Menu Close

Tag: 2015 News

Court Sets December 31, Lien Activation Fee Deadline

In the Angelotti Chiropractic federal constitutional challenge to the 2013 lien activation fee case, the United States Court of Appeals for the Ninth Circuit issued a decision in June holding that the preliminary injunction staying implementation of the lien activation fee should be vacated. The Court of Appeals denied a Rehearing Petition and issued its mandate to the District Court on October 19, 2015.

Under SB863, lienholders were to be afforded until December 31, 2013 to pay lien activation fees. The now vacated preliminary injunction went into effect on November 19, 2013 and the DWC deactivated the payment systems. As a result, lienholders – including lienholders not a party to this action – were unable to pay lien activation fees for 43 days prior to the December 31, 2013 deadline.

At an October 29 status conference in federal court, the parties agree that lienholders should be afforded at least 43 days to pay activation fees after the former payment systems are re-activated and the parties jointly requested that the deadline be made December 31, 2015. And the DWC requested that it be given until November 9, 2015 to reactivate the payment systems.

The Court ordered that the DWC has until November 9, 2015 to re-establish the activation fee payment systems. Any holder of a lien filed prior to January 1, 2013 shall be permitted to pay lien activation fees required by Cal. Lab Code § 4903.06 from November 9, 2015 to December 31, 2015. Any lien filed prior to January 1, 2013 for which the lien activation fee has not been paid on or before December 31, 2015 shall be dismissed by operation of law pursuant to Cal. Lab Code § 4903.06(a)(5). This provision shall have no effect on liens that were dismissed prior to this order.

In the event the payment systems are not re-established by November 9, 2015, or thereafter become non-operational, the December 31, 2015 deadline shall be extended by one calendar day for every day the payment systems are non-operational.

Workers’ Comp Industry Shows Solid Gains

The Insurance Journal reports that the U.S. workers’ compensation market saw solid gains in 2014, thanks in part to premium increases and favorable claims frequency. This was the fourth consecutive year in which the industry reported improved results, A.M. Best said in a report.

The U.S. workers’ compensation combined ratio came in at 101.5 for 2014. While a combined ratio under 100 is considered healthy, the number reflects steady improvement compared to the 118.1 combined ratio generated in 2010, according to the report. Net premiums written came in at $46.8 billion for the sector in 2014, a steady climb from $34 billion produced in 2010.

A.M. Best noted the improvement but pointed out that the positives are near-term, as uncertainty remains about the industry’s ability to maintain rate adequacy in the longer term.

But several giants in the fields shrunk their market share in 2014. Liberty Mutual Insurance’s U.S. workers’ compensation net premiums written for 2014 dropped 27.5 percent compared to the previous year. The decline was enough to knock it from second to fifth place in a new A.M. Best special report on the sector’s overall performance. A Liberty Mutual spokesperson said the drop is part of the insurer’s strategy to rid itself of weak accounts.

American International Group also lost ground. AIG booked $2.4 billion in net premiums written during 2014 for a 5.2 percent share and third place. That’s a 10.4 percent drop from what AIG achieved in 2013, when it produced more than $2.7 billion in net premiums written for a 6.2 percent market share and fourth place.

Other top-ranked U.S. workers’ compensation insurers generally maintained their rankings, but some gained premiums and market share while others lost ground. Top-rated Travelers Group, for example, achieved $3.8 billion in net premiums written during 2014 for an 8.2 percent piece of the market. The number is 4.3 percent higher than the $3.68 billion in net premiums written during 2013, which represented an 8.3 percent market share.

Second-place Hartford Insurance Group also grew, with $3 billion in net premiums written during 2014 for a 6.4 percent share of the market—1.4 percent higher than the $2.97 billion generated in 2013, when it had 6.7 percent of the market and was in third place.

Adventist Health Pays $115 Million to Settle Fraud Claims

The Justice Department announced that Adventist Health System has agreed to pay the United States $115 million to settle allegations that it violated the False Claims Act by maintaining improper compensation arrangements with referring physicians and by miscoding claims. Adventist is a non-profit healthcare organization that operates hospitals and other health care facilities in 10 states including California.

The allegations arose from two lawsuits filed respectively by whistleblowers Michael Payne, Melissa Church and Gloria Pryor, who worked at Adventist’s hospital in Hendersonville, North Carolina, and Sherry Dorsey, who worked at Adventist’s corporate office, under the qui tam provisions of the False Claims Act. Sherry Dorsey was a former chief operating officer of Physician Enterprise, a division of Adventist Healthcare. The act permits private parties to file suit on behalf of the United States for false claims, and to share in any recovery. The whistleblowers’ share of the settlement has not yet been determined.

Sherry Dorsey worked at corporate headquarters and reported to top Adventist executive. At a meeting with executives in August 2012, Dorsey allegedly raised questions about 85 physicians who were paid above the 90th percentile of Medical Group Management Association benchmarks for their specialties. Many of them were paid $1 million a year, and some got $2 million or $3 million, according to the complaint. “It was humanly impossible for each of the doctors to have work relative value units [RVUs] that would normally be attributed to the work of 5, 6, or 7 full-time doctors in the same field of practice,” the complaint said. Dorsey suggested assessments of the coding and billing practices of the physicians to determine if there were any irregularities, but she allegedly was rebuffed because the audits would be too expensive. Still, Dorsey continued to sound alarms about physician compensation. Adventist allegedly quantified Stark-related overpayments, but didn’t repay them. “She was, in essence, told to play ball, to not raise too much of a fuss about it,” says Atlanta attorney Marlan Wilbanks, who represents Dorsey.

The other complaint filed by Michael Payne, Melissa Church and Gloria Pryor describes how Adventist hospitals pay physicians generously even though their practices lose money. The losses are “tolerated” only because the hospitals track the value of the physicians’ referrals and “know they can more than make up for those losses through the marginal gains in income that the [hospitals realize]” from the referrals for inpatient and ancillary services, the complaint alleged.

There were no subpoenas or depositions on the way to the resolution of two false claims cases. Because Adventist self-disclosed some violations to the Department of Justice, it was given credit for cooperation, and the case moved through with relative speed and no formal litigation,

The cases, United States ex rel. Payne, et al. v. Adventist Health System/Sunbelt, Inc., et al. No. 12-856 (W.D.N.C), and United States ex rel. Dorsey v. Adventist Health System Sunbelt Healthcare Corp., et al., No. 13-217 (W.D.N.C), were handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the Western District of North Carolina and HHS-OIG. The claims settled by this agreement are allegations only, and there has been no determination of liability.

New Benefit Notice Manual Now Available

The Audit Unit of the Division of Workers’ Compensation has completed its revision of the Benefit Notice Manual containing the sample benefit notices.

The DWC thanked the workers’ compensation community for its suggestions, which improved the quality and clarity of the benefit notices.

The “safe harbor” provision of Title 8, Cal. Code of Regs., section 9810(f) provides that “Benefit notices using the sample notices devised by the Administrative Director and available on the Division’s website are presumed to be adequate notice to the employee and, unless modified, shall not be subject to audit penalties.”

The revisions to the recently approved benefit notice regulations include:

1) Elimination of the requirement to provide Fact Sheets as attachments to notices
2) Reduction of the requirement to provide a QME panel request form with notices
3) Elimination of the warning notice language at the top of notices
4) Allowance for employees and their attorneys to choose to receive electronic service of notices.

The benefit notice regulations take effect on January 1, 2016. The Division cautions the claims community that the revised notices may not be used before that date.

California Voters to Decide Limits on Drug Pricing

Drug pricing advocates affiliated with AIDS Healthcare Foundation (AHF) announce they will file close to 550,000 signatures of registered California voters with state election officials by November 2nd in order to qualify The California Drug Price Relief Act, a statewide ballot initiative that will revise California law to require state programs to pay no more for prescription medications than the prices negotiated by the U.S. Department of Veterans Affairs. The V.A. generally pays 20% to 24% less than any government program. The advocates intend to qualify the measure for the November 2016 presidential election ballot in California.

Separately, advocates from AHF and ‘Ohioans for Fair Drug Prices’ have been collecting voter signatures in Ohio for a similar drug pricing ballot measure since mid-August. State officials approved petition language in early August. Both the California and Ohio measures are expected to qualify for, and appear on the November 2016 presidential election ballots in their respective states.

To qualify the California measure, 365,880 valid signatures of registered voters are needed (5% of all votes cast for governor in the most recent statewide election, which was held in November 2014). However, as a cushion, advocates, who began collecting signatures in early April, will continue to collect signatures up until the October filing deadlines. Signatures are to be submitted to the respective counties statewide, and after signature certification, the ballot measure is expected to be placed on the November 2016 California ballot.

“As of August 16th, we had already collected enough signatures to qualify our California ballot measure, which, when passed by voters in November 2016, will compel state officials to obtain V.A. pricing – by far, the lowest pricing available to any government agency – for the purchase of prescription drugs for use in state programs,” said Michael Weinstein, president of AIDS Healthcare Foundation and one of the citizen proponents of the California measure.

“Nationally, prescription drug spending increased more than 800 percent between 1990 and 2013, making this one of the fastest-growing segments of health care,” said Tracy Jones, Executive Director of the AIDS Taskforce of Greater Cleveland and one of the citizen proponents of the Ohio measure. “Spending on specialty medications, in particular, such as those used to treat HIV/AIDS, Hepatitis C, and cancers, are rising faster than other types of medications. In 2014 alone, total spending on specialty medications increased by more than 23 percent. And although Ohio has engaged in efforts to reduce prescription drug costs through rebates, drug manufacturers are still able to charge the state more than other government payers for the same medications, resulting in a dramatic imbalance that must be rectified. That is why we are mounting this initiative, bringing the critical issue to legislators and, if necessary, directly to Ohio voters if the legislature fails to act.”

Another Drugmaker Pleads Guilty in Fraud Case

Warner Chilcott U.S. Sales LLC, a subsidiary of pharmaceutical manufacturer Warner Chilcott PLC, has agreed to plead guilty to a felony charge of health care fraud. The plea agreement is part of a global settlement with the United States in which Warner Chilcott has agreed to pay $125 million to resolve its criminal and civil liability arising from the company’s illegal marketing of the drugs Actonel®, Asacol®, Atelvia®, Doryx®, Enablex®, Estrace® and Loestrin®. Dublin-based Warner Chilcott was acquired in 2013 by what at the time was Actavis, allowing the U.S.-based Actavis to get a better tax structure by relocating its headquarters to Ireland and picking up substantial assets in women’s health. Actavis took on the Allergan name earlier this year after completing its $66 billion buyout of the Botox maker.

Under the terms of the plea agreement, Warner Chilcott will pay a criminal fine of $22.94 million. Warner Chilcott also entered into a civil settlement agreement under which it agreed to pay $102.06 million to the federal government and the states to resolve claims arising from its conduct, which allegedly caused false claims to be submitted to government health care programs. The civil settlement resolved allegations that Warner Chilcott violated the federal Ant-Kickback Statute by paying illegal remuneration to prescribing physicians in connection with the so-called “Medical Education Events” and speaker programs and caused the submission of false prior authorization requests for Atelvia® and Actonel®. The federal share of the civil settlement is approximately $91.5 million, and the state Medicaid share of the civil settlement is approximately $10.6 million.

The civil settlement resolves a lawsuit filed under the whistleblower provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. The whistleblowers will receive approximately $22.9 million from the federal share of the civil recovery.

Two former district managers, Jeffrey Podolsky, 49, of East Meadow, New York, and Timothy Garcia, 35, of Los Gatos, California, previously pleaded guilty to various charges, including conspiracy to commit health care fraud and violations of the Health Insurance Portability and Accountability Act (HIPAA). A third former district manager, Landon Eckles, 30, of Huntersville, North Carolina, was criminally charged earlier this month for alleged HIPAA violations relating to the alleged prior authorization scheme. Last week a Springfield, Massachusetts physician, Rita Luthra, M.D., 64, of Longmeadow, Massachusetts, was charged with, among other things, allegedly accepting free meals and speaker fees from Warner Chilcott in return for prescribing its osteoporosis drugs.

IMR Survives Constitutional Challenge

The Court of Appeal upheld the constitutionality of the IMR process in one of the most closely watched cases in California workers’ compensation. The case of Stevens v WCAB involved Frances Stevens who tripped and broke her foot as she carried boxes of magazines. She was diagnosed with chronic or complex regional pain syndrome and claims to be mostly confined to a wheelchair and was awarded total permanent disability.

For several years she had the assistance of a home health aide. In late 2012, the aide was injured. This led the PTP to submit an RFA to SCIF for a replacement aide which was submitted to UR and denied. The request was also denied after the IMR process. Stevens appealed the IMR decision, but the WCJ found there was no provision for a reversal since the labor code provides only limited circumstances upon which IMR can be reversed.

Stevens challenged constitutionality of the IMR process. In response the WCJ said “section 3.5 of article III of the Constitution withholds from administrative agencies the power to determine the constitutional validity of any statute.” The WCAB denied reconsideration and agreed that it could not rule on the constitutional issue saying “In sum, for purposes of appeal to the WCAB it does not matter whether the reasons given for an IMR determination support the determination unless the appealing party proves one or more of five grounds for appeal listed by the Legislature in section 4610(h) by clear and convincing evidence. Applicant did not do that in this case.

The First District Court of appeal concluded “that her state constitutional challenges fail because the Legislature has plenary powers over the workers’ compensation system under article XIV, section 4 of the state Constitution (Section 4). And we conclude that her federal due process challenge fails because California’s scheme for evaluating workers’ treatment requests is fundamentally fair and affords workers sufficient opportunities to present evidence and be heard.”

Although Stevens may have lost the war, she may not have lost the battle since she was given a second chance to prove her case on the merits. The Court stated “we also conclude that the Workers’ Compensation Appeals Board (the Board) misunderstood its statutory authority in one respect when it reviewed Stevens’s appeal. The Board concluded that it was unable to review the portion of the IMR determination that found, “Medical treatment does not include . . . personal care given by home health aides . . . when this is the only care needed.” Under the 2013 reforms, however, the Board is empowered to review an IMR decision to consider whether care was denied without authority because the care is authorized under the MTUS. (§ 4610.6, subd. (h)(1) & (5).) We therefore remand this matter to the Board to consider whether Stevens’s request for a home health aide was denied without authority.”

Medical Expert Reports Outside of AME/QME Process are Inadmissible

Margaret Batten injured her jaw, shoulders, knees, neck, and low back while working as a registered nurse for Long Beach Memorial Hospital. She also claims that she injured her psyche as a result of these physical injuries.

Dr. Joseph Stapen as the agreed psychiatric panel qualified medical examiner found that 47 percent of her psychiatric condition was caused by industrial factors, which was below the required “predominant cause” threshold for a compensable psychiatric injury.

The WCJ authorized Batten to retain her own qualified medical expert, Dr. Gary Stanwyck, at her own expense pursuant to LC 4064(d). Stanwyck found that over 51 percent of her psychiatric condition was due to her work-related injuries. The WCJ admitted Stanwyck’s report into evidence and found Stanwyck to be “convincing and persuasive” and thus found Batton sustained injury to her psyche. The WCAB granted reconsideration and concluded that Stanwyck’s report was not admissible and the WCJ should have relied on the opinion of Stapen. The Court of Appeal affirmed the WCAB in the published case of Batton v WCAB.

Although not expressly mentioned by the WCAB, section 4061, subdivision (i) prohibits the admission of privately retained reports, unless they are prepared by a treating physician. Section 4061, subdivision (i) precludes admission of an independently retained expert opinion as follows: “With the exception of an evaluation or evaluations prepared by the treating physician or physicians, no evaluation of permanent impairment and limitations resulting from the injury shall be obtained, except in accordance with Section 4062.1 or 4062.2. Evaluations obtained in violation of this prohibition shall not be admissible in any proceeding before the appeals board.”

Worker Sues Employer For Insurance Fraud Prevention Act Violation

The SunLine Transit Agency, a government body that oversees buses and taxis in the Coachella Valley, could be fined more than $300,000 for allegedly committing insurance fraud by lying about a workplace injury.

According to the report in the Desert Sun, SunLine is being sued under the California Insurance Fraud Prevention Act by an employee who claims that his supervisor saw him suffer an injury on the job but lied to cover it up. The alleged culprits are being sued by Juan Armenta, a longtime Rancho Mirage labor attorney who represents the injured employee

The SunLine supervisor insists he never saw any injury, but a witness account that surfaced later supports the employee’s story, and has strengthened the case against SunLine.

SunLine refused to provide comment for this story. General Manager Laura Skiver said it would be “inappropriate” to discuss the insurance fraud lawsuit because it is ongoing. The supervisor in question, Gerald Hebb, also refused to comment, referring all questions to Skiver.

The SunLine lawsuit springs from the injury of Mahmoud “Mark” Alzayat, a former employee who worked on a maintenance crew in charge of bus stops. Alzayat claimed he was injured in the SunLine yard when Hebb demanded that he lift a 90-pound bag of concrete. The next day, Alzayat filed a worker’s compensation claim, stating that had reinjured his back lifting the bag. Hebb responded with a report of his own, saying that he was present while Alzayat “carried” the bag, but that he had no information about any injury. Hebb’s report did not mention the bag being dropped or the argument with Alzayat. As a result of Hebb’s report, Alzayat’s worker’s compensation claim was denied.

Later, a new witness, Paul Gordon, another SunLine employee, said in a sworn court deposition that he was also working in the SunLine yard on the day Alzayat was injured. Gordon overheard Alzayat and Hebb’s argument over a concrete bag, then saw the spilled concrete crumbled on the ground. Hebb may have denied it, but the argument happened, Gordon said. “It probably went on for 10 minutes,” Gordon said, according to his deposition.

After Gordon came forward, Alzayat was paid about $93,000 for his disability and medical bills, according to settlement documents obtained by The Desert Sun.

Alzayat has taken his case a step further. His attorneys filed the insurance fraud lawsuit in 2012, after the Riverside County District Attorney’s Office declined to prosecute the case against SunLine. The suit was initially dismissed by a Riverside County judge, who said SunLine could not commit insurance fraud because it participates in a self-insured risk pool. In September, an appeals judge issued a tentative ruling overturning the dismissal, which means the lawsuit will likely return to local court for arguments. If the suit is successful, SunLine will be fined three times the initial worker’s compensation claim, plus attorneys fees and an additional $5,000 to $10,000 penalty.

The case against SunLine is uncommon because the California Insurance Fraud Prevent Act is generally used to target fraudulent claimants, like employees who pretend to be hurt or doctors who fake diagnosis, but not employees who unfairly deny claims. Cases against government agencies are even rarer.

Roseville Podiatrist Faces 10 Years for $2.8 Million Fraud

Neil A. Van Dyck, 64, of Roseville, pleaded guilty to health care fraud, He was a California-licensed podiatrist who operated a podiatry practice in Roseville called Placer Podiatry. Van Dyck offered “spa”-like treatments and performed routine foot care at his practice.

However, Van Dyck submitted over $2.8 million in fraudulent claims for reimbursement to Medicare, Medi-Cal, Tricare and private insurers. He falsely claimed that he performed more expensive procedures than he actually performed, or that the routine foot care that was provided was justified because of illness or symptoms that were not present.

Often times the treatments were performed by unlicensed staff sometimes when Van Dyck was not present at his practice. Additionally, Van Dyck altered a single-use skincare patch by cutting it into pieces and billed Medicare for multiple applications. In response to a request for documents from an investigator for Medicare, Van Dyck altered patients’ medical records to justify his fraudulent bills. Medicare, Medi-Cal, Tricare, and the private insurers paid Van Dyck over $1 million for his fraudulent claims.

Van Dyck is scheduled to be sentenced by Judge Garland E. Burrell Jr. on January 15, 2016. He faces a maximum statutory penalty of 10 years in prison and a fine of $250,000 or twice the loss or gain.

This case is the product of an investigation by the Office of Inspector General for the U.S. Department of Health and Human Services and the Federal Bureau of Investigation. Assistant United States Attorney Todd A. Pickles is prosecuting the case.