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Tag: 2014 News

State Fund Discontinues Group Insurance Plan

Since the implementation of tiered rating in March 2013, State Fund has broadened its pricing structure and allowed more accurate rating to an individual policyholder’s risk. Under tiered rating, State Fund is able to offer fair prices to a much broader range of employers, allowing it to remain a strong and stable provider of workers’ compensation insurance for all California employers.

Throughout 2014, State Fund performed an in-depth evaluation to understand how the group insurance discount was working with tiered rating. Originally, State Fund introduced the group insurance discount to recognize and reward employers whose loss history demonstrated a culture of safety. Trade associations who had agreements with State Fund received an administrative fee, which averaged approximately four percent to six percent of premium.

The study concluded that the tiered rating plan has the same effect on policyholders as the group discount, reflecting individual performance and recognizing employers with demonstrated safety records with appropriate pricing.

In light of this analysis, State Fund has decided to discontinue group insurance and will not be renewing group agreements in 2015. Additionally, the group insurance discount will be eliminated April 1, 2015 for all groups, including the California Farm Bureau Federation.

State Fund underwrites many Alternative Dispute Resolution (ADR) groups. Beginning in 2015, specialized claims handling for these groups, but we will no longer discount the policies nor pay administrative fees.

“The workers’ compensation market has changed dramatically and the decision to discontinue the group insurance program is not a reflection on the quality of the employer associations’ value to their industry and members, but rather supports our efforts to manage costs and support fair pricing for all California employers,” said Jennifer Vargen, Executive Vice President, Public Affairs. “State Fund recognizes the value employer associations bring to California and will seek opportunities to collaborate with them on safety and other issues important to California employers.”

Ventura Orthopedic Surgeon Faces Fraud Charges

A former Ventura County neurosurgeon who was last based in Detroit, allegedly defrauded the Medicare health care program of millions of dollars by performing unnecessary spinal surgeries on patients, according to a criminal complaint recently unsealed in federal court. Neurosurgeon Dr. Aria Sabit is accused of performing lumbar spinal fusions on numerous patients and billing insurers despite failing to install medical devices in patients whose pain continued after surgery. The 40-page criminal complaint caps a lengthy investigation by the Federal Bureau of Investigation and U.S. Department of Justice that spanned at least two states, and involved multiple patients and tens of millions of dollars. The criminal complaint follows a civil case filed against the same doctor, and others, in Los Angeles federal court last September.

A disheveled, unshaven Sabit, dressed in jeans and a white T-shirt and wearing handcuffs and leg shackles, made a brief court appearance after his arrest. He could face 10 years or more in prison, if convicted.

According to the report in the Detroit News, Sabit, 40, was the focus of a front-page article in the Wall Street Journal last year that concluded he profited from implants he used in dozens of surgeries on patients, including at least one who died. The charges come two months after the Justice Department sued Sabit and a medical network over the alleged fraud. He is accused of using various businesses and medical practices to perpetuate the alleged fraud, including Southfield-based Michigan Brain and Spine Physicians Group. The firm allegedly billed health care programs for services that were not provided or overcharged for the services, according to the criminal complaint.

Sabit performed surgery on almost everyone who walked through his office, an unnamed employee told an FBI agent. Sabit previously was licensed in California and was the subject of more than two dozen medical malpractice lawsuits between 2009-10. In July, he agreed to surrender his California medical license. The new criminal complaint references five former Michigan patients, four of whom were told by Sabit that they needed to undergo spinal fusion surgery. Subsequently, after continuing pain, all patients received second opinions from other doctors stating that no such spinal fusion had been performed and there was no evidence of any screw, or any medical device in the spinal column of the patient,

The United States has also filed civil complaints in a federal district court in Los Angeles, under the False Claims Act against Sabit, spinal implant company Reliance Medical Systems, a Utah company, two Reliance distributorships – Apex Medical Technologies and Kronos Spinal Technologies, both , Florida companies – and the companies’ owners, Brett Berry, John Hoffman and Adam Pike. Reliance Medical Systems allegedly sold spinal implants in Southern California through distributorships that it controlled, including Apex Medical Technologies and Kronos Spinal Technologies. Drs. Aria Sabit and Sean Xie were physician-investors in Apex, and Drs. Gowriharan Thaiyananthan who practices neurosurgery in Orange California and Ali Mesiwala who practices in Pomona California were allegedly physician-investors in Krons. The Los Angeles civil complaints allege that Apex Medical and Kronos Spinal paid physicians, including Sabit, to induce them to use Reliance spinal implants in the surgeries they performed. The litigation also involves Ventura County neurosurgeon Moustapha Abou-Samra, M.D. and Community Memorial Health System hospital in Oxnard. The private complaint alleges that in the spring of 2009, defendant Moustapha Abou-Samra, M.D. a Board Certified neurosurgeon and president of Ventura County Neurosurgical Associates with full privileges at Community Memorial Health System (CMH), recruited Aria Omar Sabit, M.D., a non-board certified neurosurgeon, to relocate from New Jersey to Ventura County, California to be employed by Abou-Samra’s corporation. Sabit was allegedly allowed to perform highly specialized neurosurgical operative procedures including spinal surgeries with open reduction and internal fixation, spinal fusions, laminectomies and pedicle screw implantation at CMH despite demonstrations that his surgeries were allegedly plagued with high infection rates, high return-to-surgery rates, violations of operating room protocols, failures in instrumentation, surgical mishaps, inappropriate case selection and high complication rates. Sabit had allegedly performed over 375 procedures from June 2009 to December 2010 while under provisional privileges at CMH. Some 27 patients who were injured by Sabit’s procedures brought individual lawsuits in the Superior Court of the State of California for the County of Ventura against Sabit and some of the other defendants for medical malpractice.

Sabit is originally from Afghanistan and is accused of illegally obtaining U.S. citizenship last year. Sabit allegedly failed to disclose that he knowingly committed health care fraud, prosecutors said. The government wants Sabit held in jail pending trial, noting that he was questioned in September in Atlanta while trying to fly to Dubai. Sabit told a customs officer that he owned a company involved in mining in Afghanistan. In his luggage, officers found a ruby and a 3.6-carat emerald, according to the complaint.

Sedgwick Acquires Software Company

Sedgwick Claims Management Services, Inc. has acquired Absentys, LLC., a Chattanooga-based software application developer and service provider. Absentys’ LeaveLink and ADALink software platforms will benefit Sedgwick’s claims services within the framework of the Family and Medical Leave Act, state-specific leave laws, the Americans with Disabilities Act and the ADA Amendment Act of 2008.

Absentys builds technology platforms designed to help employers ensure compliance with federal and state leave and accommodation regulations. Its proprietary, web-based LeaveLink® and ADALink® software solutions help companies navigate the framework of the Family and Medical Leave Act (FMLA), state-specific leave laws, the Americans with Disabilities Act (ADA) and the ADA Amendments Act of 2008 (ADAAA). The press release notes that Absentys’s state-of-the-art software solutions are easily configured to meet each employer’s unique needs and allow for self-administration or co-sourcing of leaves of absences and accommodation requests. The company’s software platforms currently administer leaves of absence and accommodation requests for more than 500 organizations and 3 million workers.

“Combining Absentys’ powerful software solutions with Sedgwick’s current capabilities allows us to not only bring our industry-leading expertise to organizations seeking to self-administer their employee absence and accommodation programs but also to augment our technology-enabled claims and productivity service offerings for large employers,” said David North, Sedgwick president and CEO.

In October, Sedgwick Claims Management Services, Inc. made another significant acquisition, of T and H Global Holdings. According to a release, this acquisition includes membership in the global vrs Adjusters’ organization, which is one of the top organizations in corporate and complex loss adjustment and claims management worldwide. Sedgwick’s move will expand the company’s international footprint beyond North America. T and H subsidiaries have a presence in all 50 states and the U.K. It includes VeriClaim Inc.; VRS VeriClaim U.K Ltd; Unified Investigations and Sciences, Inc.; Cramer, Johnson, Wiggins and Associates, Inc.; and Ellis May Chartered Loss Adjusters.

In 2010, Sedgwick was acquired by Affiliates of Stone Point Capital LLC and Hellman and Friedman LLC.

Hospitals Achieve “Historic Improvement” in Medical Errors

About 50,000 people are alive today because U.S. hospitals committed 17 percent fewer medical errors in 2013 than in 2010, according to a report in Reuters Health. The lower rate of fatalities from poor care and mistakes was one of several “historic improvements” in hospital quality and safety measured by the Centers for Medicare and Medicaid Services. They included a 9 percent decline in the rate of hospital-acquired conditions such as infections, bedsores and pneumonia from 2012 to 2013.

Secretary of Health and Human Services Sylvia Burwell is scheduled to announced the data at the CMS Healthcare Quality Conference in Baltimore. It is based on a detailed analysis of tens of thousands of medical records, but because data was collected differently before 2010, it is not possible to compare pre-2010 figures to later ones. CMS is a unit of Burwell’s department.

The deadly problem of hospital error burst into the national spotlight in 1999, when the Institute of Medicine estimated that as many as 98,000 people die every year because of hospital mistakes that allow patients to contract infections, fall, develop pneumonia from being on a ventilator, or suffer other serious but preventable harm.

In 2010, the HHS inspector general estimated that poor care in hospitals contributed to the deaths of 180,000 patients covered by Medicare, which insures the disabled and those 65 or older, every year. Officials offered several possible explanations for the steep decline in sometimes-fatal hospital-acquired injuries, infections and other conditions. Hospitals have made a concerted effort to improve safety, spurred in large part by changes in how Medicare pays them. President Barack Obama’s healthcare reform law requires CMS to reduce the reimbursement rate for hospitals that re-admit too many patients within 30 days, an indication of poor care the first time. As a result of the improvements in hospital safety, 1.3 million fewer patients suffered a hospital-acquired condition in 2013 than if the 2010 rate had remained steady, CMS Deputy Administrator Dr. Patrick Conway told reporters. That produced savings of some $12 billion from avoidable costs, such as for treating a single bloodstream infection due to a catheter, at a $17,000.

Compounding Pharmacies Sue Express Scripts

This past summer, Express Scripts began blocking coverage for approximately 1,000 active ingredients used to make a variety of compounded medicines, mostly ointments, creams and powders that are found in topical treatments. The move by the nation’s largest pharmacy benefit manager was made in response to the growing cost of some of these medicines. At the time, Express Scripts official said the average cost for each prescription had risen to about $1,100 from $90. Express Scripts officials maintained that less expensive prescription medicines are readily available.

But according to the story in the Wall Street Journal, three compounding pharmacies are fighting back. Last week, three compounders filed a lawsuit charging Express Scripts is illegally blocking legitimate prescriptions and unfairly forcing patients to seek more expensive treatments or forgo medical care.

An Express Scripts spokesman declined to comment on the lawsuit and referred us to a page on the company web site in which an explanation for the policy change was made.

The compounders maintain that Express Scripts is violating federal law, because the pharmacy benefits manager allegedly lacks the authority to alter the terms of the affected health plans, according to the lawsuit. As an example, the lawsuit cites a health plan served by Express Scripts in which compounded medicines and ingredients have not been listed as excluded. “In order to cover up its financially driven scheme, Express Scripts….. is issuing intentionally deceptive and misleading letters to patients informing them that there is an unspecified change in their compound medication benefits and that there is a purported lack of FDA approval for compound medications, which is untrue,” the lawsuit states. The lawsuit goes on to argue that, until now, Express Scripts “routinely paid” for compounded drugs as “medically necessary, efficacious and properly prescribed by patients. The letters are a misleading scare tactic and pretext invented to cover up its true financial goal behind the scheme.” The lawsuit cites a document indicating the move is designed to cut compound spending by 95%.

The safety of some compounded medications became a hot topic two years ago after an outbreak of fungal meningitis was traced to a compound pharmacy in Massachusetts and led to dozens of deaths. This prompting Congress to pass a law called the Drug Quality & Security Act to boost oversight. The FDA, meanwhile, has responded by increasing inspections and issuing warning letters.

Compound pharmacies, however, have been chafing over the law, which creates two classes of compounders – one that voluntarily chooses to register with the FDA and another that may decline to do so. The first group is subject to certain conditions, such as meeting good manufacturing practices, but the FDA hopes the requirements will give hospitals and physicians the confidence needed to purchase needed compounded medicines.

Recently, the International Academy of Compounding Pharmacists, a trade group, began lobbying Congress to alter the law and make “technical corrections.” In response, a group of trade groups for drug makers, along with the Pew Trust, wrote to the FDA to express support for the law in its existing form.

Scientists Discover Pain “Off Switch”

In research published in the medical journal Brain, Saint Louis University researcher Daniela Salvemini, Ph.D. and colleagues within SLU, the National Institutes of Health (NIH) and other academic institutions have discovered a way to block a pain pathway in animal models of chronic neuropathic pain including pain caused by chemotherapeutic agents and bone cancer pain suggesting a promising new approach to pain relief.

The scientific efforts led by Salvemini, who is professor of pharmacological and physiological sciences at SLU, demonstrated that turning on a receptor in the brain and spinal cord counteracts chronic nerve pain in male and female rodents. Activating the A3 receptor — either by its native chemical stimulator, the small molecule adenosine, or by powerful synthetic small molecule drugs invented at the NIH — prevents or reverses pain that develops slowly from nerve damage without causing analgesic tolerance or intrinsic reward (unlike opioids).

Pain is an enormous problem. As an unmet medical need, pain causes suffering and comes with a multi-billion dollar societal cost. Current treatments are problematic because they cause intolerable side effects, diminish quality of life and do not sufficiently quell pain. The most successful pharmacological approaches for the treatment of chronic pain rely on certain “pathways”: circuits involving opioid, adrenergic, and calcium channels.

For the past decade, scientists have tried to take advantage of these known pathways — the series of interactions between molecular-level components that lead to pain. While adenosine had shown potential for pain-killing in humans, researchers had not yet successfully leveraged this particular pain pathway because the targeted receptors engaged many side effects.

In this research, Salvemini and colleagues have demonstrated that activation of the A3 adenosine receptor subtype is key in mediating the pain relieving effects of adenosine. “It has long been appreciated that harnessing the potent pain-killing effects of adenosine could provide a breakthrough step towards an effective treatment for chronic pain,” Salvemini said. “Our findings suggest that this goal may be achieved by focusing future work on the A3AR pathway, in particular, as its activation provides robust pain reduction across several types of pain.”

Researchers are excited to note that A3AR agonists are already in advanced clinical trials as anti-inflammatory and anticancer agents and show good safety profiles. “These studies suggest that A3AR activation by highly selective small molecular weight A3AR agonists such as MRS5698 activates a pain-reducing pathway supporting the idea that we could develop A3AR agonists as possible new therapeutics to treat chronic pain,” Salvemini said.

DWC to Impose $500/Day Penalty for Late IMR Records

The Division of Workers’ Compensation announced it will initiate the procedure to assess administrative penalties for claims administrator failure to timely submit relevant medical records in cases currently pending Independent Medical Review (IMR).

Under Labor Code section 4610.5(i), DWC is authorized to assess penalties against claim administrators whose conduct has the effect of delaying the IMR process. Under current regulations, Maximus Federal Services, Inc., the organization designated by DWC to conduct IMR reviews, sends the claims administrator a Notice of Assignment and Request for Information (NOARFI) in an IMR case. The notice advises of the relevant medical records to be submitted, which must be provided to Maximus within 15 days of the date on the NOARFI. The regulatory requirements for submitting records can be found at California Code of Regulations, title 8, section 9792.10.5.

Under California Code of Regulations, title 8, section 9792.12(c)(6), failure to submit the records within those 15 days will subject a claims administrator to an administrative penalty of $500 for each day the records are untimely, up to a maximum of $5,000. DWC will send an Order to Show Cause to claims administrators who may be liable for a penalty, with the facts upon which the penalty is based, the penalty amount, and the administrative process for contesting a penalty.

The procedure to assess administrative penalties will commence in cases where there is a failure to timely submit medical records dated on and after December 1, 2014. For IMR cases currently pending at Maximus as of December 1, 2014, the penalty procedure will commence if the relevant medical records are not received on or before December 15, 2014.

DWC will continue to post updates and notifications regarding the IMR system on the IMR page.

SubRosa Nails San Diego Nurse After Two-Week Jury Trial

A workers’ compensation fraud defendant was sentenced to six years of local custody after being convicted by a jury of 12 felony counts including perjury and insurance fraud for her role in defrauding her employer out of more than $300,000 over a seven-year period. Golnaz Gholipour, 35, was sentenced to three years in local prison and three years of mandatory supervision. A restitution hearing will be held at a future date to determine how much she will pay in restitution to Sharp Healthcare for costs they incurred in handling her fraudulent claim.

Gholipour was a nurse at Sharp Hospital who initially told her doctors in January 2007 that she injured her back while waking up from a nightmare. She first filed for state disability benefits, but after learning that the most she could receive from state disability was $4,515 based on the fact that she’d only been employed in California a few months, she filed for workers’ compensation benefits.

All of the defendant’s medical expenses were covered and she received more than $88,000 for the two years she claimed she could not work after her injury. In May 2010, after all conservative care was exhausted, Gholipour had back surgery. By April 2013, when Ghoilpour continued to claim she was worse off than before the surgery, the insurance company hired a private investigator.

The defendant was filmed on several occasions in a normal state with no apparent injuries. Only when she was going to doctor’s visits or attending legal meetings did Gholipour appear hurt and in need of a walker. At her deposition, Gholipour testified that she lived with her parents and that her mother had to bathe her and help her get dressed. She claimed to need to use the walker at all times, that she was depressed, had not gone out on any dates and was not involved in any relationships. She also said she had significant gastro-intestinal problems and generally stayed at home groggy from her medications.

After her deposition, Gholipour was filmed over an eight-hour period as she went shopping, dined at restaurants, and moved about in a normal fashion without any sign of pain or discomfort and without a walker. On another occasion, she was filmed during a 12-hour period during which she moved potted plants on her balcony, went shopping, walked several hundred yards to go to a picnic and back and went to a movie. In the videos, she was observed with the same man who is now her husband and they appeared to be living together.

After a two-week jury trial, the defendant was convicted on eight counts of perjury and four counts of insurance fraud.

Monterey County Contractor Sentenced for 2nd Offense

Jose Valdez, 41 of Seaside, has been sentenced on one felony count of fraudulent use of a contractor’s license and one misdemeanor count of failing to secure workers’ compensation insurance, according to Monterey County District Attorney Dean D. Flippo.

Valdez was doing business as Angel Valdez Landscaping. The defendant was also sentenced on a misdemeanor violation of probation case involving the same and similar charges.

Judge Larry E. Hayes sentenced Valdez to five years probation on the new case and reinstated his probation in the earlier case on the same terms as previously ordered. He was then sentenced to 180 days in jail on the new case with that term suspended and 180 days on the violation of probation to run consecutive. His terms and conditions of probation include, but are not limited to, obey all laws including Labor Code and Business & Professions Code laws, regulations and other ordinances and pay over $20,000 in fines.

DWC Posts More Proposed Changes to MTUS Regs

The Division of Workers’ Compensation has posted a second 15-day notice of modification to the proposed Medical Treatment Utilization Schedule (MTUS) regulations to the DWC website. Members of the public are invited to present written comments regarding the proposed modification to until 5 p.m. on Tuesday, December 9. The proposed modifications include:

1) Re-organization of section 9792.21 to clarify the MTUS shall be the primary source of guidance for treating physicians and physician reviewers for the evaluation and treatment of injured workers.
2) Addition of a new section, 9792.21.1 – The Medical Evidence Search Sequence. The Medical Evidence Search Sequence was separated from section 9792.21 to clarify the steps required to find medical evidence. Any search for medical evidence begins, and likely ends, with the MTUS. Searching for medical evidence outside the MTUS is limited to situations where a medical condition or injury is not addressed by the MTUS or if the MTUS’ presumption of correctness is being challenged. (Note: A flow chart is included in the Notice of Modification to Text of the Proposed Regulations to provide a visual aid for the Medical Evidence Search Sequence.)
3) Specification that a treating physician who seeks treatment outside of the MTUS bears the burden of rebutting the MTUS’ presumption of correctness by a preponderance of scientific medical evidence.
4) Requirements that shall be included in a Request for Authority, Utilization Review Decision and Independent Medical Review Decision. Any citation provided by a treating physician or medical reviewer shall be the primary source relied upon which contains the recommendation that guides the reasonableness and necessity of the requested treatment that is applicable to the injured worker’s medical condition or injury. If more than one citation is provided, then a narrative shall be included in the three aforementioned documents explaining how each guideline or study cited provides additional information that guides the reasonableness and necessity of the requested treatment applicable to the injured worker’s medical condition or injury but is not addressed by the primary source.
5) Details of the citation format requirements.
6) Revision of The MTUS Methodology for Evaluating Medical Evidence to clarify when it must be applied by a reviewing physician and how to evaluate the quality and strength of medical evidence used to support a recommendation.
7) Amendments to citations in sections 9792.23, 9792.24.1 and 9792.24.3 referencing the sections currently being revised in rulemaking to sections 9792.20 – 9792.26.

The DWC has also prepared a graphical flowchart that depicts the decision making process of a medical treatment review.

The notice and text of the regulations can be found on the proposed regulations page.