risk management at Alvarado Hospital in San Diego, who estimated that improper short-stay admissions accounted for more than $50 million in false claims.

Most of these hospitals are in Southern California, including Centinela Hospital Medical Center in Inglewood, Encino Hospital Medical Center, Sherman Oaks Hospital and Huntington Beach Hospital.

The suit accuses Prime of engaging in a “systematic practice” of pushing physicians to increase the number of inpatient admissions for Medicare beneficiaries who go to the emergency departments at Prime hospitals, regardless of whether it is medically necessary.

The FBI began investigating Prime Healthcare in 2011, shortly after the whistleblower lawsuit against the organization was filed.

In January 2017, the federal court denied Prime’s motion to dismiss, holding that the government had alleged sufficient facts to support its false claims case against Prime. The trial is now set for February 2018.

Prime owns and operate 43 acute-care hospitals across the country. Since its founding in 2001, Prime has steadily scooped up troubled hospitals, turning them around by negotiating better rates from insurers, adding profitable service lines and implementing aggressive billing tactics, among other strategies.

But in 2015 Prime pulled out of a deal to buy six financially struggling hospitals in California, with those hospitals facing bankruptcy.

Prime told the LA Times that California’s attorney general put “impossible” conditions on the sale, which caused them to back out. The target hospitals were St. Vincent Medical Center and St. Francis Medical Center in L.A. County and four in Northern California: O’Connor Hospital in San Jose, Saint Louise Regional Hospital in Gilroy, Seton Medical Center in Daly City and Seton Coastside in Moss Beach, near Half Moon Bay..

Prime has also been tangled in labor disputes for years with the Service Employees International Union-United Healthcare Workers West, which has publicized a variety of allegations against the company.

The Independent Physical Therapists of California (iPTCA), is a non-profit association of California physical therapists dedicated to advocating for physical therapists and their patient.

Last month it announced that it has filed suit against One Call Medical, Inc, D/B/A One Call Care Management, and Align Networks in California state Superior Court- San Diego.

The Complaint in this unfair competition lawsuit alleges that iPTCA and its non-contracted members have suffered injury and lost money or property as the result of numerous unlawful, unfair, and deceptive or fraudulent business acts and practices engaged in by the defendants, which it alleges operate as unlicensed ‘middlemen’ between Workers’ Compensation payers and injured workers and their rehabilitation providers.

Dr. Paul Gaspar, DPT, President of iPTCA summarized the Complaint “The Complaint details numerous allegedly unlawful activities by the defendants, particularly a referral scheme where defendants demand that physical therapists accede to significant discounts or potentially lose the ability to provide physical therapy services to large numbers of injured workers.”

For example, the suit alleges that “OCM has developed an opaque, unfair and illegal scheme whereby OCM maximizes the compensation it receives from its payor clients by referring injured workers to those of its contracted health care professionals who accede to the deepest discount. This system is nothing like a traditional “Preferred Provider Organization” (“PPO”) where the PPO contracts with health care providers, payors let their beneficiaries choose to receive services from any of the health care providers who contract with the PPO, and then the payors pay the claims submitted by those contracted providers. OCM does not offer health care professionals the opportunity to be listed in a directory. Rather, OCM solicits (or extorts) deep discounts of a specified amount from its contracted health care professionals as an inducement for it to send them a specified number of additional referrals. “

iPTCA claims to have communicated its concerns regarding Defendants’ practices with the California Department of Insurance, the Senate Labor and Industrial Relations Committee, numerous state legislators, and leadership of other healthcare professional associations.

On April 17, One Call Medical Inc.,filed a Notice of Removal in the United States District Court, Southern District of California, case 17CV773 pursuant to 28 U.S.C. sections 1441 and 1446, asserting original federal jurisdiction under 28 U.S.C. section 1332(a), to effect the removal of the action, which was originally commenced in the Superior Court of the State of California in and for the County of San Diego.

iPTCA alleges that it is a corporation organized under the laws of California with its principal place of business in Encinitas, California. One Call Medical, Inc. is a New Jersey corporation .with its principal place of business in Jacksonville, Florida. And Defendant Align Networks, LLC is a Florida corporation with its principal place of business in Jacksonville, Florida.

One Call claims that the federal courts have original jurisdiction over this matter under 28 U.S.C. § 1332(a)(1) because the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and Plaintiff and Defendants are citizens of different States. 28 U.S.C. § 1332(a)(1).1111

At this time no other substantiative responsive pleading’s have been filed in the federal court action. `

The Orange County District Attorney has filed charges against 26 doctors, pharmacists and business owners in a crackdown on an alleged $40 million workers’ compensation fraud that involved overbilling for unnecessary compound creams and urine tests. The defendants billed workers’ compensation insurers for $40 million and collected $23 million, according to the California Department of Insurance, which led the investigation.

The Kings are accused of pocketing more than $18.5 million from at least 27 insurance companies. Tanya Moreland King, 37, and her husband Christopher King, 38, both of Beverly Hills, own medical billing and medical management companies Monarch Medical Group, Inc., King Medical Management, Inc. and One Source Laboratoires, Inc. The defendants are accused of masterminding a complex insurance fraud scheme of recruiting doctors and pharmacists to prescribe unnecessary treatment for workers’ compensation insurance patients.

Irvine pharmacists Charles Bonner, RPh., 56, and Mervyn Miller, RPh., 66, both owners of Steven’s Pharmacy, are accused of conspiring with Christopher and Tanya King by selling more than $1 million in compound creams that were not FDA approved nor have known medical benefits.

The Kings are accused of making oral and written agreements with doctors across the state paying them each time they prescribed a compound cream or oral medication or ordered a urine drug test. The doctors or the companies connected to them are accused of labeling the payments “marketing expenses” in an attempt to conceal the kickbacks. The Kings are accused of rewarding doctors who provided higher volume by paying for office technicians.

Prosecutors also accuse the Kings of working with pharmacist and co-defendant Charles Bonner, owner of Stevens Pharmacy in Costa Mesa, to manufacture a variety of creams with unknown effects from Steven’s Pharmacy that were not FDA approved. The Kings purchased the creams for between $15 and $40 per tube. These products were then billed to patients’ workers’ compensation insurance carriers for between $250 and $700 dollars per tube. Tanya King is accused of recruiting physicians to participate in this scam by paying a flat $50 rate or a share in the profits.

They allegedly purchased repackaged oral pain medications from two companies: NuCare Pharmaceuticals in Orange and A-S Medication Solutions in Costa Mesa. Using their company Monarch Medical Group as a cover, the Kings are accused of repackaging meds sent directly to the physicians involved in the scam. As the doctors dispensed the medication, the bar code on the packaging was scanned, notifying the Kings. The Kings are accused of billing workers’ compensation insurance carriers without disclosing the wholesale cost or the fact they had purchased the medication on behalf of the physicians who ultimately prescribed it. Once the Kings received the payment, they are accused of splitting the profits with the prescribing physician based upon a pre-arranged agreement.

The Kings are also accused of providing technical staff to participating physician’s offices through their company One Source Labs. The doctors are accused of ordering unnecessary urine tests, under the guise of verifying patients on workers’ compensation insurance were taking their medications as prescribed. The urine samples were then tested by One Source Lab technicians or the doctors’ staff and billed to the insurance company on behalf of the physicians by King Medical Management. The results were then referred to Pacific Toxicology Laboratory for additional testing, regardless of results. Through their company One Source Labs, the Kings are accused of paying Pacific Toxicology a flat rate of $60 per test and billing the insurance carriers hundreds of dollars per patient.

The following defendants are charged for their part in the fraudulent schemes. The list below may provide an opportunity to determine if there is any teeth in new law (SB 1160) that theoretically bans providers who are charged with medical fraud from collecting liens until the case is concluded.

– Tanya King, 37, Beverly Hills
– Christopher King, 38, Beverly Hills
– Charles Bonner, RPh., 56, Irvine
– Mervyn Miller, RPh., 66, Irvine
– Rafael Chavez, P.A., 53, Apple Valley
– Dr. Jerome Robson, 68, Modesto
– Dr. Eric Schmidt, 63, Santa Rosa
– Dr. Chris Chen, 55, Pleasanton
– Dr. Duke Ahn, 49, Los Alamitos
– Dr. Robert E. Caton, 65, Modesto
– Dr. Ismael Silva Jr., 63, Newport Coast
– Dr. Ismael Geli Silva, 38, Huntington Beach
– Dr. Paul A. Stanton, 54, Victorville
– Dr. William Pistel, 53, Modesto
– Dr. Kevin Park, 49, Buena Park
– Dr. Kourosh Shamlou, 49, Newport Coast
– Dr. Mannie Joel, 67, Pleasanton
– Dr. Parvez Fatteh, 46, Pleasanton
– Dr. Robert Fenton, 68, Ranchos Palos Verdes
– Dr. Michael Henry, 61, Granite Bay
– Dr. Howard Oliver, 70, Long Beach
– Dr. Eduardo T. Lin I, 55, Pleasanton
– Dr. Paul Kaplan, 76, Folsom
– Dr. Mohamed Ibrahim, 40, Danville
– Dr. Jonathan Cohen, 57, Modesto
– Dr. John Casey Jr., 65, Modesto

Plaintiff Karla Garcia-Laverentz filed a complaint against her employer Sedgwick Claims Management Services, Inc., alleging a myriad of disability-related claims under the California Fair Employment and Housing Act (Gov. Code, § 12900 et seq.; FEHA) and other laws.

Plaintiff suffered from depression and anxiety, which she controlled with medication. She also suffered from asthmatic bronchitis. Following her return to work after a bronchitis episode, she expressed concern about the environment and requested that the air ducts be cleaned. She then filed a workers’ compensation claim alleging an unhealthy work environment after she suffered another episode.

While out on leave, plaintiff learned she was pregnant, so her doctor took her off of her psychotropic and other medications. When she returned to work she asked to be allowed to stay away from ill employees and for the first time requested Sedgwick change the location of her desk such that it is away from any heater or air conditioning vents.

Sedgwick retained engineers to conduct an air quality study, which did not uncover any dangerous air contaminants. Plaintiff experienced another attack of bronchitis and never returned to work after that. She was granted disability leave which was extended at times. Subsequently, she believed that Sedgwick had terminated her position. But her doctors continued to submit notes with estimates of return dates. But she never returned to work. Nor did she ever tell Sedgwick she could return. In fact, she had no contact with Sedgwick from late July 2010 until she moved to Fresno in October 2011.

Following her filing of a civil action, Sedgwick moved for summary judgment, which the trial court granted. In a detailed order, the trial court concluded the undisputed evidence demonstrated plaintiff did not suffer the adverse employment action of termination as she argued, and Sedgwick reasonably accommodated her disability and engaged in the good faith interactive process. Those holdings were dispositive of all of plaintiff’s claims. The plaintiff appealed. The Court of Appeal affirmed the dismissal in the unpublished case of Karla Garcia-Laverentz v. Sedgwick Claims Management Services, Inc.

The Court noted that “Throughout this litigation, plaintiff’s theory of adverse employment action has been a moving target. First, in her prelitigation complaint filed with the Department of Fair Employment and Housing (DFEH), in the FAC, and during discovery, she claimed she was terminated on May 27, 2010, as shown by the June 7 letter. In opposition to summary judgment, she expanded that theory to argue she was terminated when she received the July 28 letter indicating her position would be filled for business reasons. Now, for the first time in her opening brief on appeal, she further argues she suffered an adverse employment action short of termination  when Sedgwick indicated in the July 28 letter it intended to fill her position. And in her reply brief, she argues the “retaliation” she allegedly faced for exercising her rights constituted an adverse employment action. …..We find she waived the last two theories because she raised them for the first time on appeal.

“In her declaration opposing summary judgment, plaintiff expressed her subjective belief the June 7 letter, and later the July 28 letter, indicated she had been terminated. Her belief alone is not enough to defeat summary judgment.”

The trial court concluded plaintiff failed to raise a triable issue of fact over the reasonableness of two accommodations provided by Sedgwick: (1) granting plaintiff medical leaves of absence; and (2) moving her desk away from vents in the office. On appeal, plaintiff does not challenge the trial court’s holding that her leaves of absence were reasonable accommodations. Nor could she do so successfully. “[A] finite leave can be a reasonable accommodation under FEHA, provided it is likely that at the end of the leave, the employee would be able to perform his or her duties.”

California lawmakers are slated to hear the details on a proposed law that would create an anti-fraud division within the state’s Division of Workers’ Compensation, according to updates posted on the state’s website that tracks bills.

A Committee on Insurance hearing is slated for April 19 on Assembly Bill 1697, which would amend the state’s labor code to better tackle workers comp fraud in the state.

Existing law creates the Fraud Division, within the Department of Insurance, to administer provisions related to insurance fraud. Existing law requires the Insurance Commissioner to ensure that the Fraud Division aggressively pursues all reported incidents of probable workers’ compensation fraud.

This bill would require the administrative director to establish an antifraud support unit within the Division of Workers’ Compensation. The bill would set forth the duties of the unit, including coordinating and advancing antifraud activities for the division and serving as the point of contact between the division and other agencies and entities engaged in antifraud activities.

According to the text of the bill to create an anti-fraud unit within the department, the state’s labor code section 139.8 would be amended to read: “The administrative director shall establish an anti-fraud support unit within the division. The unit shall perform all of the following duties: (a) Coordinate and advance anti-fraud activities for the division; (b) Serve as the point of contact between the division and other agencies and entities engaged in anti-fraud activities; (c) Act as the repository and clearinghouse for data on anti-fraud activities; (d) Ensure the efficient sharing of data among the division, other agencies, and other entities engaged in anti-fraud activities; (e) Research fraud in the workers’ compensation system.”

A.B. 1697 was introduced by 10 lawmakers, including Assemblyman Tom Daly, D-Anaheim, chairman of the Committee on Insurance who in March requested that the state’s Joint Legislative Audit Committee investigate the state’s system to prevent, detect and prosecute fraud – an audit that office says is now underway and will be completed by 2018.