Tag: 2013 News

It is likely that more than 10% of the cost of medical benefits for the workplace injuries that occur this year will be for services provided more than two decades into the future. That percentage has been growing and might continue to grow. A new study by NCCI looks at workers compensation medical services provided beyond 20 years after the injury, with a view toward anticipating: which medical service categories will account for the largest shares of costs and future treatment and utilization that will drive those costs.

NCCI first looks at the demographics of claimants who are still being treated for job-related injuries that were suffered more than two decades ago. The focus then shifts from patients to their medical care, looking at medical costs by service and diagnosis categories. Some key findings concerning services provided from 20 to 30 years following the date of injury are as follows:

• Patients are predominantly male, more so than can be explained by historical gender differences in the workforce
• Deteriorating medical conditions of the more elderly claimants is not a main cost driver; indeed, claimants younger than age 60 cost more per year, per claimant, to treat than those older than age 60
• Relative to services within the first 20 years after injury, care provided later has a significantly greater portion of cost going for prescription medications, supplies, home health services, and the maintenance of implants, orthotics, and prosthetics.

Because drugs account for a large proportion of late-term-care costs, prescription data can suggest the nature of late-term care. The study compares the share of WC medication costs for several specific drugs. It compares late-term-care experience with all WC medication costs in 2009 and includes the top 10 WC drugs, either overall or within late-term care:

• The top drug, OxyContin, accounts for 6% of WC medication costs in 2009 and that share rises another 5 percentage points to 11% for late-term care
• The shares for opioid chronic pain medications, such as Oxycodone (OxyContin, Percocet) and Fentanyl (Duragesic), are generally higher within late-term care than within all medication costs for 2009
• The shares within late-term care for muscle relaxants, such as Skelaxin and Cyclobenzaprine HCL are substantially lower than their overall shares for 2009

The specific medications given late-term provide a further indication for the shift in focus from treating the loss of function to relieving pain.

Bloomberg New reports that Johnson and Johnson which is fighting more than 10,000 lawsuits over its recalled hip implants, is negotiating a potential settlement with patients that may eventually total more than $2 billion, according to five people familiar with the matter. The world’s biggest seller of health-care products, offered to pay more than $200,000 a case, according to the people, a deal which could exceed $2 billion if most plaintiffs accept the terms. Lawyers for hip recipients have so far rejected the offer as too low, the people said.

In 2010, J and J recalled 93,000 all-metal hips worldwide, including 37,000 in the U.S., saying more than 12 percent failed within five years. Patients who sued contend they suffer pain and are immobilized by joint dislocations, infections and bone fractures. They alleged metal debris from the hips causes tissue death around the joints. The settlement talks probably won’t end until after the first trials of the lawsuits begin, starting next week, with more set for next month and May, according to the people, who asked not to be identified because they aren’t authorized to speak publicly about the talks.

J and J faced 10,100 suits over the hips through September. Most pretrial collection of evidence has been consolidated in federal court in Toledo, Ohio, where 7,240 cases are pending, and California state court in San Francisco, where more than 2,000 cases are filed. Other cases have been filed in state courts around the U.S. The three cases going to trial in the next few months may offer lawyers guidance on potential liability and damages. The first proceeding starts Jan. 23 in state court in Los Angeles; the second begins next month in state court in Chicago; and a third is slated for May in federal court in Toledo, Ohio.

The Los Angeles court trial involves a lawsuit by Loren Kransky of Montana, a retired corrections officer who got an ASR hip implanted on Dec. 5, 2007. He had the hip replaced in February 2012. Claims by Kransky, 65, include failure to warn, negligent recall and manufacturing defect. “Kransky asserts that his device released metal ions into his body and that as a result he developed elevated chromium and cobalt levels,” J and J said in a Nov. 21 court filing. The instructions with the implant “specifically warned that metal ions may be released from the hip implant into the body and that additional surgery may be required.”

A retiree and a military veteran, Kransky’s health conditions included “diabetes, neuropathy, arteriosclerosis and heart problems, some of which were determined to be associated with his exposure to Agent Orange while serving in Vietnam in the 1970s,” according to the filing.

Kransky’s case was chosen from those pending in the California Judicial Council Coordinated Proceeding before Judge Richard Kramer in San Francisco.

“Any comment relating to settlement that does not come from leadership, the court, or from the company itself, is speculative and uninformed,” said Skikos, of Skikos Crawford Skikos and Joseph in San Francisco and Cleveland.

The 2008 bankruptcy and default by fallen department store giant Mervyn’s LLC on its self-insured workers’ compensation insurance obligations represents the largest-ever for a state fund that will assume responsibility for the claims. The California Self Insurers Security Fund, believed at the time that Hayward-based Mervyn’s defaulted on almost $20 million in unpaid workers’ compensation claims, though the final total could be significantly lower because many claims are inactive.The Security Fund, a nonprofit mutual benefit corporation created by the state in 1984, is designed to ensure that workers’ comp claims are paid for workers in self-insured plans in the event of a default by their employer. In its 24 years, officials say, it has assumed liability for $160 million in claims involving 64 defaults, ultimately leaving it responsible for $90 million in net costs after accounting for about $70 million in surety bonds or deposits posted by the defaulting organizations. Prior to Mervyn’s, the last big default was National RV in late 2007, leaving $3.5 million in claims and $5 million in security deposits,

Joh Navroth II was an applicant with a pre-bankruptcy industrial injury. He is attempting to recover directly from the bankruptcy court in Delaware.The bankruptcy court issued an order deferring his claim to the WCAB.

Navroth seeks damages for alleged injuries from a work related accident (dropping a folding table on his foot). The Initial Claim includes allegations of and requests for compensation for physical and emotional suffering and demands for payment of vacation, sick and personal holiday time. The alleged incident occurred in California prior to Mervyn’s bankruptcy. Importantly, Claimant filed a statutory workers’ compensation proceeding (the “State Proceeding”) prior to the commencement of the bankruptcy case. The Amended Claims contain allegations of breaches of fiduciary duties, discrimination, employment discrimination, interference with contractual relations and interference with prospective business advantage. The Amended Claims increase the total sum Claimant seeks to in excess of $21 million. Claimant also alleges that the Amended Claims are secured.

The Amendments are untimely and therefore void, as they were filed after the General Bar Date of January 9, 2009. Claimant’s only timely filed claim is Claim No. 3283 in the amount of $671,759.86. The Amendments are clearly new claims filed after the Bar Date and are therefore void. The Court carefully reviewed the Amended Claims against the Initial Claim and it is beyond any doubt that the Amended Claims are not related to the Initial Claim.

The Initial Claim is the only remaining claim. The Court fully agrees with Debtors that the Court should abstain from hearing the Initial Claim. 28 U.S.C. § 1334(c)(I) directs the Court to consider exercising its discretion to abstain from hearing a matter arising under the Bankruptcy Code or arising in or related to a bankruptcy case, in “the interest of justice, or in the interest of comity with State courts or respect for State law.”

Abstention will limit the necessary tribunals to one, the California Workers’ Compensation Board (“CWCB”) in the State Proceeding. Were the Court to hear the Initial Claim, it could determine the validity but not the amount. The District Court would have to determine the amount. In re Amtrol, 384 B.R.686, 690 (Bankr. D. Del. 2008). The estate would therefore have to litigate in two courts, an obvious burden and waste of judicial resources.The Initial Claim, which is the sole remaining claim, raises only California workers’ compensation law. Abstention is therefore wholly proper. Fruit of the Loom, 407 B.R. at 600, 602; In re Holiday RV Stores, Inc., 362 B.R. 126, 130-31 (D. Del. 2007).

For the foregoing reasons, the Court entered an Order dismissing the Amended Claims and abstaining from hearing the Initial Claim and thereby deferring to the State Proceeding.

The Superior Court of Los Angeles County, California issued an order denying a petition seeking court approval for the transfer to factoring company Fortress Funding LLC of an applicant’s rights to payments under a workers’ compensation settlement according to the report on the Corporate Counsel website. In the matter styled In Re Rudy Andrade, No. BS139876, Superior Court Judge Amy D. Hogue held that the issuer of the annuity that funded the settlement payments was an interested party with standing to appear and oppose the petition, and that, based on the arguments in the annuity issuer’s opposition, the petition was denied.

It is not uncommon in large workers’ compensation or personal injury cases to resolve the claim by way of a structured settlement. The settlement is typically funded by an annuity purchased from another insurance company for a lump sum of money. The annuity pays a regular benefit to the claimant over his or her lifetime, and may even offer a residual payment to the heirs of the claimant. There are advantages to a structured settlement for both parties. The lump sum paid by the carrier is less than the total aggregate of future payments, thus there is cost savings. The carrier no longer has to keep an open file as the future payments are paid directly by the annuity company. The applicant receives an aggregate dollar settlement higher than what the workers’ compensation benefit would have been. And, the annuity payments are tax free.

However, after a structured settlement, some applicants have second thoughts, and want to get a lump sum of cash for their structured settlement. Indeed, there are financial companies advertising on television offering cash for assignment of a structured settlement (for a deep discount of course). It would appear that the petition of Rudy Andrade is an example of such cases. Fortress Funding LLC was seeking to buy out his annuity funded structured settlement for a discount of 13.48%. An agreement such as this requires court approval pursuant to the California Structured Settlement Act. In this case the annuity company opposed the petition, and the Superior Court denied the petition to transfer the annuity to Fortress Funding LLC..

n its opposition, the annuity issuer argued, among other things, that:

• The California structured settlement transfer act, Cal. Ins. Code § 10134 et seq., under which the petition was brought, did not apply to transfers of workers’ compensation payments.
• The proposed transfer contravened the California Labor Code § 4900 prohibiting assignment of workers’ compensation payments.
• The proposed transfer would be contrary to California common law, as the compromise and release agreement signed by the payee expressly prohibited assignment of the payments.
• The proposed transfer would be contrary to a prior order of the Workers’ Compensation Appeals Board of the State of California, which approved the underlying workers’ compensation compromise and release agreement that expressly prohibited assignment of the payments.
• The factoring transaction involved a transfer with an effective annual discount rate of 13.48%, and did not appear to be in the payee’s best interest.
• The payee had no rights to the annuity that funded the workers’ compensation payments, and could not lawfully assign the annuity payments.

Three of nine defendants were arrested in a continuing investigation into a fraudulent unemployment and disability benefits scheme based out of Sutter County, United States Attorney Benjamin B. Wagner announced. Balkar Singh, 50; Harvinder Kaur, 37; and Harjinder Kaur Thandi, 34, all of Yuba City, will be arraigned before U.S. Magistrate Judge Dale A. Drozd.

In a 36-count indictment a federal grand jury charged nine defendants with participating in a scheme to defraud the State of California of unemployment and disability benefits. The remaining defendants: Jit Kaur, 62; Daljit Kaur Sangha, 41; Sukhwinder Kaur, 54; Darshan Rani, 44, all of Yuba City; Avtar Kaur Bains, 73, of Roseville; and Mo Pegany, 56, of Ceres, will appear in court at a later date.

This is the third indictment in an ongoing investigation. Six defendants were indicted in May 2012, and six others were indicted in September 2012.

According to the first indictment, Mohammad Nawaz Khan, 56; Mohammad Adnan Khan, 31; Iqila Begum Khan, 31, all of Live Oak, and Mohammad Shahbaz Khan 56, of Yuba City, controlled a series of companies that were reported to the Employment Development Department as farm labor contractors. The Khans sold fake paystubs to other people in the community and used the companies they controlled to report false wages for the individuals who purchased those paystubs. The Khans at times instructed the purchasers how the fake paystubs could be used to fraudulently claim unemployment and disability benefits. Over the course of the conspiracy, the defendants reported wages for over 400 separate individuals that resulted in more than 2,000 fraudulent claims for unemployment and disability benefits. The loss in this case is more than $5 million.

According to the new indictment, Jit Kaur, Bains, Sangha, Pegany, Singh, Harvinder Kaur, Thandi, Sukhwinder Kaur, and Rani purchased pay stubs that falsely showed they had been paid wages by companies controlled by the Khans. The defendants would then use that pay stub to file for unemployment benefits, disability benefits, or both. According to the indictment, the defendants purchased pay stubs for approximately $250 for every $1,000 in wages. They would use those fraudulent obtained wages to file for unemployment insurance, disability insurance, or both.

This case is the product of a joint investigation by the Federal Bureau of Investigation, the Department of Labor, Office of Inspector General, and the Employment Development Department, Investigations Division. Assistant United States Attorney Jared Dolan is prosecuting the case.

If convicted, the defendants face a maximum statutory penalty of 20 years in prison and a $250,000 fine for each count.

“Fraud against the employer-funded Unemployment Insurance program or the employee-funded Disability Insurance program costs all of us and will not be tolerated,” said Pam Harris, Director of the California Employment Development Department (EDD). “EDD’s investigators are committed to detecting and deterring fraud to protect the integrity of these vital programs, which are meant to benefit hardworking Californians and businesses.”