The Boccardo Law Firm and one of its partners, John C. Stein, filed an action in San Joaquin Superior Court on behalf of Albert Carabello, alleging that he had been injured when his pickup collided with a vehicle operated by Beverly Casby. Casby was insured with a policy limit of $100,000. At the time of the collision, Carabello was acting in the course and scope of his employment. Old Republic was the workers’ compensation insurer for Carabello’s employer. It provided benefits which it claims exceeded $100,000. It filed a complaint in intervention in the San Joaquin action, asserting a right to reimbursement of these expenditures. Casby raised the affirmative defense of Witt v. Jackson (1961) 57 Cal.2d 57, which limits the ability of an employer, or its insurer, to obtain reimbursement out of an injured worker’s recovery against a third party where the employer’s own negligence contributed to the worker’s injuries.

Carabello and Casby agreed to settle the case for her $100,000 policy limits. Old Republic’s claim to reimbursement, however, remained unresolved. Accordingly, Casby’s insurer made the settlement check payable to Carabello, Boccardo, and Old Republic. Stein and counsel for Old Republic therefore signed a written stipulation stating “that the $100,000.00 settlement money . . . will be deposited into an interest bearing account” and that “[s]ignatures of both parties will be required to withdraw any money.” It was apparently understood that the funds would be placed in Boccardo’s client trust account. The settlement check was duly endorsed and deposited.

The Court set a settlement conference and trial on the motion of Old Republic for “apportionment of settlement proceeds” and the Witt v. Jackson defense to their lien. Before this was heard, counsel for Old Republic filed a notice of lien seeking to recover $111,026.33 “against any settlement of [sic] judgment in this action.” At the same time, counsel filed a request to dismiss Old Republic’s complaint in intervention with prejudice. Stein also dismissed the Carabello complaint with prejudice. The request recited that it was made “[a]s to defendants Beverly Casby and Gerald Casby only” and that “Plaintiff and Intervenor have Trial August 9, 2010 to resolve liens.” However, the dismissal of the complaint meant that there was no longer any pleading before the court seeking affirmative relief.

Boccardo then filed a motion authorizing release of the settlement funds to Carabello. He argued that by dismissing its pleading, Old Republic had forfeited any right to litigate the issue of employer negligence, and thus to recover on its lien. The trial court, however, concluded that the dismissal of all affirmative pleadings had deprived it of any power to grant the requested relief. In a formal order the court wrote, “This case has been dismissed in its entirety. This Court has no further jurisdiction.” It does not appear that either party sought relief from this order.

Stein wrote to counsel for Old Republic indicating that he intended to distribute the deposited funds. He again asserted that by dismissing its complaint Old Republic had given up the right to seek reimbursement. He took issue with a prior assertion by opposing counsel “that the matter can be litigated before the WCAB” He offered to forbear from withdrawal for one week to “give you time to go to the WCAB and get a Restraining Order prohibiting me from disbursing my settlement.” Old Republic apparently did nothing. On July 28, Stein wrote that having just received the court’s formal order disclaiming the power to grant relief, he was disbursing the funds to his client forthwith.

Old Republic petitioned the WCAB to order disbursement of the settlement proceeds. A workers’ compensation judge denied Old Republic’s petition for disbursement. He found that the settlement funds had already been “disbursed by applicant’s counsel.” He also concluded that the WCAB lacked jurisdiction to grant the relief sought by Old Republic. The WCAB granted reconsideration and issued a decision finding that it had jurisdiction over the issues presented, and remanding them for trial.

Old Republic also filed a civil complaint alleging that the stipulation was a binding contract between Carrabello [sic], and The Boccardo Law Firm. The first cause of action alleges that Boccardo and Stein “breached this contract” by disbursing the settlement proceeds without the signature and/or consent of Old Republic. After a successful demurrer to some of the causes of action, Boccardo filed a motion to dismiss the remaining causes of action under the anti-SLAPP law (§ 425.16) which the court denied in part and denied the motion to stay proceedings. Boccardo appealed. The Court of Appeal in the published case of Old Republic Construction Program Group v The Boccardo Law Firm ruled that the trial court correctly concluded that the first, fifth, and sixth causes of action, sounding respectively in breach of contract, negligence, and declaratory relief. did not arise from the parties’ stipulation for purposes of the SLAPP act. The conduct at the center of all three causes of action is defendants’ withdrawal and disbursement of the settlement funds that were the subject of the stipulation between defendants and counsel for Old Republic. There is no suggestion that this noncommunicative conduct had any connection to any issue of public concern or interest. It therefore falls outside the protection of the SLAPP act statute.

Medical marketers are often used inside and outside of workers’ compensation to induce physicians to prescribe a variety of products such as compounded medications, DME and other items as “profit enhancement” schemes for a medical practice. Little attention has been given when responding to lien claims in these cases to the application of the Insurance Fraud Prevention Act provisions contained in Insurance Code section 1871 as a possible tool to defend those claims when a capper (ie. marketer) has been used to seduce to the doctor. The Court of Appeal in the published opinion in The State of California ex rel. Michael Wilson et al. et al. v. Superior Court of Los Angeles County, Bristol-Meyers Squibb Co may have opened the door to the use of this tool where a “person” was “employed” to recruit the doctor into a scheme, even without a prescription by prescription quid pro quo.

Michael Wilson, a former Bristol-Meyers Squibb Co. sales representative filed the underlying qui tam action against the drug maker. The California Insurance Commissioner later intervened and participated in the litigation.

The lawsuit alleges that in marketing its drugs, Bristol-Meyers Squibb Co., (BMS) engaged in a course of illegal and fraudulent conduct aimed at doctors, health care providers, pharmacists, and insurance companies. It alleges BMS targeted high-prescribing physicians, members of formulary committees, and sometimes their families, to be recipients of lavish gifts and other benefits (such as tickets to sporting events and concerts, free rounds of golf, resort vacations, meals, gifts, and other such incentives – characterized in the complaint as “kickbacks”), in order to induce physicians to prescribe BMS’s drugs and to reward them for doing so.  And it alleges the targeted physicians “wrote prescriptions and submitted them to the private insurance companies . . . as a result of kickbacks BMS provided to them.” The suit alleges that in carrying out this program, BMS effectively employed physicians and others to act as runners and cappers, paying them for the purpose of procuring patients whose prescriptions will be covered by insurance. This conduct, the suit alleges, violated the Insurance Fraud Prevention Act, Insurance Code section 1871.7, subdivisions (a) and (b), as well as a number of provisions of the Penal Code.

At issue in the case is the proof required to establish a violation of subdivision (a) of Insurance Code section 1871.7, a portion of the IFPA that relates to health insurance and workers’ compensation insurance fraud, informally entitled, “Employment of persons to procure clients or patients.” Subdivision (a) makes it unlawful to knowingly employ runners or cappers to procure clients or patients to obtain insurance benefits. The trial court ruled in favor of BMS on a summary judgment hearing, and the Court of Appeal granted writ review in part due to the dearth of appellate review of matters involving interpretation of section 1871.7,

The court of appeal reversed the dismissal of the claim, and remanded the case for further proceedings. In doing so, it clarified the requirements for proof of a case of violation of IFPA contained in section 1871.7.  Some of the language of the published opinion is as follows.

The conduct made unlawful by subdivision (a) is identified by a single verb: To employ. Subdivision (a)’s single verb makes a single act unlawful: “Employment”. What kind of employment is unlawful? Employment of a person or persons (“runners, cappers, steerers or other persons”), for a specified purpose: “. . . to procure clients or patients to perform or obtain services or benefits . . . that will be the basis for” an insurance claim. Subdivision (a) is violated by the employment of others with that objective; it does not make proof of that result a prerequisite to its violation. Based upon this language the Court of Appeal ruled “there can be a violation of subdivision (a) without proof that the item or service of value provided or promised to the physician caused a particular prescription to be written.”

Subdivision (a) identifies certain running and capping activities as unlawful without regard to whether the resulting services are competently rendered. Running and capping activities are disfavored and unlawful not just because they may often result in services that are excessive or unnecessary, but also because their purpose is to unfairly (and perhaps deceptively) obtain the benefits (clients, patients, prescriptions, claims, etc.) that otherwise might have gone to others who did not use the prohibited methods. In enacting section 1871.7, the Legislature could have concluded that using runners and cappers for the prohibited purpose tends to result in additional insurance claims and payments, that have substantial social costs despite their inability to be identified on an individual basis. Subdivision (b) identifies remedies for conduct that the Legislature has concluded leads to undesirable results that are rarely subject to available proof.

Section 1871.7 contains no specification that proof of unlawful conduct, or of causation, must necessarily be on a prescription-by-prescription or claim-by-claim basis, and such a requirement would be contrary to the statute’s clear purpose. While subdivision (b)’s final sentence requires proof of deceit and causation, section 1871.7’s primary focus is on the unlawful conduct identified in subdivision (a); the proof of resulting claims is required in order to measure the penalties to be assessed, not to define the targeted wrong – the employment of runners and cappers for the unlawful purpose. Yet the requirement that each prescription and claim to an insurer must be attributed to a quid pro quo arrangement involving the drug company and the physician shifts the focus from the conduct identified in subdivision (a) – which is unlawful without regard to its success in producing prescriptions and claims – to conduct that would constitute bribery and kickbacks, for which success is an essential element.

“Subdivision (a) remains a viable identification of running or capping activity as conduct that the Legislature has found to be unlawful, and to be “almost always” a harbinger of fraud.  (Analysis of Sen. Comm. on Crim. Proc., Sen. Bill 465 (1995-1996 Reg. Sess.) p. 5.)”

“Under the clear language of subdivision (b), the equitable and other remedies that do not constitute the “penalty prescribed in this paragraph” may be imposed without proof that a prescription or claim resulted from the unlawful conduct, or that any resulting claim was fraudulent or deceitful.”

“A substantial purpose for subdivisions (a) and (b)’s enactment is to enable the assessment of civil penalties for unlawful running and capping activities, without the practically impossible showing that a particular claim resulted from a particular violation.”

This opinion may provide new tools for the defense of certain medical lien claims.  The opinion specifies a broad and liberal interpretation of what is unlawful under 1871.7(a).  Thus for example, when a medical supplier hires a “person” to market a group of PTP’s to recommend or prescribe its products to industrially injured workers, is that in effect illegal “employment’ of a capper, runner, steerer or “other person?”  If so, there is no need to show quid pro quo, or any kickback, or a direct relationship with the prescriptions that were written. According to this decision, the use of a marketer alone is “almost always” a harbinger of fraud and thus conduct declared unlawful.  It remains to be seen if this can be a viable defense to liens in such cases.    

A new study appearing in the Journal of Bone and Joint Surgery (JBJS) links the use of opioid pain relievers to less improvement and higher levels of dissatisfaction following spine surgery.

Between 1999 and 2010, a greater focus on pain management resulted in a four-fold increase in opioids sold to hospitals, pharmacies and doctors’ offices, and a related and ongoing increase in opioid-related complications, including opioid dependence, impaired cognition and poor treatment outcomes. Previous studies have found a link between opioid use and diminished spine surgery outcomes; however, the studies did not account for differences in opioid consumption among patients.

In this study, 326 out of 583 (56 percent) patients reported some degree of opioid use prior to elective lumbar, thoracolumbar or cervical spine surgery between October 2010 and June 2012. Researchers collected preoperative demographic data on all patients including age, sex, race, diabetes and smoking status, level of surgical invasiveness, relevant comorbidities and socioeconomic information. Daily opioid use, including opioid type, dosage, route and frequency of administration in a 24-hour period, was self- reported and converted into a morphine-equivalent amount in milligrams per day. The median patient preoperative daily morphine equivalent amount was 8.75 milligrams.

Patient-reported health status was measured preoperatively, and at three and 12 months following surgery, using a range of established medical tests that measure levels of physical and mental function, depression, distress, back and other pain, disability, somatization (chronic, physical symptoms with no known cause) and treatment results. Among the findings:

1) Increased preoperative opioid use was a significant predictor of worse health outcomes at 3 and 12 months following surgical treatment, as measured in 12-Item Short-Form Health Survey (SF-12) and EuroQol-5D (EQ-5D) scores.
2) Every 10 milligram increase in the daily morphine equivalent amount taken preoperatively was associated with a decrease in mental and physical health and disability scores: a .03 decrease in the SF-12 physical and mental health summary scores, a .01 decrease in the EQ-5D score, and a .5 increase in the Oswestry Disability Index assessment.
3) Opioid consumption seems to occur frequently in those with psychiatric comorbidities such as depression and anxiety, which may lead to increased opioid use.

“We have demonstrated that increasing amounts of preoperative opioid consumption may have a harmful effect on patient reported outcomes in those undergoing spinal surgery,” said lead study author Clinton J. Devin, MD, assistant professor of orthopaedic surgery and neurosurgery at the Vanderbilt Spine Center. “Our work highlights the importance of careful preoperative counseling with patients on high doses of preoperative opioids, pointing out the potential impact on long term outcome and working toward narcotic reduction prior to undergoing surgery,” said Dr. Devin.

State Senator Leland Yee was indicted for public corruption early this year as part of another major FBI undercover sting operation. Federal prosecutors say Yee consorted with an alleged San Francisco Chinatown gangster, Raymond “Shrimp Boy” Chow, in a scheme that involved conspiracy to traffic in firearms, money laundering, murder-for-hire, drug distribution and what the law calls defrauding citizens of honest service, or political corruption. Yee is free on bail awaiting trial. He has been suspended from the Senate. He dropped out of the race for California Secretary of State shortly after his arrest. But it was too late to take his name off the June ballot.

And the California voters did not seem to get the memo about his indictment, nor the voluntary withdrawal of his candidacy for Secretary of State.

In this month’s largely sleepy California election, there was one jaw dropping result. More than 350,000 ballots were cast for Leland Yee for secretary of state, good enough for third place, even though he dropped out. This came as a surprise to pundits as well as the other seven candidates.

The top two finishers in the June 3 primary, State Sen. Alex Padilla (D-Van Nuys) and Republican Pete Peterson, led the pack with 1,129,988 votes (30.2 percent) and 1,117,487 votes (29.8 percent) respectively, and are headed for the Nov. 4 runoff. Yee was a distant third with 354,425 votes (9.5 percent), but he finished ahead of five candidates who had actively campaigned on a clean government platform. In fourth place was independent Dan Schnur, director of the Jesse M. Unruh Institute of Politics at USC, with 347,509 votes (9.3 percent). He told KFBK Newsradio, “If you were a Californian that didn’t happen to be paying very close attention the week of the Yee arrest, the odds of you knowing about it were actually relatively slim.”

But, in San Francisco, where there was heavy coverage of the scandal – and where Yee served on the Board of Education, on the Board of Supervisors and in the State Assembly before becoming a state senator – Yee finished third with 12.2 percent of the vote, behind Padilla (41.1 percent) and Democrat Derek Cressman (14.0 percent). Asian Week pointed out that this was better than Yee’s fifth-place showing as a candidate for mayor in 2011.

In San Mateo County, part of which was represented by Yee in the Legislature, Yee was in fourth place (9.5 percent) behind Padilla (38.1 percent), Peterson (17.0 percent) and Schnur (10.2 percent).

The vote count for non-candidate Leland Yee does not stand alone in the history of jaw dropping election results from profoundly uninformed California voters.

Sherman Block (July 19, 1924 – October 29, 1998) was the 29th Sheriff of Los Angeles County, California from January 1982 until his death. He was preceded by Peter Pitchess and succeeded by Lee Baca. He died during his campaign for re-election, which he was expected to win. He still obtained about one third of the vote by voters who apparently were unaware that he was dead.

The California Worker’s Compensation system is highly politically influenced. One would hope that voters would be informed of the consequences of various political issues and strategies before selecting a candidate for office and make a wise and well informed choice. Vote counts such as the one for disgraced suspended Senator Leland Yee who had withdrawn his own candidacy should raise some question about the efficiency of the California electoral process.

An Orange County Grand Jury last week indicted 45-year-old Kareem Ahmed and 14 others, alleging he formulated topical creams and oversaw an extensive network of kickbacks that paid doctors and pharmacists more than $25 million to prescribe and distribute the products. Ahmed, president of Ontario company Landmark Medical Management, and the others face a total of 44 counts on felony charges including conspiracy, trading rebates for patient referrals, insurance fraud and involuntary manslaughter, according to two grand jury indictments.

The Los Angeles Times back story says that “with little prior history of political giving, Ahmed emerged as a major donor to Obama’s 2012 reelection campaign, giving $1 million to the pro-Obama Priorities USA Action that year, and an additional $5,000 to the president’s campaign, according to data from the Center for Responsive Politics. In addition, Ahmed made the center’s list of 100 top donors to outside spending groups, and also gave $100,000 each to the House Majority PAC and Senate Majority PAC, and thousands more to the Democratic Congressional Campaign Committee and the Los Angeles County Democratic Central Committee.”

The website CampaignMoney.com, which tracks political donations, shows that Ahmed also donated $75,800 in total to the Obama Victory Fund in 2012. Other beneficiaries of Ahmed’s generosity include the Majority PAC and the House Majority PAC, which both received $100,000. Ahmed reportedly donated to a number of Democratic senators and representatives, including $5,000 to Florida Sen. Bill Nelson’s 2012 re-election campaign. In 2013, he contributed $5,200 to Pennsylvania Sen. Bob Casey’s coffers.

The Daily Caller claims that Ahmed also gave California Rep. Brad Sherman a total of $7,500 in 2012. That seemingly merited a shout of from Sherman on the House floor. On June 27, 2012, the politician hat-tipped Ahmed and another doctor in attendance who, said Sherman, “show such leadership of the Muslim community in the Los Angeles area.”

According to TPM, Ahmed claimed in a 2012 interview with the outlet that California Rep. Nancy Pelosi was his “best friend.”

The Orange County Weekly goes on with this back story. One year before that, then-Assemblyman and Assembly Insurance Committee Chairman Jose Solorio (D-Santa Ana) sponsored a bill to stop workers comp profiteering through “drug compounding,” which involves using multiple medications to create a chemical remedy specifically for one patient. It is labor intensive, costly and, according to Solorio’s legislation, devastating to California’s already bloated workers comp system. “Drug compounding–a legal but rarely necessary practice–has exploded as a physician profit-center in workers comp,” Solorio said at the time. “That practice must be stopped.”

Before Governor Jerry Brown signed Solorio’s bill into law in October 2011, the legislation withstood heavy lobbying from Ahmed’s Ontario-based company, Landmark Medical Management. The firm’s former vice president, Bruce Curnick, took credit for gathering opposition to the bill, convincing all Republicans in the State Senate to oppose it so there would not be enough votes for it to advance to the governor and helping hammer out a more industry-palatable version for Brown to sign after the Assembly-Senate negotiations. The State Bar disbarred Curnick in 2000 for misappropriating about $40,000 of client funds, disregarding the welfare of seven clients, acts of moral turpitude and 15 other violations of professional rules. Curnick reportedly mentioned to Talking Points Memo that Solorio’s bill as signed into law was essentially toothless because doctors could get around restrictions by administering the compounds themselves in their offices.

Other interesting cases are pending that raise questions about the role of political influence. Sen. Ronald S. Calderon and his brother, Tom, have been indicted on public corruption charges. The case alleges that Ronald Calderon accepted $88,000 in bribes from an undercover FBI agent and a businessman to affect legislation to extend film-industry tax credits and to change workers’ compensation laws.

It goes without saying that the top twenty pharmaceutical companies and their two trade groups, Pharmaceutical Research and Manufacturers of America (PhRMA) and Biotechnology Industry Organization, lobbied on at least 1,600 pieces of legislation between 1998 and 2004. According to the non-partisan Center for Responsive Politics, pharmaceutical companies spent $900 million on lobbying between 1998 and 2005, more than any other industry. During the same period, they donated $89.9 million to federal candidates and political parties, giving approximately three times as much to Republicans as to Democrats. According to the Center for Public Integrity, from January 2005 through June 2006 alone, the pharmaceutical industry spent approximately $182 million on Federal lobbying. The industry has 1,274 registered lobbyists in Washington D.C.

So the question is this. What does the pharmaceutical industry expect to gain in return?