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Tag: 2015 News

Grand Jury Indicted Union Official for Kickbacks to Comp Attorney

A federal grand jury indicted 54 year old Oakland resident Daniel Rush for taking illegal payments as a union employee, honest services fraud, attempted extortion, and money laundering. According to the indictment, Rush is alleged to have used his position as a union organizer with the United Food and Commercial Workers (UFCW) to obtain money and other things of value over a five year period.

Rush was an organizing coordinator of the medical cannabis division of the UFCW. The indictment further charges Rush with taking kickbacks from Marc Terbeek, an Oakland workers compensation attorney, in exchange for arranging for the attorney to represent clients in worker’s compensation matters. Rush was an officer and director of an advocacy organization for the working poor. Rush directed the organization’s referral of worker’s compensation clients to the attorney. In exchange, the attorney provided Rush with a credit card on which Rush charged thousands of dollars of personal expenses which ultimately were paid by the attorney.

Rush also is charged with attempted extortion. Rush was a member of the Berkeley Medical Cannabis Commission, which is a commission of the City of Berkeley organized to facilitate the appropriate licensing and regulation of medical marijuana in the city. Rush demanded a well-compensated job from a prospective medical marijuana dispensary in exchange for his influence as a member of the commission.

In addition, the indictment alleges that Rush engaged in a conspiracy to commit money laundering and financial structuring, as well as substantive money laundering. The indictment and FBI agent’s affidavit filed in the case explain that Rush took a loan totaling $600,000 in cash from a person engaged in the marijuana business. Rush and the attorney engaged in a series of structuring transactions designed to obscure the origin of the money. Over the ensuing years, Rush required the attorney to fund interest payments on the loan and, when Rush ultimately was not able to repay the loan, he offered favorable union benefits in exchange for forgiveness of the loan.

The case is being prosecuted by the Special Prosecutions and National Security Unit of the U.S. Attorney’s Office in San Francisco and investigated by the FBI.

Cloud Based Payroll Companies Expanding to Comp Insurance

The San Francisco-based company ZenPayroll has offered a cloud-based system to automate tax calculations and payroll payments. Its web-based services are already used by more than 20,000 small businesses. The company has now changed its name to Gusto, and is competing in the workers’ compensation insurance marketplace. When it was still ZenPayroll, the company’s sights were set on helping the six million US-based small businesses – places like florists, churches, and salons – that have, in the past, done payroll by hand. But the company also announced that it will also be rolling out health benefits and workers’ compensation to these businesses.

Over the past few months, Gusto has quietly tested health benefits and workers’ compensation products. Now, it will offer both services to existing and new accounts, starting in California. That shift will put the San Francisco-based company in head-to-head competition with Zenefits, the powerful online health insurance broker. Traditionally, the two startups have been partners: Zenefits uses payroll data from the likes of ADP and ZenPayroll to manage its plans, but wants to reduce that dependency. As of late June, Zenefits claimed more than 10,000 accounts. Last year, it generated around $20 million in revenue and as of May its valuation was around $4.5 billion. CEO Parker Conrad told Fortune sales could quintuple this year.

So far, Gusto has raised approximately $86.1 million, including a massive $60 million round from Google Capital last April. As a side note, Google Capital just put $32.5 million into another disruptive insurance startup, Oscar Health. There are also plenty of other companies seeking a piece of the action, including those hoping to empower existing insurance brokers with cloud software, such as EaseCentral and Maxwell Health.

WCAB En Banc Extends IMR Appeal Time Limit to 35 Days

Joann Matute claimed cumulative industrial injury to her psyche, fibromyalgia, carpal tunnel syndrome, allergies and rheumatoid arthritis while employed as a teacher for the Los Angeles Unified School District. She was awarded 37% permanent disability and future medical treatment for rheumatoid arthritis, fibromyalgia and psychiatric injuries.

On July 7, 2014, Pamela Stitt, M.D. issued a prescription for 24-hour home health care services. On August 23, 2014, defendant served applicant with a letter finding that the requested services were not medically necessary. On September 4, 2014, applicant filed a request for IMR. On November 6, 2014, Maximus Federal Services, Inc., issued a Final Determination Letter upholding the UR denial. On December 10, 2014, applicant filed an appeal of the IMR determination. December 10 was 34 days after the November 6, 2014 date of the Final Determination Letter.

The WCJ found that a five day extension for service by mail pursuant to Code of Civil Procedure [C.C.P.] section 1013(a) did not apply to applicant’s IMR appeal and issued the Findings and Order dismissing the IMR appeal as untimely. The WCAB in the case of Matute v LAUSD reversed and held that:

(1) The term “mailing” contained in section 4610.6(h) is equivalent to and means “service by mail” and (2) The 30-day period to file a timely appeal from an IMR determination under section 4610.6(h) is extended by five days pursuant to the provisions of section 5316 and C.C.P. section 1013(a).

There is no specific mention of “service” in section 4610.6(h). Thus, the issue presented is whether the “mailing” of the written IMR determination to the employee or employer is equivalent to and means service by mail. WCAB Rule 10957.1(c) specifically mentions “service by mail” as the trigger for responding to an IMR determination. This rule reflects the intended meaning of “mailing” in light of the relevant case law. The 30-day period to file an appeal of an IMR determination pursuant to section 4610.6(h) is extended by five days pursuant to the provisions of section 5316 and C.C.P. section 1013(a).

Cautious Optimism at DWC Drug Formulary Public Hearing

The California Legislature passed A.B. 1124, which would establish an evidence-based closed drug formulary for Workers’ Compensation by July 1, 2017 if signed by the Governor. Notwithstanding this legislation, the DWC has already commenced public hearings on a drug formulary believing that it has authority to adopt one without further legislation.

An article in Business Insurance reports that California insurance experts are optimistic that a new workers compensation prescription drug formulary will help injured workers and reduce comp costs in the state, but the legislation could face hurdles from claimants who need to be weaned from banned drugs or want to continue using them off-label.

The formulary “takes a significant step forward in improving the state workers compensation system as it will assist in injured workers’ medical outcomes, decrease system bureaucracy and provide for savings,” Steve Suchil, Western region assistant vice president of state affairs at the American Insurance Association, said Wednesday in a statement.

Mark Sektnan, president of the Sacramento-based Association of California Insurance Cos., said the proposal could help curb opioid addiction and ensure injured workers receive appropriate medications. “We need to be very careful about ensuring that we provide the correct drug at the right time to that injured worker so they can do what they need to do, which is get back to work,” Mr. Sektnan said.

While California’s formulary has received positive reactions, experts say there also could be some pushback. Mr. Sektnan said California insurance regulators have discussed limiting the off-label use of medications for conditions that aren’t Food and Drug Administration-approved for such drugs. For instance, injured workers would have difficulty getting prescriptions for some powerful opioids that are indicated for treating end-stage cancer pain, Mr. Sektnan said.

The formulary could include a process for claimants who want to continue taking medications for off-label uses. Speakers also cautioned that patients already on medications need a robust and carefully managed transition process – a provision in the bill requires a yet-to-be-determined transition period. However, Mr. Eichler advised against adopting transition rules from the plan Texas implemented in 2011, which used a two-year phase-in for legacy claims. “It doesn’t take two years to wean a patient,” Mr. Eichler said. “My personal recommendation is to go with one year for legacy claims. You need to protect injured workers with the best protocols possible.”

A major concern voiced by several participants during the public meeting was the need to ensure that the formulary is consistent with the state’s medical treatment utilization schedule, which provides guidelines for utilization review, a framework to evaluate and treat injured workers; and information for providers on understanding which evidence-based treatments have been effective.

QME Panel Ordered in Psyche Add-On Case

SB 863 placed limits on the ability to claim permanent disability for psychiatric injury, sleep disorder or sexual disorder, if it is the result of a physical injury. Before the new law, these claims were referred to as AMA Guides “add-on” cases. A recent case may answer questions about the use of a PQME with a specialty in those areas in add-on cases.

Shari Hernandez, a bank teller for Fremont Bank, claims to have sustained a specific injury to her knee, and cumulative trauma injury to her left leg and foot. Both Applications were amended to include claim of injury to psyche, stomach and internal organs.

The parties later decided to utilize Joel Renbaum, M.D., as an orthopedic AME. Applicant petitioned for assignment of an additional panel in psychiatry, and an Order to that effect was issued by a WCJ. It is from this Order that Defendant petitioned for removal.

Defendant relied on Labor Code Section 4660.l(c)(l), which it quotes as follows: “‘there shall be no increases in impairment ratings for sleep dysfunction, sexual dysfunction or psychiatric disorder, or any combination thereof arising out of a compensable physical injury’ for injuries occurring on or after 1/1/13.” Defendant goes on, “Therefore, a medical legal evaluation in the specialty of psychiatry is inappropriate.”

The WCAB denied removal in the case of Hernandez v. Fremont Bank. The WCJ pointed out that the second sentence of 4660. l(c)(l), states, “Nothing in this section shall limit the ability of an injured employee to obtain treatment for sleep dysfunction, sexual dysfunction, or psychiatric disorder, if any, that are a consequence of an industrial injury.”

The appropriate procedure to resolve a dispute over injury is to utilize the panel Qualified Medical Evaluator mechanism (or agree to an AME). The fact that compensation for a permanent psychiatric impairment is not available to this injured worker does not deprive her of her potential right to medical care or, for that matter, temporary disability indemnity on a psychiatric basis.

DWC Orders Adjustment to OMFS

The Division of Workers’ Compensation (DWC) has posted an order adjusting the Official Medical Fee Schedule (OMFS) to conform to changes in the Medicare payment system as required by Labor Code section 5307.1.

The Physician and Non-Physician Practitioner Fee Schedule Update Order adopts the following Medicare changes:

1) National Correct Coding Initiative Medically Unlikely Edits October 1, 2015 quarterly update
2) National Correct Coding Initiative Physician/Practitioner Services CCI Edits October 1, 2015 quarterly update
3) CMS’ Medicare National Physician Fee Schedule Relative Value File (RVU file) RVU15D October 1, 2015 quarterly update

The order adopting the OMFS adjustments is effective for services rendered on or after October 1, 2015 and can be found on the DWC website.

Munir Uwaydah M.D. (Finally) Arrested and Faces 132 Felony Counts

Los Angeles County District Attorney Jackie Lacey announced that two criminal Grand Jury indictments were unsealed charging an orthopedic surgeon, his personal attorney and a cadre of assistants with operating one of the largest insurance fraud scams in state history.

Dr. Munir Uwaydah, his personal lawyer and his former office manager were among the 15 named in two indictments totaling 132 felony counts. Uwaydah was arrested in Germany and is awaiting extradition back to the United States.

The vast conspiracy outlined in the overt acts included fraudulently billing of more than $150 million to insurance companies including workers’ compensation claims, and paying attorneys and marketers up to $10,000 a month each for illegal patient referrals, known as “capping.” But the most serious charges outlined in the indictment involve Uwaydah and his staff deceiving nearly two dozen patients into having surgeries thinking they would be done by Uwaydah. In fact, the surgical procedures were performed by a physician’s assistant who never attended medical school, prosecutors said.

The physician’s assistant operated on patients while they were under general anesthesia and without Uwaydah present in the operating room, the indictment alleges. Prosecutors said in addition all 21 patients sustained lasting scars and many required additional surgeries and suffered physical and psychological trauma as a result of their experience in Uwaydah’s clinics.

A total of 102 people testified during two separate Grand Jury proceedings, one in February and the second in August. The 57-count indictment, BA425397, charges Uwaydah and 10 other defendants with one count each of conspiracy; 32 counts each of insurance fraud; 18 counts each of aggravated mayhem; and three counts each of capping or unlawful client referrals. Uwaydah, the physician’s assistant and three others are charged with three additional counts of aggravated mayhem involving patients. The 57-count indictment alleges all the surgeries were billed to insurance companies as if Uwaydah had performed the surgeries. As part of the fraud, the indictment alleges MRI and insurance authorization reports were routinely altered to justify surgeries, and some surgeries were performed with no medical justification.

In the 75-count indictment, BA435339, Uwaydah’s personal lawyer and three others are charged as coconspirators. Charges include conspiracy to commit insurance fraud, money laundering, illegal patient referrals and filing false tax returns. His personal attorney also is charged with one count of aggravated mayhem for her role in the alleged fraudulent surgery of a patient. If convicted, Uwaydah and 11 others face up to life in state prison.

In case BA425397, a 57-count indictment returned on Feb. 25, the 11 defendants are: Munir Uwaydah (dob 4/1/66): Alleged mastermind of fraud and owner of Frontline Medical. Awaiting extradition from Germany – Paul Turley (dob 11/12/62) of Granada Hills: A chiropractor and Uwaydah’s business partner – Maria Turley (dob 3/4/67) of Granada Hills: Uwaydah’s director of surgery and Paul Turley’s wife – Marisa Schermbeck-Nelson (dob 11/29/76) of Redondo Beach: Uwaydah’s personal assistant – Peter Nelson (dob 8/1/71) of Redondo Beach: Uwaydah’s physician assistant and Marisa Schermbeck-Nelson’s husband – David Johnson (dob 11/7/34) of Corona: Doctor who worked for Frontline – Leticia Alvarez Lemus (dob 2/9/77) of Corona: Office manager for Frontline – Jeff Stevens (dob 4/4/51) of Playa Del Rey: Uwaydah’s business associate – Wendee Luke (dob 7/2/74) of Brea: Uwaydah’s office manager for several of his companies – Kelly Park (dob 10/10/65) of Thousand Oaks: Uwaydah’s office manager and personal assistant; – Ron Case (dob 4/11/76) of Camarillo: Billing manager for Frontline.

In BA435339, a 75-count indictment returned on Aug. 26, the four defendants are: Tatiana Torres Arnold (dob 1/6/70) of Encino: Uwaydah’s personal attorney who held various positions for Uwaydah’s companies – Terry Luke (dob 1/23/45) of Brea: Held various positions for Uwaydah’s companies and defendant Wendee Luke’s father – Tony Folgar (dob 11/24/57) of Sylmar: Paralegal for a law firm and Yolanda Groscost (dob 7/16/66) of Fountain Valley: Owner of YDG Marketing, a marketing firm.

Six More Defendants Plead Guilty in Leland Yee Corruption Case

Former state senator Leland Yee in plea agreement this summer admitted that he traded his political influence for bribes. Yee, among other things, admitted he agreed to influence legislation for would-be medical marijuana businesses in California, an NFL team owner trying to exempt pro athletes from the state’s workers’ compensation laws and a fictitious FBI concocted software firm seeking government technology contracts. He is scheduled to be sentenced on October 21.

Now six more defendants have entered guilty pleas in the case. George Nieh, Leslie Yun, Kevin Sui, Alan Chiu, Yat Wa Pau, and Andy Li all pleaded guilty to a broad range of charges alleged against them in a superseding indictment filed January 29, 2015. The indictment charged the defendants, Leland Yee, and 21 others with illegal conduct stemming from an alleged racketeering operation.

The guilty pleas bring to 10 the number of people who have pleaded guilty to one or more of the charges in the indictment. Unlike earlier pleas, these guilty pleas do not include an admission of guilt with respect to the charge that the defendants conspired to conduct the affairs of an enterprise through a pattern of racketeering activity, in violation of 18 U.S.C. § 1962(d) (RICO conspiracy); yet, the each defendant pleaded guilty one or more of the crimes alleged as part of the RICO conspiracy.

The superseding indictment charged twenty-eight people in all. Eight of the defendants, including the six defendants who pleaded guilty, Raymond Chow, and Kongphet Chanthavong, are scheduled for trial on November 2, 2015, before U.S. District Judge Charles R. Breyer. The charges against the six defendants to which they have not pleaded guilty are still pending.

Legislature Passes Comp Formulary Bill

AB-1124 passed the California legislature yesterday, and now awaits the expected signature of Governor Brown in order to become law. According to the author, this bill gives the Administrative Director clear authority to establish a formulary. An effective formulary will control rising prescription drug costs in California’s workers’ compensation system, limit the over-prescribing of highly-addictive opioids, and ensure injured workers get the necessary treatment needed to get back to work.

Drug formularies have proven to be very effective at managing the cost of prescription drugs. Health plans have been using formularies in California for decades and they are commonly accepted as a useful cost control mechanism. They control costs by limiting the utilization of high priced drugs and reducing the price of drugs. Formularies are usually developed by companies known as pharmaceutical benefits managers (PBMs) who design formularies and manage prescription drug benefits for a contracting health plan. At the most basic level a formulary is a list of drugs that a health plan or insurer agrees to cover. However, formularies are not simply arbitrary limits on drug use. Formularies must be broad enough to provide drug treatment options when they are available, and formulary decisions are guided substantially by the scientific evidence regarding individual drugs. However, in most cases there are multiple drugs available to treat a given condition and formularies are constructed to drive treatment choices to the most cost-effective option.

This bill would require the DWC Administrative Director to establish a drug formulary, on or before July 1, 2017, as part of the medical treatment utilization schedule.The Administrative Director would be required to meet and consult with stakeholders, prior to the adoption of the formulary, and publish at least 2 interim reports on the Internet Web site of the DWC. The bill would require the Administrative Director to update the formulary at least on a quarterly basis to allow for the provision of all appropriate medications, including medications new to the market.The bill would require the Administrative Director to establish an independent pharmacy and therapeutics committee to review and consult with the Administrative Director in connection with updating the formulary.

The California Applicants Attorneys Association argued against the law claiming that establishing a formulary is just another in a long line of take-aways from injured workers. Business groups supported this bill and the California Labor Federation supports the concept of a formulary.

50 Million Americans Report Chronic or Severe Pain

Nearly 50 million American adults have significant chronic pain or severe pain, according to a new study prepared by National Institutes of Health’s National Center for Complementary and Integrative Health (NCCIH), which appears this month in The Journal of Pain, published by the American Pain Society.

Based on data from the 2012 National Health Interview Survey (NHIS), the study estimates that within a previous three-month period, 25 million U.S. adults had daily chronic pain, and 23 million more reported severe pain. Those with serious pain need and use more health care services and suffer greater disability then persons with less severe pain.

The annual NHIS study is conducted by the U.S. Centers for Disease Control and Prevention (CDC) and surveys tens of thousands of Americans about their overall health and illnesses. The 2012 NHIS studied asked participants about the frequency and intensity of pain experienced in the last 3 months.

The findings also showed that half of individuals with the most severe pain still rated their overall health as good or better, and there were associations between pain severity and race, ethnicity, language preference, gender, and age. Women, older individuals, and non-Hispanics were more likely to report any pain, but Asians less likely. Also, the study showed the impact of gender on pain is influenced by race and ethnicity.

In an NIH news release, Richard L. Nahin, Ph.D., M.P.H., lead epidemiologist for NCCIH and author of the analysis said: “This report begins to answer calls for better national data on the nature and extent of the pain problem. The experience of pain is subjective. It’s not surprising then that the data show varied responses to pain even in those with similar levels of pain. Continuing analyses of these data may help identify subpopulations that would benefit from additional pain treatment options.”

Publication of the NIH study follows the recent “Pain Research Agenda for the 21st Century,” published in December in The Journal of Pain, in which The American Pain Society identifies promising but underfunded approaches to develop new treatments and to help make currently used pain medications safer and more effective. However, APS believes breakthrough new treatments will not become available unless more resources are devoted to pain research. Its Pain Research Agenda states: “The most direct path to achieving dramatic advances in pain treatment is through substantially increased investment in pain research and education, which would enable the pursuit of an aggressive translational pain-research agenda.”