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Tag: 2013 News

Police Officer Files Suit Over Cal/OSHA Claim

A Glendale police officer has filed a lawsuit against the city and the police department claiming he was the victim of repeated retaliation after he reported alleged work-related health violations.

The article in the Los Angeles Times says that Officer John Schmidt alleges that he and another officer were exposed to “blood-borne pathogens” while on duty, according to a lawsuit filed in Los Angeles County Superior Court on Jan. 22. He reported the incident on Sept. 28, 2011, to the city and the police department, alleging that he believed they failed to comply with California’s Division of Occupational Safety and Health regulations. That resulted “in a serious threat to their and other officers’ health and safety,” according to the lawsuit. Schmidt’s complaint does not specify which Cal-OSHA regulations were allegedly violated, nor does it go into detail about his exposure to any purported pathogens. His attorney, Marla Brown, declined to comment about the complaint.

City Atty. Michael Garcia denied the allegations and disputed “the contention that the city retaliated against the plaintiff in any manner.”

Schmidt alleges that because he reported the violations, co-workers and the defendants ostracized him, and that he was subjected to an unwarranted internal affairs investigation. He also claims that he was denied or discouraged from applying from certain job positions, and was turned down for a special evaluation and a chance to attend Special Weapons and Tactics school. Schmidt alleges that he was deprived of opportunities for overtime pay and was reportedly subjected to an unwarranted evaluation and denied merit pay, according to the lawsuit.Police and city officials also allegedly made false statements, which Schmidt claims “are reasonably calculated to harm or destroy” his reputation, according to the lawsuit.

Schmidt is seeking a judgment for the anguish he suffered, healthcare expenses and loss of wages, as well as attorney fees.

WCAB Suspends Lien Representative From Appearing at Board

On September 21, 2011, the Appeals Board initiated an action against lien hearing representative Daniel Escamilla citing 11 cases in which Mr. Escamilla was sanctioned for misconduct, which demonstrated a pattern of behavior with no attempt to reform. Several of the example cases reflect sanctions for verifying and filing a frivolous petitions for reconsideration that were totally without merit.

Workers’ compensation administrative law judge (WCJ) David Hettick was appointed to act on behalf of the Appeals Board as the hearing officer to conduct prehearing conferences and take testimony. There were five prehearing conferences and on June 5, 2012, WCJ Hettick conducted an evidentiary hearing at which Mr. Escamilla testified, documentary evidence was introduced and witness declarations were submitted. At Mr. Escamilla’s request, a second hearing took place on September 24, 2012, before the Commissioners of the Workers’ Compensation Appeals Board sitting en banc. Despite the fact that Mr. Escamilla did not comply with orders regarding the timing of his submission of evidentiary exhibits and witness declarations. Because of the seriousness of these proceedings, the WCAB considered all of the exhibits and declarations offered by Mr. Escamilla. These documents include pleadings filed by Mr. Escamilla in the underlying cases in which sanctions were ordered, as well as the declarations of Michael Smalley, David M. Bautista, Lori Milas, Nathan Deschnes, David E. Bresler, Thomas Hewko, and Edward Wood.

The authority for a nonattorney representative to appear in workers’ compensation proceedings is conferred by section 5700, which states that a party may be represented “by attorney…or by any other agent…” and by section 5501, which states that an application may be filed by an applicant’s “attorney….or other representative authorized in writing.” As explained by the Supreme Court, the rationale for allowing lay representation of litigants in WCAB proceedings was “that numerous claimants for compensation are indigent and their claims are of such character and the compensation allowed by the Commission is so small as not to justify the engagement or service of a member of the bar, and that without the right to have a lay representative the claimant would ofttimes be unrepresented.” (Eagle Indem. Co. v. Industrial Acc. Com. (Hernandez) (1933) 217 Cal. 244, 249.) However, the Court also recognized that the use of lay representatives could result “in inexperienced and inexpert advice and assistance to a deserving claimant to the latter’s detriment.”

The Appeals Board is vested with the power under section 4907 to remove, deny, or suspend the privilege of a nonattorney hearing representative appearing before the WCAB after a hearing for “good cause.” Given hearing representatives’ lack of legal education and training, and given that they are not held to the same standard of care as licensed attorneys for purposes of malpractice or breach of fiduciary duty section 4907 is an important bulwark for protection of the public and the WCAB adjudicatory system. “Good cause” is a term that frequently appears in statutes and contracts and dozens of California cases have expounded upon its meaning. “Good cause” essentially connotes “a fair and honest cause or reason, regulated by good faith on the part of the party exercising the power.” Good cause means “real circumstances, substantial reasons, objective conditions, palpable forces that operate to produce correlative results, adequate excuses that will bear the test of reason, just grounds for action, and always the element of good faith.”

Based upon the above, the WCAB in the case of In Re Daniel Escamilla (En Banc) concluded that “Mr. Escamilla has repeatedly violated our regulations, misrepresented facts either intentionally or with reckless disregard for the truth, filed frivolous petitions and engaged in other sanctionable conduct in violation of section 5813 and WCAB Rule 10561. He has been warned about and sanctioned for his behavior repeatedly. In two of the cases cited in the NOH, Mr. Escamilla was sanctioned the maximum amount of $2,500 and in one case he was ordered to pay fees and costs to opposing counsel in excess of $44,000.”

“Mr. Escamilla’s conduct has wasted valuable court time, delayed proceedings, burdened the Appeals Board with frivolous petitions, inconvenienced other parties and exposed his clients to monetary sanctions. Even though Mr. Escamilla has been sanctioned repeatedly, he persists in engaging in a pattern of conduct which evidences no intent to reform. Thus it is apparent that sanctions are ineffective and consequently we exercise our authority under section 4907.”

The WCAB ordered that Mr. Escamilla be suspended from appearing before the Workers’ Compensation Appeals Board as a hearing representative on behalf of any party or lien claimant for a period of 90 days. During this time Mr. Escamilla is prohibited from performing any acts in furtherance of representation of clients before the WCAB including, but not limited to, drafting and/or filing pleadings or other documents before the WCAB, negotiating and settling claims relating to workers’ compensation proceedings, appearing at depositions, appearing at WCAB hearings, and engaging in discovery or responding to discovery requests. This suspension will commence 45 days after the date of the filing of this order.

DWC Scheduled Next QME Examination

The Division of Workers’ Compensation (DWC) will hold the next qualified medical evaluator (QME) exam on Oct. 19. The exam will include changes made to the QME program as a result of Senate Bill 863. Some of these changes will not be in effect until July 1. The QME study guide will also be updated and be available 30 days prior to the exam.

“SB 863 introduced a number of changes that will affect the role of qualified medical evaluators,” said DWC Executive Medical Director Dr. Rupali Das. “We want to make sure that the next exam and the study materials reflect these changes so that new QMEs are well prepared to efficiently provide needed care and service for injured workers.”

Applicants may contact the DWC Medical Unit at 510-286-3700 or e-mail QMETest@dir.ca.gov to receive the link to the Application Packet, which will be available in July.

DWC Updates Fact Sheet and Benefit Notices

The Division of Workers’ Compensation has posted an updated fact sheet for injured workers online which provides answers to questions about permanent disability indemnity. The division is providing a grace period until March 18, 2013 to use the revised fact sheet as required for issuance of benefit notices. Only the text of the fact sheet is required for compliance. Specific changes to the fact sheet: include:

  • Information is provided to confirm the claims administrator for an employer
  • The potential modification of the PD rating in accordance with Labor Code §4658(d) is clarified as applicable to injuries occurring prior to Jan. 1, 2013. PD for injuries occurring on or after Jan. 1, 2013 will be increased by a Whole Person Impairment factor of 1.4%. 
  • There is an explanation for the basis for delaying the payment of PD in accordance with Labor Code §4650(b)(2).
  • Information is provided about the Department of Industrial Relation’s Special Earnings Loss Supplement Program for workers who feel that they are not adequately compensated for their earnings loss.

DWC has also received questions about the effect of SB 863 on the current benefit notice requirements, particularly as to the requirement to pay permanent disability before an award is issued.

The Division is in the process of significantly redrafting the benefit notice regulations to incorporate the changes required by SB 863 and streamline the current notice requirements.

The current notice requirements remain in effect until the updated regulations are adopted. However, a claims administrator could include an explanation of Labor Code section 4650(b)(2) in the initial Permanent and Stationary with PD notice required by Title 8, California Code of Regulations, section 9812(g)(2) to explain if PD benefits will not be paid to the injured worker.

The benefit notice regulations prescribe the required content of each notice. The sample benefit notices set forth in the benefit notice manual contain suggested language for complying with the benefit notice regulations. Unless specific notice language is required by a Labor Code section or a DWC regulation, a claims administrator can rephrase the notice language in the model notices so long as the content required by the regulations is accurately given.

New Study Questions Hip Replacement Costs

Many hospitals are hard-pressed to tell people needing a hip replacement how much their procedure is likely to cost, according to a new study. Even when they can cite prices, going rates for the procedure may vary from hospital to hospital by a factor of 10, researchers found.

“It was very frustrating,” said Jaime Rosenthal, a student at Washington University in St. Louis, Missouri, who led the new research. “You got transferred to all these different people. You had to leave messages, call back.”

According to the U.S. Centers for Disease Control and Prevention, about 327,000 Americans had a hip replaced in 2009. The surgery is especially common among the elderly, who are covered by Medicare. Still, about half of all hip replacements in the U.S. are done on people younger than 65 – some of whom may not have private insurance.

For the new study, Rosenthal called 122 hospitals: two per state and two in Washington, D.C., plus the top 20 orthopedic hospitals listed in the US News and World Report rankings. During each call, she pretended to have a 62-year-old grandmother who needed a hip replaced but didn’t have insurance, and asked for the total price of the procedure. Just 45 percent of the top 20 hospitals and 10 percent of other hospitals could provide a complete cost for the hospital and doctor fees for a hip replacement, after up to five phone calls. When Rosenthal called both the hospital and affiliated doctors separately, she did a little better. In those cases, her team was able to put together the prices of procedures at 60 percent of top hospitals and 63 percent of others.

Those totals ranged anywhere from $11,100 to $125,798, Rosenthal and her colleagues from the University of Iowa reported Monday in JAMA Internal Medicine. She said some hospitals gave her reasons for a higher price – such as assigning her grandmother to a private room – but for others, it wasn’t clear what went into the cost of care. “It just points to the fact that most of us in the health system don’t have any idea what the costs really are,” said medical ethicist Dr. Ezekiel Emanuel from the Perelman School of Medicine at the University of Pennsylvania in Philadelphia, who co-wrote a commentary published with the new study.

Often, only the hospital’s billing office knows how much a patient is actually charged for a procedure such as a hip replacement, researchers noted. Some of the variation in costs has to do with how hospitals factor in overhead to each patient’s bill, Emanuel told Reuters Health. And the cost of an actual hip prosthesis can vary four- or five-fold across the country, he added.

Jeanne Pinder, founder of the transparency group ClearHealthCosts, said a ten-fold difference in price for any given test or procedure isn’t unusual, even within a single geographic area. “Nobody has any idea what they will pay in healthcare because the marketplace is completely opaque,” Pinder, who wasn’t involved in the new study, told Reuters Health. “When you go into the system, you’re usually not there because you want to be. You’re usually anxious, upset, and there’s a question of when you come out on the back end, whether you’ll be bankrupt or not.” That’s not only a concern for uninsured people, she noted, given how high co-pays or deductibles may be for those who are covered.

For a patient looking for cost information, there aren’t a lot of options right now – other than waiting for more transparency to come through legislation or other means, researchers said. “I don’t know that the information is readily available right now,” Emanuel said. “You can try to call around, especially if it’s elective.” Rosenthal told Reuters Health the findings do show that people willing to make lots of calls might have success shopping around for the best deal. But hospitals don’t make it easy. “Patients can take responsibility and put pressure on hospitals to make this information available,” she said. Pinder agreed. “I always recommend that people ask,” she said. “If you put this information into people’s hands… you can start to think like a consumer.”

WCAB Panel Warns Applicant Attorneys About Inflating Attorney Fee Requests

In the case of Felix Nino Mota v Allgreen Landscape and National Insurance Company ADJ2567272 (ADM 0105012), the Court of Appeal issued an order denying defendant’s petition for writ of review and found under section 5801 that “there is no reasonable basis for the petition.” Therefore the Court remanded this case to the Appeals Board to make a supplemental award of “reasonable attorney’s fees [to applicant’s attorneys] based upon services rendered in connection with the petition for writ of review.”

Applicant’s attorneys then submitted three unitemized declarations claiming a section 580 I attorney’s fee in the total amount of $51,900, i.e., 62 hours at $500 per hour for Susan E. Kaplan, Esq.,16 hours at $550 per hour for R. Jeffrey Evans, Esq., and 22 hours at $550 per hour for Gary R. Kaplan, Esq.

The WCAB indicated the request for fees was “inadequate.” First,”the declarations do not cite to itemized billings or, indeed, anything that might indicate the time expended on (and the dates of) each specific task” and, therefore, “the declarations of time expended are essentially completely unsupported.” Second, “although the declarations claim a total of 100 hours of attorney time rendered in connection with defendant’s petition for writ of review, the declarations give no indication of why so many hours were reasonably required.” Third, “the declarations include statements that the attorneys’ ‘usual and customary’ rates are $500 to $550 per hour, but the statements are not supported by such potential factors as the attorneys’ status as certified workers’ compensation specialists, if any, or the degree of care exercised and the effort required because of the legal or factual issues involved. Furthermore, a mere declaration that the stated rates of $500 and $550 per hour actually represent applicant’s attorneys’ ‘usual and customary’ rates for appellate work does not establish that those rates are reasonable.” Fourth, “Ms. Kaplan’s declaration also claimed $500 per hour for time she spent performing clerical tasks. However, section 5801 provides for ‘a reasonable attorney’s fee for services rendered in connection with the petition for writ of review.’ We interpret ‘services’ in this context to mean legal services rendered by the attorney, not clerical services the attorney may have performed..

The WCAB went on to say “we ordinarily determine a reasonable fee based on our independent review of the record. Moreover, in the absence of the $51,900 fee claimed, we would have determined that a fee award in the range of $14,000 to $16.000 would have been “reasonable” based on our independent review.”

“However, based on an extensive discussion of California and corresponding federal case law, we emphasized that “where the original request for a “reasonable” attorney’s fee is unreasonably inflated, we may award less than what would otherwise be a “reasonable” fee or even allow no fee at all.”

“Therefore, for the limited purpose of assisting us in determining what fee, between $0 and $16,000, should be awarded, our NIT allowed applicant’s attorneys to file properly itemized declarations. We were not allowing applicant’s attorneys a “second bite of the apple” at justifying the original $51,900 inadequate and defective fee request.”

“On November 2, 2012. applicant’s attorneys filed a response and three supplemental declarations consequent to our October 15, 2012 NIT. Based on our review of the three latest fee declarations, together with our review of the prior declarations and the appellate record. we conclude that the latest fee declarations are not credible and, instead, represent an inaccurate and inadequate after-the-fact attempt to justify the original un-itemized fee request.”

“In concluding that the three supplemental declarations represent a non·credible. inaccurate, and inadequate after-the-fact attempt to justify the original un-itemized fee request, we observe that all three declarations claim that legal services were rendered in connection with the petition for writ of review before (according to its proof of service) it was even mailed and before the petition presumably would have been received by the attorneys in the course of ordinary mail.”

“Because we conclude that the declarations are not credible, and possibly even perjurious, and we will entirely disregard them.”

“Therefore, even though their original fee request was unreasonably inflated, and even though their response to our NIT is inadequate for the reasons specified above ( among others), we will allow a section 5801 fee of $2500.”

“We emphasize that our decision on fees is expressly intended to deter applicants attorneys from making future unreasonably inflated fee requests that are not supported by adequate and accurate time itemizations (or. worse, that are based on non-credible and possibly even perjurious declarations). We specifically observe that our intent is to deter them not only from making unreasonably inflated fee section 5801 requests, but also any other type of “reasonable” attorney’s fee request, including but not limited to deposition attorney’s fees (Lab. Code, § 5710(b)(4)), fees for compensation unreasonably delayed subsequent to the issuance of an award (Lab. Code. § 5814.5), and even fees claimed as a lien against ordinary benefits (Lab. Code, § 4906 (esp., subd. (d)], Cal. Code Regs., tit. 8, § 10775). Moreover) we caution applicant’s attorneys that if they do make such improper fee requests in the future, not only do they risk being allowed a $0 attorney’s fee. but they also risk sanctions under section 5813 and WCAB Rule 10561. (Cal. Code Regs.) tit. 8, § 10561.)”

Feds Recover Record $4.2 Billion in 2012 Health Care Fraud Efforts

Health and Human Services and the Department of Justice say that a record-breaking $4.2 billion were recovered as a result of joint efforts to address health care fraud in 2012.

Health and Human Services (HHS) Secretary Kathleen Sebelius and Attorney General Eric Holder issued a report which showed that for every dollar the US government spent on health care-related fraud and abuse investigations over the last 36 months, it got $7.90 back. This is a record over a three-year period since the HCFAC (Health Care Fraud and Abuse) Program began sixteen years ago.

Is this huge haul a sign of better coordination among public authorities, or does it reflect an increase in criminality? The Justice Department and HHS believe it is a sign of the government’s health care fraud prevention and enforcement efforts. $4.2 billion (2012) is an increase from $4.1 billion in 2011.

The money was recovered from companies and individuals who had tried to defraud federal health programs aimed at seniors and taxpayers for payments they were not entitled to receive. $14.9 billion have been recovered over the last four years, compared to $6.7 billion during the previous four-year period. Over $23 billion have been returned to the Medicare Trust Funds since 1997 by the HCFAC Program.

HEAT (Health Care Fraud Prevention and Enforcement Action Team) was created in 2009 to fight fraud, abuse and waste in the Medicaid and Medicare programs, and to close in on people and entities which abuse the system and cost the American taxpayers billions of dollars. A takedown involving the highest number of false Medicare billings in history of the strike force program occurred in 2012. It involved 107 people, including nurses and doctors in seven cities. They were charged for taking part in Medicare fraud schemes totaling approximately $452 billion in fraudulent billings. During that takedown, HHS also suspended or took other action against 52 providers to suspend payments until the investigation was completed.

Last year, 251 guilty pleas and 13 jury trials were brought to court. Twenty-nine defendants had guilty verdicts against them in strike force cases. Those found guilty were given prison sentences averaging over 48 months.

Hearings Scheduled for Electronic Document Filing and Lien Filing Fee Rules

The Division of Workers’ Compensation has issued notices of public hearings for the electronic document filing and lien filing fee rules. The proposed rulemakings are to permanently adopt the emergency regulations which became effective Jan. 1, 2013. A public hearing on the proposed regulations has been scheduled at 10 a.m., March 26 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.

Senate Bill (SB) 863 has created substantial changes to how liens are filed within the workers’ compensation system. Specifically, any liens filed pursuant to Labor Code section 4903(b) or claims of costs must be filed electronically. Also, a fee of $150 is now required prior to filing for most liens filed after Jan. 1, 2013, and a $100 activation fee is required for most liens filed before then, but activated for a lien conference after Jan. 1, 2013. This activation fee is required to be paid at the time a lien claimant files a declaration of readiness or appears at a lien conference. This rulemaking implements these changes.

There are some proposed revisions to the emergency regulations. Specifically, the definitions of “cost,” “lien conference,” “mandatory settlement conference” and “party” have been amended for clarity. The definition of “section 4903(b) lien” is amended to delete reference to “interpreters’ fees incurred in connection with medical treatment (Labor Code section 4600)” because those fees are subject to a petition for costs under Labor Code section 5811. The EAMS E-Form Filing Reference Guide has been revised to reflect that lien claimants will now be given uniform assigned names to use when filing electronically.

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

Ventura County Sheriff’s Office Employee Arrested For Comp Fraud

Ventura County District Attorney Gregory D. Totten announced the filing of a felony complaint against Keri Atwood (DOB 09/24/1984) and Michael Atwood (DOB 08/28/1976) of Santa Paula. Both defendants are charged with committing workers’ compensation fraud and conspiracy. Keri Atwood is also charged with grand theft and burglary. This case was investigated by the Valencia office of the California Department of Insurance.

Keri Atwood, a civilian employee of the Ventura County Sheriff’s Office, reported to her supervisors that she sustained an injury to her left ankle. According to Keri Atwood, the injury occurred when another employee accidentally hit the back of her foot with a mail cart. She was placed on Temporary Total Disability (TTD) status and received over $29,000 in disability pay.

Keri Atwood used crutches or a wheel chair to get to her medical appointments. After her medical appointments, she was seen walking freely without the aid of crutches or a wheel chair. She was also observed engaging in a number of physical activities that she had told her treating physicians she could not perform. Michael Atwood drove Keri Atwood to her doctors’ visits and failed to disclose her true physical condition.

The defendants were arrested on February 7, 2013, by investigators from the California Department of Insurance. The defendants are scheduled to be arraigned on February 8, 2013, at 9:00 a.m. in courtroom 12. Keri Atwood faces a maximum sentence of nine years and eight months in county jail. Michael Atwood faces a maximum sentence of four years and four months in county jail.

CWCI Report Says Compound Drug Costs Still Out of Control Despite Recent Legislation

Recent public health concerns and legislative actions have raised the profile of compound drug utilization in the California workers’ compensation system. In 2011, California lawmakers enacted Assembly Bill 378, which took effect January 1, 2012. The legislative intent of this statute was to control the increase in prescriptions for and thee costs associated with compounded pharmaceutical products in the California workers’ compensation system through the implementation of unit price controls.

In 2002, California lawmakers passed Assembly Bill 749, the first of several workers’ compensation reforms that included provisions to modify the delivery of pharmacy benefits and contain the rapidly escalating cost of prescription drugs used to treat injured workers. In January 2004, the California Division of Workers’ Compensation adopted a pharmacy fee schedule that capped maximum reimbursements for pharmacy services and drugs at 100 percent of Medi-Cal rates, which at the time, were at least 10 percent below the average wholesale price (AWP) for prescription drugs, plus a dispensing fee. However, these legislative and regulatory adjustments, which focused on unit price controls, were only partially successful in containing the growth in workers’ compensation prescription drug costs. Following the full implementation of the 2002-2004 reforms, the average amount paid for pharmaceuticals on a California workers’ compensation indemnity claim within the first two years of injury more than doubled from $599 to $1,234 between accident years 2005 and 2009.

After the repackaged drug regulations took effect, some manufacturers began promoting compound drugs, medical foods and convenience packs (or “co-packs”) that included prescription medications and “medical foods” to California workers’ compensation medical providers.

Compounding pharmacies provide drugs to patients who may experience challenges obtaining specific prescription medications that are not available through conventional means. Such challenges include special formulation requirements to improve tolerance or products that lack a critical mass of potential patients to make their manufacturing economically viable. Although many compound drugs outside of workers’ compensation are related to hormone replacement, dermatology, children’s formulations for those who can’t swallow pills and anti-cancer treatment, most of the compounded drugs in the California workers’ compensation system are pain management medications delivered through topical creams.

Assembly Bill 378, signed into law in 2011 and implemented on January 1, 2012, was designed to curb the increased use of and the rapidly growing costs associated with compounded pharmaceutical products in the California workers’ compensation system. The measure sought to reduce the amounts paid for compounded drugs used to treat injured workers through the adoption of additional unit price controls and billing conventions. AB 378 strengthened the pharmacy fee schedule by requiring that any compounded drug used to treat an injured worker must be billed at the ingredient level by the compounding pharmacy or dispensing physician, with each ingredient identified using the applicable National Drug Code (NDC) of the ingredient and the corresponding quantity. The bill also prohibited separate reimbursement for ingredients with no NDC. Workers’ compensation reimbursements for compounded medications were set at the rates allowed by Medi-Cal for each ingredient, plus a dispensing fee equal to that allowed by Medi-Cal. The maximum reimbursement for a compound drug dispensed by a physician was set at 300 percent of the physician office’s Documented Paid Cost, but in no case could that amount exceed $20 above the Documented Paid Cost.

A new CWCI study examines changes in compound drug utilization and payments before and after the implementation of AB 378 by measuring the volume of compound drugs prescribed to California injured workers and the amounts reimbursed for those drugs in the first half of 2011 to the comparable data from the first half of 2012.

Compound drugs fell from 3.1 percent of California workers’ compensation prescriptions in the first half of 2011 to 2.0 percent of the prescriptions dispensed to injured workers in the first six months of 2012, a relative decline of 35 percent; yet at the same time, compound drug reimbursements increased from 11.6 percent to 12.6 percent of California workers’ compensation prescription payments, a relative increase of 9 percent. Over the same period, the average amount paid per compound drug prescription increased 68.2 percent from $460.42 to $774.21, while the average paid for a non-compound drug prescription decreased 4.6 percent from $112.78 to $107.61.

The average number of NDC ingredients used within compounded drugs dispensed to California injured workers increased from 3.4 in the first half of 2011 to 3.8 in the first half of 2012, a 13.1 percent increase; while the average paid per NDC ingredient increased 48.7 percent from $135.63 to $201.67. In addition, there was a 25.5 percent increase in the quantity per NDC ingredient but virtually no change in the average days’ supply per compound drug prescription, suggesting that more potent compound drugs are being dispensed.

There is little evidence from clinical trials to support the use of many of the compound drugs dispensed to injured workers. Ingredients such as Dextromethorephan are reimbursed at significantly higher levels than alternative therapeutic equivalents without adequate cost/benefit evaluation. The lack of rigorous independent evaluation and the lack of federal and state oversight limit the California workers’ compensation payers’ ability to control compound drug utilization and cost. Current Trends in Compound Drug Utilization and Cost in the California Workers’ Compensation System Alex Swedlow, MHSA Eileen Auen, MBA