United States Attorney André Birotte, Jr. announced that an Orange County-based ambulance company has paid the United States more than $3 million to settle a lawsuit alleging it received overpayments from the Medicare program and other federal health care programs for transporting patients who were not eligible for ambulance transports.

A federal judge in Santa Ana unsealed a lawsuit this month filed under the False Claims Act against ambulance transport company FILYN Corporation, which does business under the name Lynch Ambulance and is based in Anaheim. Lynch Ambulance and two of its principals named in the lawsuit settled the case. On November 7 Lynch Ambulance paid $3.05 million to the United States to resolve allegations that from 2001 through 2007 it regularly billed Medicare and other federal healthcare programs for transporting patients who were not “bed-confined” or whose transports otherwise were not medically necessary. The federal health care programs that paid claims for medically unnecessary transports were Medicare, TRICARE, and the Federal Employees Health Benefits Program.

The settlement resolves a lawsuit filed under the qui tam or “whistleblower” provisions of the federal False Claims Act, which allow private citizens with knowledge of fraud to bring civil actions on behalf of the United States and to share in any recovery. The lawsuit – which was filled by two former Lynch Ambulance employees, Jamie Weatherly and Dawn Lucero – was unsealed after the United States elected to take over part of the case and negotiated the settlement.

Lynch Ambulance has also entered into a Corporate Integrity Agreement with the Department of Health and Human Services. Glenn R. Ferry, Special Agent in Charge for the Los Angeles Region of the Office of Inspector General for the Department of Health of Human Services, said, “Taxpayers shouldn’t be on the hook for these expensive and medically unnecessary ambulance trips. Count on federal law enforcement to aggressively investigate and prosecute such actions.”

Lynch Ambulance and its principals have resolved this case without admitting any wrongdoing.

The settlement with Lynch Ambulance is the result of an investigation by the United States Department of Health and Human Services, Office of the Inspector General; the Department of Defense, Office of the Inspector General; the Office of Personnel Management, Office of the Inspector General; and the Federal Bureau of Investigation.

This is the second federal case against a Southern California ambulance company this month. The owners and supervisor of Alpha Ambulance Inc. (Alpha), a now-defunct Los Angeles-area ambulance transportation company, have pleaded guilty in connection with an ambulance fraud scheme. The owners of Alpan Ambulance face a ten year sentence.

The National Insurance Crime Bureau released its third quarter 2013 questionable claims (QC) referral reason analysis. The report examines six referral reason categories of claims – property, casualty, commercial, workers’ compensation, vehicle and miscellaneous – for the third quarters of 2011, 2012 and 2013.

Questionable claims are claims that NICB member insurance companies refer to NICB for closer review and investigation based on one or more indicators of possible fraud; A single claim may contain up to seven referral reasons. The volume of QC referrals can increase or decrease over a given period of time and may be caused by a number of factors, including better reporting by the industry and an increase or decrease in fraudulent activity, etc.

During the first three quarters of 2011, there were 74,944 QCs referred to NICB. During the first three quarters of 2012, that number increased to 87,684 and it increased again during the first three quarters of 2013 to 93,053. Overall, comparing the first three quarters of 2011 to the first three quarters of 2013, the numbers of QCs increased 24 percent

Although most categories of QCs saw increases in the third quarter, only one, the commercial category, posted a decrease. It was down 13 percent in the third quarter from the previous quarter; For a single referral reason, Medical Provider referrals in the Miscellaneous category had the largest increase in volume, as well as the highest percentage increase. Duplicate billing complaints were up 26%, unbundling/upcoding were up 20% and inflated billing referrals were up 17%.

Overall, Workers’ Compensation Questionable Claim referral reasons increased 4% when comparing the First 3 Quarters 2012 to the First 3 Quarters 2013. Disability and False SSN referrals topped the percentage increases with 58% and 40% respectively. Disability referrals had the highest increase of volume in the Workers’ Compensation category when comparing the First 3 Quarters 2012 to the First 3 Quarters 2013; while Claimant Fraud remains the largest Workers’ Compensation referral reason by over 2 ½ times the next highest referral reason.

Obese employees make more workers’ comp claims, and they make costlier ones than non-obese employees. That conclusion was drawn by Lockton Companies based on its review of several independent studies on employees with high health risks (including obesity, smoking, high blood pressure and limited physical activity) and workers’ comp claims. The Kansas City, Mo., provider of risk management, insurance, and employee benefits consulting services cites three studies that, when taken together, paint a troubling picture, especially of the impact overweight workers can have on workers’ comp claims.

Lockton says that wellness programs, properly designed and implemented, can address this situation by helping obese workers lose weight. But Lockton doesn’t offer any stats on how effective wellness programs are overall in combating obesity. Still, the studies cited offer food for thought.

The University of Michigan Health Management Research Center studied Xerox Corp. employees and confirmed that “employees with high health risks tended to have the highest workers’ compensation costs.” Xerox was an early proponent of wellness plans. The UM followed employees for four years and reported that “workers’ compensation costs increased for those employees whose health risks were increasing or high already (e.g., smoking, physical inactivity, hypertension, high cholesterol, and life/job dissatisfaction).”

Lockton also refers to a 2010 study by the National Council on Compensation Insurance which more closely correlated obesity with workers’ comp claims. The data “showed that workers’ compensation claims that included the obesity comorbidity diagnosis incurred significantly higher medical costs than comparable claims without the high health risk. NCCI also discovered that claims for employees identified as ‘obese’ almost tripled from 2000 to 2009 from 2.4 percent to 6.6 percent,” Lockton said.

Lockton then cites a more recent NCCI study testing whether “the lost-time duration of obese claimants is a multiple of non-obese claimants.” It was. “According to their findings, obese claimants incurred medical costs 6.8 times higher than non-obese (as defined by body mass index), were twice as likely to file a claim and an indemnity duration that averaged about 13 times higher,” Lockton summarized.

Lockton suggests that companies proactively engage HR and employee benefits to better understand the scope and breadth of existing corporate wellness initiatives, as well as how the organization is tracking the effectiveness of those programs. They should also determine how their insurer and/or third party administrator is capturing data on comorbid factors in workers’ compensation claim files and how that information can be incorporated into effective analytics. Finally, companies should collaborate with internal safety, health, and environment professionals (if applicable) to discover how best to integrate employee wellness with workplace safety.

“Effective corporate wellness initiatives have shown to be successful in not only reducing the duration of lost-time workers’ compensation claims,” said Lockton’s Michal Gnatek, author of the report, “but also in promoting healthy behaviors that potentially inhibit unsafe or inattentive workplace behavior.”

A report by the Insurance Journal says that a rule proposed by the Centers for Medicare and Medicaid Services contradicts the intent of a recently passed law aimed at requiring CMS to tell insurers how much of a claims settlement involving federal health insurance recipients must be given to CMS. The regulatory process was mandated by passage in January, after years of effort, of the SMART Act, or The Strengthening Medicare and Repaying Taxpayers Act. It deals with mandates for providing timely information to CMS on settlements of lawsuits involving no-fault auto-insurance claims, workers’ compensation claims, and payments under liability insurance, such as auto accidents.

The interim final rule–which means it goes into effect immediately–more than doubles the statutory 120-day period CMS is given under the new law to provide to insurers the portion of the final settlement that insurers will have to give to CMS rather than the claimant. Under the interim final rule, CMS will be given 245 days to process claims submitted by the insurers and other third-party payers, as well as lawyers involved in settlements. The comment letters sent by insurers voiced concern that, contrary to the intent of the law, the proposal doesn’t reflect the fact that when a deal is reached, all parties have certainty within a reasonable period of time.

Among those submitting comment letters are the American Insurance Association, the Risk and Insurance Management Society (RIMS) and the Medicare Advocacy Recovery Coalition (MARC), which includes self-insured employers. RIMS members include a number of municipalities, public school systems, etc.

“In addition to conforming to the requirements of the SMART Act, the CMS proposal also must work within the context of how settlements actually occur, and should promote, rather than delay the settlement of claims. The potential that settling parties would have to wait over half a year to conclude their settlement because of a lengthy MSP process will lead many settlements to breakdown,” said John Phelps, RIMS president.

Michele L. Adams, chair of MARC said that the interim final rule designed to implement the SMART Act “is flawed” because it creates a settlement process that is in “direct contradiction to Congress’ clear instruction, exceeds and misconstrues the SMART Act, and fails to address needed regulatory issues,” “For all the reasons set forth above, the MARC Coalition urges CMS to withdraw the IFR and reissue a proposed rule upon which all stakeholders can comment,” .

The insurers and other interested parties are also concerned that CMS is presenting them with a fait accompli, meaning immediate implementation of the rule, rather than a full notice and comment process, interested parties including insurers, are saying in comment letters.

Lashing back at federal officials and Senate colleagues, state Sen. Ron Calderon charged in a federal lawsuit filed last week that authorities leaked an FBI affidavit against him after Calderon refused to participate in a sting operation targeting Senate President Pro Tem Darrell Steinberg and Sen. Kevin de Leon. The filing in Sacramento federal court urges a judge to hold the FBI and U.S. Attorney’s Office in Los Angeles in contempt, contending that last month’s release of a sealed FBI affidavit “has prejudiced any future grand jury proceeding and irreparably tainted any future court proceedings involving Senator Calderon.”

Calderon alleges in the complaint that he “was approached on six separate occasions by high level agents of the Federal Bureau of Investigation and on two occasions by the Assistant United States Attorney for the Central District of California Doug Miller demanding that Senator Calderon participate in a sting operation against Senate President pro Tern Darrel Steinberg. The FBI agents requested that Senator Calderon wear a wire and secretly record his conversations with Senator Steinberg and Senator Kevin de Leon. The FBI was specifically interested in Senator Steinberg’s financial activities with Michael Drobot, the former Chief Executive Officer of Pacific Hospital of Long Beach. Senator Calderon refused to continue participating in the FBI’s sting operation, and rejected their demands to secretly record conversations with Senator Steinberg and Senator de Leon. Senator Calderon, through the law office of Geragos and Geragos, APC, returned the wire equipment supplied by the FBI to the agents working for United States Attorney’s Office for the Central District of California.”

According to an article published by McClatchy News, Steinberg said Calderon’s filing “is pure fantasy.” De Leon declined to comment. His office has previously said he has been told he is not a target of the investigation. Mark Geragos, Calderon’s lawyer, said Steinberg’s move prompted the latest legal action.  Steinberg spokesman Rhys Williams said the Senate leader has been told he is not a subject of the investigation, Geragos said “we have indisputable proof that they were targeting Steinberg.”  Thom Mrozek, a spokesman for the U.S. Attorney’s Office in Los Angeles, declined to comment Wednesday evening.

Late last month, Al Jazeera America posted the FBI affidavit, which alleges that Calderon took $60,000 in bribes from an FBI agent posing as a film studio owner and $28,000 in bribes from Drobot. Drobot’s lawyer has called the allegations baseless. Calderon is quoted in that document as saying he was working with Steinberg on legislation to lower the threshold for film tax credits to $750,000 from $1 million. The affidavit also describes de Leon amending one workers’ compensation bill at Calderon’s request in a way that would have less impact on Drobot’s business at Pacific Hospital.

There have been calls for Calderon to resign by Assemblywoman Cristina Garcia, D-Bell Gardens, and other officials in Calderon’s east Los Angeles County district. Calderon issued a statement slamming Garcia for “assuming the role of judge and jury,” adding that his current problems could befall “anyone in public office.”