Alta Vista Healthcare & Wellness Centre, LLC, a skilled nursing facility in Riverside, California, and its management company, Rockport Healthcare Services, a privately held California corporation that provides management services to skilled nursing facilities, have entered into a settlement agreement to pay the United States and California a total of $3.825 million to resolve allegations that they submitted and caused the submission of false claims to Medicare and Medicaid by paying kickbacks to physicians to induce patient referrals.

The settlement amount was negotiated based on Alta Vista’s and Rockport’s lack of ability to pay.

The Anti-Kickback Statute prohibits offering or paying remuneration to induce the referral of items or services covered by Medicare, Medicaid, and other federally funded programs. It is intended to ensure that medical decision-making is not compromised by improper financial incentives and is instead based on the best interests of the patient.

From 2009 through 2019, Alta Vista, under the direction and control of Rockport, gave certain physicians extravagant gifts, including expensive dinners for the physicians and their spouses, golf trips, limousine rides, massages, e-reader tablets, and gift cards worth up to $1,000.

Separately, Alta Vista paid these physicians monthly stipends of $2,500 to $4,000, purportedly for their services as medical directors. At least one purpose of these gifts and payments was to induce these physicians to refer patients to Alta Vista.

The defendants’ conduct allegedly resulted in false claims to Medicare and California’s Medicaid programs, the latter of which is jointly funded by the federal government and California. Under the settlement, they will pay $3,228,300 to the United States and $596,700 to California.

The settlement stems from a whistleblower complaint filed in 2015 by a former Alta Vista accounting employee, Neyirys Orozco, pursuant to the qui tam provisions of the False Claims Act, which permit private persons to bring a lawsuit on behalf of the government and to share in the proceeds of the suit. Orozco will receive $581,094 as her share of the federal government’s recovery in this case.

In addition to resolving their False Claims Act liability, Alta Vista and Rockport have entered into a five-year Corporate Integrity Agreement with the HHS-OIG which requires, among other compliance obligations, an Independent Review Organization’s review of Alta Vista’s and Rockport’s physician relationships.

This matter was handled by the Civil Division’s Commercial Litigation Branch, Fraud Section, the U.S. Attorney’s Office for the Central District of California, and the California Department of Justice, with investigative support from the HHS-OIG.

The case is captioned United States of America ex rel. Neyiris Orozco v. Shlomo Rechnitz et al., No. 15-cv-6177 (C.D. Cal.).

California workers’ comp private self-insured claim frequency rose 6% last year as both medical-only and indemnity claim volume increased, but a California Workers’ Compensation Institute (CWCI) review of initial data from the state Office of Self-Insurance Plans (OSIP) suggests that many of the claims may have been low-cost COVID-19 cases, as private self-insureds’ average paid and incurred losses both declined, so their total paid losses at first report fell 1.2% to $311 million, while their incurred losses fell 3.3% to just under $812 million.

OSIP’s summary of private self-insured data, issued June 6, offers a first glimpse at California private, self-insured claims experience for cases reported in 2022. It notes the total number of covered employees, medical-only and indemnity claim counts, and total paid and incurred losses on those claims through the end of the year.  The summary reports on the experience of private self-insured employers who covered 2.49 million California workers last year (vs. 2.38 million in the 2021 initial report) and who reported 104,278 claims in 2022, 11.6% more than the 93,430 claims noted in the 2021 initial report.

The distribution by claim type was almost evenly split, as private self-insured employers reported 52,300 medical-only claims in 2022, up 7.2% from 48,766 in 2021; while they reported 51,978 indemnity claims, up 16.4% from the 2021 first report level.  

This marked the third year in a row that the private self-insured indemnity claim count has risen, as the tally went from 34,307 claims in 2019 (the last year before the pandemic) to 42,724 claims in 2020, then rose to 44,664 claims in 2021, before the addition of 7,314 more indemnity claims last year.  The overall claim count for 2022 works out to 4.31 claims (2.16 medical-only and 2.15 indemnity) per 100 private self-insured employees, the highest rate in at least 16 years.    

Despite increasing claim volume and claim frequency, first report total paid losses for 2022 fell 1.2% to $311 million, as total paid medical declined by $6.9 million to $149.2 million, (-4.4%), more than offsetting the $3.2 million increase in paid indemnity, which rose 2.0% to $161.9 million.  

The average paid loss on a 2022 claim in the initial report was $2,983, down 11.5% compared to 2021 as average medical payments per claim fell 14.3% to $1,431, and average paid indemnity fell 8.7% to $1,552.  First report total incurred losses on the private self-insured incurred claims, which include paid benefits plus reserves for future payments, also fell in 2022, declining by $28.0 million (3.0 percent) to $811.8 million.  

Here too, the overall decline was due to the decline on the medical side, as total incurred medical fell by $30.5 million (6.1%) to $466.7 million, while total incurred indemnity showed little change, increasing by $2.5 million (0.7%) to $345.1 million.  The declines in private self-insureds’ total paid and incurred losses in the face of an 11.5% increase in claim volume – which included an additional 7,314 indemnity claims – suggests an influx of relatively inexpensive claims.  

CWCI notes that many of those may have been COVID-19 claims as its online COVID-19 claim application shows there were 112,298 COVID-19 claims in 2022, and 61.2% of those involved self-insured employers, including health care employers such as hospitals and large retailers, many of which are private self-insureds.  The increased number of inexpensive claims helped drive down private self-insureds’ average incurred medical (-15.9%) and average incurred indemnity (-9.8%) last year, so the total average incurred per claim at first report fell from $8,988 in 2021 to $7,785 in 2022 (-13.4%).  

OSIP’s summary of private self-insured’s calendar year 2022 data follows the December 2022 release of public self-insured claims data for fiscal year 2021/2022.  The private and public self-insured claim summaries from the past 20 years are posted at http://www.dir.ca.gov/SIP/StatewideTotals.html.  CWCI members and subscribers may log on to the Communications section of the CWCI website www.cwci.org to view a summary Bulletin with more details, analyses, and graphics.

The VA Accountability and Whistleblower Protection Act of 2017 is a law that was passed by the United States Congress to improve accountability and whistleblower protection within the Department of Veterans Affairs.

Prior to passage of this act,it was whistleblowers who helped expose the nationwide scandal over long waits for care. Beginning in 2014, VA medical facilities across the country were found to have covered up delays in providing care, making waits as long as four months appear much shorter.

The law created a new Office of Accountability and Whistleblower Protection (OAWP) within the VA, which is responsible for investigating allegations of misconduct and retaliation against whistleblowers. The law also expanded the definition of protected disclosures to include allegations of gross mismanagement, gross waste of funds, and abuse of authority.

Following passage of the Act, members of Congress asked the Office of the Inspector General to determine the success or failure of the VA in implementing this Act. The OIG reported in October 2019 that implementation was not successful.  For example it said that “A critical purpose of the Act was to facilitate holding Covered Executives accountable for misconduct and poor performance. However, as of May 22, 2019, the Inspector General determined that VA had removed only one Covered Executive from federal service pursuant to the authority provided by the Act.”

And it does not seem that things have gotten much better since the 2019 OIG report. Earlier this year Rep. Jay Obernolte (R-Calif.) issued a press release stating that the VA informed him that “it will no longer use the tools provided by the bipartisan VA Accountability and Whistleblower Protection Act, which was signed into law in 2017″ citing that this was “because the Biden administration paused the use of the law.”

His consternation at the time of this press release was his request for “answers on a situation at the Loma Linda VA Medical Center (VAMC) where a supervisory employee continues to be employed by the medical center despite creating a hostile work environment, ultimately reducing accountability, impacting employee morale, and hindering the good delivery of services to veterans.”

Also last April 2023, U.S. Senators Marco Rubio (R-FL) and Steve Daines (R-MT) sent a letter bashing U.S. Department of Veterans Affairs Secretary Denis McDonough for announcing the VA will ignore important provisions of the VA Accountability and Whistleblower Protection Act that require the agency to hold bad employees accountable.

The Government Executive website confirmed the VA decision to discontinue use of the Act starting April 3. It claims the reason was that the “Federal Labor Relations Authority found VA violated its collective bargaining agreement with the American Federation of Government Employees when it eliminated ‘performance improvement plans’ from the pre-disciplinary process. The decision required VA to reinstate all employees fired without first being provided such a plan, a process McDonough told members of Congress on Thursday is currently under negotiation.”

And the situation at Loma Linda VA is discussed in detail by a news story published on June 18 by Military.com. According to it’s report, several VA Loma Linda Healthcare System whistleblowers have come forward with new allegations of retaliation, harassment and hostile working conditions amid a widening investigation by the House Veterans Affairs Committee.

Last Friday, committee member Jay Obernolte, met behind closed doors with VA Loma Linda’s interim director Bryan Arnette, and other officials to discuss the whistleblower complaints and map out needed changes.

“Sometimes in federal government – we can create a workplace environment that is tolerant of people that don’t follow the rules,” Obernolte said during a press briefing following the meetings without offering specific details about what was discussed. “We want to make sure that doesn’t occur.”

Separately, staff members from the House Veterans Affairs Subcommittee on Oversight and Investigations met with whistleblowers at an undisclosed location to review their complaints that suggest systematic failures by the federal government to address problems at VA Loma Linda. Obernolte declined to disclose the specific nature of the confidential whistleblower allegations

Obernolte’s visit follows a Southern California News Group report in May that revealed a 2021 federal investigation found that a VA Loma Linda manager frequently used racial slurs, required workers to buy him food and drive him to and from work, and then punished those who refused his demands with bad assignments.However, instead of being terminated for creating a hostile work environment, the manager – identified by multiple sources as grounds department supervisor Martin Robles – was inexplicably promoted.

“There were numerous instances where inappropriate language and racial slurs were used which appears to be a common practice,” a Veterans Administration investigative board said in a heavily redacted 61-page report obtained by the Southern California News Group. “Inappropriate and discriminatory hiring practices were found, which have contributed to the lack of trust, poor morale, and fractured culture.”

The Administrative Investigation Board (AIB) recommended Robles be removed from employment because of “overwhelming evidence to support that the supervisor was intimidating, exhibited bullying behavior, threatening behavior, and contributed to a hostile work environment,” said a source familiar with the probe. The AIB investigation, which began on Dec. 9, 2020, and concluded the week of Jan. 11, 2021, included 57 hours of testimony from 36 witnesses and 4,000 pages of exhibits.

Robles also was the focus of two other VA Loma Linda investigations in 2020 and 2022 that substantiated allegations he fostered a hostile work environment. Details of those two investigations were not immediately available.

The controversy involving Robles is the latest in a string of troubling incidents involving VA Loma Linda employees.

About a decade ago, a great number of former NFL players filed civil and industrial injury claims in California alleging that sport related head trauma and concussions while engaged in professional football resulted in the development of a Alzheimer’s like dementia decades later. At the time, this medical condition became known as CTE or Chronic Traumatic Encephalopathy.

Their claims were based, in part, on the work of Anne McKee M.D. who is a neuropathologist and expert in neurodegenerative disease at the New England Veterans Affairs Medical Centers and is professor of neurology and pathology at Boston University School of Medicine and director of Boston University CTE Center, which was established in 1996 and funded by the National Institutes of Health to advance research on Alzheimer’s disease and related dementias.

In her early work published in 2009, she reviewed 48 cases of neuropathologically verified CTE recorded in the literature and document the detailed findings of CTE in 3 professional athletes, 1 football player and 2 boxers, and theorized that “Chronic traumatic encephalopathy is a neuropathologically distinct slowly progressive tauopathy with a clear environmental etiology.”

Het hypothesis received widespread media attention with the arrival of the movie “Concussion” a 2015 American biographical sports drama film. Will Smith starred as Dr. Bennet Omalu, a forensic pathologist who fights against the National Football League trying to suppress his research on chronic traumatic encephalopathy (CTE).

Over the years, much scientific debate ensued over her theory, and the relationship between a head trauma and the development of CTE many years later. And for over two decades, the Concussion in Sport Group (CISG) has held meetings and developed five international statements on concussion in sport.  CISG is an international multidisciplinary group of experts who work to improve the understanding and management of concussion in sport. It was founded in 2001 and has met every four years since then to produce consensus statements on the latest evidence about concussion in sport.

The CISG is made up of experts from a variety of disciplines, including neurology, neurosurgery, sports medicine, neuropsychology, and epidemiology. The group’s work is supported by the International Olympic Committee (IOC) and the World Health Organization (WHO).

The 4th Consensus Statement on Concussion in Sport published in the British Journal of Sports Medicine in 2013, reviewed the medical literature at the time and rejected the blanket conclusion that there is a definitive cause and effect connection between repetitive head trauma and CTE. It concluded that ‘the speculation that repeated concussion or subconcussive impacts cause CTE remains unproven,“

The sixth International Consensus Conference on Concussion in Sport was delayed because of the pandemic, and was rescheduled to meet in Amsterdam on 27 October 2022 through 29 October 2022. As a result of this newest Conference, the Consensus statement on concussion in sport: the 6th International Conference on Concussion in Sport – Amsterdam, October 2022 was published in the British Journal of Sports Medicine on June 14, 2023. It was compiled by 114 co-authors.

It first noted that “To avoid conceptual confusion between the pathology and a possible clinical condition, the postmortem neuropathology is referred to as CTE neuropathologic change (CTE-NC).” However “CTE-NC is not a clinical diagnosis. The first consensus criteria for traumatic encephalopathy syndrome (TES), a new clinical diagnosis, were published in 2021.

Using these new terms, CISG then wrote “These diagnostic criteria can be used to determine the extent to which CTE-NC identified after death was associated with this new clinical diagnosis during life. The prevalence of CTE-NC (a neuropathological entity) and TES (a clinical diagnosis) in former athletes, military veterans and people from the general population is not known. It is also not known whether (1) CTE-NC causes specific neurological or psychiatric problems, (2) the extent to which CTE-NC can be clearly identified within the presence of Alzheimer’s disease neuropathology or (3) whether CTE-NC is inevitably progressive.”

Critiques of the latest Consensus Conference were immediate. According to an article in Nature, “Their refusal to acknowledge a causal relationship between contact-sports participation and CTE [chronic traumatic encephalopathy] is a danger to the public,” said Chris Nowinski, a neuroscientist and chief executive of the Concussion Legacy Foundation in Middletown, Delaware, which supports athletes and veterans affected by concussions and CTE.

Yet Robert Cantu M.D. one of the co-authors of the consensus report and colleague of Ann McGee M.D. at the Boston University School of Medicine in Massachusetts said  “The CTE literature is almost exclusively case series studies” and he went on to say “And that literature did not meet the inclusion criteria for the systematic review.”

Liberty Mutual Insurance Company employed Joy Slagel from 1985 to June 30, 2016, most recently as Senior Case Manager in its Glendale claims department. For 30 years, she received consistently positive reviews from supervisors, colleagues and clients. A review of allegations and documentation in the litigation file between them revealed the following allegations.

In February 2015, Slagel went on disability leave due to stress and anxiety.

After returning in March 2015, Ariam Alemseghed, Regional Claims Manager, overseeing Liberty’s Glendale claims department, instructed Craig Ballard, Slagel’s immediate supervisor, to rate Slagel as “needs improvement” on her performance assessment. When Slagel asked Ballard why she received this rating, he told her he had not wanted to give it but Alemseghed instructed him to do so. When Slagel complained to Alemseghed about the rating, Alemseghed stated that because of her “tenure,” Slagel would be held to “higher expectations.”

On March 4, 2015, Slagel wrote to Glenn Shapiro, Liberty’s Vice President/Chief Claim Officer, complaining that Alemseghed mistreated her and several other long-term employees “in a manner that lacked dignity and respect,” and she feared retaliation because Alemseghed had a close relationship with Virginia Bennett, Liberty’s Human Resources Generalist. Slagel received no response.

In June 2015, Slagel told Human Resources (HR) Manager Michael Polk that 15 people had left in the last 12 months, and Alemseghed wanted long-term employees to leave so she could hire recent college graduates. Nothing was done.

In November 2015, Slagel received a Customer Service Award for her handling of claims for one of Liberty’s accounts. Alemseghed told her, “You just got lucky, it will never happen again.”

In January 2016, Leann Lo became Slagel’s Claims Manager. Shortly thereafter, Lo accused Slagel of speaking negatively about Liberty, and said, “I am warning you!” Lo and Alemseghed allegedly thereafter inundated Slagel with work and shunned and ostracized her.

A protracted dispute between Joy and her managers over the documentation of a social media check made during a claim review with an employer. Slagel complained to Bennett and Lo that she was being targeted because she was a 30-year employee whom Alemseghed wanted to replace.

On April 19, 2016, Slagel sought medical care for hypertension, coronary artery disease, hyperlipidemia, and panic attacks related to work-related stress and depression, and subsequently applied for short-term disability leave.

While Slagel was on leave, Bennett analyzed her failure to obtain a social media report for the employer in question, and noted that Slagel thought she was being set up because she was a 30-year employee. Bennett resolved Slagel’s complaint with no investigation because he believed she was a “negative influence in the Glendale office.”

After receiving authorization from attorney Gabriel Williams, Liberty’s Employee Relations Consultant, who could authorize terminating an employee, Lo terminated Slagel on June 30, 2016, the day she returned from leave. Slagel filed a complaint against Liberty, Alemseghed, and Lo, alleging 12 causes of action.

During discovery, Slagel attempted to depose Williams concerning his decision to approve Slagel’s termination. During the deposition Williams, an attorney, was unable to understand several basic questions, and according to the review by the Court of Appeal “Williams avoided the entire line of questioning pertaining to Slagel’s termination.” Other disputes between arose during plaintiffs discovery process concerning Polk’s depostion.

Defendants filed motions for summary judgment, arguing no triable existed as to whether they harbored a discriminatory motive for Slagel’s discharge. Slagel sought to continue the summary judgment hearing to complete discovery regarding Polk’s interviews, including the notes and an interview chart he had not produced, and also requested time to depose Latecia Flemming about her discussions with Polk. Slagel further requested time to depose Dan Karnovsky, who controlled some the investigatory reports and notes. The court denied these requests

The trial court found that Slagel submitted evidence of a discriminatory motive on the part of Alemseghed, but no triable issue existed as to whether Liberty’s reason for terminating Slagel was pretextual. The court found, Slagel “simply has not submitted evidence to show how Alemseghed’s age bias caused her termination when Alemseghed was not responsible for her termination, and when the proffered reason for Plaintiff’s termination, i.e., the social media report incident, actually did occur.” Accordingly, the court granted summary judgment in defendants’ favor and entered judgment. It awarded Liberty and Alemseghed jointly $26,917.61 in costs as prevailing parties, allocated to Slagel’s non-FEHA claims. The court awarded Lo $70,058.15 in attorney’s fees and $15,418.96 in costs as a result of Lo’s subsequent sanctions request.

The Court of Appeal reversed in the unpublished case of Slagel v. Liberty Mutual Insurance Company -B310132 (June 2023).

The Court of Appeal noted that “Here, triable issues exist as to whether Williams’s decision to approve Slagel’s termination was tainted by Alemseghed’s bias. Alemseghed influenced Bennett’s and Williams’s deliberations by portraying Slagel’s performance in the worst possible light. This influence may well have been decisive. Williams’s deliberations were brief, perhaps perfunctory, taking only about half an hour.”

“Williams testified in deposition that he could not remember having considered the issue. Having no personal knowledge of the facts, Williams, who was not conversant with the possible age animus that may have motivated Alemseghed’s recommendations (as filtered through Bennett), was apt to defer to Bennett’s and Alemseghed’s judgment. If Williams acted as the conduit of Alemseghed’s bias, his innocence would not spare Liberty from liability for Alemseghed’s procuring Slagel’s discharge because of her age.”

On summary judgment, inferences must be drawn in favor of the opposing party. Here, the trial court should have but failed to draw several inferences in Slagel’s favor. Therefore, summary judgment was improper.

The Court of Appeal also concluded that the court arguably found only that Slagel’s claims against Lo lacked evidentiary support, not that they would have been legally insufficient even if supported by evidence. “Because the trial court found only that a subset of Slagel’s allegations lacked legal and evidentiary support, and because some of her allegations against Lo actually did have evidentiary support, sanctions were improper.“

The judgment was reversed as to Slagel’s first through fifth and tenth and twelfth cause of action. The costs and sanctions awards were vacated. The judgment was otherwise affirmed.