A federal qui tam whistle-blower lawsuit filed in 2008 by former University of California-Irvine (UCI) Professor and Anesthesiologist Dr. Dennis O’Connor triggered a multi-year investigation by the United States Department of Justice, resulting in an agreement by the California Board of Regents to pay the United States $1.2 Million.

The False Claims Act lawsuit alleged that anesthesia was routinely administered at UCI by Certified Registered Nurse Anesthetists (CRNAs) or residents when there was no supervisory anesthesiologist present or immediately available, in violation of federal regulations. The complaint alleged that, in many instances, the supervisory anesthesiologist would be in a completely different building at the time, and that anesthesia records would be “pre-filled” to make it appear that the anesthesiologist was present. The complaint also alleged that required post-operative evaluations would routinely be performed by unsupervised and/or unlicensed residents, in violation of federal regulations, increasing the likelihood that post-operative complications would be missed.

In the Settlement Agreement with UCI, the United States contended that “it has certain civil claims against the Regents arising out of … the submission of claims by or on behalf of the Regents for payment by the Medicare program and the federal portion of the Medicaid program for anesthesia services performed at UCI in a manner inconsistent with federal healthcare program documentation requirements for those services, or inconsistent with federal healthcare program payment requirements for supervision of residents or CRNAs.” The Regents agreed to pay $1.2 Million to the United States to resolve such claims. UC Regents denied the allegations.

According to the story in the Los Angeles Times, the UCI Medical Center had come under fire in the past for similar accusations. The medical center was placed under state supervision in 2008 because of the anesthesiology department’s “inability to provide quality healthcare in a safe environment,” according to a federal report. Among the most serious failings federal inspectors cited was filling out reports in advance of care.

In 2008, the California Medical Board accused the former head of the anesthesiology department, Peter Breen, of gross negligence and incompetence. Two years later, the medical board gave him a public reprimand for writing that a patient was “stable” and “comfortable” during each phase of the procedure before anesthesia had been administered. Breen was ordered to take ethics and medical record-keeping courses. He also was reprimanded by the Illinois Department of Professional Regulation. Breen, who remains at UCI, did not return phone calls or an email Wednesday.

The UCI statement said “new leadership took over and transformed” the anesthesiology department in 2008, putting in place new training and policies, including “an electronic record keeping system that does not permit the practices alleged.”

O’Connor, who now works at the Veterans Administration Hospital in Long Beach, remains wary of UCI Medical Center. “I won’t go there, and I wouldn’t take my family there,” he said.

The medical center has suffered a number of scandals in the last 18 years. In 1995, fertility doctors were accused of stealing patients’ eggs and embryos and implanting them in other women without permission. In 2005, the hospital shut its liver transplant program after federal funding was withdrawn. The action came after The Times reported that 32 people died awaiting livers, even as doctors turned down organs that later were transplanted elsewhere.

A federal government watchdog has issued a warning about the risk for fraud when doctors buy an ownership interest in a medical device distributor and then share in its profits from sales to hospitals.

In its March 20 report, the Department of Health and Human Services, Office of Inspector General issued a “Special Fraud Alert” that addresses physician-owned entities that derive revenue from selling, or arranging for the sale of, implantable medical devices ordered by their physician-owners for use in procedures the physician-owners perform on their own patients at hospitals or ambulatory surgical centers (ASCs).

These entities frequently are referred to as physician-owned distributorships, or “PODs.” A “POD” is any physician-owned entity that derives revenue from selling, or arranging for the sale of, implantable medical devices and includes physician-owned entities that purport to design or manufacture, typically under contractual arrangements, their own medical devices or instrumentation. Although this Special Fraud Alert focuses on PODs that derive revenue from selling, or arranging for the sale of, implantable medical devices, the same principles would apply when evaluating arrangements involving other types of physician-owned entities.

PODs are most commonly used in orthopedics.

Longstanding OIG guidance makes clear that the opportunity for a referring physician to earn a profit, including through an investment in an entity for which he or she generates business, could constitute illegal remuneration under the anti-kickback statute. The anti-kickback statute is violated if even one purpose of the remuneration is to induce such referrals.

OIG has repeatedly expressed concerns about arrangements that exhibit questionable features with regard to the selection and retention of investors, the solicitation of capital contributions, and the distribution of profits. Such questionable features may include, but are not limited to: (1) selecting investors because they are in a position to generate substantial business for the entity, (2) requiring investors who cease practicing in the service area to divest their ownership interests, and (3) distributing extraordinary returns on investment compared to the level of risk involved. PODs that exhibit any of these or other questionable features potentially raise four major concerns typically associated with kickbacks – corruption of medical judgment, overutilization, increased costs to the Federal health care programs and beneficiaries, and unfair competition. The OIG does not believe that disclosure to a patient of the physician’s financial interest in a POD is sufficient to address these concerns.

OIG is concerned about the proliferation of PODs. This Special Fraud Alert reiterates our longstanding position that the opportunity for a referring physician to earn a profit, including through an investment in an entity for which he or she generates business, could constitute illegal remuneration under the anti-kickback statute. OIG views PODs as inherently suspect under the anti-kickback statute.

Three lawsuits from former National Football League players who are seeking California workers compensation benefits have been consolidated in U.S. District Court in San Francisco after a request from the NFL and several teams.

According to the story on the Business Insurance website, the cases involve 67 former NFL players who want to vacate a December 2012 arbitration award that requires them to withdraw workers comp claims in California, according to court records. The players played for the Buffalo Bills, Denver Broncos, New York Giants and Philadelphia Eagles.

California law allows NFL players to make a claim in California if they have played at least one game in the state. The plaintiffs argue that the arbitration award violates California and federal law and public policy by waiving their ability to seek workers comp in California, records show.

U.S. District Court Judge William H. Alsup ordered the three cases to be consolidated on March 13. The NFL Management Council and the four NFL teams filed a countersuit on March 8 asking the court to require the players to file any workers comp claims in the state specified by their respective player contracts.

The California comp lawsuits are part of several claims being made against the NFL by former players seeking compensation for injuries suffered on the field. At least 2,400 former players have sued the league over neurological and cognitive problems that they allege were caused by football-related head injuries. Most of the concussion-related cases have been consolidated into multidistrict litigation in the U.S. District Court in Philadelphia. The NFL is expected to use an exclusive remedy defense in those lawsuits.

A former Oxnard police officer pleaded guilty Monday to two counts of workers’ compensation fraud and was ordered to pay $70,000 in restitution to the state. According to the report in the Ventura County Star, 28 year old Edward Idukas handed over a check during the court proceedings to cover the full amount, prosecutor Ernesto Acosta said.

Ventura County Superior Court Judge Kevin McGee set sentencing for June 13. Idukas faces up to four years behind bars but will not likely get a harsh sentence, Acosta said. “Other than committing workers’ compensation fraud, he doesn’t have anything else on his record,” Acosta said. “The guy is a former cop.”

Outside the courtroom, Idukas’ lawyer, David S. Kestenbaum, said his client was remorseful. “He’s lost his whole career and had to move his family out of state and picked up a new career. This is all he wanted to be: a police officer,” Kestenbaum said. “I hope in the interest of justice the judge reduces it to a misdemeanor and doesn’t impose jail. He’s suffered a lot as a result of his mistake. But before that he had done a lot of good for the community and received a lot of commendations … from the Oxnard PD.”

Idukas was placed on temporary total disabled status after he told a supervisor on Dec. 29, 2009, that he hurt his back while bending over at his locker and had pain and limited mobility, according to court records. He received disability pay for several months.

Investigators discovered Idukas was playing baseball weekly in a local adult league while receiving disability benefits from the city of Oxnard, according to court records. While these activities were taking place, Idukas told doctors and physical therapists that he was too disabled to return to his duties as a police officer, prosecutors said.

Kestenbaum said he thinks Idukas, who was arrested in June 2011, is innocent. But he was offered a good plea bargain, so he took it, Kestenbaum said. “He was not hiding what he was doing and felt he had received bad advice – that he could resume playing baseball to strengthen his back,” Kestenbaum said. “From our standpoint, there is a big difference in playing baseball, where you can say timeout if your back hurts, than being in a squad car in El Rio and there is no timeout in the field. Psychologically, he didn’t feel he could be a police officer (with a back injury). That was one of the problems.”

Claims administrators are reminded that the 2013 annual report of inventory (ARI) for claims reported in calendar year 2012 is due to be submitted to the Division of Workers’ Compensation (DWC) Audit Unit no later than April 1, 2013.

The California Code of Regulations,title 8, section 10104 requires claims administrators to file an annual report of inventory (ARI) with the number of claims reported at each adjusting location for the preceding calendar year. Even if there were no claims reported in 2013, the report must be completed and submitted to the DWC Audit Unit. Each adjusting location is required to submit an ARI, whether or not they receive a form for reporting claims from the Audit Unit, unless their ARI requirement has been waived by the AD.

In 2011, the Audit Unit began requesting the federal employer identification number (FEIN) for each adjusting location and for all underwriting companies and/or clients for which claims are administered at the given location. A claims administrator’s obligation to submit an ARI can be waived if the AD determines that they are in compliance with electronic data reporting requirements of the Workers’ Compensation Information System (WCIS). FEIN information will be used by the DWC Research Unit to match claims information submitted electronically to the WCIS with that reported to the Audit Unit on the ARI. This will allow the AD to waive ARI requirements for claims administrators, as appropriate.

When ARI requirements are waived, claims administrators must file an annual report of adjusting locations. This report is to be filed annually on April 1 of each calendar year for the adjusting location operations as of Dec. 31 of the prior year. DWC has provided a form which can be used for this purpose.

Claims administrators are also required to report any change in the information reported in the ARI or annual report of adjusting location within 45 days of the effective date of the change.

The forms for the required 2013 ARI and annual report of adjusting locations, along with advice for claims administrators, are posted on the website.

Questions about submission of the ARI or the annual report of adjusting locations may be directed to the DWC Audit Unit by email, phone or U.S. mail: to the State of California Department of Industrial Relations, Division of Workers’ Compensation – Audit Unit, 160 Promenade Circle, Suite #340, Sacramento, CA 95834-2962. E-mail: DWCAuditUnit@dir.ca.gov., Facsimile: 916.928.3183. Telephone inquiry: 916.928.3180.