Tag: 2013 News

A new WCAB en banc decision in the case of Luis Martinez vs Ana Terrazas held that a medical-legal lien claimant cannot avoid the lien activation fee by pursuing their fees as “costs” under Labor Code 5811.

On April 18, 2011, applicant Luis Martinez resolved his claim against Ana Terrazas and Allstate Insurance Company by compromise and release. On August 8, 2011, New Age filed a lien for copying and related expenses. The billings submitted with the lien show that the expenses claimed were for subpoenaing and copying various records at the request of applicant’s attorney, namely: (1) the records of applicant’s employer on September 28, 2009, (2) the records of Dr. Zaragaff on October 12, 2009, (3) the records of the U.S.C. Medical Center on September 21, 2009, (4) the records of the Law Office of Lionel Quiroz on September 16, 2009, (5) the records of the WCIRB on July 26, 2010,3 and (6) the records of Specialty Risk Services (defendant’s claims administrator) on June 16, 2011.

After January 1, 2013, the effective date of Senate Bill 863 but prior to any lien proceedings, New Age withdrew its lien and in lieu of it filed a petition for costs under Labor Code section 5811 for the same expenses it previously sought to recover by its lien, apparently in an attempt to avoid payment of a lien activation fee under section 4903.06. The WCJ denied the petition for costs, determining that New Age could not “abrogate” its obligation to pay the lien activation fee. New Age appealed.

The WCAB in the en banc decision held that section 5811 “costs” do not include costs and expenses that are governed by other specific statutory schemes. The Legislature has established an extensive statutory scheme for claimed medical-legal expenses. In light of the specific statutory framework established by the Legislature for pursuing claims of medical-legal expenses, the WCAB concluded that medical-legal expenses cannot be sought through the filing of a petition for costs under section 5811. “[I]t would be an abuse of discretion to permit medical-legal expenses to be claimed under section 5811.”

“However, given the uncertainty in the law when New Age withdrew its lien and given that its lien was never formally dismissed, we will deem its lien reinstated. This reinstatement principle shall be applied to lien claimants in other cases who withdrew their liens and filed petitions for costs on or before the issuance date of this decision, if their liens have not been dismissed.”

The WCAB went on to note that although “the case presently before us relates to copy service expenses claimed through a medical-legal lien filed before January 1, 2013 under former section 4903(b), we emphasize that this holding applies to all medical-legal expense claims, regardless of: (1) whether a pre-January 1, 2013 lien was filed; (2) when the claimed medical-legal expenses might have been incurred; or (3) the nature of the medical-legal expenses claimed.”

The Sacramento Bee reports that CalPERS is moving to strike from government health care rolls tens of thousands of people it believes are mistakenly or fraudulently receiving benefits. The fund, which is the second-largest health care purchaser in the nation after the federal government, figured last year that removing an estimated 29,000 wrongly listed children, spouses and domestic partners of government employees would save approximately $40 million annually. And one industry expert said CalPERS may have underestimated that 4 percent of the 739,000 dependents now on CalPERS’ medical plans don’t qualify for coverage.”Based on our experience, that 29,000 is a very conservative number,” said Karen Frost, a benefits administration expert at human resources firm Aon Hewitt. The global company has audited insurance eligibilities of nearly 10 million people in both public- and private-sector medical plans. CalPERS spends $7 billion annually on health care for 1.4 million state and local government employees, retirees and their families.

Most ineligible dependents wind up on insurance rolls because of honest mistakes, experts say. In many of those cases, children aren’t dropped when they should be, currently at age 26. Employees sometimes mistakenly continue covering spouses and ex-domestic partners who don’t qualify as dependents even if a court orders they must receive continued medical coverage. Ex-stepchildren aren’t eligible, either.

The new process will require verification of every dependent on CalPERS’ rolls. The agency expects the state’s human resources department and local governments “will take steps to ensure dependents enrolled in our health plans are eligible,” Madison said, “as will CalPERS.” The law allows the system and government employers who purchase medical coverage through it to drop anyone who shouldn’t be receiving medical benefits and retroactively recover costs.
CalPERS last month sent 390,000 letters to health subscribers carrying dependents on their plans, asking them to voluntarily drop ineligible beneficiaries by June 30. After that, members will have to send documents proving their dependents’ eligibility and could face penalties if they can’t.

And while the law allows insurers to go after subscribers who fraudulently add ineligible dependents to their health insurance, they rarely do.The University of California last summer found that 5 percent of dependents shouldn’t be on their employees’ plans. Removing them saved the system $35 million. The UC system didn’t offer amnesty, said spokeswoman Shelly Meron, and it didn’t impose penalties on any employees with ineligible dependents on the rolls. Recouping months or years of premiums paid by employers for ineligible dependents can be a difficult exercise, said Frost, the Aon Hewitt’s eligibility expert. “We see very few employers do that, less than 5 percent,” Frost said. “It’s just a very messy process to look retroactively and figure out the point at which someone should never have been covered.”

And proving fraud can be a high bar to clear, said Dennis Jay, executive director of the Washington, D.C.-based Coalition Against Insurance Fraud. “Most systems give the benefit of the doubt,” Jay said. “For example, if someone gets divorced and keeps the ex-spouse on the plan when they shouldn’t have, that’s pretty innocent stuff.”

CalPERS spokeswoman Rosanna Westmoreland cited a law that makes it a crime to improperly obtain a benefit – including health insurance – by making a false statement. Anyone convicted of that misdemeanor may be liable for paying reparations.

A Washington state law firm has accused one of the region’s largest health care providers and a California collections agency of conspiring to defraud Pierce County accident victims by using liens to increase money recouped for providing medical treatment. The firm of Pfau Cochran Vertetis Amala last week sued Tacoma-based MultiCare Health System and Hunter Donaldson of Brea, Calif. Hunter Donaldson employees Rebecca Rohlke and Ralph Wadsworth also are named as defendants. The News Tribune story says that the suit was filed on behalf of five Pierce County residents who contend they suffered monetary losses as a result of the alleged fraud. The five, Velma Walker, James Stutz, Karl Walthall, Gina Cichon and Melanie Smallwood, seek unspecified damages.

The law firm, which has offices in Seattle and Tacoma, said in a statement that there potentially are thousands of other victims and that it will seek to have the lawsuit certified as a class action.”MultiCare has a lot of explaining to do,” plaintiff’s attorney Darrell Cochran said this week. “This hospital group touts itself as a consumer award winner, all the while they are violating the most basic consumer rights we have.”

MultiCare, which operates Tacoma General Hospital and Mary Bridge Children’s Hospital and Health Center, among other facilities, issued a statement Wednesday through spokeswoman Marce Edwards. “MultiCare Health System takes these allegations very seriously,” the statement reads. “We have commenced an investigation into the specific allegations that are listed in this complaint. Until we know all of the facts and have fully investigated the concerns raised, MultiCare has temporarily suspended the enforcement of all medical liens issued on its behalf by Hunter Donaldson. We will meet with representatives from Hunter Donaldson as soon as possible.”

The dispute is over a section of Washington law that allows some medical providers, including doctors and hospitals, to place a lien against money an accident victim might get from successfully suing or settling with the person responsible for his or her injuries. The purpose of the lien is to ensure that the medical providers would be paid for services rendered. The plaintiffs allege that MultiCare and Hunter Donaldson, which MultiCare hired to manage its third-party collections, conspired to use the law to unfairly enrich themselves.

MultiCare stands to gain more money by using liens to recoup its costs from money its patients obtain through a lawsuit or settlement than it does from billing insurance, Cochran said. Such practices often leave accident victims with no money once they pay their medical bills, even if they gained cash for pain and suffering and other costs, he said. “Injured accident victims who go to MultiCare’s hospitals and clinics are being kept in the dark about MultiCare’s intentions to never bill their insurance but instead to try to get more money from the injured victims’ later recovery,” said plaintiffs’ attorney Tom Gallagher.

Controversial legislation that would restrict most professional athletes from out-of-state teams from filing claims in California workers’ compensation courts won overwhelming approval Thursday in the state Assembly. The Los Angeles Times reports that despite aggressive lobbying by professional football players and other athletes, the bill, AB 1309, passed 61 to 4. The measure now goes to the state Senate.

“Our workers’ compensation system has been increasingly exploited by out-of-state professional players at the expense of California teams and all California businesses,” said the bill’s author, Assemblyman Henry T. Perea (D-Fresno). “The flood of claims are raising insurance costs for all employers.”

The story in the Los Angeles Times says that player unions and their labor backers said they were disappointed with the lopsided vote and vowed to continue fighting the bill as it moves through the Legislature.

Perea and supporters of his bill – the five major professional sports leagues and individual franchise owners – contended that some California workers’ compensation courts have been swamped by claims from retired football players and, more recently, retirees from basketball, hockey and baseball teams.

California’s century-old workers’ compensation system has turned into a magnet for out-of-state claims because it has the power to approve financial payouts and lifetime medical care for long-term injuries that are not available in other states. California’s liberal statute-of-limitation interpretation makes it relatively easy for older athletes to make claims, sometimes years after they stopped playing. The athletes typically have been seeking compensation for so-called cumulative trauma. These injuries don’t stem from a specific incident, such as a broken bone or ripped tendon. Trauma, rather, is caused by the accumulated wear and tear on the body after years of rough play.

Opponents of the bill say it would give billionaire team owners an opportunity to sidestep their responsibility for caring for their injured former players. “The truth is AB 1309 makes it impossible for professional athletes to receive workers’ compensation they collectively bargained,” said a statement released by the labor coalition trying to defeat the bill. “There is no loophole. Those players paid taxes in California, and California provides a forum for workers’ comp cases to be heard.” The bill, opponents added, unfairly singles out pro athletes but also sets a precedent that could later restrict coverage for people in other professions whose traveling to California contributed to an eventual cumulative trauma.

A.B. 1309 specifies that the “amendments made to this section by the act adding this paragraph apply to all pending claims for benefits pursuant to this division that have not yet been adjudicated.”

AB 1309 will now be considered by the state Senate and if passed it will move to the governor for signature before it becomes law..

In an open letter to the California workers’ compensation community posted on the WCIRB website, President and CEO Bill Mudge describes some of the transformations taking place at the WCIRB including a new mission statement, new core values, and a renewed commitment to openness and transparencys.

The letter also noted that one of the WCIRB top priorities is monitoring and analyzing the impact on system costs of SB 863 as they emerge in statewide loss and loss adjustment expenses.

To that end, the WCIRB developed, in collaboration with industry experts who serve on its Claims Working Group and Actuarial Committee, a detailed and comprehensive SB 863 Cost Monitoring Plan. As data becomes available, the WCIRB will make it available to everyone in the workers’ compensation community. This plan has been submitted to Insurance Commissioner Jones for approval.

SB 863 is not the only significant change to occur for the WCIRB in 2012. It embarked on an ambitious transformation and modernization of the WCIRB’s business operations and culture, and developed a new mission statement which sharply defines the WCIRB’s role and will guide actions in the coming years. The new mission statement is: “The WCIRB is California’s trusted, objective provider of actuarially-based information and research, advisory pure premium rates, and educational services integral to a healthy workers’ compensation system.”

The WCIRB transformation started at the top with a restructuring of the senior management team. It promoted David Bellusci – the WCIRB’s highly respected Chief Actuary – to the position of Executive Vice President and Chief Operating Officer. It also promoted Eric Riley to the newly-created position of Chief Customer Officer – a job dedicated to the WCIRB commitment to broad external outreach and customer service to its members and all system stakeholders. The WCIRB brought on board a new Chief Information Officer, Raj Marwah, to lead its ambitious technology modernization efforts. Completing the senior management team is Senior Vice President and Chief Legal Officer Brenda Keys who serves as the WCIRB’s primary liaison with the California Department of Insurance and has responsibility for all legal issues.

Looking forward in 2013, the WCIRB will deploy Phase 2 of STAR (its new operating system for processing unit statistical data and reports and for the promulgation of more than 125,000 experience modifications a year) to incorporate a new policy audit system and significantly extend our online services. Taken together, these two initiatives will allow WCIRB members and other data submitters to completely eliminate paper interaction with the WCIRB. Our goal together is to reduce costs while increasing process speed and efficiency.