Floyd, Skeren and Kelly LLP is pleased to announce the formation of its disabled veterans litigation unit. The attorneys in this group represent veterans who have claims for benefits pending before the Veteran’s Administration.

Veterans qualify for disability benefits if they suffer from a current diagnosis that has a “nexus” with military service. The scheme of benefits is very similar to workers’ compensation for civilian workers. The veteran need only show active military service, a discharge at greater than dishonorable service and a “nexus” between the current disability and military service to receive benefits. The nexus can be established by direct injury, an aggravation of a disease by military service, or by a presumption of causation imposed by federal law or in other ways. A nexus issue in veteran cases has the same implication as an AOE-COE issue in workers’ compensation claims.

Vietnam veterans, for example, who have had “boots on the ground” in Vietnam, even for one day, qualify for the Agent Orange presumption. Agent Orange is one of the herbicides and defoliants used by the military as part of its herbicidal warfare program. Between 1962 and 1971, the military sprayed nearly 20 million gallons of Agent Orange over Vietnam. The product contained an extremely toxic dioxin compound. Dioxins and furans are some of the most toxic chemicals known to science. Vietnam veterans who develop a number of diseases years after service such as ischemic heart disease, diabetes mellitus type II, a number of cancers including prostate cancer (and other listed diseases) are presumed to have a nexus between military service and those medical conditions;

Once a nexus has been established, a veteran may obtain medical care in any VA facility nationwide. This may include free care for health problems in addition to those that are service connected. The veteran may also receive a monthly tax free disability payment. The disability is rated using a rating schedule similar to the workers’ compensation scheme. The rating can increase over time if the condition worsens. There is no time limit to request an increase of a disability award. The system provides death and survivor benefits, payment for at home attendant care, educational and rehabilitation benefits and more.

Another veteran program provides a pension to war era veterans who are totally disabled for any reason even if there is no service connection. This program is “means tested” meaning that current income is measured and used to offset this benefit. If a war era veteran is 65 years of age or older, they are presumed to be totally disabled and entitled to this pension. The means testing allows the veteran to reduce any income by current medical expenses. Thus, even veterans who have a source of income may qualify for a pension if their income is currently used for medical care.

If a veteran’s claim for disability compensation or pension is turned down by the VA Regional Office (RO), they may seek the services of an “accredited” advocate to appeal an unfavorable decision. Lay and attorney advocates must be accredited by the Office of the General Council of the Veterans Administration to assure a minimal level of competency before they can serve a veteran. The appeal begins at the Regional Office where the claim was filed. The Veteran can ask for a de-novo review of the file by a Decision Review Officer (DRO). If unsuccessful, the claim can then be appealed to the Board of Veteran’s Appeals (BVA). The BVA decision can be appealed to the Court of Appeals of Veteran Claims (CAVC) and ultimately to the U.S. Supreme Court.  These cases are quite similar to workers’ compensation litigation in that they heavily involve forensic medical issues.  Practitioners need considerable experience with medical terminology and medicine in general.  Generally advocates can be paid a contingent fee of 20% of accrued and unpaid benefits as of the time of the successful appeal.  Thereafter the veteran retains 100% of the balance of the award.

Three of our attorneys, Rene Thomas Folse, Chris Lear and Tim Morgan have been accredited by the VA Office of General Council to represent veterans.  Rene is a Vietnam veteran, and Chris is also a veteran who has had several deployments in the Persian Gulf. Both served in the U.S. Army. Tim has a background in the civil litigation of medical malpractice claims and will assist with the complex forensic medical issues.

Any veteran who would like a no-cost consultation about his or her right to benefits may call Rene, 818 651-7028.  He is the litigation group lead counsel, and does initial client contact and intake. Since this is a federal program, we can represent veterans nationwide.  In those cases we will conduct our interviews by teleconference.

In Title V of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), Congress established the Federal Insurance Office (FIO) within the U.S. Department of the Treasury. One of the tasks of the FIO is to monitor all aspects of the insurance industry, including identifying issues or gaps in the regulation of insurers that could contribute to a systemic crisis in the insurance industry or the U.S. financial system. The Dodd-Frank Act also requires that the FIO Director report to the President and to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate each year “on the insurance industry and any other information as deemed relevant by the Director or requested by such Committees.” FIO has prepared its 2013 Annual Report on the Insurance Industry with a view to its role as monitor of the insurance industry.

This Report says that the financial performance and condition of U.S. insurers continued to show recovery and improvement from the decline during the financial crisis. In 2012, the U.S. insurance industry reported record aggregate premium levels. The two principal sectors in the U.S. insurance industry are life and health (L/H) and property and casualty (P/C). The U.S. insurance industry currently has more than 1,000 L/H insurers and more than 2,700 P/C insurers. At year-end 2012 reported surplus levels were at record highs for both sectors. Both reported improved profitability in 2012. Market values of insurers have also been recovering since the financial crisis, when large investment losses led to sharp declines in the book values for many insurers..

L/H insurer insolvency levels are at the lowest point in forty years. P/C insurer insolvency levels are at relative lows compared to the last few decades. Insurer insolvencies occurred with some regularity during the late 1980s and early 1990s, and peaked in 1991 at 142. These insolvencies prompted Congressional inquiries and efforts by state regulators to develop a program whereby states were required, through an accreditation process, to adopt solvency laws and regulations that meet certain minimum standards. The laws and regulations of an accredited state must contain provisions substantially similar to, or no less effective than, the significant elements of the NAIC model solvency oversight laws and regulations that state regulators have identified as key. The accreditation standards include compliance with standardized practices, including those pertaining to off-site financial analyses,on-site financial examinations, cross-jurisdictional regulatory information sharing, and assessment and intervention authority with respect to troubled insurers. The accreditation process is a peer review exercise, and all 50 states and the District of Columbia are currently accredited by the NAIC. As a result, the responsibility for taking regulatory actions rests with the insurance regulator of the state in which the legal entity is domiciled. The frequency of L/H insurer insolvencies has decreased since the early 1990s and has remained at relatively low levels for the period during and since the financial crisis. The number of reported financially impaired L/H insurers in recent years is at the lowest since the 1970s.

Despite the seemingly good financial news, the report concludes that insurance regulation in the U.S. is best achieved through a hybrid model in which state and federal authorities can work together, their roles defined by which strength each party brings to the process of improving solvency and market-conduct regulation.  According to an article in the Insurance Journal, industry reaction thus far has been measured, if not mostly predictable: David Sampson, president and CEO of the Property Casualty Insurers Association of America, notes that the report “starts by listing a number of attacks on state regulation that PCI believes does not adequately reflect the strengths and historical success of the current state-based system.” Similarly, the National Association of Professional Insurance Agents (PIA) says the report fails to properly highlight conclusions of a June 27 Government Accountability Office report stating that the state-based system worked effectively to help mitigate the negative impacts the 2008 financial crisis had on the insurance industry. Interestingly, one group that didn’t question the report’s assessment of the state-based system was the National Association of Insurance Commissioners, which is comprised of state-based regulators. NAIC President and Louisiana Insurance Commissioner Jim Donelon says in a statement that the 71-page report “acknowledges the effectiveness of state-based insurance regulation and the improvements states have made.” No chest-beating there.Cheering the strengths of state regulation, however, was never the point of the FIO’s report.

One of the more colorful turns of phrase in describing the FIO’s recommendations was offered by PIA National Executive Vice President and CEO Mike Becker, who said while the group needs to take a closer look at the FIO report, “On first blush, this looks like the camel’s nose under the tent.”

One of the central features of a value-based healthcare insurance system is a financial “stick.” If patients insist on medical procedures that science shows to be ineffective or unnecessary, they’ll have to pay for all or most of the cost.

The article in Reuters Health presents the case of Tanner Martin as an example. When the 17 year old developed excruciating back pain last year, he was sure he needed an X-ray to find out what was wrong. So was his mother, who worried that the pain might indicate a serious injury that could cause permanent disability. In Tanner’s case, when he and his mother went to the San Luis Valley Regional Medical Center in Alamosa, Colorado, they were invited to watch a short video first. The best approach to back pain like Tanner’s, it explained, is stretching, strength-building and physical therapy; X-rays and MRIs, according to rigorous studies, are unlikely to make a difference. If they insisted on the X-ray, they would have to pay $300 on top of the basic cost. They passed on the imaging, knowing they could change their minds if Tanner’s condition worsened. After three weeks of therapy, his back was as good as new.

The additional cost when patients choose procedures that research shows are unlikely to help their condition is a key element of San Luis Valley’s two-year experiment in value-based insurance, the premise of which is that a mix of financial carrots and sticks can steer patients toward medical services that will help them and away from ineffective or unnecessary ones. Starting in 2014, Engaged Public, the Denver research and consulting firm that designed the study, will scrutinize the two years of data to see what effects the novel plan had on healthcare costs and outcomes.

Healthcare policy wonks have been studying value-based insurance for a decade. For some consumer groups, the concept raises concerns over whether it will deter people from treatment when certain procedures are needed. But the idea has gained momentum since the passage of President Barack Obama’s healthcare reform law, which includes provisions to control healthcare spending that now tops $2.7 trillion a year in the United States. About one-third of that is attributed to wasteful or ineffective care. Among the provisions is one that allows state Medicaid programs to adopt value-based designs, as two, in Michigan and South Carolina, have. At least one private insurance plan sold in an “Obamacare” marketplace has done so as well. In addition, Obama’s Affordable Care Act encourages doctors and hospitals to form Accountable Care Organizations (ACOs), which are paid more under the Medicare program for older Americans if they control costs while also providing quality care. Some 4 million Medicare enrollees are now in one of the nation’s nearly 500 ACOs, and private insurance plans are adopting them as well. Medicare now penalizes hospitals if a patient is re-admitted for the same condition within 30 days.

Advocates of value-based insurance say that while focusing on the “supply side” – hospitals and doctors – is a good start, healthcare spending reforms must also involve the “demand” side: patients. For one thing, they say, patients who know they’re on the hook for care that won’t benefit them are less likely to badger their providers. “If someone goes to the doctor and really wants antibiotics for a cold or an MRI for back pain, it can take more time to talk him out of it than to order it,” said Dr. David Downs, medical director of Engaged Public.

The success of value-based insurance’s disincentives is far from assured and has some worried over the extent to which procedures would be considered off-limits. “We have reservations about financial obstacles that might keep patients from getting care they need,” said Joyce Dubow, senior healthcare reform director at AARP, the research and lobbying group formerly known as the American Association of Retired Persons. AARP is a partner in Choosing Wisely, a program in which medical specialty groups identify procedures – more than 200 so far – that do not benefit patients, according to rigorous scientific evidence. The list is a benchmark for discouraged procedures in value-based insurance plans.

The very idea that some diagnostic tests and treatments might not help patients comes as a shock to many Americans. The Choosing Wisely message is difficult to convey to the many patients who “think that when it comes to medical care newer is better and more is better,” said Dr. Yul Ejnes of Brown University’s Alpert Medical School. “So when patients have more skin in the game (in terms of cost), they’re more likely to ask, do I really need this?”

The American Tort Reform Foundation (ATRF) is a District of Columbia nonprofit corporation, founded in 1997. The Foundation says its primary function is to educate the general public about: how the American civil justice system operates; the role of tort law in the civil justice system; and the impact of tort law on the public and private sectors.

The Foundation issued its annual Judicial Hellholes® report this month, naming civil courts in California, Louisiana, New York City, West Virginia, Southwestern Illinois’ Madison and St. Clair counties, and South Florida among the nation’s “most unfair.”   According to the report, California was ranked as number 1 in the nation.   ATRF president Tiger Joyce also said that “this year’s report also identifies 10 marginally less problematic jurisdictions on the ‘Watch List,’ along with some particularly bad court decisions we call ‘Dishonorable Mentions.'” The Report says that California remains ignominiously atop the Judicial Hellholes list for a second consecutive year.

The Report goes on to say that California’s addiction to lawsuits claims average residents as victims, too. The California litigation system effectively imposed a $33.5 billion hidden tax – or $883 per resident – just for the costs of lawsuits settled thus far in 2013, reported Orange County Register columnist Joseph Perkins. “Most California residents are blissfully unaware of the tremendous toll lawsuit abuse has on the state,” he observed.  Perkins pins California’s poor reputation, in part, on former class-action kingpin Bill Lerach, whose seaside La Jolla Farms mansion and revoked bar membership are testimony to both the profitability and unscrupulousness of California’s lawsuit industry. Lerach shows no remorse after pleading guilty for his role in concealing lucrative kickbacks that his former law firm gave to individuals for serving as on-call plaintiffs in its storied securities litigation racket. He told the Wall Street Journal, “I’m proud of the work we did,” even after he was disbarred, sentenced to two years in prison, and ordered to pay an $8 million penalty.

The Report cites current litigation trends in the state. Over the past two years, plaintiffs’ lawyers have filed a surge of consumer class actions targeting what they have labeled as “Big Food.” Some of these claims are brought by veterans of lawsuits against the tobacco industry who are looking for the next deep pocket to sue. About a dozen plaintiffs’ law firms have taken to the courts with gusto, filing about 75 class action lawsuits between them in the past few years. By one count, which includes filings from additional firms, more than 100 consumer class actions were filed against food makers in 2012 alone, five times the number filed four years earlier. Rarely has there been a week in 2013 without a report of another class action filed against a food maker. In some instances, the lawyers bringing the cases do not even bother to find new clients – they recycle the same individuals as lead plaintiffs, over and over again, in lawsuits involving different manufacturers and products. California is the epicenter of this litigation due to its plaintiff-friendly consumer laws, large population, and the U.S. District Court for the Northern District of California’s growing reputation for receptivity to such claims. Some also point to the federal Ninth Circuit Court of Appeals’ willingness both to uphold questionable class certifications and be quite lenient when it comes to requiring consumers to show they actually relied on allegedly misleading conduct when deciding to purchase a given product. The Northern District of California, located in San Francisco, has earned the derisive moniker of “the food court,” since it hosts more food-marketing and food- labeling lawsuits than any other federal court.

For example, plaintiffs’ lawyers filed several cases over the past 15 months against companies like Chobani, Trader Joe’s and WhiteWave, which sells Horizon Organic dairy products and Silk brand products. These lawsuits claim that the companies use the term “evaporated cane juice” instead of “dried sugar cane syrup” or “sugar” to make consumers believe that there is no sugar in their product. As pointed out by WhiteWave, “evaporated cane juice was not controversial until this recent tsunami of lawsuits was filed.” An average consumer should not be surprised that cane means sugar.

Another trend – Lawsuits brought ostensibly to enforce technical standards of the Americans with Disabilities Act (ADA) in California reached an all-time high in 2012, making small business owners feel as though they have targets on their backs. In response to the crisis, Sacramento lawmakers enacted S.B. 1186 in September of 2012. Unfortunately, prior to final passage, the bill was stripped of a key provision requiring an attorney to notify a business owner of a violation at least 30 days prior to filing a claim so as to provide the business an opportunity to address the issue. California Citizens Against Lawsuit Abuse called the compromise measure the “most serious attempt at ADA litigation reform to ever come out of the Legislature,” but added that it “does not go as far as we would have preferred.”  Taxpayers in Torrance, California, are now on the hook for at least $75,000 in legal costs, as the town fights a lawsuit challenging the accessibility of a city-owned parking lot. The lawsuit also targeted a popular Italian restaurant and a family-owned bakery that use the lot, even though the businesses have no control over it. That case was filed by a man responsible for filing hundreds of lawsuits in Los Angeles County alone. The plaintiff, Jon Carpenter, is a Los Angeles resident, but is represented by a San Diego law firm that calls itself the Center for Disability Access.

As noted in previous Judicial Hellholes reports, there has been in recent years a steady migration of asbestos lawyers to California from states that, unlike California, have enacted reasonable civil justice reform laws to give asbestos defendants a fairer shake in court. Many of these transplants hail from reform-minded Texas, for example, and have eagerly opened offices in California, particularly in Los Angeles, where more plaintiff-friendly tort law, court procedures and juries give them a sizeable advantage over asbestos defendants.

The British drug maker GlaxoSmithKline will no longer pay doctors to promote its products and will stop tying compensation of sales representatives to the number of prescriptions doctors write, its chief executive said Monday, effectively ending two common industry practices that critics have long assailed as troublesome conflicts of interest. According to the story in the New York Times, the announcement appears to be a first for a major drug company – although others may be considering similar moves – and it comes at a particularly sensitive time for Glaxo. It is the subject of a bribery investigation in China, where authorities contend the company funneled illegal payments to doctors and government officials in an effort to lift drug sales. Glaxo is among the largest drug companies in the world, reporting global third-quarter sales of 6.51 billion pounds, or $10.1 billion, a 1 percent rise from the same period a year ago. Sales fell markedly in China as the investigation proceeded.

Andrew Witty, Glaxo’s chief executive, said in a telephone interview Monday that its proposed changes were unrelated to the investigation in China, and were part of a yearslong effort “to try and make sure we stay in step with how the world is changing,” he said. “We keep asking ourselves, are there different ways, more effective ways of operating than perhaps the ways we as an industry have been operating over the last 30, 40 years?”

For decades, pharmaceutical companies have paid doctors to speak on their behalf at conferences and other meetings of medical professionals, on the assumption that the doctors are most likely to value the advice of trusted peers. But the practice has also been criticized by those who question whether it unduly influences the information doctors give each other and can lead them to prescribe drugs inappropriately to patients. All such payments by pharmaceutical companies are to be made public next year under requirements of the Obama administration’s health care law.

Under the plan, which Glaxo said would be completed worldwide by 2016, the company will no longer pay health care professionals to speak on its behalf about its products or the diseases they treat “to audiences who can prescribe or influence prescribing,” it said in a statement. It will also stop providing financial support directly to doctors to attend medical conferences, a practice that is prohibited in the United States through an industry-imposed ethics code but that still occurs in other countries. In China, the authorities have said Glaxo compensated doctors for travel to conferences and lectures that never took place. Mr. Witty declined to comment on the investigation because he said it was still underway.

Glaxo will continue to pay doctors consulting fees for market research because Mr. Witty said it was necessary for the company to gain insight from doctors about their products, but he said that activity would be limited in scope. A Glaxo spokesman said that each year the company spends “tens of millions” of dollars globally on the practices that it was ending, but declined to be more specific.

The move won qualified praise from Dr. Jerry Avorn, a professor at Harvard Medical School who has written critically about the industry’s marketing practices. “It’s a modest acknowledgment of the fact that learning from a doctor who is paid by a drug company to give a talk about its products isn’t the best way for doctors to learn about those products,” Dr. Avorn said. But he noted that Glaxo would continue to provide what the company described in a statement as “unsolicited, independent educational grants” to continue educating doctors about their products. He said that in the past the grants had often been provided to for-profit companies that rely on such payments from drug companies, raising questions about whether they were providing truly independent information. Mr. Witty said while the details were still being worked out, the company intended to provide such grants to respected educational institutions and medical societies. “I’d like to look for those sorts of partners, and I do not envision these partners being companies or pseudocompanies,” he said.

Glaxo is first among its peers to announce a plan to end paid-speaker programs, but it is not the only one considering such a move, said Pratap Khedkar, who oversees the pharmaceutical practice at ZS Associates, a global sales and marketing firm. He said a handful of drug makers were weighing similar actions for several reasons, including concerns about the reaction to the required disclosure of such payments that will begin next fall under a provision of the health care law. Glaxo and several other major companies already report many such payments, but Mr. Khedkar said the new requirements may go farther than what some companies are reporting, and will be accessible on a searchable government website. Previously, “It wasn’t really made public in some big, splashy way,” he said.

Jeff Francer, vice president and senior counsel at the Pharmaceutical Research and Manufacturers of America, the industry trade group, said many other companies were looking for ways to better reach increasingly busy doctors – who may not have time to travel to a conference in the first place – and Glaxo’s actions represent just one example. “Of course all of our companies are looking for ways in which they can refine their relationship with physicians to make sure they’re making the best use of physicians’ time,” he said.