Menu Close

S.B. 863 Legislative Push Back Begins

WorkCompAcademy

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.

View More

DWC Audit Unit Admonishes Claim Administrators About Lien Negotiations

WorkCompAcademy

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.”

View More

Owners of DME Supply Company Plead Guilty in Fraud Case

WorkCompAcademy

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.

View More

New Bill in California Assembly Seeks to Limit Professional Athlete Claims

WorkCompAcademy

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.”

View More

DWC Updates Time of Hire Pamphlet

WorkCompAcademy

The Division of Workers’ Compensation (DWC) has posted an updated time of hire pamphlet on its website. The updates reflect changes made to California’s workers’ compensation system by Senate Bill 863, which took effect Jan. 1, 2013.

The pamphlet is posted in English and Spanish versions, and meets the requirements under Labor Code section 3551 to notify new employees about California workers’ compensation rights and benefits either at the time of hire or by the end of the first pay period.

The pamphlet was initially developed in 2011 in response to requests from claims administrators and provides employees with information about what to do if they are injured on the job and ways to resolve disputes over workers’ compensation benefits. In addition, it discusses the role of the primary treating physician and medical provider networks (MPNs). Predesignation forms are included as part of the document.

Changes to the pamphlet prompted by SB 863 include material on permanent disability, temporary disability and supplemental job displacement benefits. This model time of hire pamphlet is offered in “text only” format in English and Spanish, which gives claims administrators the option to more fully customize the presentation. The text of the pamphlet meets the “time of hire” legal requirements.

From the DWC home page, employers, workers and claims administrators can easily find information related to their specific needs.

View More

California Legislature May Act to Limit NFL Injury Claims

WorkCompAcademy

Over the last three decades, California’s workers’ compensation system has awarded millions of dollars in benefits for job-related injuries to thousands of professional athletes. The vast majority worked for out-of-state teams; some played as little as one game in the Golden State. All states allow professional athletes to claim workers’ compensation payments for specific job-related injuries – such as a busted knee, torn tendon or ruptured spinal disc – that happened within their borders. But California is one of the few that provides additional payments for the cumulative effect of injuries that occur over years of playing.

A growing roster of athletes are using this provision in California law to claim benefits. Since the early 1980s, an estimated $747 million has been paid out to about 4,500 players, according to an August study commissioned by major professional sports leagues. California taxpayers are not on the hook for these payments. Workers’ compensation is an employer-funded program.

But, the Los Angeles Times article says that a major battle is brewing in Sacramento to make out-of-state players ineligible for these benefits, which are paid by the leagues and their insurers. They have hired consultants and lobbyists and expect to unveil legislation next week that would halt the practice. “The system is completely out of whack right now,” said Jeff Gewirtz, vice president of the Brooklyn Nets – formerly the New Jersey Nets – of the National Basketball Assn.

Major retired stars who scored six-figure California workers’ compensation benefits include Moses Malone, a three-time NBA most valuable player with the Houston Rockets, Philadelphia 76ers and other teams. He was awarded $155,000. Pro Football Hall of Fame wide receiver Michael Irvin, formerly with the Dallas Cowboys, received $249,000. The benefits usually are calculated as lump-sum payments but sometimes are accompanied by open-ended agreements to provide lifetime medical services.

Players, their lawyers and their unions plan to mount a political offensive to protect these payouts.

Although the monster salaries of players such as Los Angeles Lakers guard Kobe Bryant and Denver Broncos quarterback Peyton Manning make headlines, few players bring in that kind of money. Most have very short careers. And some, particularly football players, end up with costly, debilitating injuries that haunt them for a lifetime but aren’t sufficiently covered by league disability benefits. Retired pros increasingly are turning to California, not only because of its cumulative benefits but also because there’s a longer window to file a claim. The statute of limitations in some states expires in as little as a year or two. “California is a last resort for a lot of these guys because they’ve already been cut off in the other states,” said Mel Owens, a former Los Angeles Rams linebacker-turned-workers’ compensation lawyer who has represented a number of ex-players.

To understand how it works, consider the career of Ernie Conwell. A former tight end for the St. Louis Rams and New Orleans Saints, he was paid $1.6 million for his last season in 2006. Conwell said that during his 11-year career, he underwent about 18 surgeries, including 11 knee operations. Now 40, he works for the NFL players union and lives in Nashville. Hobbled by injuries, he filed for workers’ compensation in Louisiana and got $181,000 in benefits to cover his last, career-ending knee surgery in 2006, according to the Saints. The team said it also provided $195,000 in injury-related benefits as part of a collective-bargaining agreement with the players union.

But such workers’ compensation benefits paid by Louisiana cover only specific injuries. So, to deal with what he expects to be the costs of ongoing health problems that he said affect his arms, legs, muscles, bones and head, Conwell filed for compensation in California and won.

View More

DWC Schedules Public Hearing on IBR Regulations

WorkCompAcademy

The Division of Workers’ Compensation (DWC) has issued a notice of public hearing for the Independent Bill Review (IBR) regulations. A public hearing on the proposed regulations has been scheduled at 10 a.m., April 9, in the auditorium of the Elihu Harris Building, 1515 Clay Street, Oakland, CA, 94612. Members of the public may also submit written comment on the regulations until 5 p.m. that day.

The proposed rulemaking is to permanently adopt the IBR emergency regulations which became effective on Jan. 1, 2013. The IBR regulations implement Senate Bill (SB) 863’s mandate to establish an efficient procedure to resolve medical treatment and medical-legal billing disputes in the workers’ compensation system. Prior to this year, such disputes could only be resolved through litigation after the filing of a lien with the Workers’ Compensation Appeals Board. Under the proposed regulations, for dates of service on or after Jan. 1, 2013, a medical provider who disputes the amount of payment made on a bill must first submit a timely request to the claims administrator for a second review.

If the provider disagrees with the outcome of the second review, they may request further review by an independent, conflict-free medical payment and billing expert applying fee schedules adopted by DWC. The regulations detail the IBR process, and include the timeframes and manner for a medical provider to seek a second review and IBR, the forms that must be completed, the billing documents that must be filed, and the IBR fee. Additionally, the regulations update and clarify the standard for the electronic submission of medical treatment bills, and amend the Medical-Legal Fee Schedule to conform to statutory changes made by SB 863.

DWC will consider all public comments, and may modify the proposed regulations for consideration during an additional 15-day public comment period. The notice of rulemaking, text of the regulations, and the initial statement of reasons can be found at on the DWC rulemaking page.

View More

Owner of Janitorial Company Sentenced to One Year for Fraud

WorkCompAcademy

The owner of a San Mateo pest and janitorial services company who prosecutors say under-reported more than $10 million of payroll to avoid paying more than $2 million in workers’ compensation insurance was sentenced to a year in jail and ordered to repay the money.

The SM Daily Journal reports that Teresa Reif, 34, faced up to 17 years in prison after pleading no contest in April to eight various counts of fraud without any sentencing promises. On Tuesday, Judge Craig Parson instead handed down the year jail followed by five years supervised probation. She must also repay $1,651,148 to the State Compensation Insurance Fund and $451,310 to Berkshire Hathaway.

Defense attorney Chuck Smith said he was “disappointed” in the sentence, calling the case a “sad, unfortunate situation” in which his client didn’t profit a nickel but insurance companies will now receive an extra $2 million. Prison was never a realistic concern, he said, but five years incarceration rather than the financial penalty would affect the life of her husband and three children much less significantly. “She was given financial penalties akin to an inside trader,” Smith said. “This is unfair and far beyond the conduct that she committed.”

Smith had requested house arrest for Reif and said the Probation Department recommended the same.

The prosecution was pleased with the outcome, said District Attorney Steve Wagstaffe.

Reif has operated the business with her brother since 2003 as the fourth-generation offshoot of the family business, according to the company’s website. The site also notes it has ‘grown by providing superior service, at a reasonable price, with honesty and reliability for over 80 years.’

Between 2004 and 2009, Reif purchased workers compensation insurance through Redwood Fire and Casualty Insurance Company and the State Compensation Insurance Fund for her business, Genesis Building Services. In 2008, the insurance company said it received conflicting data from Genesis staff about the number of employees and began suspecting it was under-reporting its payroll by approximately $544,440. Further investigation by the California Department of Insurance placed the under-reported amount at $10,657,776.69 which resulted in Reif avoiding paying $2,957,089.20 in insurance premiums.

The CDI claims Reif misrepresented both the number of employees and its payroll when applying for insurance, while insured and during annual audits conducted by the carriers. Genesis allegedly employed more than 140 employees but Reif reported less than half the staff and gave auditors fraudulent paperwork to support the false monthly reports. During a search of the business, investigators actually found the fraudulent books, according to prosecutors.

View More

Study Finds Minimally Invasive Surgery Effective for Thoracic Outlet Syndrome

WorkCompAcademy

Two new studies from Washington University School of Medicine in St. Louis suggest ways to improve surgical treatment for a debilitating condition caused by compressed nerves in the neck and shoulder. The condition, neurogenic thoracic outlet syndrome, causes pain, numbness or tingling in the shoulder, arm or hand and is perhaps best known for affecting baseball pitchers and other elite athletes. Patients often describe pain and tension in the neck and upper back, numbness and tingling in the fingers, headaches and perceived muscle weakness in the affected limb.

Treatment begins with physical therapy and sometimes medications such as anti-inflammatory drugs and muscle relaxants. When these treatments fail to improve symptoms and there is substantial disability in the use of the affected upper extremity, surgery can help relieve pressure on the nerves, often by removing the first rib and other structures thought to be causing the compression.

According to the summary in Science Daily, one of the studies showed that certain patients may do just as well with a minimally invasive procedure done on an outpatient basis as those who require the traditional surgery. The traditional procedure has an average five-day hospital stay. This study looked at 200 patients treated for neurogenic thoracic outlet syndrome from 2008 through 2011. To determine the best surgical approach for each patient, the doctor examined two locations of potential nerve compression — the side of the neck above the collarbone and the upper chest just below the collarbone, near the shoulder.

If patients experienced pain and tenderness in both places, they were offered the traditional procedure that includes removing the first rib and scalene muscles in the neck and detaching the tendon of the pectoralis minor muscle, which connects to the top and front of the shoulder blade. Of the 200 patients, 143 underwent this procedure.

When symptoms occurred exclusively under the collarbone, patients only received detachment of the pectoralis minor tendon as a minimally invasive procedure. The remaining 57 participants in the study underwent this outpatient procedure.

To determine outcomes, the researchers compared various measures of the patients’ arm and shoulder function before surgery and again three months after surgery. Both sets of patients improved significantly after surgery, and the extent of their improvement was not statistically different. At the three-month mark, about 75 percent of patients in both groups demonstrated improved function in the affected areas.

“The ideal candidate for the minimally invasive procedure would be a patient with characteristic and debilitating symptoms, no response to physical therapy and clinical exam findings that were completely localized to the pectoralis minor tendon,” Thompson says. “That’s the really exciting subset of patients. You might be able to have a big impact with a minor outpatient procedure. The trick is to properly identify these patients. We still have to rely primarily on the experience of the physician and old-fashioned diagnosis by physical exam — knowing the anatomy, knowing what we’re feeling and what elicits symptoms.”

View More

Carriers Challenge Surgery Center Inflated Bills

WorkCompAcademy

An $87,500 bill for a 20-minute knee procedure is just an extreme example of high amounts that insurers are billed by out-of-network surgery centers, experts say. Insurers are starting to fight back.

A Southern California surgery center charged a Long Beach Unified School District teacher $87,500 for a routine, 20-minute knee operation that normally costs about $3,000. According to the report in the Los Angeles Times, despite the huge markup, the Long Beach Unified School District and its insurer, Blue Shield of California, paid virtually all of the bill from Advanced Surgical Partners in Costa Mesa. Blue Shield mailed the $84,800 check to the high school Spanish teacher last month and told her to sign it over to the surgery center.

This case points to a growing battle nationwide over billing by outpatient surgery centers. Industry experts say some of these surgery centers seek out well-insured patients, sometimes by waiving their copays and deductibles, and then bill their insurers exorbitant amounts for out-of-network care. All too often, critics say, insurers pay these large sums and then cite high medical bills for why insurance premiums keep rising for businesses and consumers.

In response to questions from The Times, Blue Shield defended its $84,800 payment as proper. Advanced Surgical Partners, through its lawyer, said the bill was excessive. Amid the scrutiny, the two sides agreed to a lower amount this week. Henry Fenton, an attorney for the surgery center, said this bill “was excessive and not correct. I’m sure they will be more careful in the future.” Blue Shield said its typical rate for this arthroscopic knee procedure in Southern California is about $3,000 among in-network providers.

“This surgery center is charging 30 times the average by remaining out of network to advance this outrageous and anti-consumer practice,” said Blue Shield spokesman Steve Shivinsky. “This is a national problem.” Yet the company said it was obligated to pay nearly all of Advanced Surgical’s bill because it is bound by the health plan rules set by the teacher’s employer, the Long Beach school district. The school system is self-insured, meaning it pays its own medical bills and uses Blue Shield to administer its benefits and process claims.

In other situations involving out-of-network care, it’s common for insurers to pay only about 60% of what’s deemed to be “usual and customary” charges or some percentage of Medicare rates. Insurers and out-of-network medical providers routinely spar over what constitutes a reasonable amount. Kominski, a UCLA professor, said he faulted both Blue Shield and the school district for “dropping the ball on this. There were lots of opportunities for red flags to go off on such an outlandish bill.”

Nationwide, some insurers have begun to challenge these bills from outpatient centers. Last year, a unit of insurance giant Aetna Inc. sued several surgery centers in Northern California and accused them of overbilling the insurer more than $20 million. It has pursued similar actions against providers in New Jersey and Texas. Other insurers such as UnitedHealth Group Inc. have filed similar suits in California.

In one instance, Aetna said, a California surgery center charged $73,536 for a kidney stone procedure when the average in-network charge was $7,612. Aetna said it paid some of these bills before disputing them in court.

Doctors and surgery centers say the criticism is unjustified. Surgery centers say they have helped reduce healthcare costs by offering convenient care at a fraction of what hospitals charge for colonoscopies, cataract surgeries and other outpatient procedures. These facilities now handle up to 40% of all outpatient surgeries, according to the Ambulatory Surgery Center Assn.

View More