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Well Known Los Angeles Attorney Charged in $2.4M Tax Case

A federal grand jury has indicted Los Angeles attorney Milton C. Grimes with the evasion of payment of his individual income taxes and willful failure to pay taxes.

Grimes served as the lead attorney for Rodney King 30 years ago, and was responsible for prevailing in a $3.8 million civil claim on behalf of King. Rodney King was the black motorist whose beating at the hands of LAPD sparked the deadly 1992 riots and led to local and national police reform.

It is not the first time tax charges have been leveled against Grimes. Not long after the lawyer made national headlines representing accused murderer Sheryl Lynn Massip – who was charged with running over her infant son with the family Volvo in 1987, Grimes pled guilty in 1988 to three counts of willfully failing to file a tax return. (Rev. & Tax. Code, § 19401.)

According to the California Supreme Court records (51 Cal.3d 199 (1990) 793 P.2d 61 270 Cal. Rptr. 855) Grimes was suspended from the practice of law for a period of two years, but the order of suspension was stayed, and he was placed on probation for two years upon conditions including sixty days’ actual suspension, and that he comply with the other conditions of probation. Grimes acknowledged the omission in 1988 when he pleaded guilty to a misdemeanor tax charge in Orange County Municipal Court. He was ordered to pay delinquent taxes of $1,269, along with a $4,000 fine, and to perform 100 hours of community service.

The current indictment filed in March 2024, charges Grimes with one count of attempted tax evasion and four counts of willful failure to pay taxes. He is expected to be arraigned in United States District Court on April 10.

According to the indictment, Grimes owed the IRS more than $1.7 million in taxes for tax years 2010 and 2014.

The IRS tried to collect the unpaid taxes from Grimes by, among other things, levying his personal bank accounts. In response to IRS collection efforts, from 2014 through 2020, Grimes allegedly engaged in a scheme to thwart the tax levies by keeping his personal bank account balances low.

Grimes deposited the money he earned from representing clients into his law firm’s business bank accounts, and then he routinely purchased cashier’s checks and withdrew cash from those business bank accounts, the indictment states.

By not depositing income earned into his personal accounts, Grimes allegedly avoided IRS collection efforts. With this scheme, Grimes allegedly withdrew approximately $16 million in funds from the business accounts in cashier’s checks during those years, rather than paying the amount owed to the IRS.

Grimes also allegedly filed individual income tax returns for tax years 2018 through 2021 reporting that he owed approximately $700,000 in taxes. Grimes allegedly did not, and has not, paid the taxes that he self-reported he owes.

In total, Grimes is alleged to have caused a tax loss of approximately $2,418,050 to the IRS.

If convicted, Grimes faces up to five years in prison for the tax evasion count and up to one year in prison for each count of willful failure to pay taxes. A federal district court judge will determine any sentence after considering the United States Sentencing Guidelines and other statutory factors.

Hi-Level S.F. City Manager Arrested for Stealing $627K in Work Comp Funds

The San Francisco District Attorney announced the arrest of 38 year old Stanley Ellicott who lives in Oakland, and who is a manager in the HR Department for the City, on 62 felony charges involving the theft of more than $627,000 directly from the Department of Human Resources’ Division of Workers’ Compensation, the very department where he worked.

A criminal complaint filed by the San Francisco District Attorney’s Office alleges that, over a four-and-a-half-year period from May of 2019 to January of 2024, Ellicott stole $627,118.86 from the City. The complaint alleges one count of grand theft (PC 487(a)) and one count of misappropriation of public money (PC 424). The complaint also alleges 10 counts of insurance fraud (PC 550(a)(5)) as well as 50 counts of money laundering (PC 186.10). Further, the complaint alleges an aggravated white collar crime enhancement (PC 186.11) and that one of the money laundering counts was committed while Ellicott was out on bail in another case (PC 120221(b)).

An affidavit filed with the Court in support of the arrest warrant explains that at the time of the crimes, Ellicott was the Assistant Director of Finance and Technology for the City’s Human Resources Department, Workers’ Compensation Division. One of his responsibilities was to oversee “the financial integrity of the Workers’ Compensation Division.”

The affidavit describes how Ellicott enlisted a friend to register a fake business in Illinois called “IAG Services” and open a bank account for the business, which she gave full control of to Ellicott. Ellicott then added this fake business as a vendor in the workers’ compensation system and over time billed more than 600 actual City workers’ compensation claims with charges for auditing services. Department archives show no evidence any auditing services were ever performed. Because the City is self-insured for workers’ compensation purposes, payments to doctors, employees, and vendors related to workers’ compensation claims come directly from the City’s coffers.

The affidavit further explains that all of the City payments to “IAG Services” were deposited into the account set up by Ellicott’s friend, then the money was systematically transferred into Ellicott’s personal checking accounts in a pattern to appear like they were payroll payments. In total, he transferred more than $488,000 from IAG’s account into accounts belonging to him.

The affidavit describes a website for the Illinois business “IAG Services” created in Oakland – where Ellicott lives – and IAG emails sent to Ellicott’s work address that appear to be created by him. The affidavit also explains that on several occasions, Ellicott emailed his subordinates and directed them to process payments to IAG that he had approved, enlisting their unknowing and unwitting assistance in his fraud.

This is a second case against Ellicott who was charged in January in a separate case for his role in a scheme to misappropriate grant funds awarded through the City’s Community Challenge Grant Program. He faces charges in court number 24001435 for misappropriating City money, aiding and abetting his co-defendant – former employee of the Office of the City Administrator Lanita Henriquez – in having a conflict of interest in contracts she entered into on behalf of the City by kicking grant money back to her, and possessing stolen property by selling electronics purchased with City funds on eBay. Local businessman and former City employee Rudolph Dwayne Jones is also a co-defendant in that case.

Ellicott was arrested without incident in Oakland this morning and will be arraigned in Department 10 of the San Francisco Superior Court on March 22, 2024. If convicted of all counts, Ellicott faces a substantial term of incarceration in state prison.

“The charges announced today reflect my Office’s continuing commitment to uncover official misconduct in San Francisco’s City government,” said District Attorney Brooke Jenkins. “My Office would like to thank the Department of Human Resources for its swift and thorough cooperation in uncovering the depths of their trusted manager’s great betrayal.”

Ellicott began working for the city in 2012, with a brief hiatus between 2015 and 2016. He was a manager at the human resources department from 2017 until January 25 of this year, when he was placed on paid leave. Transparent California lists Ellicott’s 2022 pay as $187,884, with benefits of $55,613, for a total compensation package of $243,496.t

Newsom Derails Indoor Heat Standard Rules Over Cost Concerns

It has taken five years for California to adopt regulations to protect workers from indoor heat. This week there was an unexpected delay.

CalMatters reports that the rule was expected to be finally voted into place by the Occupational Safety and Health Standards Board at a meeting this week in San Diego. But Wednesday night, state officials ordered that it be pulled from the agenda after Gov. Gavin Newsom’s administration suddenly withdrew a required stamp of approval, saying it learned the rule would cost state prisons much more money than anticipated.

The eleventh-hour move infuriated workers, their advocates – and the safety board itself, which faced a brief protest by the rule’s proponents during the meeting. Then in an equally remarkable rebuke, the board unanimously voted to approve the indoor heat rule anyway.

The six-member board, an independent part of the state’s labor agency, is appointed by the governor. Members said during the meeting that they had been “blindsided,” that the move to pull the agenda item was “a slap in the face” and that workers in numerous other industries such as warehouses, manufacturing and restaurants had waited long enough.

Still, the future of the rule is uncertain.

Approved regulations cannot become law without the sign-off from the state’s Department of Finance, which it withdrew Wednesday night. Department spokesperson H.D. Palmer told CalMatters it had received a late estimate “in the last few weeks” from the California Department of Corrections and Rehabilitation that it would cost the state billions more dollars to comply with the rule in state prisons than the state’s workplace safety agencies predicted. He did not explain why the information came so late, but said after the vote that his department has been meeting with the board’s staff in recent weeks.

And this weeks meeting was only nine days before a deadline in California administrative law to approve the proposed rule – with a sign-off included – for it to take effect this summer.

Board members said they hoped their move would spur the administration to resolve its concerns with the proposed rule with more urgency.  They also asked Cal/OSHA, which enforces workplace safety laws and which initially drafted the heat rule in 2017, to prepare to re-introduce the rule as an emergency regulation this year, which allows faster approvals. Cal/OSHA’s deputy chief of health Eric Berg told the board his agency, too, was caught by surprise by the administration’s move.

A spokesperson for the Department of Industrial Relations – which oversees both the standards board and Cal/OSHA – said it was “evaluating options to strengthen protections as soon as possible” and would continue assessing workers’ complaints of indoor heat under a general rule requiring safe workplaces. The agency received 549 safety complaints related to indoor heat in 2023, and 194 the year before.

Cal/OSHA and the standards board have been developing the rule for years amid rising concerns about the health effects of climate change on workers. A 2016 law directed the agencies to create an indoor workplace heat rule by 2019 — five years ago.

The proposed rule would require employers to either try to cool workplaces that get hotter than 87 degrees indoors or take other measures to reduce the risks of heat illness. California faces a budget deficit projected at as much as $73 billion. Gov. Gavin Newsom and Democratic leaders in the Legislature announced Wednesday that they would try to reduce the shortfall by $12 billion to $18 billion before passing a full budget.

A 2021 RAND Corp. economic impact report estimated the costs of the indoor heat rule on employers statewide to total $215 million in the first year and about $88 million annually afterward, mostly for employers to install AC or fans or provide cool-down areas. The analysis also stated employers would save money because the rule would cut indoor workplace heat injuries by 40% by 2030.

For state government, the standards board last year estimated the Department of Corrections would need to pay less than $1 million in the rule’s first year and less than $500,000 annually after that to comply. About half of the state’s 1,500 correctional institutions are either already climate controlled or located in areas that won’t be hot enough to trigger the heat rule, the Department of Industrial Relations stated. That was after finance officials told the department in 2021 that it underestimated prison costs; the department said its updated analysis resulted in double the cost to the state.

The proposed rule was first drafted by Cal/OSHA in 2017 before going to the independent standards board for official rulemaking in 2019. After the board finally officially proposed the rule in March 2023 and held the public hearing, it also revised the rule three more times.

The rule has been subject to wide-ranging employer pushback and a lengthy economic impact analysis. The COVID-19 pandemic diverted attention from an understaffed state labor agency, CalMatters reported last month.

The proposed rule would require warehouses, factories, restaurants and other workplaces to cool workplaces down if the temperature reaches 87 degrees. If installing air conditioning isn’t feasible, employers would be required to take other measures such as adjusting schedules, allowing longer breaks or providing personal fans or cooling vests.

Mariner Health Stipulates to Injunction & Pays $15.5M for Poor Care Claims

The California Attorney General announced a settlement with Mariner Health Care, Inc. who operated 19 skilled nursing facilities in California. The settlement, which is linked to the Bankruptcy Reorganization Plan of two Mariner entities in Chapter 11, will provide injunctive relief for a minimum of five years, monitoring by an independent monitor for a minimum of three years, payment of $2.25 million in costs, and penalties of up to $15.5 million dollars for any violations of the injunction or law.

The settlement resolves allegations filed by the Attorney General and the District Attorneys of Alameda, Los Angeles, Marin, and Santa Cruz counties, alleging that Mariner violated California’s Unfair Competition Law and False Advertising Law by understaffing its facilities and subjecting its patients to negligent care while inflating their skilled nursing facilities advertised ratings to the Center for Medicare and Medicaid Services.  All 19 facilities, including their Alameda facility, were named in the settlement.

On April 8, 20t21, the Division of Medi-Cal Fraud and Elder Abuse (DMFEA) and the four District Attorneys filed a civil complaint against the 19 skilled nursing facilities and their corporate management entities. The complaint sought injunctive relief and claimed Mariner Health understaffed facilities leading to resident harm, unsafely discharged residents from the facilities, and, falsified staffing numbers to CMS to advertise inflated ratings.

Understaffing allegedly left residents vulnerable and the inadequate care resulted in unnecessary amputations, the spread of diseases such as lice and pests among residents, and a high number of unreported sexual assault cases, among other issues.

On January 6, 2022 the Alameda County Superior Court granted a motion for a preliminary injunction requiring Mariner Health to comply with laws and regulations regarding the staffing of five of its facilities and with the discharges from 19 of its facilities in order to safeguard the safety and well-being of their residents.

Mariner also allegedly falsified staffing numbers to government regulators in an attempt to improve their published ratings, the complaint said

NBC Bay Area’s Investigative Unit dug into the company’s inspection records which revealed a long list of issues at 10 Bay Area facilities operated by Mariner. According to records from the California Department of Public Health, inspectors found more than 170 deficiencies at those facilities and issued seven fines totaling nearly $20,000.

In two separate cases, residents left the building without supervision. One was hit by a car, and another was found eating rocks and dirt. In another case, a resident’s foot had to be amputated after inspectors say a wound wasn’t properly treated or monitored. Other deficiencies included dirty kitchens, medication errors, and other patient care issues, according to the records.

As part of the settlement, Mariner will be required to:

– – Reform and improve its practices and the services for residents in their California skilled nursing facilities.
– – Implement an independent monitor for no less than 3 years.
– – Pay $2.25 million in costs and up to $15.5 million in civil penalties.

The California Department of Justice’s Division of Medi-Cal Fraud and Elder Abuse protects Californians by investigating and prosecuting those who defraud the Medi-Cal program as well as those who commit elder abuse. These settlements are made possible only through the coordination and collaboration of governmental agencies, as well as the critical help from whistleblowers who report incidences of abuse or Medi-Cal fraud at oag.ca.gov/dmfea/reporting.

DMFEA receives 75% of its funding from HHS-OIG under a grant award totaling $87,038,485 for federal fiscal year 2024. The remaining 25% is funded by the State of California.

Setting Reserves? US Life Expectancy Rises After 2-Year Dip

Reserving is an important aspects of claim handling. Whether it is a normal run of the mill lost time claim, or a claim with benefits payable over the remaining life of the injured worker, the goal is always the same: To accurately place the proper amount of money or reserves in the claim for the duration of the claim, which may be for the life of the claimant.

One method of estimating life expectancy is to use a one-size-fits all chart or table based upon historical data. This is the method set by California regulations (§10169. Commutation Tables and Instructions) when a commutation of future benefits is ordered by a WCJ. This table is based on the U.S. Decennial Life Tables for 1989-91, a metric that is outdated by about two and a half decades.

However, a rigid life expectancy chart or table may not be the best choice when a more accurate calculation is needed, such as when estimating settlement value, or a reserve estimate.

U.S. life expectancy increased for the first time in two years, according to a new report by the CDC. The report, released this week, marks a notable reversal: People born in the U.S. in 2022 can expect to live 77.5 years, an increase from 76.4 in 2021.

The data shown in this report reflect information collected by the National Center for Health Statistics for 2021 and 2022 from death certificates filed in all 50 states and the District of Columbia and compiled into national data known as the National Vital Statistics System. Differences between death rates were evaluated using a two-tailed z test.

The 10 leading causes of death in 2022 remained the same as in 2021. Heart disease was the leading cause of death, followed by cancer. Age-adjusted death rates decreased for 9 leading causes and increased for 1. Life expectancy at birth increased 1.1 years from 76.4 in 2021 to 77.5 in 2022, largely because of decreases in mortality due to COVID-19, heart disease, cancer, unintentional injuries, and homicide.

Data from the National Vital Statistics System

– – Life expectancy for the U.S. population in 2022 was 77.5 years, an increase of 1.1 years from 2021.
– – The age-adjusted death rate decreased by 9.2% from 879.7 deaths per 100,000 standard population in 2021 to 798.8 in 2022.
– – Age-specific death rates increased from 2021 to 2022 for age groups 1-4 and 5-14 years and decreased for all age groups 15 years and older.
– – The 10 leading causes of death in 2022 remained the same as in 2021, although some causes changed ranks. Heart disease and cancer remained the top 2 leading causes in 2022.
– – The infant mortality rate was 560.4 infant deaths per 100,000 live births in 2022, an increase of 3.1% from the rate in 2021 (543.6).

The rise in life expectancy comes as overdose deaths leveled out between 2021 and 2022, according to a separate CDC report also released Thursday.  According to that report, while overdose deaths nearly quadrupled over the past two decades, they did not significantly increase between 2021 and 2022. The rate of drug overdose deaths was 32.4 deaths per 100,000 people in 2021 and 32.6 deaths per 100,000 people in 2022.

And a number of other factors can make major differences. According to the latest CDC data in 2022, the difference in life expectancy between females and males was 5.4 years, a decrease of 0.4 year. from 2021.

From 2021 to 2022, age-adjusted death rates, corrected for race and ethnicity misclassification, decreased 15.4% for Hispanic males (915.6 to 774.2) and 14.5% for Hispanic females (599.8 to 512.9).

Among the non-Hispanic population, death rates decreased 15.9% for American Indian and Alaska Native males (1,717.5 to 1,444.1), 14.0% for American Indian and Alaska Native females (1,236.6 to 1,063.6), 9.7% for Asian males (578.1 to 522.2), 9.3% for Asian females (391.1 to 354.9), 8.5% for Black males (1,380.2 to 1,263.3), 11.8% for Black females (921.9 to 813.2), 7.9% for White males (1,055.3 to 971.9), and 7.8% for White females (750.6 to 691.9).

California’s Chief Justice 2024 State of the Judiciary Address

The California Supreme Court Chief Justice Patricia Guerrero delivered the 2024 State of the Judiciary address to the California Legislature in March 19, 2024. This is the the second year of her 12-year term of office.

Among the various topics discussed, the Chief Justice reported on Increasing transparency, improving efficiencies and increasing productivity without sacrificing quality. Caseflow management is an important process in meeting these objectives and providing timely access to justice.

The California Supreme Court, has instituted internal targets for the court to meet. It’s annual number of opinions has trended up, and it also is working its way through some important landmark new laws, such as the Racial Justice Act, which is impacting workflow.

The Courts of Appeal statewide have implemented a monitoring system to manage appellate caseload inequities and ensure that they too are promptly resolving cases.

Caseflow management and time to disposition is also an important tool for trial courts. Data management and analytics help them to manage caseloads, provide interpreter coverage, and make jury duty more efficient. It also informs how they can work best with our justice system partners.

From the clerk’s window to final dispositions – and everywhere in between – caseflow management is critical for the public.The resources the legislature provides are of course crucial.

The Chief Justice was advocating for a stable budget that the judicial branch can count on to make public access to justice a reality for all 58 counties. For this budget year, she was grateful for Governor Newsom’s continued support of her mission to advance access to justice and for protecting essential funding for critical programs and services.

She went on to discuss what is called the Strategic Plan for California’s Judicial Branch. The Strategic Plan provides is a foundational document for the court system..

Since the first strategic plan was developed in 1992, the process has served to articulate their mission and direction, set governance structures and priorities, and helped to navigate some of the most significant reforms, improvements, and challenges in the history of California’s court system.

At periodic intervals they have updated our long-term goals as California and the needs of its residents have evolved.Most recently, in December 2022, the Judicial Council amended the number one strategic goal of “Access, Fairness, and Diversity,” to add “Inclusion.”

“Although this may seem like a small change, as one of our council members shared at the time, ‘As important as diversity is, if you’re not included, it doesn’t matter.’ We saw this as an opportunity to speak out louder and make more explicit the branch’s commitment to an inclusive court system in which all individuals are – and feel – respected and engaged, and their contributions are valued.”

And this first goal guides all facets of the Judicial Council’s review, analysis, and deliberations.

On the topic of Modernization of Management and Administration, the Chief Justice has asked Administrative Presiding Justice Mary Greenwood and Judge Arturo Castro to help lead the branch’s efforts to identify the foundational questions that must be asked to consider the opportunities and challenges that are associated with AI.

Their efforts will facilitate consideration of what might be appropriate uses of AI in relation to the judiciary with the guiding principle of safeguarding the integrity of the judicial process.

No discussion of modernization is complete without a discussion of remote technology. Court users themselves are choosing to access these new services and tools – including 24/7 eFiling, access to online records and research, self-help resources, and remote appearances.

The Chief Justice said that accessing court services remotely works! “We know this from court users and staff alike.” A recent Judicial Council report on this issue showed that:

– – Approximately 150,000 remote civil proceedings are conducted statewide each month;
– – More than 90% of court users and 98% of court staff reported positive experiences; and
– – Very few technical issues were reported.

As always, more work remains to be done. “But we can build on these successes.” Addressing remote access is one example of effective three- branch solutions to better serve the state.

Key California Health Care Players are Divided Over PBM Regulation

Key California health care players are divided over whether the state should impose new regulations on pharmaceutical middlemen to bring down spiraling drug prices in the largest market in the nation.

Those middlemen, the pharmacy benefit managers, came under the microscope Tuesday at “Corrective Action: How to address prescription drug costs,” a POLITICO Live event. And according to the report by Politico “It was somewhat hostile territory for the industry, featuring its chief antagonist in Sacramento: State Sen. Scott Wiener.”

Wiener has authored legislation, Senate Bill 966, that would impose new rules on PBMs, represented on the panel by industry advocate Caitlin Berry.

Anthony Wright, executive director of Health Access California, a consumer advocacy organization, supported the goal of the legislation though not its specifics while a third panelist, UC Law San Francisco professor Robin Feldman argued that California can in fact act more boldly to bring down drug prices in the state.

Here are five takeaways from the event:

1) A chief antagonist of pharmacy benefit managers does not want to eliminate them. Wiener did not go as far as others nationally who seek to abolish the middlemen who negotiate with manufacturers over drug prices. He’s carrying legislation that would, among other things, require PBMs to be licensed with the California State Board of Pharmacy and to pass down drug rebates to consumers. The proposal is expected to dominate health care regulation discussions in Sacramento this legislative year.

Caitlin Berry, a senior principal with Prime Therapeutics, opposes the bill and argued her industry bolsters competition through negotiations and actually helps limit prices. “We build networks that stoke competition in between pharmacies to capture business from the insurance members in order to lower costs for the payer,” she said.

2) States have been limited in their ability to regulate the drug industry. That could be changing. UC Law San Francisco professor Robin Feldman argued a 2023 Supreme Court ruling allowing California to set rules for pork ranchers has reframed the Constitution’s Commerce Clause in a way that would allow states to regulate pharmaceuticals, too.

3) A group representing consumers didn’t back one proposed regulation of PBMs.Wiener’s SB 966 does not yet have the approval of Health Access California. Anthony Wright, it’s executive director said “we agree that there should be regulation of the industry,” but did not sound sure of which entity should license PBMs.

4) Drug pricing remains the elephant in the room. Pharmaceutical prices have risen faster than inflation, prompting finger-pointing between industry players and skeptics in government over who’s to blame.

5) Artificial intelligence could bring down drug costs. Wiener pointed to an antibiotic developed by artificial intelligence as evidence that the technology presents major promise for drug development. And using AI to help design treatment could help bring down the costs of doing so, including speeding the designing of generics, said Feldman.

East Bay Doctor Sentenced and License Revoked for Illegal Drug Prescriptions

Parto Karimi, a former Bay Area doctor, has been sentenced to one year and one day in federal prison for distributing powerful opioids outside the scope of medical practice, announced United States Attorney Ismail J. Ramsey and Drug Enforcement Administration (DEA), San Francisco Field Division, Special Agent in Charge Brian M. Clark.

The sentence was handed down on March 15, 2024, by the Hon. Jon S. Tigar, United States District Judge.

Karimi, 59, of Alamo, California, pleaded guilty in July 2023 to one count of distributing hydrocodone, a Schedule II controlled substance, outside the scope of professional practice, in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(C).

According to the government’s sentencing memorandum, Karimi practiced medicine from an accessory dwelling unit on the grounds of her suburban home from roughly 2011 to 2022. Her practice operated under the name “Mindful Medicine.” Karimi was a licensed practitioner of internal medicine who had previously worked as an emergency room doctor at an East Bay hospital and was authorized to prescribe controlled substances as part of her medical practice.

According to the government’s sentencing memorandum, the DEA began investigating Karimi after receiving concerning information from the family of one of Karimi’s former patients, who had passed away. The investigation included multiple visits by undercover agents to Karimi’s medical practice.

During one, on October 1, 2021, an undercover agent asked Karimi for 10mg Norco tablets based on a claim of leg pain resulting from work as a restaurant server. Karimi admitted in her plea agreement that she wrote the undercover agent a prescription for 60 high-dose Norco pills without conducting a physical examination, without asking follow-up questions about the undercover’s reported pain, without obtaining medical records, and without exploring alternative treatment options or trying a lower dose.

Karimi admitted that, in doing so, she knew she was acting in an unauthorized manner by prescribing a controlled substance outside the usual course of medical practice. She also admitted she knew the drug she prescribed was a powerful opioid that can be highly addictive and is liable to abuse by patients.

The government argued in its papers that Karimi wrote medical prescriptions for opioids like Norco in exchange for street drugs including cocaine and methamphetamine, as well as cash payments.

In addition to sentencing Karimi to prison, Judge Tigar ordered the defendant to serve three years of supervised release to begin after her prison term is completed. Judge Tigar also ordered the defendant to forfeit her California medical license and to pay a $4,000 fine.

Assistant United States Attorney Daniel Pastor is prosecuting the case with assistance from Laurie Worthen. The prosecution is the result of an investigation by DEA, with assistance from the United States Department of Health and Human Services – Office of Inspector General and the California Department of Justice Division of Medical Fraud and Elder Abuse.

DOJ Sues Six Health Plans for Overpayments

The United States filed a complaint alleging that six health plans participating in the Uniformed Services Family Health Plan (USFHP) program, as well as their trade group, the US Family Health Plan Alliance, violated the False Claims Act by knowingly retaining erroneously inflated payments for healthcare services the health plans contracted to provide to retired military members and their families. The United States has also reached a settlement with Department of Defense (DOD) contractor Kennell & Associates Inc., a consulting firm, related to the conduct.

The USFHP program is one of the healthcare options available to military personnel, retirees and their families. Six health plans are eligible to participate in this program, each of which is a defendant in the government’s complaint: Brighton Marine Health Center, CHRISTUS Health Services, Johns Hopkins Medical Services Corporation, Martin’s Point Health Care, Pacific Medical Center and St. Vincent’s Catholic Medical Centers of New York.

Through the USFHP program, the DOD pays the plans capitated rates to provide healthcare services to their enrollees. According to the complaint, in June 2012, the plans learned of calculation errors that had inflated the rates they had been paid in prior years. Nevertheless, the plans took steps to conceal the existence of the overpayments from the government and continued to submit invoices at the inflated payment rates. The complaint alleges that during discussions about rates for the subsequent year, some of the plans even asked the government to continue paying them at the prior, inflated rates even though, by that time, those plans knew the rates were inflated by the errors.

“Contractors have an obligation to return overpayments, and we will hold accountable contractors that knowingly and improperly retain such funds,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We are committed to ensuring that taxpayer funds for healthcare services to military members and their families are actually used for that purpose, not to enrich those charged with administering the program.”

“Protecting the integrity of the healthcare system for our military members and their families, is a top priority of the Defense Criminal Investigative Service (DCIS), the law enforcement arm of the Department of Defense Office of Inspector General,” said Acting Special Agent in Charge Brian J. Solecki of the DCIS Northeast Field Office. “The DOD expects companies to adhere to contract requirements and DCIS will continue to work with our law enforcement partners and the Justice Department to hold DOD contractors who engage in fraudulent activity at the expense of the U.S. military accountable for their actions.”

The United States filed its complaint in a lawsuit originally brought under the qui tam or whistleblower provisions of the False Claims Act by Jane Rollinson and Daniel Gregorie in the District of Maine. From 2007 to 2015, Rollinson worked at Martin’s Point Health Care, including as its Interim Chief Financial Officer. Gregorie was a consultant to the CEO and Board of Martin’s Point Health Care and later served on its Board of Trustees. The False Claims Act permits a private party to file an action on behalf of the United States and receive a portion of any recovery. The United States has the ability to intervene in such lawsuits, as it has in this case. The qui tam case is captioned United States ex rel. Rollinson v. Martin’s Point Health Care Inc., No. 2:16-cv-00447-NT.

The United States entered into a settlement agreement with Kennell and Associates Inc., a research and consulting firm located in Falls Church, Virginia, that provides actuarial consulting services to the Defense Health Agency (DHA) in connection with the USFHP program. The settlement resolves allegations that Kennell & Associates failed to notify DHA about errors in executing the rate-setting methodology that caused the USFHP rates to be overstated and their impact on DHA’s payments made to the plans. Under the terms of the settlement agreement, Kennell & Associates has agreed to pay the United States $779,951, plus interest, as well as contingent payments based on its annual contract revenue and cash reserves through the year 2025. The settlement amount is based on Kennell and Associates’ ability to pay.

The Civil Division’s Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the District of Maine investigated the case, with assistance from DHA.

Attorneys Diana Cieslak, Evan Ballan and Amy Kossak of the Civil Division’s Fraud Section and Assistant U.S. Attorneys Andrew Lizotte and Sheila Sawyer for the District of Maine are handling this case.

The claims in the complaint and settlement agreement are allegations only. There has been no determination of liability.

After 3 Years 65.5% of Hospitals Non-Compliant with Price Transparency Rule

PatientRightsAdvocate.org (PRA) released a new report examining hospital compliance with the Hospital Price Transparency Rule, which went into effect over three years ago requiring all hospitals to publicly post all

PRA’s sixth Semi-Annual Hospital Price Transparency Compliance Report revealed that only 34.5% of the 2,000 hospitals reviewed were in full compliance with the federal rule, virtually unchanged from the 36% compliance found in PRA’s last report released in July 2023. Despite stagnant compliance, the Centers for Medicare & Medicaid Services (CMS) has issued penalty notices to only 14 hospitals.

The report also includes links to the hospital pricing files for the 2,000 hospitals examined for the latest review, to allow for easy access and comparison by consumers, purchasers, technology developers, and other interested parties. Additionally, PRA recently created the Hospital Price Files Finder, a first-of-its-kind free and publicly available search tool that allows consumers and researchers to access the available hospital pricing files from nearly all 6,000 hospitals throughout the U.S.

In a letter to President Biden, PRA Founder and Chairman Cynthia Fisher wrote:

Our comprehensive study of 2,000 hospitals indicates nearly two-thirds (65.5%) of hospitals reviewed continue failing to fully comply with the rule, yet the Centers for Medicare and Medicaid Services (CMS) has only fined fourteen hospitals for noncompliance out of the thousands found to not be meeting all of the rule’s requirements. When hospitals don’t post their prices, they can charge whatever they want. We work with patients across the country who are struggling under the weight of unexpectedly high medical bills.

… “Fortunately, a bipartisan bill introduced in the Senate by Senators Bernie Sanders and Mike Braun – and cosponsored by several other Democrats and Republicans – would strengthen and expand current healthcare price transparency rules. The Braun-Sanders Senate Health Care PRICE Transparency Act 2.0 (S. 3548) is a bill that deserves the full support of the Biden Administration.

… “The American people support efforts to lower the costs of healthcare through price transparency. According to a poll conducted by Marist for PRA, 94% of Americans support healthcare price transparency. This remains one of the most popular and unifying issues being considered in Washington today.”

The latest review of 2,000 hospitals across the United States found:

– – Only 689 hospitals (34.5%) were fully compliant with the rule.
– – 1,311 hospitals (65.5%) were not in full compliance with the rule.
– – 87 hospitals (4%) did not post any usable standard charges file and were in total noncompliance.
– – Substantial improvements since the last report include:
– – 100% of hospitals owned by Community Health Systems,
     – – 93% of hospitals owned by Christus Health, and
    – – 84% of hospitals owned by Advocate Health were found to be in full compliance.
– – Of the hospitals reviewed, none (0%) of those owned by the largest hospital systems were fully compliant (HCA Healthcare, Tenet Healthcare, Providence, Kaiser Permanente, Avera Health, UPMC, Baylor Scott & White Health, and Mercy).
     – – While 98% of hospitals owned by Kaiser Permanente were found to be fully complying in our last report, Kaiser now posts multiple files for each hospital, instead of a single file as required by the rule, so none (0%) of Kaiser’s hospitals are now fully compliant.
– – 135 hospitals exhibited ‘backsliding,’ with an assessment of Noncompliant in the current report after having been assessed as Compliant in our prior report.
– – Analysis for this report found more hospitals posting multiple files, instead of the single file required by the rule.

View the PatientRightsAdvocate.org Sixth Semi-Annual Hospital Price Transparency Compliance Report.

PatientRightsAdvocate.org is a nonprofit organization fighting for systemwide healthcare price transparency. We seek to empower patients and consumers with actual, upfront prices, greatly reducing healthcare costs through a functional, competitive market.