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Alex Swedlow New CWCI President

J. Michael Nolan has announced his retirement as president of the Oakland-based California Workers’ Compensation Institute (CWCI) effective May 1, 2013. The Institute’s Board of Directors has named Alex Swedlow, CWCI’s Executive Vice President for Research, as his successor.

“We knew this day would eventually arrive, and extend our sincere appreciation to Michael for all his contributions to CWCI, its members, and the California workers’ compensation system” said Tom Rowe, President and CEO of State Compensation Insurance Fund and chairman of the CWCI Board. “Under Michael’s steady and insightful leadership, CWCI has remained an indispensable resource for our members and the industry by generating reliable data that helps them make informed business decisions, track industry trends, and analyze key issues in the industry. Michael is leaving us in a very good place, and we thank him for his many years of service.”

Mr. Nolan joined the Institute in June 2001 as successor to former president, Ed Woodward. His career in the insurance industry spans more than 40 years, including 10 years at Argonaut Insurance, where he served as Senior Vice President, General Counsel and Secretary. During his time with the Institute, Mr. Nolan served on a number of government and private advisory committees, including working groups of the California Division of Workers’ Compensation, the Commission on Health and Safety and Workers’ Compensation, the Department of Insurance, the California Workers’ Compensation Insurance Rating Bureau and RAND Corporation. Additionally, Mr. Nolan periodically testified on workers’ compensation issues at public hearings of the California State Legislature and administrative agencies, including last year’s workers’ compensation reform hearing that culminated in the enactment of the 2012 reform bill (SB 863).

“My years with CWCI have been some of the most rewarding of my career,” said Mr. Nolan. “I am thankful for the great opportunities I had with CWCI and look forward to its continued success under Alex Swedlow, who brings impressive credentials and deep industry expertise.” Following his retirement from CWCI and a short sabbatical, Mr. Nolan intends to re-enter the workers’ compensation industry or corporate-regulatory law field.

Effective April 2 Mr. Swedlow will become the fourth President at CWCI in almost 50 years. Mr. Swedlow formally joined CWCI in November 2000 as Executive Vice President of Research, where he focused on data development and research on cost drivers, evidence-based medicine, opioid utilization, litigation and alternative dispute resolution, access to care, return-to-work and key performance indicators of the 2002-2004 and 2012 California workers’ compensation reforms.

Prior to that, Mr. Swedlow was an independent consultant to CWCI from 1988 to 1999, working to enhance data collection and research on topics including medical and indemnity benefit development, 24-hour coverage and medical treatment utilization, and cost drivers. In 1998, he served as the Systems Architect and Project Manager for the Industry Claims Information System (ICIS) Project, which has since grown into one of the largest and most vital transactional data warehouses in the California workers’ compensation system. Mr. Swedlow is an active participant in industry advisory committee work and frequently speaks at regional and national conferences and forums.

“I’m thrilled to take on this new responsibility and lead CWCI in its next chapter,” said Mr. Swedlow. “As CWCI looks to its next 50 years, we have an opportunity to further establish our role as a critical but objective industry resource.”

Study Says Patients Not Warned About CT Scan Dangers

Only about a third of patients surveyed at one U.S. medical center said their doctors told them about the possible risks of a CT scan, such as radiation exposure, a new study finds.According to the summary in Reuters Health, researchers, who published their findings in JAMA Internal Medicine on Monday, also found that most patients thought their doctors made the final decision to have the scans.

“I think that sounds pretty consistent of what my experience would be as a patient, physician and with family members,” said Dr. Howard Forman, professor of diagnostic radiology and public health at the Yale School of Public Health in New Haven, Connecticut, who was not involved with the new study.The new study jibes with previous research that found people are unaware of the radiation risks posed by CT scans.

CT scans are high-powered X-rays that provide clearer images but expose patients to between ten and 100 times as much radiation as a normal head or chest X-ray.

For the new study, Dr. Tanner Caverly, from the University of Colorado Anschutz Medical Campus in Aurora, and colleagues surveyed 286 patients getting a CT scan at the Denver Veterans Affairs Medical Center from November through December 2011. Of the 271 patients that returned their surveys, 35 percent said they discussed the risks of a CT scan with their doctors and 62 percent believed the final decision to have the scan was made by the doctors. Only 17 percent of the patients said they were involved in the decision-making process and discussed risks and benefits with their doctors. But even when doctors were discussing the potential risks, their patients ended up being no more informed than people who didn’t talk with their healthcare providers.

“It’s likely that many physicians also do not know the risks, and so it’s not surprising that even when there are discussions with patients about risks and benefits of the procedure, patients clearly still do not understand the true risk of radiation exposure,” wrote Dr. Patrick O’Malley, a deputy editor of the journal, in an note accompanying the new study.

One study from the National Cancer Institute estimated there would be about 29,000 future cancers related to scans done in 2007 alone. That year, Americans had about 72 million total CT scans, which can cost from a few hundred dollars to several thousand dollars.

Forman told Reuters Health there are a few ways to address the problem of patients not being told about the risks of CT scans, including educating doctors and empowering patients to ask questions. “I think we need to empower healthcare consumers/patients much more to have complete understanding and control of their care and its delivery. I think physicians are sometimes offended by patients who ask too many question and I think that’s something we need to change,” Forman said.

Gene Simpson New CompWest VP

CompWest Insurance Company has announced the appointment of Gene J. Simpson as vice president of Underwriting and Marketing. Simpson recently joined CompWest’s senior management team and is responsible for company-wide underwriting and marketing practices. In this position, Simpson coordinates the development and implementation of company underwriting and marketing programs; manages and directs the execution of all sales plans and production initiatives; as well as the research, strategy and implementation of new markets.

Simpson most recently served as vice president of Workers’ Compensation Product Management for Seabright Holdings, Inc. Prior to that, he served as vice president of General Liability and Product Line Manager for Liberty Mutual Insurance and for 11 years in a variety of capacities for Safeco Insurance Company, including assistant vice president of Product Development,; assistant director of Workers’ Compensation; commercial manager of National Programs and commercial underwriter of Multiline and Workers’ Compensation.

Simpson graduated from Western Washington University with a Bachelor of Science in applied mathematics and holds the designations of Chartered Property Casualty Underwriter (CPCU) and Certified Insurance Counselor (CIC). Simpson is an active member of his community, participating in various fundraising efforts to support several charitable organizations with a particular interest in Susan G. Komen for the Cure.

Sacramento Bee Supports Elimination of Out of State Athlete Claims

In an article published by the editorial board of the Sacramento Bee, the newspaper stated that “professional athletes claiming cumulative injuries incurred during the course of their careers have been abusing the California workers’ compensation system.” That is a notable statement by a typically liberal newspaper which may signal the political appetite in the Sacramento legislature for the elimination of these claims by passage of A.B. 1309.

In an article last week, Los Angeles Times reporter Marc Lifsher described how retired athletes tap into California’s generous workers’ compensation system to collect six-figure settlements for cumulative trauma, even though they played only a fraction of their games in California, or may never have played here. Many of them are big-name players who earned huge dollars. Others attained neither fame nor fortune.

The Bee article also notes that the California Insurance Guarantee Association is the entity that pays workers’ compensation claims when workers’ comp insurance companies become insolvent. California employers – not just professional sports teams – pay into the California Insurance Guarantee Association. In a letter to Assemblyman Henry T. Perea, D-Fresno, the association in December said that California residents account for only 373 of its 1,873 claims from professional athletes. The number of claims from retired athletes is growing at an alarming rate – 34 per month, as of December. The association had to add four claims adjusters to handle the influx of athletes’ claims.

The CIGA letter cited several issues that should alarm lawmakers, employers and workers. Athletes who played only one day in California, or suited up but sat on the bench, can receive compensation from California’s workers’ comp system. Athletes can file claims whether or not they were injured on a California field or court. The letter notes that players file claims in their home states and receive compensation. Because of the laxity of California’s law, California judges can award full benefits to out-of-state players. Adding to the complexity, the letter noted, “an athlete who last played 20 or 30 years ago is not barred from filing a claim today.”

The Bee article goes on to say that “California cannot afford to be the bank for out-of-state athletes and their lawyers. The guarantee association’s deficit hovers at $2 billion. California employers – not just sports teams – paid $78 million toward reducing that deficit last year. Since 2002, CIGA has paid $42 million in claims to professional athletes. The cost of processing the claims was $1 million a year. The largest number of claims come from Texas and Florida, states favored by wealthy athletes because, unlike California, they impose no state income tax.”

Assembly member Perea has proposed Assembly Bill 1309, which would deny California benefits to pro baseball, basketball, football, hockey and soccer players whose teams are not based in California and who came here only occasionally for games.

The Bee says that “The fix seems simple – though in the Capitol, nothing ever is easy. California’s system should take care of injured athletes who played the bulk of their time California, quickly and fairly. But if they played for teams in Texas, Florida, or any other state, those states need to take responsibility.”

McDonald’s Worker Arrested for Faking Injury

The San Bernardino County District Attorney reports that Maria Arrieta, 51, of Victorville, has been charged with multiple counts of workers’ compensation insurance fraud and perjury.

In June 2010, Arrieta was injured as a result of her duties at McDonald’s Hamburger Restaurant. She was treated for burns to her hands and released.

“Sometime later, Ms. Arrieta filed a fraudulent workers’ compensation claim alleging that she slipped and fell at work while removing a case of meat from the freezer on the same day and had injured her foot,” said Jose Guzman, Senior Investigator assigned to the case. “However, she made no mention to the physician who was treating her hand of her slip and fall accident which allegedly occurred earlier the same day as the hand injury.”

According to Guzman, approximately nine days earlier to the incident, Arrieta had been seen by her primary care physician and told him that she had sustained her foot injury at home and not at work. Arrieta was ultimately diagnosed with a non-work related medical condition for which she is seeking workers’ compensation benefits.

In Aug. 2010, Arrieta was examined by a specialist in Podiatric Medicine, a Qualified Medical Examiner (QME). “The QME reviewed the medical history questionnaire completed by Arrieta, who advised the doctor that she injured her foot at home on her day off from work,” said Guzman. “Again, she made no mention of the injury being work-related.”

The QME submitted Employment Development Department (EDD) paperwork indicating a non-work related injury. Arrieta later obtained a workers’ compensation attorney who filed a claim for her in May 2011, alleging the slip and fall foot injury. The insurance company then referred the case to the District Attorney’s Office, Workers’ Compensation Insurance Fraud Unit in Oct. 2011 for a fraud investigation.

On Feb. 11, 2013, the District Attorney’s Office Workers’ Compensation Insurance Fraud Unit filed criminal charges against Arrieta for knowingly filing a fraudulent workers’ compensation claim to obtain benefits for a non-work-related injury. Arrieta was taken into custody the next day by District Attorney Investigators at the Santa Ana Workers’ Compensation Appeals Board, while awaiting a hearing in her workers’ compensation case. Arrieta was transported to West Valley Detention Center in Rancho Cucamonga and booked.

Arrieta is scheduled to be arraigned April 18 in Victorville Superior Court. If convicted as charged, she faces 19 years in County Prison. Deputy District Attorney Scott Byrd will prosecute this case.

60 Former NFL Players Seek to Overturn Arbitration Award

Larry Centers and Troy Vincent were among more than 60 former National Football League players suing the organization’s management council to overturn an arbitration decision that bars them from seeking workers compensation in California.

According to the story in Bloomberg News, the players were required under a December arbitration award to withdraw claims in the state and banned from claiming they are entitled to the benefits, according to a complaint filed in federal court in San Francisco. The players contractually waived their rights to file workers’ compensation benefits in California, an NFL arbitrator decided, according to the lawsuit.

The decision must be thrown out because it’s unconstitutional and against public policy and federal labor law, attorneys for the ex-players say in the complaint. The players suing were all injured in California, or claim that injuries they had were aggravated while playing in games or practices in California, according to the complaint.

Greg Aiello, an NFL spokesman, said there are other federal lawsuits involving athletes who played for football teams from outside California, weren’t injured in California and breached contracts they signed promising to file claims in their team’s home state.

“In all those cases, the federal courts threw out the lawsuits and confirmed the award,” Aiello said in an e-mail. “In addition to all signing contracts promising to file elsewhere, none of the players listed as plaintiffs in this lawsuit had any specific injury in California and they all played for non-California” teams.

Two similar lawsuits were filed in federal court in San Francisco in December. The case is Centers v. National Football League, 13-882, U.S. District Court, Northern District of California (San Francisco).

S.B. 863 Legislative Push Back Begins

This week state Senator Jim Beall introduced S.B. 626  – a bill that would roll back many of the provisions of newly enacted S.B. 863.

Theoretically, last year’s S.B. 863 was a “balanced” bill that sought to both reduce costs and increased benefits. The balanced approach was forced by Governor Brown who vetoed one sided legislation the previous year that sought to unwind portions of Governor schwarzenegger’s S.B. 899.  His veto messages asked the legislature to pass a balanced measure that had some benefit for California employers. Thus, the political climate, up until this year, was a state legislature that clearly wanted to grow the benefits of the Worker’s Compensation system, balanced by a Governor who considers the impact of increasing a hostile business climate.

However, the November election may have changed that political climate. The Democratic Party has controlled the California Legislature for a nearly unbroken stretch of 42 years. Yet control goes only so far: it takes two-thirds of the Legislature to enact a host of important legislation in this state, meaning that even the diminished Republican Party has been able to easily frustrate Democratic ambitions. But with a swell of electoral victories in November, the Democratic Party has now crossed that boundary and controls two-thirds of both the Senate and the Assembly, giving it the kind of unfettered power that no party has had here for 80 years. With the exception of a few brief lapses caused by vacancies, Democrats could hold a supermajority at least through the end of the decade. A supermajority can override the Governor’s veto, and indeed can even call a constitutional convention and re-write the California constitution placing the new version before the voters for final approval.

With the new political climate in mind, S.B. 626 may have a fighting chance for passage this legislative session. Here are the key provisions.

S.B. 863 prohibits a chiropractor from being the treating physician after the employee has received the maximum number of chiropractic visits. S.B. 626 would delete that provision and would instead provide that a chiropractor may remain the patient’s primary treating physician even if additional treatment has been denied as long as the he complies with specified reporting requirements of workers’ compensation law..

Currently, physicians who perform utilization review or the new IMR process need not be licensed in California. S.B. 626 would revise these provisions to require that medical treatment utilization reviews and independent medical reviews be conducted by physicians or medical professionals who hold the same California license as the requesting physician. The bill would delete the requirement that independent medical review organization keep the names of the reviewers confidential in all communications with entities or individuals outside the independent medical review organization.

S.B. 863 prohibits a workers’ compensation administrative law judge, the appeals board, or any higher court from making a determination of medical necessity contrary to the determination of the independent medical review organization.S.B. 626 would delete that provision and allow disputed medical issues to proceed to litigation after the IMR process.

And S.B. 863 limited the AMA Guide add-ons for psychiatric injury, sleep disorder or sexual dysfunction in cases that were initially a physical injury. S.B. 626 would delete the prohibition on increases in impairment ratings for psychiatric disorder.

The destiny of S.B. 626 will not be known until at least August, the end of the current legislative session. Nonetheless, there is little if any political headwind in the way. It is not inconceivable that S.B. 626 in some form will become law.

DWC Audit Unit Admonishes Claim Administrators About Lien Negotiations

The Audit Unit of the Division of Workers’ Compensation has received an increasing number of complaints from individuals and entities providing services on a lien basis in workers’ compensation claims. The complainants report that some payors have adopted a policy of refusing to discuss negotiating the provider’s liens until the provider of the services demonstrates it has filed a lien with the WCAB and paid the applicable lien filing or activation fee required by the enactment of SB 863. As a result, the DWC published the following admonishment.

“Such a policy is both unsupported by the plain language of Labor Code sections 4903.05 or 4903.06, and directly contrary to the legislative intent of those sections and existing law.”

“If a claims administrator has reasonable grounds to contend that nothing is owed, then good faith negotiation does not necessarily require an offer of compromise. In the absence of a good faith contention that nothing is owed, however, a refusal to negotiate prior to payment of the filing fee would not be in good faith”.

Additionally, Title 8, California Code of Regulations, section 10109(e) mandates that “[a]ll Insurers, self-insured employers and third-party administrators shall deal fairly and in good faith with all claimants, including lien claimants”.

“Title 8 California Code of Regulations, section 10250(b) requires a moving party state under penalty of perjury that the moving party has made a genuine good faith effort to resolve the dispute before filing the Declaration of Readiness (DOR). Forcing a provider to file a lien and pay the filing or activation fee before the payor will discuss informal resolution of their billing amount prevents the provider from complying with this mandate. Such conduct could expose the payor to the imposition of sanctions, attorney’s fees and costs under Labor Code section 5813. This practice also exposes the payor to audit penalties for violation of Title 8, California Code of Regulations, section 10109(e). As is the Audit Unit’s existing practice, the Audit Unit will review all complaints received about this practice during the next random or targeted audit of any payor about whom such a complaint has been received.”

Owners of DME Supply Company Plead Guilty in Fraud Case

Two former owners of a Los Angeles-area medical equipment wholesale supply company pleaded guilty this week to conspiring with their customers to defraud Medicare. Rajinder Singh Paul, 69, and Baljit Kaur Paul, 65, of Redlands, Calif., each pleaded guilty before U.S. District Judge Percy Anderson in the Central District of California to one count of conspiracy to commit health care fraud.

The Imperial Valley News reports that Rajinder and Baljit Paul admitted that they were the president and vice president, respectively, and shareholders of AHPK Inc., a medical equipment wholesale supply company located in Redlands and Ontario, Calif., and formally known as Major’s Wholesale Medical Supply Inc. The Pauls later sold Major’s Wholesale Medical Supply Inc. to Major’s Wholesale Medical Supply LLC (collectively, “Major’s”) and, according to court documents, remained employed at Major’s Wholesale Medical Supply LLC as consultants until they were terminated in February 2009.

During the time the Pauls either owned or worked as consultants for Major’s, Major’s sold durable medical equipment (DME) almost exclusively to customers who owned and operated DME supply companies, according to court documents. A majority of Major’s customers were Medicare providers and relied on Medicare to make money, which they did by billing Medicare for the DME that they purchased from Major’s.

One of the more popular items of DME that the Pauls sold at Major’s were power wheelchairs. Court documents indicate that to attract customers, the Pauls sold power wheelchairs to Major’s customers wholesale for between $850 to $1,000 each. Major’s customers, however, billed these power wheelchairs to Medicare at a rate of between $3,000 to $6,000 per wheelchair.

The Pauls admitted they knew that Major’s customers were dependent on Medicare for their revenue, and that Major’s customers could not pay Major’s unless Medicare paid the customers first. To foster customer loyalty, the Pauls engaged in a variety of conduct over a period of six years that helped Major’s customers defraud Medicare, including by providing Major’s customers with false inventory purchase agreements that showed they had higher credit limits than they really did. Major’s customers submitted these false inventory purchase agreements to Medicare to prove, as required by Medicare, the ability to purchase the volume of DME they billed.

The Pauls also admitted they provided Major’s customers with backdated invoices, knowing customers were billing Medicare for power wheelchairs and DME before the customers actually purchased or delivered the equipment. The Pauls admitted that by backdating these invoices, they provided Major’s customers with the paper trail the customers needed to prove to Medicare that they had both purchased the DME and purchased it before they submitted their claims to Medicare. According to court documents, the Pauls backdated or falsified invoices for more than 100 different customers.

Court documents indicate that two of many customers who conspired with the Pauls to defraud Medicare owned and operated a number of fraudulent DME supply companies in the Los Angeles area, including one customer who used “straw” or nominee owners to operate the customer’s companies. The Pauls admitted they provided these two customers with false inventory purchase agreements and backdated invoices that the customers used to defraud Medicare. The Pauls admitted that as a result of their conduct, these two customers were able to use their fraudulent DME supply companies to submit approximately $16,662,143 in false claims to, and receive approximately $9,743,609.42 in ill-gotten reimbursement payments from, Medicare.

At sentencing, scheduled for July 8, 2013, the Pauls each face a maximum penalty of 10 years in prison and a $250,000 fine.

This case is being prosecuted by Jonathan T. Baum of the Criminal Division’s Fraud Section. The case was investigated by the FBI, HHS-OIG, and Cal DOJ and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.

New Bill in California Assembly Seeks to Limit Professional Athlete Claims

A.B. 1301 was introduced this week in the California Assembly by Assembly Insurance Committee Chairman Henry Perea (D-Fresno). If passed into law, it would limit the avalanche of workers compensation claims filed by out of state professional athletes,

This bill would provide that an employee hired outside of this state, his or her dependents, and his or her employer shall be exempt from this state’s workers’ compensation laws if the employee is a professional athlete, defined, for purposes of these provisions, to include an athlete who is employed at the minor or major league level in the sport of baseball, basketball, football, hockey, or soccer, and that professional athlete is temporarily within this state doing work for his or her employer. Perea’s bill would not apply to members of other professions whose work takes them from state to state, such as horse racing jockeys, truck drivers and salesmen.

This bill would deem a professional athlete to be temporarily within the state doing work for his or her employer if, during the 365 days immediately preceding either the professional athlete’s date of injury, or, in the case of an occupational disease or cumulative injury claim, the professional athlete’s last date of injurious exposure while employed anywhere as a professional athlete, the professional athlete performs less than 90 total days of required services within the state under the direction and control of the employer.

The bill would provide that if the employee is a professional athlete, the date of injury in cases of occupational diseases or cumulative injuries is the date of the employee’s last injurious exposure while employed anywhere as a professional athlete, or the date of diagnosis, as defined, by a licensed physician, whichever occurs later.

The bill would also provide that an employer of a professional athlete that is subject to California’s workers’ compensation laws is not liable for occupational disease or cumulative injury if at the time application for benefits is made the professional athlete performed his or her last year of work in an occupation that exposed him or her to the occupational disease or cumulative injury as an employee of one or more other employers that are exempt from California’s workers’ compensation laws or pursuant to the above provisions or any other law. The bill would provide that these changes apply to all pending claims for benefits, as specified.

The language of A.B. 1301 does not indicate if these provision are retroactive to claims that have already been filed. California is the only state that makes it relatively easy for long-retired players to claim cumulative trauma injuries. About 4,500 out-of-state players have won judgments or settlements since the early 1980s, according to a study commissioned by the professional sports leagues.

The filing of this bill will commence the arduous process of hearings, debates and amendments to the bill language before there will be any new law on this topic. The proposal is expected to be one of the most hotly debated issues of the legislative session, with team owners lining up against the players’ unions and their labor allies. It is likely that there will be a bitter debate in the weeks and months that follow.

Regardless of whether they play for out-of-state teams, said Angie Wei, legislative director of the California Labor Federation, “these players are workers and they deserve to have access to their benefits. They work for short durations of time at an intense level and get injured.”