Hundreds of health professionals engaged in a spirited debate Monday about the proposed sale of a nonprofit Lynwood hospital to a for-profit hospital company in Ontario. According to the story in the Los Angeles Times, St. Francis Medical Center is one of six struggling Roman Catholic nonprofit hospitals that Prime Healthcare Services has agreed to buy for about $843 million in cash and assumed liabilities.

Because Prime Healthcare intends to convert the Daughters of Charity hospitals to for-profit status, the sale requires the approval of California Atty. Gen. Kamala D. Harris. Harris’ staff hosted a public hearing Monday in Lynwood to hear public feedback about the proposed sale of St. Francis. The hearing is one of six scheduled for this week in Southern and Northern California. Harris is expected to make a decision about the sale by early February.

Opponents urged Harris to reject the sale, saying Prime Healthcare places too big of an emphasis on profit and the sale would diminish the services that the Catholic hospitals provided to their primarily lower-income clientele. They also noted that the Justice Department is investigating Prime for alleged billing fraud.

Supporters of the sale note Prime’s history of rescuing struggling hospitals by reducing costs and increasing revenues, largely through tough negotiations with insurers. Prime owns 29 hospitals in California and eight other states.

Prime Healthcare Chief Executive Dr. Prem Reddy has vowed to keep the hospitals open for at least five years and retain all services, including emergency rooms. He also said he would continue to provide care to patients who are unable to pay for services.

Dr. Clayton Kazan, head of emergency care at St. Francis, was one of several of the hospital’s doctors who advocated the sale to Prime at Monday’s hearing. “Prime represents our lifeline,” he said. “Having never closed a hospital and never closed an emergency department, Prime represents our best hope.”

Scott Byington, president of the St. Francis Registered Nurses Assn., said he thinks that Prime will reduce services provided to those people unable to pay. “These patients will not be able to go to that hospital because it’s a for-profit institution,” he said.

Opponents of the sale wore blue T-shirts that said, “There is an alternative,” a reference to a competing offer to buy the hospitals from private equity firm Blue Wolf Capital.

Robert Issai, chief executive of Daughters of Charity, said the six Catholic hospitals probably would be forced into bankruptcy if Harris rejects the sale. Blue Wolf’s offer was not feasible because the firm offered to manage the hospitals without promising to buy them, he said. “It was crystal clear that Prime was the best choice.”

An independent consultant who reviewed the proposed sale for Harris had recommended that Prime be required to keep the hospitals open for at least 10 years. Reddy said that he would agree.

In addition to St. Francis, the Daughters of Charity hospitals include: St. Vincent Medical Center near in downtown Los Angeles, O’Connor Hospital in San Jose, Saint Louise Regional Hospital in Gilroy, Seton Medical Center in Daly City and Seton Coastside Medical Center in Moss Beach, north of Half Moon Bay.

Maximus Federal Services has been awarded the sole contract by the DWC to administer the IMR process for all of the treatment provided to California injured workers. The latest DWC IMR Progress Report seems to suggest that the IMR process is progressing flawlessly.

But Maximus does not seem to be a company that is flawlessly run. According to a story in the Idaho Statesman, the company has hired, laid off and rehired hundreds of employees at the call center, which opened in fall 2013 to provide customer support for the federal health-insurance exchange created under the Affordable Care Act.

This round of layoffs is permanent, according to a letter just given to Maximus employees. The Idaho Statesman obtained the letter as did the city of Boise. The letter advises that Maximus would close its office and conduct mass layoffs, according to a city spokesman.

Maximus, a Virginia company that serves health and human-service agencies under contract, is a subcontractor under a $100 million, 30-month federal government contract for services to exchange customers, according to court documents from a lawsuit against it. “The reduction in staffing is based on the term of the contract,” the letter to employees said. Maximus said in the letter that some employees will receive severance pay. Maximus did not respond to a request for comment by the Idaho Statesman.

The move seems to be somewhat chaotic. Maximus hired about 1,600 Idahoans for its Boise call-center launch in 2013. Layoffs followed in spring 2014. Several employees from the Boise call center sued Maximus over the layoffs. They claimed the company led them to believe the jobs were permanent. Maximus denied those allegations, saying its call-center work was temporary – ramping up and winding down in tandem with the federal exchange’s enrollment season each year. That lawsuit is pending in federal court.

Separately, employees at the Boise office sued Maximus in early 2014 for unpaid overtime. That lawsuit, also still pending in federal court, claimed Maximus mischaracterized the employees’ jobs and, as a result, deprived them of overtime pay. Maximus denies those allegations.

Maximus started its latest Boise-area hiring spree in summer 2014 – for the 2015 enrollment season, running November 2014 through February 2015 – and struggled to fill 1,800 openings. The Idaho Department of Labor coordinated several job fairs for the company. Maximus continued to advertise opportunities at its Boise call center as recently as Friday, on its careers website, but it had taken down the actual job listings for Boise.

This Court of Appeal decision perhaps answers the question of when is an expedited hearing too expedited.

Kristian Von Ritzhoff sustained injuries while working as a banquet server in 1996. Orthopedic injuries were admitted and psychiatric injury denied. The PTP found Ritzhoff’s right ankle permanent and stationary as of October 25, 2005. Save for its significance as the origin of Ritzhoff’s psychiatric injuries, the orthopedic injury dropped out of consideration thereafter.

Thomas Curtis MD found Ritzhoff TTD on a psychiatric basis and in need of treatment. This brought about the expedited hearing of May 18, 2006. Ritzhoff has been representing himself since 1998. The defendant began to cross-examine him at this hearing. He effectively admitted working from time-to-time since his injury in 1996. However, the WCJ terminated cross-examination over the defendant’s objection and even though the defendant had not finished because of alleged time constraints arising from the expedited nature of the hearing. The WCJ also noted that the videotape the defendant sought to have admitted was “more appropriate for later cross-examination (of a doctor and/or applicant as to accuracy of his history) rather than at this stage of the proceedings.” Nonetheless the WCJ found Ritzhoff temporarily totally disabled from a psychiatric injury based upon a 1999 medical report. The WCAB denied reconsideration of this order.

By August 2008, Ritzhoff had received electric shock therapy and by November 6, 2009, had attempted suicide by hanging while he was hospitalized. Dr. Curtis opined that it was obvious to him Ritzhoff was totally and permanently disabled on a psychiatric basis.

There now followed three hearings. The first two focused on whether Ritzhoff was psychiatrically permanent and stationary and thus no longer entitled to TTD. The third hearing ended with the finding that Ritzhoff was 100% disabled. Ritzhoff refused to be cross-examined at all three of these hearings.

Ritzhoff requested the April 23, 2009 expedited hearing to resolve the issue of TTD benefits. Dr. Gilberg, the independent medical evaluator in psychiatry appointed by the WCJ, issued a report that Ritzhoff would become permanent and stationary psychiatrically by December 31, 2008. The WCJ asked Ritzhoff to take the stand. Ritzhoff stated: “I object to be cross-examined without an attorney.” The WCJ told him he was his own attorney, as he indeed had been since 1998. Ritzhoff took the stand only to deliver a short monologue. The Court of Appeal noted that “The hearing continued on its downhill path…… finally collapsed in inconclusive confusion, one reality did emerge. Ritzhoff was true to his word; he did not testify. This hearing concluded without a word of testimony by Ritzhoff. ” Nonetheless the WCJ concluded that Ritzhoff was temporarily totally disabled. The appeals board affirmed the WCJ’s order. However, the appeals board noted defendant’s legitimate complaints regarding the opportunity to cross-examine Ritzhoff. The appeals board explicitly stated that “[i]f [Ritzhoff] intends to continue to prosecute his claim for workers’ compensation benefits, he must submit to cross-examination.”

Another hearing on October 27, 2009 requested by Ritzhoff was essentially the same. The WCJ did not allow cross-examination on issues related to temporary total disability and stated that this issue was already settled. Ritzhoff eventually took the stand. However, he squarely refused at least six times to answer defense counsel’s questions. In short, as in the first hearing, Ritzhoff did not testify at the second hearing. The WCJ ordered the defendant to reinstate treatment with Dr. Curtis. The appeals board denied defendant’s petition for reconsideration and let the WCJ’s decision on temporary total disability “stand, but only ‘for now.’”

The matter came on for hearing over the objection of the defendant on May 30, 2013. Discovery remained open until the final mandatory settlement conference. However, since the October 27, 2009 hearing, the defendant still was unable to obtain the deposition of Dr. Gilberg, who had recused himself because of harassment by Ritzhoff. At the hearing, Ritzhoff preemptively refused to respond to any questions by defendant. With no testimony being allowed, Ritzhoff was nonetheless found totally permanently disabled and no basis for apportionment. Reconsideration was denied

The Court of Appeal reversed and remanded in the unpublished case of Ogden Entertainment Services v. WCAB.

“For two centuries past, the policy of the Anglo-American system of Evidence has been to regard the necessity of testing by cross-examination as a vital feature of the law.” “We address in this case therefore nothing less than one of the fundamental guarantees of a fair trial or, as in this case, a fair hearing, for there is no doubt that the right of cross-examination is guaranteed to the parties in workers’ compensation proceedings.” “Give what the purposes of cross-examination are, we must correct the misperception shared by the WCJ and the appeals board that, as a layperson, Ritzhoff had nothing to add as a witness.” “The importance of cross-examination as a means of testing and attacking the credibility of a witness is undiminished in the modern era.”  

Indeed, the Court of Appeal unraveled the case to a point earlier than the last hearing by stating “The appeals board’s view that the defense should have sought review of its decision regarding cross-examination following the first and second hearings ignores the plain fact these were not final decisions of the appeals board and thus were not reviewable in this court under the aegis of a writ of review.”

Fosun International Limited and Meadowbrook Insurance Group, Inc. announced that they have entered into a definitive agreement under which Fosun will acquire Meadowbrook for US$8.65 per share in cash, representing an aggregate transaction value of approximately US$433 million. The transaction follows a thorough review of strategic alternatives by the Meadowbrook board of directors and represents a 24% premium over Meadowbrook’s closing price on December 29, 2014 and a premium of 39% to Meadowbrook’s three-month average closing price for the period ending December 29, 2014. The transaction also represents a multiple of approximately 1.04x Meadowbrook’s tangible book value per share as of September 30, 2014.

Meadowbrook Insurance Group, Inc., based in Southfield, Michigan, is a leader in the specialty program management market. Meadowbrook includes several agencies, claims and loss prevention facilities, self-insured management organizations and six property and casualty insurance underwriting companies. Meadowbrook has twenty-eight locations in the United States including California. It is a risk management organization, specializing in specialty risk management solutions for agents, professional and trade associations, and small to medium-sized insureds.

Fosun is a leading investment group headquartered in Shanghai, China with over $50 billion in total assets and operations around the world. The acquisition of Meadowbrook will enable Fosun to establish a significant presence in the U.S. property and casualty market. Currently, Fosun has more than one third of its total assets invested in insurance businesses around the world, including investments in Yong’an P & C Insurance, Pramerica Fosun Life Insurance and Peak Reinsurance, as well as Fidelidade Group, Portugal’s largest insurance company.Fosun’s most recent investment in the insurance sector was an acquisition of a 20% equity interest in Ironshore Inc. in August 2014.

Guo Guangchang, Chairman of Fosun, said, “This transaction allows Fosun to establish a presence in the important U.S. P & C market, consistent with our strategy of expanding our core insurance business. Meadowbrook has a talented employee base, comprehensive offering of high-quality specialty insurance products, robust distribution network and a strong commitment to meeting the evolving needs of its policyholders.The transaction represents another milestone for Fosun and will enable Fosun to further strengthen its insurance-oriented comprehensive financial capabilities.”

Robert S. Cubbin, President and Chief Executive Officer of Meadowbrook, said, “Combining with Fosun further strengthens our capital base as we continue to focus on supporting the needs of our customers, partners and policyholders, improving our underwriting performance and driving profitability.” Mr. Cubbin continued, “This transaction is the culmination of a thorough strategic review process to maximize shareholder value. We believe this is a positive outcome for our shareholders, who will receive significant value; our employees, who will benefit from enhanced opportunities as part of a larger, global organization; and our customers, partners and policyholders, who will benefit from an even stronger specialty risk, insurance and service provider.”

The transaction has been unanimously approved by all of the directors of the Meadowbrook board of directors present at the meeting and has been unanimously approved by the Fosun board of directors. Following the closing of the transaction, which is expected in the second half of 2015, Meadowbrook will continue to maintain its headquarters in Southfield, Michigan and will operate under the Meadowbrook brand name. The transaction is subject to the approval of Meadowbrook’s shareholders as well as regulatory approvals and the satisfaction of other specified closing conditions.

The Department of Industrial Relations released its 2014 Legislative Digest, which provides an overview of new laws and vetoed bills related to the work of DIR and its divisions, which include the Labor Commissioner’s Office, Cal/OSHA, the Division of Workers’ Compensation and the Division of Apprenticeship Standards. These bills were all reviewed during the second half of the 2013/2014 legislative session. Among the chaptered bills signed by the Governor in the digest are:

AB 1035 extends the time period to file a dependency case with the WCAB from 240 weeks to no later than 420 weeks from the date of injury for certain safety workers if the death was due to cancer, tuberculosis, a blood-borne infectious disease or methicillin-resistant Staphylococcus aureus skin infection; Governor Brown vetoed a similar bill last year.
AB 1746 requires that cases in which an unrepresented employee who is or was employed by an illegally uninsured employer be placed on the priority conference calendar at the WCAB. It must be held within 30 days after a DOR is filed in the case..
AB 2230 allows CIGA to levy an assessment of up to two percent of direct written premiums for the payment of covered claims and expenses.
AB 2732 makes technical, non-substantive, and clarifying changes to several Labor Code provisions amended or enacted by SB 863.

It is of interest that the Governor vetoed the following bills that pertain to Workers’ Compensation.

AB 2052 would have established or expanded presumptions of injury for safety officers In the veto message Brown said “This measure seeks to expand coverage to dozens of additional categories of officers without real evidence that these officers confront the hazards that gave rise to the presumptions codified in existing law. Presumptions should be used rarely and only when justified by clear and convincing scientific evidence.”
AB 2378 would have overturned the June 2013 decision by the California Court of Appeals in County of Alameda v. WCAB (Knittel) (2013) 213 Cal.App.4th 278, 78 Cal. Comp. Cases 81, which ruled that the period of salary continuation must be counted as part of the 104-week limit on TD benefits.
AB 2616 would have established a statutory presumption that a MRSA infection that develops in a hospital employee who provides direct patient care in an acute care hospital is work related. Brown’s veto message said “The determination that an illness is work-related should be decided by the rules of that system and on the specific facts of each employee’s situation. While I am aware that statutory presumptions have steadily expanded for certain public employees, I am not inclined to further this trend or to introduce it into the private sector.”

Other bills of interest that were signed into law include

AB 326 modernizes reporting requirements for employers reporting serious injury, illness or death. This law provides that employers may also report such incidents via email and removes the option to report via telegraph.
AB 1522 creates the Healthy Workplaces, Healthy Families Act of 2014, which provides that as of July 1, 2015, employees shall accrue compensated sick leave to care for themselves or for family members as defined in the bill. Under this bill, employers shall provide up to 24 hours (i.e., three days) of paid sick leave each year.

The Governor vetoed the following bill that pertains to Employment Law.

AB 2271 would have restricted employers, employment agencies, and persons who operate an Internet website from posting job advertisements that indicate an individual’s current employment is a requirement for a job. The veto message said “While I support the intent of this bill, it could impede the state’s efforts to connect unemployed workers to prospective employers as currently drafted. The problems facing our state’s long term unemployed are great. There is no doubt that those Californians want to get back to work and I want to help them get there – unfortunately this bill does not provide the proper path to address this problem.”

The 26 page DIR 2014 Legislative Report, or the website of the Legislative Counsel of California should be consulted for further more detailed information about these and other laws that take effect in January.