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Tag: 2015 News

New Labor Law Gives Employers Some Slack

Governor Jerry Brown signed a bill that provides employers with a limited window to correct technical violations in itemized wage statements before being subject to costly litigation. AB 1506 is a bi-partisan effort to strike a balance between protecting the integrity of wage statements and providing relief to employers from potential litigation over minor paperwork violations. The bill, which received unanimous support in both the Assembly and Senate, includes an urgency clause that allowed it to immediately become law after signed by the governor .

In recent years, there have been a number of cases in which employers were sued under the Private Attorneys General Act (PAGA) over minor, hyper-technical violations of existing law. PAGA requires employers to provide accurate itemized wage statements – and allows employees, through an attorney, to file what is called a “representative action” against an employer for any violation of the California Labor Code related to paystubs.

Because PAGA penalties can be high, and the cost of defending them substantial, some employers have opted to settle employee claims rather than contest them in court. And a handful of legal firms around the state have made a lot of money convincing clients to go after their employers for PAGA-related claims.

But AB 1506 now allows employers up to 33 days to cure any alleged technical violation on wage statements. The bill states that if the alleged violation involves the wage statement’s inclusion of the name and address of the employer, or the inclusive dates of the pay period, then the employer shall have an opportunity to “cure” the violation before any PAGA claim may be filed.

AB 1506 was supported by the California Chamber of Commerce, which applauded Gov. Brown’s “fiscal prudence” in limiting “frivolous and potentially devastating” litigation against Golden State employers. “By allowing the employer a limited time period to fix technical violations on an itemized wage statement that does not create any injury to an employee before civil litigation is pursued, AB 1506 will enable an employer to devote its financial resources to expanding its workforce,” said a CalChamber report.

Senate Opens Investigation of Drug Price Gouging

The political pressure on the drug industry’s pricing practices intensified this week with the Senate launching a formal investigation into four companies that have been under fire in recent months for hiking up the prices of their products.The Senate’s Special Committee on Aging, which is led by Sens. Susan Collins (R-Maine) and Claire McCaskill (D-Mo.), said the probe will include Turing Pharmaceuticals AG, Valeant Pharmaceuticals, Retrophin and Rodelis Therapeutics and seeks to understand the “causes, impacts, and potential solutions” related to the issue.

In September, Martin Shkreli, the 32-year-old former hedge fund manager who is CEO of Turing, became the face of the industry’s greed when he insisted on national television that the $750-a-pill price on the formerly $18-a-pill drug Daraprim – a more than 4000 percent increase – was justified and called a journalist a “moron” on Twitter for asking why.

The outcry also prompted scrutiny of other companies that had taken similar actions. Valeant, in the summer, quadrupled the price of its drug Cuprimine which treats an inherited disorder that can cause liver and nerve damage.

Retrophin, a public company where Shkreli served as an officer and director before being ousted, has been criticized for hiking the price of an old drug called Thiola more than 20-fold. The drug is used almost exclusively for patients suffering from cystinuria, a particularly nasty disease affecting the kidneys.

Separately, the United States Attorney’s Office for the Eastern District of New York is investigating Shkreli for his actions during his time there. The allegations are complex, and the details of the case haven’t been made public, but Newsweek has reported that “the inquiry, according to court records and people with knowledge of the inquiry, involves such a vast number of suspected crimes it is difficult to know where to start.”

In October, Rodelis Therapeutics, which specializes in a drug for a rare disease, found itself in the spotlight after its plans to raise the drug’s price more than 20-fold were revealed. Only a few weeks after purchasing the rights to the medicine, it agreed to return it to the nonprofit that previously had the rights.

Southern California Leads State Claim Frequency

In a new study, WCIRB researchers have documented significant differences in the costs of claims among California regions. The Study found that the Los Angeles region experiences significantly higher claim frequency relative to the rest of California, while the Silicon Valley and San Francisco Bay Area regions experience lower claim frequencies. The Santa Monica – San Fernando Valley region is second, and San Gabriel Valley – Pasadena region is third highest. No opinion was provided to explain these differences.

WCIRB researchers also found that claim severities tend to be higher in the Central Valley and many of the urban coastal areas, but lower in the more remote, rural areas of the state.

The Study involved linking several diverse datasets which allowed the WCIRB to conduct a more refined analysis of geographical differences across California than has previously been possible. The Study examines geographical differences in:

– Indemnity frequency
– Total frequency
– Incurred indemnity on indemnity claims
– Median injured workers’ average weekly wages
– Incurred medical on indemnity claims
– Cumulative injury and occupation disease claims

The Study of Geographical Differences in California Workers’ Compensations Claim Costs and a mapping of nine-digit zip codes to the Study’s regions are available on the WCIRB website in the Research and Analysis section.

Pre-Claim Nurse Triage May Reduce Claims

Though large, self-insured companies have been using it for years, pre-claim nurse triage has not yet been wholeheartedly embraced by workers’ compensation carriers.

The Claims Journal article quotes Brian Cullen, managing director of Triage for Medcor, an outsourcing triage service. “Claim people are so sure that they have everything done with the claim, but they don’t quite get pre-claim first aid screening, which all the big companies have already proven works great for the 17 years we’ve been doing it. It’s fascinating to watch an industry wake up to this best practice.”

According to Cullen, Medcor works with about 15 carriers now and says it’s still in the very early stages of the adoption curve. Captives have embraced pre-claim nurse triage while state funds have also been slow to adopt the system. He said a nurse answers the phone directly and after obtaining a name and location will begin series of questions on defining the injury. The system can handle multiple injuries due to a patent the company has that enables parallel triaging of multiple injuries simultaneously.

Medcor pioneered telephonic triage, according to Cullen. “We literally now have taken 1.7 million phone calls in 17 years, and we’re taking about a thousand a day with a call center staffed with RNs,” said Cullen. “We have algorithms that we’ve homegrown, we own our own software company,” he said. Initially, the nurse will try to rule out a call to 911. “Literally, one percent of all calls we take result in a recommendation of 911,” Cullen said.

One insurer that sees benefits in using early claims triaging is Secura. “We have been doing it since late 2011. We were fully engaged with it by about the middle of 2012,” said Tony Brecunier, director of workers’ compensation for Secura. “We had some of our agents who had a 24/7 nurse triage on some of their program accounts, and were telling us that they were seeing benefits of lesser claims reported, better reporting, lower lag time reporting.”

“We have seen a reduction in all types of situations,” the workers’ comp director said. “While it’s hard to measure – we know that when we look at the calls that are made to the 24/7 triage – about 42 percent of those folks go back to work without ever making a claim,” said Brecunier.

The advantage of a nurse hotline, he said, is that the injured worker knows he or she is speaking with a medical professional who can provide reassurance that a back strain will typically resolve in a day or two and if it doesn’t then further treatment can be sought. Though Brecunier can’t say for sure that it has limited fraud in Secura’s program, Cullen said pre-claim triage has the potential to reduce fraudulent workers’ compensation claims.

OSIP Streamlines Self Insurance Regulations

The Office of Self Insurance Plans (OSIP) is a program within the director’s office of the Department of Industrial Relations that is responsible for the oversight and regulation of workers’ compensation self-insurance within California. OSIP is also responsible for establishing and insuring that required security deposits are posted by self-insurers in amounts sufficient to collateralize against potential defaults by self-insured employers and groups.

This week OSIP posted proposed regulations to streamline self-insurance procedures and eliminate some existing requirements. A public hearing on the proposed regulations has been scheduled at 10 a.m., Monday, December 21, 2015, in the conference room at the Office of Self Insurance Plans, 11050 Olson Drive, Suite 230, Rancho Cordova, CA 95670. Members of the public may also submit written comments on the regulations until 5 p.m. that day.

The proposed regulation amendments function primarily to update and clarify existing regulations. Several proposed amendments make substantive changes to clarify and simplify the documentation and evaluation of the financial qualifications of self-insureds and to simplify and streamline procedural requirements. Existing requirements pertaining to claims loss history and evaluation of illness prevention program are eliminated as no longer necessary. The rulemaking also updates existing forms, implements new forms in some cases and provides for an online platform for submission of annual forms by self-insureds. The proposed rulemaking does not implement any new reporting requirements and claims not to have an adverse financial impact on California businesses.

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

Fear of Malpractice Correlates With Medical Costs

A new study published in the British Medical Journal, and summarized by Reuters Health claims that providing more care than necessary may work to lower a doctor’s risk of being accused of malpractice. This phenomena may also be driving up costs . The researchers found that doctors who provided the most costly care between 2000 and 2009 were also least likely to be sued between 2001 and 2010.

Lead author Dr. Anupam Jena, of Massachusetts General Hospital and Harvard Medical School in Boston and his colleagues write in The BMJ that critics of the U.S. malpractice system suggest it encourages defensive medicine, which is when doctors provide more healthcare than necessary in order to stave off lawsuits. “If you ask physicians what’s the number one concern they have when you talk to them about their careers, I would say malpractice will come up as one of their top concerns,” Jena said.

For the new study, Jena’s team examined data from Florida hospitals, looking specifically at whether doctors within seven medical specialties were less likely to face lawsuits in the year following one when they racked up higher than average hospital charges.

“If you look at doctors who spend more in a given specialty, higher spending physicians get sued less often than low spending physicians,” Jena said of the findings.

“The only thing you can say with certainty is there is a correlation between spending and a risk of being named as a defendant on a lawsuit, but that’s a correlation without causation,” said Dr. Daniel Waxman, of RAND Corporation in Santa Monica, California. “Yes, doctors are afraid of lawsuits, but they’re also afraid of looking bad,” said Waxman, who has researched defensive medicine but was not involved in the new study. “There are other motivations to do more as well.”

Orange County Weight Lifter Faces Fraud Charges

An Orange County Social Services Agency (SSA) group counselor has been charged for defrauding over $30,000 from the County of Orange by making fraudulent statements relating to his workers’ compensation claim. Maluelue Tafua, 40, Orange, is charged with two felony counts of insurance fraud and two felony counts of making fraudulent statements. If convicted, Tafua faces a maximum sentence of eight years in state prison. He is out of custody on $20,000 bail.

At the time of the crime, Tafua worked as a group counselor for SSA.

On Jan. 8, 2014, Tafua is accused of claiming that he injured his right shoulder and elbow restraining someone while working at Orangewood Children’s Home. SSA attempted to accommodate his injury by assigning him to modified duties within the work restrictions prescribed by the treating physician. Tafua is accused of going to his doctor and claiming to be unable to use his right arm. SSA could not accommodate that restriction and placed Tafua on temporary total disability.

On June 3, 2014, Tafua is accused of bench pressing 315 pounds in a gym. During a medical appointment with his doctor the following day, Tafua is accused of claiming that his pain had not improved and that he had been complying with his treatment. He is accused of failing to report that he exercised using weights at the gym.

On July 14, 2014, the County began investigating this case after observing inconsistencies in the defendant’s statements, what was observed at the gym, and what activities he told the doctor he was capable of performing. Deputy District Attorney Pam Leitao of the Insurance Fraud Unit is prosecuting this case.

DWC Restores JET File System for Lien Activation Fee

The Division of Workers’ Compensation officially announced it will reinstate statutorily required lien activation fees that have been enjoined by the U.S. District Court for the past two years on Monday, November 9.

The Ninth Circuit United States Court of Appeals upheld the constitutionality of the lien activation fees on June 29, 2015. The Court denied the plaintiff’s Petition for Rehearing on October 18, 2015 and sent the case back to Judge Wu to vacate the preliminary injunction and dismiss the case.

On November 3, 2015, Judge George Wu issued an order vacating the preliminary injunction and permitting lien claimants to pay activation fees required by Labor Code § 4903.06 from 8 a.m. on November 9 until December 31, 2015.

The DIR said it will restore the electronic lien activation fee payment system through JET File and the EAMS Public Information Search. To do this both EAMS and Public Search will be offline starting in the late afternoon of November 6, 2015 and restored on November 9, 2015 at 8 a.m.

If, between November 9, 2015 and December 31, 2015, the lien activation payment system becomes non-operational for six or more hours in a 24-hour period, the deadline will be extended by one calendar day for each day of non-operation.

457 Hospitals (27 in California) Involved In Latest Fraud Settlement

The Department of Justice has reached 70 settlements involving 457 hospitals in 43 states for more than $250 million related to cardiac devices that were implanted in Medicare patients in violation of Medicare coverage requirements. Twenty-seven California hospitals were included in the settlement: Irvine-based St. Joseph Health System agreed to pay $2.7 million on behalf of 10 affiliated hospitals; Sacramento-based Sutter Health agreed to pay $3 million on behalf of 12 affiliated hospitals; and San Diego-based Scripps Health agreed to pay $5.6 million on behalf of five affiliated hospitals.

An implantable cardioverter defibrillator, or ICD, is an electronic device that is implanted near and connected to the heart. It detects and treats chaotic, extremely fast, life-threatening heart rhythms, called fibrillations, by delivering a shock to the heart, restoring the heart’s normal rhythm.  It is similar in function to an external defibrillator (often found in offices and other buildings) except that it is small enough to be implanted in a patient’s chest. Only patients with certain clinical characteristics and risk factors qualify for an ICD covered by Medicare.

Medicare coverage for the device, which costs approximately $25,000, is governed by a National Coverage Determination (NCD). The Centers for Medicare and Medicaid Services implemented the NCD based on clinical trials and the guidance and testimony of cardiologists and other health care providers, professional cardiology societies, cardiac device manufacturers and patient advocates. The NCD provides that ICDs generally should not be implanted in patients who have recently suffered a heart attack or recently had heart bypass surgery or angioplasty. The medical purpose of a waiting period -40 days for a heart attack and 90 days for bypass/angioplasty – is to give the heart an opportunity to improve function on its own to the point that an ICD may not be necessary. The NCD expressly prohibits implantation of ICDs during these waiting periods, with certain exceptions.The Department of Justice alleged that from 2003 to 2010, each of the settling hospitals implanted ICDs during the periods prohibited by the NCD.

“The settlements announced today demonstrate the Department of Justice’s commitment to protect Medicare dollars and federal health benefits,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida. “Guided by a panel of leading cardiologists and the review of thousands of patients’ charts, the extensive investigation behind the settlements was heavily influenced by evidence-based medicine. In terms of the number of defendants, this is one of the largest whistleblower lawsuits in the United States and represents one of this office’s most significant recoveries to date. Our office will continue to vigilantly protect the Medicare program from potential false billing claims.”

Most of the settling defendants were named in a qui tam, or whistleblower, lawsuit brought under the False Claims Act, which permits private citizens to bring lawsuits on behalf of the United States and receive a portion of the proceeds of any settlement or judgment awarded against a defendant. The lawsuit was filed in federal district court in the Southern District of Florida by Leatrice Ford Richards, a cardiac nurse, and Thomas Schuhmann, a health care reimbursement consultant. The whistleblowers have received more than $38 million from the settlements. The Department of Justice is continuing to investigate additional hospitals and health systems.

Over Prescribing LA Physician Convicted by Jury for Murder

The second-degree murder convictions of a Los Angeles-area physician were the first against a U.S. doctor for prescribing massive quantities of addictive and dangerous drugs to patients with no legitimate need, three of whom died of overdoses. A jury of 10 women and two men found Hsiu Ying “Lisa” Tseng, 45, guilty of 23 counts, including 19 counts of unlawful controlled substance prescription and one count of obtaining a controlled substance by fraud.The guilty verdict marks the first time in the United States where a doctor was convicted of murder for overprescribing drugs.

Tseng was convicted of second-degree murder for the deaths of Vu Nguyen, 28, of Lake Forest; Steven Ogle, 24, of Palm Desert; and Joseph Rovero, 21, an Arizona State University student from San Ramon. Nguyen died March 2, 2009. Ogle died a month later on April 9, 2009. Rovero died Dec. 18, 2009. All were patients of Tseng, who prescribed a myriad of drugs for the three young men.

Tseng, licensed to practice in 1997, opened a storefront medical office in Rowland Heights in 2005. During the timeframe when nine of her patients died in less than three years, Tseng took in $5 million from her clinic and continued dispensing potent and addictive drugs unabated.

Deputy District Attorneys John Niedermann and Grace Rai of the Major Narcotics Division prosecuted the case.
In closing arguments, Niedermann told jurors that in dozens of instances, Tseng kept no medical records of visits or patient prescriptions. In many instances, she faked medical records when authorities began investigating, he said.

Tseng surrendered her license to practice medicine in February 2012 and has been behind bars in lieu of $3 million bail since her March 2012 arrest. She returns to court on Dec. 14 for sentencing before Los Angeles County Superior Court Judge George Lomeli. She faces up to life in state prison.