Tag: 2013 News

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.

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.

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.

A San Leandro medical center has been shut down and one of its doctors is facing criminal charges. Authorities say they investigated the As Soon As Possible (ASAP) Medical Clinic for two years. The facility employed Dr. Sultan Said Hamid as well as acupuncturists and chiropractors. It primarily handled worker compensation and automobile accident patients.

According to the story in the San Leandro Patch, Alameda County District Attorney Nancy O’Malley, along with California Insurance Commissioner David Jones, announced they have filed a civil action against the As Soon As Possible Medical Center. Authorities have closed the center at 1460 150th Ave. as well as its other clinics in Hayward, Vacaville and Fairfield.

Officials say they have also filed a criminal complaint against Dr. Sultan Said Hamid. The charges accuse Hamid of insurance fraud, perjury, filing false documents and conspiracy to dispense prescription drugs and other controlled substances by non-authorized personnel. Assistant District Attorney Larry Blazer said Hamid was dispensing drugs such as muscle relaxtants, anti-inflammatory agents and creams to patients who did not need them. “It seems everyone who walked in there walked out with two, three or four of these things,” said Blazer.The main purpose for the fraud, Blazer said, was to drive up insurance payments.

Hamid’s attorney, Ivan Golde, said Thursday his 75-year-old client is making arrangements to pay $100,000 bail. He expected it would be weeks before Hamid is arraigned. Golde said he hadn’t seen all the evidence yet, but he felt the case was not a criminal matter. If anything, he said, it is something for a medical board to investigate. Golde said he doubts there are any patients who are claiming they were harmed. He said the case centers on undercover officers going into the clinic and posing as patients. “Is that what we want law enforcement in Alameda County doing?,” he asked.

Authorities also filed a civil complaint against the clinic and its co-owner, Thomas Vamvouris. Vamvouris set up the corporation in 2004 with himself as a 49 percent owner and Hamid as a 51 percent owner. In reality, Barnes said, Vamvouris was the majority owner and that violates California law requiring a medical professional to be the primary owner of a medical facility. Authorities say Vamvouris has agreed to pay $450,000 in penalties, costs and restitution. He will also be prohibited from owning this type of facility in the future. No criminal charges are pending against Vamvouris.

Vamvouris’ attorney, Daniel Horowitz. said his client agreed to pay the $450,000 in penalties because he believed there was some “gray area” in the situation at the medical clinic and the payment was a compromise to settle the case. Horowitz said Vamvouris also had no knowledge of any of the illegal activities Hamid is accused of engaging in.”He was running the business side of things,” said Horowitz.

Taking umbrage at Texas Gov. Rick Perry’s campaign to lure California businesses, the Sacramento Bee swiped at Texas in an editorial stating that among its shortcomings, Texas is last in workers’ compensation coverage.

The radio ad by the Texas governor said “Building a business is tough, but I hear building a business in California is next to impossible,” the Republican governor says in the ad. “This is Texas Gov. Rick Perry, and I have a message for California businesses: Come check out Texas.”

And the Sacramento Bee editorial responded by saying “Yes, come check out Texas. Check out a state that ranks dead last in the percent of its population with high school diplomas. Come check out a state that is last in mental health expenditures and workers’ compensation coverage. Come check out a state that ranks first in the number of executions, first in the number of uninsured, first in the amount of carbon dioxide emitted and first in the amount of toxic chemicals released into water.”

Fact checkers soon joined the battle.

Stuart Leavenworth, who edits the Bee’s editorial page, offered as a basis for this claim a February 2011 report, “Texas on the Brink,” issued by a Texas House caucus called the Legislative Study Group. The basis for the report’s ranking on “workers’ compensation coverage” was 2006 data on the percentage of workers covered in each state that came from the National Academy of Social Insurance, a Washington, D.C., nonprofit group that researches such issues.

And herein lies an important anomaly: Texas is the only state that does not require all employers to obtain workers’ compensation coverage. Experts we consulted agreed this is the reason why Texas consistently ranks last and well behind other states in the proportion of workers covered.

There are exceptions; the National Federation of Independent Business says in an online comparison of such state laws that those include government construction contracts. In those cases, workers can file compensation claims, a right that employees usually give up in workers’ compensation agreements, “if they think they have a genuine case and the employer is still refusing to pay monetary benefits,” the summary says. And other states exempt certain employers.

The academy’s most recent data on the percentage of workers covered in each state comes from 2010. As charted in an August 2012 report, it shows that while Texas had 78.6 percent of workers covered, no other state had less than 94.9 percent covered. Thirteen states — including California — had 100 percent covered.

Jennifer Wolf, executive director of an association representing state and provincial workers’ compensation systems in the U.S. and Canada, said there can be “quite a bit of difference” between states, especially “when you are comparing different types of benefits (temporary, permanent partial, permanent total).” Wolf’s group, the International Association of Industrial Accident Boards and Commissions, is based in Madison, Wis.

Wolf and Amy Lee, a Texas Department of Insurance expert on workers’ compensation at the Texas Department of Insurance said that most states’ systems have gradually come into line with a set of federal recommendations issued in 1972. Wolf said the most recent check on compliance with those guidelines was a Jan. 1, 2004, report from a branch of the U.S. Department of Labor. States averaged compliance with 12.83 of the 19 recommendations, the report said; Texas’ compliance was slightly below average, at 12.5.