After many years of underwriting losses, underwriting performance for the U.S. property/casualty (P/C) industry’s workers’ compensation line generated a significant profit in 2015, according to a new report from Fitch Ratings. Competition is heating up however and Fitch expects a return to an underwriting loss by 2017 in the workers’ compensation (P/C) line.

“The workers comp insurance market saw a sharp turnaround in the last few years due to past premium rate increases, stable loss cost trends and improved loss reserve experience, however, this performance will likely be unsustainable as price competition intensifies due in part to abundant market capacity,” said Jim Auden, Managing Director, Fitch.

The segment underwriting combined ratio dropped from a recent cyclical high of 117% in 2011 to 95% in 2015. Premium revenue growth tapered more recently, but averaged more than 5% for the last three years and was 3.5% in 2015. In the recent economic recession, workers’ compensation business suffered from weak pricing and significant declines in segment premium volume. The underwriting response to 2010 and 2011 losses, combined with improving economic conditions, led to a sharp increase in written premium volume for the segment.

Workers’ compensation is the largest individual product segment by premium volume in the commercial lines market and an important business line for a wide number of underwriters. Market share shifted significantly in workers’ compensation over the last five years. Prior industry leaders, American International Group, Inc. (AIG) and Liberty Mutual Insurance Group (Liberty Mutual) reduced premiums in the segment in response to past underwriting losses, while rapid growth was reported by several underwriters, particularly, Berkshire Hathaway Inc. and AmTrust Financial Services, Inc..

“As the market landscape shifts, there have been a number of companies that have demonstrated extraordinary growth, however, Fitch considers rapid growth that is well in excess of the market’s growth rate to add considerable risk to an insurer’s underwriting profile,” added Auden.

The full report ‘U.S. Workers’ Compensation Insurance Market Update’ is available at ‘www.fitchratings.com’.

Midnight Rider is an uncompleted American biographical drama film. Director Randall Miller co-wrote the screenplay with Jody Savin, based on the autobiography My Cross to Bear by the singer Gregg Allman. Miller and Savin were the producers.The film was to star William Hurt, Tyson Ritter, Zoey Deutch, Eliza Dushku, and Wyatt Russell.

On February 20, 2014, the first day of filming, the crew was on an active railroad trestle bridge, high over the Altamaha River in Wayne County, Georgia. Due to criminal negligence by the producers of the film, second camera assistant Sarah Jones was killed when she was struck by a CSX freight train that arrived on the trestle. Seven other crew members were also hurt, one seriously. Production was suspended the following week, and multiple investigations into the incident were undertaken. Miller, Savin, executive producer Jay Sedrish, and first assistant director Hillary Schwartz were charged with involuntary manslaughter and criminal trespass, as well as being cited by OSHA for “serious” and “willful” safety violations.

Miller and Sedrish entered guilty pleas to felony involuntary manslaughter and criminal trespassing, while charges were dropped against Savin as part of Miller’s plea. Miller received a sentence of ten years, of which he was expected to serve two years in jail followed by probation  On March 10, 2015 Schwartz pleaded guilty to felony involuntary manslaughter and criminal trespass, and was also sentenced to 10 years probation.

Hillary Schwartz also filed a workers’ compensation claim and alleged a psychiatric industrial injury as a result of this incident. Last December a Finding and Award found that she sustained an industrial injury to her psyche on February 20, 2014, while employed as a first assistant director, finding against defendant’s affirmative defense under Labor Code section 3600(a)(8) which precludes awarding benefits where injuries were caused by the commission of a felony. Schwartz was awarded temporary disability and further medical treatment, and all other issues were deferred.

The Defendant’s petition for reconsideration was denied in the split panel decision of Schwartz v Ease Entertainment. A Petition for Writ of Review has been filed with the Court of Appeal case number B271708. The Court has not yet acted on the Petition filed last April.

Evidence at the workers’ compensation trial showed that Schwartz accepted a plea agreement under the Georgia First Offender Act whereby she would be found guilty of the charges and would be placed on probation for ten years. Upon the successful completion of her probation, there would be no entry of judgment and no adjudication of guilt.

Pursuant to this agreement, a Bench Trial in the criminal case was held on March 10, 2015, in the Superior Court of Wayne County, State of Georgia. After reviewing the evidence the trial Judge said I “find you guilty in Count of criminal trespass and guilty in Count 5 of involuntary manslaughter.” The Judge approved applicant’s “First Offender Petition,” which states that the Court entered a verdict of guilty to the offenses and that “no judgment has been entered and no adjudication of guilt has been made.” The Petition further states: “Defendant hereby consents to the Court’s withholding the entry of a judgment of guilt, deferring adjudication, and deferring further proceedings, placing her on probation as provided by O.C.G.A. §42-8-60.”

As a result the WCJ concluded that under a strict interpretation of the language of section 3600(a)(8), a conviction is required to bar a claim for workers’ compensation benefits. In view of the deferral of applicant’s prosecution after a finding of guilt by the Court, the WCJ concluded that the requirement that applicant’s injury be caused by the commission of a felony for which she was “convicted” has not been met. The WCAB agreed with this reasoning and denied reconsideration of the Award. Essentially both reasoned that technically there was no “judgment” of a felony as required by the Labor Code should she successfully complete the terms of her probation under the First Offender Law.

Commissioner Razo dissented. He reasoned that “as a consequence of applicant’s conduct, she was determined by a Superior Court Judge to have committed acts which constitute a felony. The Judge found applicant guilty of criminal trespass and involuntary manslaughter in the death of Sarah Jones. This finding constitutes applicant’s conviction of a felony, which under Labor Code section 3600(a)(8), bars her claim for workers’ compensation benefits for an injury to her psyche arising out of her felonious conduct. That applicant was subsequently accorded leniency in her sentencing does not obviate the fact that she was found guilty of involuntary manslaughter. I would therefore grant defendant’s Petition for Reconsideration and find applicant’s claim is barred.”

The Los Angeles Times reported on its stunning investigation of L.A. Oxycontin rings that distributed millions of dollars of opiates, all with the knowledge and apparent silent approval of drugmakers such as Purdue Pharma.

In 2008, a convicted felon and his business partner leased office space on a seedy block near MacArthur Park. They set up a waiting room, hired an elderly physician, Eleanor Santiago M.D., and gave the place a name that sounded like an ordinary clinic: Lake Medical. The doctor began prescribing the opioid painkiller OxyContin – in extraordinary quantities. In a single week in September 2008, Santiago issued orders for 1,500 pills, more than entire pharmacies sold in a month. In October, it was 11,000 pills. By December, she had prescribed more than 73,000, with a street value of nearly $6 million.

To keep the OxyContin flowing, Lake Medical needed people whose time was cheap. For that, there was no place better than skid row. For as little as $25, homeless people served as straw patients and collected prescriptions for “80s”, 80-milligram pills with the strength of 16 Vicodin tablets and very popular on the streets. It required just a few hours at the clinic, then they were driven, often in groups, to a pharmacy, where a capper acting as a chaperone paid the bill in cash. He then took the pills back to the Lake Medical ring leaders who packaged them in bulk for sale to drug dealers.

A physician writing a high volume of “80s” was a red flag for anyone trying to detect how OxyContin was getting into the black market. The number of prescriptions Santiago was writing wasn’t merely high. It was jaw-dropping. Many doctors would go their entire careers without writing a single “80s” prescription. Santiago doled out 26 in a day.

Purdue Pharma, the maker of OxyContin, tracked the surge in prescriptions. A sales manager went to check out the clinic and the company launched an investigation. It eventually concluded that Lake Medical was working with a corrupt pharmacy in Huntington Park to obtain large quantities of OxyContin. Yet Purdue did not shut off the supply of highly addictive OxyContin and did not tell authorities what it knew about Lake Medical until several years later when the clinic was out of business and its leaders indicted. By that time, 1.1 million pills had spilled into the hands of mobsters, the Crips gang and other criminals. The pills from Lake Medical coursed out of L.A. An informant would later tell an FBI agent that East Hollywood’s White Fence gang trafficked pills to Chicago.

Legitimate pharmacists from La Canada-Flintridge, Glendale, Moreno Valley and elsewhere complained to Purdue. Company executives and lawyers received at least 11 reports about Santiago in the four months after they first suspected her. For example, on June 10, an Encino pharmacist sent an email to her Purdue sales rep with the subject line “urgent question.” The pharmacist said she was being asked to fill prescriptions written by Santiago and other Lake Medical doctors for “lots of Oxy patients.” “I want to make sure Dr office is legit,” Tihana Skaricic wrote. “So wondering….if you know ‘behind the scenes.” No one at Purdue ever got back to Skaricic. Eventually she and some other pharmacists decided on their own to turn away business from Lake Medical.

And the Los Angeles Times investigation found that, for more than a decade, Purdue collected extensive evidence suggesting illegal trafficking of OxyContin and, in many cases, did not share it with law enforcement or cut off the flow of pills. A former Purdue executive, who monitored pharmacies for criminal activity, acknowledged that even when the company had evidence pharmacies were colluding with drug dealers, it did not stop supplying distributors selling to those stores. Purdue knew about many suspicious doctors and pharmacies from prescribing records, pharmacy orders, field reports from sales representatives and, in some instances, its own surveillance operations.

Purdue had access to a stream of data showing how individual doctors across the nation were prescribing OxyContin. The information came from IMS Health, a company that buys prescription data from pharmacies and resells it to drugmakers for marketing purposes. That information was vital to Purdue’s sales department. Representatives working on commission used it to identify doctors writing a small number of OxyContin prescriptions who might be persuaded to write more. By combing through the data, Purdue also could identify physicians writing large numbers of prescriptions – a potential sign of drug dealing.

And the data at its fingertips was astounding. At one San Marino store, Huntington Pharmacy, monthly orders for “80s” were up nearly 20-fold over the previous year. At another in East L.A., orders jumped 400% in two months. A small shop in Panorama City, Mission Pharmacy, became the top seller of OxyContin in the entire state of California. Mission was a top supplier to the Lake Medical ring In Southern California there was a troubling spike in sales at St. Paul’s Pharmacy in Huntington Park from filling prescriptions for Lake Medical. Purdue added those store names to a long list of problematic pharmacies across the country.

A private, family-owned corporation, Purdue has earned more than $31 billion from OxyContin, the nation’s bestselling painkiller. A year before Lake Medical opened, Purdue and three of its executives pleaded guilty to federal charges of misbranding OxyContin in what the company acknowledged was an attempt to mislead doctors about the risk of addiction. It was ordered to pay $635 million in fines and fees.

In the end, the Lake Medical ring was brought down by a team of state, federal and local investigators who collected tips from citizens and spent hours staking out the clinic, interviewing witnesses and turning junior ring members into informants. When Lake Medical closed in 2010, after a year and a half in business, Purdue had still not shared its wealth of information on the clinic with the authorities, according to law enforcement sources.

In July, 2012 the State Fund brought an action for violation of the federal Racketeer Influenced and Corrupt Organizations Act (RICO) statute against defendants Alexander Zaks, M.D., Sana Khan, M.D., David Holmes, D.C., and Daniel Reyes, D.C.; their various companies; and State Fund’s own former employee, attorney Bruce Roth. State Fund also asserted a claim for fraud against Dr. Zaks and the Zaks Entities.

In 2001, Dr. Zaks decided to form several businesses in California’s Central Valley that focused on providing medical treatment to the region’s agricultural workers.Dr. Zaks, along with Drs. Holmes and Reyes, formed Accident Help Line Medical Group (AHL) at that time.AHL was staffed with doctors, chiropractors, and other medical professionals, and focused on patients with chronic work-related injuries and associated pain. Zaks also established Millcreek Surgery Center and Alta Surgery Center, ambulatory surgery centers where doctors performed outpatient surgery procedures. Zaks and a partner also owned Reliable Medical Supply, which provided medical equipment to multiple medical providers, including AHL. In 2003 Zaks and partners also created Valley Interpreting, a translation service for patients who spoke limited or no English. Dr. Khan owned the Khan Entities, which conducted diagnostic testing for AHL.

Defendant Bruce Roth, then a senior attorney with State Fund, was assigned to defend State Fund against the Zaks Entities’ WCAB liens. Suspecting possible fraud, Roth led an investigation of the Zaks Entities by no later than 2004. With State Fund’s authorization, Roth made a criminal referral of the case to California’s Department of Insurance. Based on Roth’s referral and other insurance companies’ reports, CDI initiated a fraud investigation of AHL that it dubbed “Operation Chicken.” CDI’s investigation led to indictments of some AHL employees (none of whom are defendants in this case), but the indictments were eventually dismissed.

In January 2006, Roth filed a petition with the WCAB to consolidate the Khan Entities’ and Zaks Entities’ 1,200+ liens against State Fund. From 2006 to 2009, Roth represented State Fund against the Zaks Entities in the WCAB matter. In 2007, the parties stipulated to resolve the WCAB matter in binding arbitration. In October 2009, after losing on several issues before the arbitrator, Roth settled the consolidated case with the Zaks Defendants without first gaining the approval of his manager at State Fund or State Fund’s claims department. Once Roth’s superiors at State Fund learned of the settlement they removed Roth from the case, contacted the Zaks Entities, and disavowed the settlement on the basis that Roth lacked authority to enter into it. State Fund compelled Roth to resign in March 2010.

In April 2010, with the help of outside counsel and without Roth’s involvement, State Fund entered into superseding settlement agreements with the Zaks Entities for substantially the same amount of money as provided for in the 2009 Settlement Memorandum. The centerpiece of the 2012 RICO case was the effect of the 2010 settlement agreements that purportedly released the parties from all claims. SCIF sought to avoid the 2010 agreement based upon various fraud and conspiracy theories.

After three years of litigation and extensive discovery, the Zaks Defendants, the Khan Defendants, and Roth filed three separate motions for summary judgment which was granted. The court stated “The 2010 Settlement Agreements remain binding on the Zaks Entities and State Fund. State Fund has failed to prove the extrinsic fraud or connivance necessary to warrant rescission of those agreements, which were freely entered into by the parties with no involvement from Roth and while State Fund had in its possession all of the evidence about the Zaks Defendants’ allegedly fraudulent lien claims.”

Following the successful summary judgment, the Zachs defendants filed a motion for attorney fees. On July 6, the federal judge awarded them $4,391,277.94 in attorneys’ fees.

In a case that could have ramifications around the country, a lawsuit filed Wednesday alleges that many disabled California workers get less than their due simply because they are women.

“This discrimination exacerbates and expands the pay gap,” Kathryn Eidmann, one of the attorneys who filed the lawsuit in Los Angeles Superior Court, told reporters. “We cannot have true equality between the sexes until the fact of being a woman is no longer a reason to compensate women workers even a penny less for injuries on the job.’’

According to the report in USA Today, the lawsuit alleges that injured female workers in California are denied equal disability benefits because of systemic gender bias. The case was brought against California state agencies that oversee the dispensing of workers’ compensation benefits on behalf of several women injured on their jobs, as well as the 700,000-member Service Employees International Union in California. The plaintiffs are seeking class-action status.

Permanent disability benefits are often reduced, the suit claims, because an injury or condition is linked in part to gender-based “risk factors” like menopause. And the ramifications of some illnesses mostly associated with women, such as breast cancer, are considered less disabling than those that affect men, which can result in a denial of compensation .

One plaintiff, Janice Page, was diagnosed with breast cancer in February 2012 and ultimately underwent a mastectomy. Workers’ comp officials determined that Page, a corrections officer with nearly 30 years in law enforcement, contracted cancer after being exposed to toxins in the course of her work. However, a medical evaluator, adhering to American Medical Association guidelines, said that she had no permanent impairment, and so her insurance company denied her permanent-disability compensation.

Those guidelines give no impairment rating to women who undergo a mastectomy past childbearing age even if they were found to have breast cancer because of work conditions. The impairment rating for a woman who can still bear children is up to 5%. Yet a man whose prostate is removed because of cancer is usually assigned an impairment rating between 6% and 20%, according to the complaint.

“I should not be discriminated against, and have my disability compensation reduced, because of a bias against women,” Page said at the news conference. “It’s not fair for me or my fellow female officers to be penalized because of our gender.'”

In an emailed statement, Christine Baker, director of the Department of Industrial Relations which monitors workers’ compensation claims, called the charges in the lawsuit “misleading and superficial.”

“The Department of Industrial Relations and its Division of Workers’ Compensation take allegations of gender discrimination in the workers’ compensation system seriously,” Baker said. “When the plaintiffs’ counsel sent a demand letter to the department dated April 20, 2016, we investigated the examples they cited. The examples did not support the inflammatory accusations of systemic gender bias in California’s workers’ compensation system, and we requested more information from plaintiffs’ counsel to substantiate their claims.”

Instead of providing more evidence, Baker says, the plaintiffs filed suit. “The department will vigorously defend the workers’ compensation system against these unfounded accusations.”

The suit asks the court to find that such actions violate both federal and state law and to order California’s workers’ comp system to root out gender bias, implementing staff training, monitoring and taking punitive action when discrimination is discovered.