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Tag: 2015 News

SCIF Loses Independent Contractor Premium Claim Against Employer

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Urgent Nurses Resources Inc., is a nursing registry. It provides hospitals with temporary nurses at hospitals’ requests.

After Urgent receives a hospital’s request for a temporary nurse, it offers certain nurses in its registry, who have been preapproved by the hospital, the requested assignment. The nurses are free to reject the assignment without explanation or penalty. Once a nurse accepts an assignment, Urgent reviews with the nurse a checklist provided by the hospital of the assignment’s duties. If the nurse can perform the duties, the nurse reports to the hospital. The nurse provides his or her own uniform, shoes, stethoscope, watch, and occasionally other small supplies (such as pens and pen lights) for the assignment, but does not provide any other equipment. The nurse completes the assignment, usually a shift, under the supervision of hospital. Once the nurse completes the assignment, the hospital pays Urgent for the nurse’s and Urgent’s services. Urgent later distributes the nurse’s portion of the payment to the nurse.

Urgent allows nurses in its registry to choose whether to be designated as an employee or independent contractor. To be classified as an independent contractor, Urgent requires, in part, that the nurses sign an independent contractor agreement and provide their own liability insurance. These nurses receive Internal Revenue Service forms 1099 (1099 Nurses).

Urgent was audited by State Fund at the end of 2007 and 2008. State Fund determined Urgent owed it premiums for the 1099 Nurses. Urgent disagreed and refused to pay. State Fund sued Urgent for the premiums. The trial court held the 1099 Nurses were independent contractors and consequently Urgent did not owe State Fund for the 1099 Nurses’ premiums. State Fund appealed. The trial court was affirmed in the unpublished case of SCIF v Urgent Nurses Resources Inc.

Urgent presented substantial evidence the 1099 Nurses were independent contractors under the Borello factors. (S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341, 349), It is of note other courts have similarly decided that nursing registries are agents for independent contractor nurses. For example, in Avchen v. Kiddoo, the court reasoned that nursing registries role was that of a commercial matchmaker, where a commissioned go-between attempts to put buyers and seller of goods and services in contact with each other and found that nursing registries are not employers.

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DWC Announces 2016 Mileage Rate Decrease

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The Division of Workers’ Compensation (DWC) is announcing the decrease of the mileage rate for medical and medical – legal travel expenses by three and one – half cents – down from 57.5 to 54.0 cents per mile effective January 1, 2016. This rate must be paid for travel on or after January 1, 2016 regardless of the date of injury.

Labor Code section 4600, in conjunction with Government Code section 19820 and the Department of Personnel Administration regulations, establishes the rate payable for mileage reimbursement for medical and medical – legal expenses and ties it to the Internal Revenue Service (IRS).

IRS Bulletin Number IR – 2015 – 137 dated December 17, 2015 announced the rate decrease. The IRS standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile.

The updated mileage reimbursement form is posted on the DWC website.

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DIR Releases 2015 Legislative Digest with Overview of New Laws

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The Department of Industrial Relations released its 2015 Legislative Digest which summarizes new laws and vetoed bills relevant to DIR and its divisions.

Most of the chaptered bills are slated to take effect on January 1 , 2016. Highlights of the chaptered bills include:

1) SB 358 mandates that women be paid equally for work that is substantially similar to the work of their male colleagues . It also prohibits discrimination or retaliation of employees who discuss their wages and those of their male colleagues .
2) SB 579 gives workers more flexibility to take job – protected leave to address child care issues, a schoo l emergency or to enroll or re – enroll a child in school.
3) AB 970 authorizes the Labor Commissioner’s office to issue citations for violations of local minimum wage laws and failure to reimburse employees for unpaid business expenses.
4) AB 1124 requires the Division of Workers’ Compensation to establish a prescription drug formulary for the California workers’ compensation system.
5) AB 1513 clarifies pay requirements for piece – rate workers’ mandated rest and recovery breaks and other nonproductive time, and addresses back liability by providing employers the opportunity, within a specified period, to make back wage payment s for rest and recovery breaks and other nonproductive time in exchange for relief from statutory penalties.

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Interpreters Arrested in $24.6 Million Fraud Case

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Detectives with the California Department of Insurance arrested nine individuals involved in a complex scheme allegedly targeting more than 230 workers’ compensation insurers and self-insured employers. Siblings Francisco Javier Gomez, Jr., 32, and Angela Rehmann, 38, owners of G&G Interpreting Services, allegedly fraudulently billed more than $24.6 million for interpreting services for injured workers with Latino surnames. G&G Interpreting Services changed their company name to American Liberty Interpreting in August 2012. The company is family owned and operated. Francisco Javier Gomez, Jr., Angela Rehmann, Cynthia Gomez, Gloria Sandoval, Arnulfo Reyes III, Crystal Garcia, and Jamilett Ortega are related.

According to Department of Insurance detectives, over a four year period G&G Interpreting allegedly billed for translation services provided to clinics where the majority of the clinic staff spoke Spanish and there was no need for translation services. In other cases, the company billed for services to clinics where 13 treating physicians spoke fluent Spanish-and again-there was no need for translation.

G&G Interpreting had a substantial operation providing Spanish-language interpreting services across the Los Angeles Basin and Southern California for injured workers receiving healthcare services through the workers’ compensation system. Billing occurred in San Diego, Riverside, San Bernardino, Orange, Los Angeles, Ventura and Santa Barbara Counties.

The investigation revealed that 83,411 interpreting service events exceeded 12 hours in a day-more hours than the clinics were actually open. Detectives also discovered that G&G Interpreting billed workers’ compensation insurers more than $422,000 for the services of an interpreter who was actually incarcerated in state prison during the time the company claimed she was providing interpreting services; in fact, she is still in state prison.

The arrest operation was conducted by the Department of Insurance with assistance from the California Highway Patrol and the Riverside County District Attorney’s Office and San Bernardino District Attorney’s Office. The case is being prosecuted by the Los Angeles County District Attorney’s Office. Officials carried out a morning raid on a North Hollywood home, which is one of the nine sites investigators arrested suspected conspirators. As the investigation continues, the California Department of Insurance said they need the public’s help to stop similar schemes.

“For example, if an interpreter does show up in the room in a medical clinic as a part of your workers’ compensation case and you don’t need one, we urge you to call the California Department of Insurance,” Jones said.

Investigators are trying to determine whether the owners of G&G, Angela Rehman and her brother Francisco Gomez, opened a new operation to hide their activities.This investigation is ongoing.

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CDC Proposed Opioid Guideline Fails to Address Tapering

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The U.S. Centers for Disease Control and Prevention’s proposed opioid prescribing guideline for chronic pain is a step toward improving patient safety, but it falls short when addressing long-term users, reports a story in Business Insurance.

The voluntary guideline, released Monday along with a Federal Register notice of a 30-day comment period on the proposal, is aimed at primary care providers who prescribe opioids for “chronic pain outside of active cancer treatment, palliative care and end-of-life care.” With health care providers writing millions of prescriptions for opioid pain relievers in 2012, the CDC’s proposal attempts to address the epidemic. Workers compensation is not immune, as many industry professionals say opioid abuse is the biggest issue they face.

“It’s really important that CDC take the lead on opioid guidelines,” said Michael Gavin, Duluth, Georgia-based president of medical cost management company PRIUM. “It’s the right agency to do it. They have the voice, they have the bully pulpit and they should have the credibility.” Recommendations in the proposal cover when to initiate or continue opioids for chronic pain; how to select the drugs, dosage and duration; and how to assess the risks of use.

Mr. Gavin said he’s “concerned that there’s no guidance on weaning and tapering.”

“The guidelines don’t appear to be particularly useful for patients already on chronic opioid therapy,” he said, adding that it’s unclear whether the proposal would influence the workers comp industry’s thinking about legacy chronic pain claims.

More in-depth prescribing guidelines devised by organizations such as the American College of Occupational and Environmental Medicine (ACOEM) and Washington State already are used in workers comp. But the industry still can benefit from the CDC guideline, which will help “general practitioners gain a level of insight and education that they might have been missing before,” Mr. Gavin said.

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Trucker Not Independent Contractor Despite Contract Language

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Sheik Zahid Ali was injured in 2006, after having driven a tractor-trailer rig filled with latex paint from Hayward, California to Spokane, Washington. While unloading the trailer a pressurized cap came off the trailer causing serious injury. The truck was owned by Ali’s Trucking; the trailer was owned by Trimac who was insured by Lexington Insurance Company. The injury was industrial. The significant issue was the claim of an employment relationship with Trimac.

Trimac is a multi-national corporation that specializes in transporting liquid latex-based products from producer to buyer. To transport its products, Trimac used approximately four tractors it owned driven by about six employee-drivers and about 14 tractors leased to it by about 32 “independent contractors.” One such owner/operator was Ali’s Trucking, a business owned by Intaz Ali. Intaz owned two tractors he had purchased from Trimac. He leased the tractors back to Trimac for its business, sometimes driving one himself and using other drivers. Ali’s Trucking had no business premises apart from Trimac’s Hayward location, where Ali’s Trucking kept its tractors. Ali’s Trucking entered into a contract with Trimac, entitled “Lease Agreement Independent Contractor” (Lease Agreement) which designates Trimac as “Carrier” and Ali’s Trucking as “Independent Contractor.”

However the relationships among Trimac, Ali’s Trucking and Sheik operated quite differently in practice from the way their relationships are outlined in these contracts. Most significantly was the exercise of control over drivers. Although the Lease Agreement purported to place responsibility on the Independent Contractor for “selecting, hiring, firing, supervising, training, setting wages and working conditions” for their drivers and employees. But the way in which the operation actually worked reflects substantial Trimac involvement.

At the conclusion of a hearing on the employment issue, it was found that that Sheik Zahid Ali was an employee of Trimac.  It was further found that “[t]he legal relationship between Sheik Ali, Ali’s Trucking and Trimac was one of joint employment. Both employers had the right to direct and control Sheik Ali’s activities while he was at work on the joint enterprise of transporting materials for Trimac and Ali’s Trucking and that Trimac not only had the right to control, it affirmatively exercised that control. Trimac appealed this finding.

The WCAB and the Court of Appeal affirmed in the unpublished case of Lexington Insurance Co. v. WCAB (Ali).

The seminal case of Borello and Sons, Inc. v. DIR (1989) 48 Cal.3d 341 acknowledged that the right to control work details is the primary consideration. Ultimately, Lexington’s arguments must fail because it has fallen short of demonstrating that the decision is unsupported by substantial evidence or that, as a matter of law, all commercial truck drivers whom a transportation company designates as “independent contractors” are necessarily so.

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DWC Adds New Form to Expand Electronic JET File Options

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The Division of Workers’ Compensation has added a new form to give users of the JET File system greater flexibility .

JET File is an electronic filing method that transmits DWC forms and attachments using secure State of California servers. While JET File allows users to bypass paper handling processes in DWC district offices, it has been limited to the six most commonly filed forms since its debut in 2011.

The new Unstructured Form adds the ability to file petitions, requests, answers and other frequently filed court documents, including the Request for Withdrawal of Lien and the Petition for Reconsideration. The complete list is on the JET File Unstructured Form Document titles list on DWC’s website.

DWC has tested and certified the new Unstructured Form for participating JET File vendors . Customers should contact their vendor for further information.

DWC has also updated the Declaration of Readiness for Expedited Hearing form to capture the stated reasons for the requested trial.

Electronic filing is the fastest way to get documents into EAMS , DWC’s electronic case management system for the workers’ compensation courts. In addition to JET File, e-forms are also available. Information on both methods is posted on DWC’s website .

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Drywall Contractor Sentenced in Premium Fraud Case

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An Ontario man was sentenced to 3 years’ probation and 120 days in jail for committing workers’ compensation insurance fraud and stealing wages from his workers, both felonies. Miguel Contreras, 36, the former owner of Ontario-based National Drywall, Inc., was also ordered to pay his insurance carrier $262,535 in underpaid workers’ compensation insurance premiums.

The conviction stems from a 2011 project in which Contreras was awarded the contract to install drywall at Joe Baca Middle School in Colton. “Because this was a ‘Public Works’ project, Contreras was required to pay his employees the current prevailing wage,” said the prosecutor in charge of the case. “However, he employed two schemes to avoid doing so.”

One method required some of his workers to “kick back” a portion of their pay on a weekly basis in order to keep their jobs. The other required some workers to alter their time cards to falsely indicate that their primary job duties included “stocking/scrapping,” which was paid at a much lower prevailing wage, when in fact they were framing and hanging drywall, which was paid at a much higher prevailing wage.

While this theft of wages was occurring, National Drywall submitted false payroll reports to its workers’ compensation insurance carrier, ICW Group, which resulted in a fraudulent reduction of its insurance premium.Contreras was originally arrested on Oct. 23, 2014. A year later, on Oct. 23, 2015, Contreras entered pleas to workers’ compensation insurance fraud, and theft of prevailing wages, and admitted his conduct was subject to California’s white collar crime enhancement.

In March 2015, the Little Hoover Commission issued a report highlighting the magnitude of California’s underground economy problem. An underground economy is one that includes activities that businesses try to hide from government licensing, regulatory, tax and law enforcement agencies, and is subsidized by businesses that otherwise would be legal operators but who are breaking the law to gain a leg up on their competition. The Little Hoover Commission believes California’s underground economy is costing the State upwards of $10 billion in annual tax revenue, money that could be used for funding education, law enforcement, and infrastructure improvements, or reducing taxes and insurance premiums for Californians who play by the rules.

According to District Attorney the theft of prevailing wages and workers’ compensation premium fraud that took place in this case are the types of illegal activity that feed California’s underground economy.

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Claims Involving Prescription Painkillers are Four Times More Costly

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The director of the Centers for Disease Control and Prevention recently referred to opioid abuse – including prescription painkillers – as “a growing epidemic that is gripping our country.” And increasingly, that grip includes the American workplace.

A new survey, the first of its kind, conducted by the National Safety Council (NSC), along with Indiana’s attorney general, concluded that 80 percent of Indiana employers have been impacted by prescription drug misuse and abuse by employees. Deborah Hersman, president and CEO of the NSC, told CNBC that these issues are not just limited to Indiana. “We would expect very similar results in many states,” Hersman said. “This is not a local problem; this is a national problem, and it’s very important for employers to understand this is an issue they need to pay attention to and not put their head in the sand.” Millions of Americans are addicted to opioids, and the rate of death from addiction has tripled since 2010.

Though research is limited as to the exact economic costs of opioid abuse, the story on CNBC says that the most recent estimates suggest that the economic annual burden is upward of $60 billion, with nearly half of that attributable to workplace costs, such as productivity loss. “If an employee is taking a prescription painkiller, their cost on worker’s comp goes up four times, and 25 percent of all prescription costs in workers comp are opioid painkillers,” Hersman told CNBC.

Moreover, while only about half of employers have a written policy on using prescription drugs, according to the survey, nearly two-thirds believe prescription pills, like Vicodin and Percocet, cause more problems than illegal drugs.

To try to deal with the issue, the NSC recommends that employers expand drug testing to include detection of opioid painkillers. The survey found that while 87 percent of employers conduct drug testing, only about 52 percent test for synthetic opioids. “Beyond the loss of productivity, prescription abuse can cause impairment, injury and may lead employees to bad choices, such as theft or embezzlement from the employer,” Indiana Attorney General Greg Zoeller said.

The Centers for Disease Control and Prevention says that non-medical use of prescription painkillers costs health insurers up to $72.5 billion annually in direct health-care costs.

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Cal/OSHA Fines Santa Clara Theme Park for Serious Safety Vilolations

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Cal/OSHA announced that the owner/operator of California’s Great America theme park in Santa Clara was at fault for a roller coaster accident that critically injured a ride mechanic on June 12.

Robert Hooks , 66, suffered serious injuries when he was s truck by the Flight Deck ride while retrieving a cell phone in a restricted area. Cal/OSHA learned that Cedar Fair Southwest, the amusement park owner/operator, failed to have safety protocols in place to ensure that the roller coaster was shut down prior to retrieving lost articles near it , and also failed to effectively train workers to shut down the ride to retrieve lost articles. The accident happened shortly after 8 p.m. that night as the train was returning to the station. A park patron on the ride also suffered a hand injury.

“Employers are required to maintain a comprehensive injury and illness prevention program that addresses all safety hazards,” said Cal/OSHA Chief Julian n Sum. “Cedar Fair Southwest ‘s lack of safety protocols and training for employees contributed to this serious workplace accident.”

Cal/OSHA issued citations with penalties totaling $70,200 for eight workplace safety violations, including five serious in nature, two of them directly related the accident . A serious violation is cited when there is a realistic possibility that death or serious harm could result from the actual hazardous condition. A willful violation is cited when the employer is aware of the law and violates it nevertheless, or when the employer is aware of the hazardous condition and takes no reasonable steps to address it. The park was issued six violations in the past 10 years, one of which was serious, according to online federal Department of Labor records.

Great America issued the following statement in response to the charges: “On Monday, December 14 California’s Great America received six OSHA citations related to events occurring at the park earlier this year. The safety of all guests and associates is our highest priority. It is our intent to appeal each of the citations that have been put forward.”

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