Tag: 2016 News

The connection between opiate pain pills and heroin addiction is now reached epidemic proportions according to state and federal health regulators. Yet it is uncommon for anyone in the workers’ compensation claim industry to be aware of even a single case where an injured worker is involved in heroin or concurrent use of illegal substances. What what are the odds that workers’ compensation claimants are free of illegal drug use?

A new study published in Spine, concludes that the odds are fairly high that people living with chronic low back pain (cLBP) are more likely to use illicit drugs — including marijuana, cocaine, heroin, and methamphetamine — compared to those without back pain.

In addition, cLBP patients with a history of illicit drug use are more likely to have a current prescription for opioid analgesic (pain-relieving) drugs, according to the new research by Dr. Anna Shmagel of University of Minnesota, Minneapolis, and colleagues. While it’s not clear which direction the association runs, the patterns of illicit drug use may have implications for decisions about prescribing opioids for patients with back pain.

The researchers analyzed survey responses from more than 5,000 US adults (aged 20 to 69) from a nationally representative health study (the 2009-2010 National Health and Nutrition Examination Survey, or NHANES).

About 13 percent of respondents met the study definition of cLBP — back pain present for three months or longer. The confidential survey also asked participants about their use of illicit drugs — marijuana, cocaine, heroin, and methamphetamine.

The results suggested that back pain was linked to higher rates of illicit drug use. About 49 percent of adults with cLBP said they had ever used illicit drugs, compared to 43 percent of those without cLBP. Rates of current illicit drug use (within the past 30 days) were also higher in the cLBP group: 14 percent versus nine percent.

All four specific drugs in the survey were more commonly used by respondents with cLBP. Rates of lifetime use were about 46.5 versus 42 percent for marijuana, 22 versus 14 percent for cocaine, nine versus five percent for methamphetamine, and five versus two percent for heroin. After adjustment for other factors, participants with cLBP were more than twice as likely to report methamphetamine and heroin use.

The results also suggested a link between illicit drugs and prescription opioids among patients with cLBP. Subjects who had ever used illicit drugs were more likely to have an active prescription for opioid analgesics: 22.5 percent versus 15 percent. Current illicit drug users were also more likely to have an opioid prescription, although that difference was not statistically significant.

Prescription opioids are widely used by patients with cLBP, raising concerns about addiction, misuse, and accidental overdose. Previous studies have found that people with a history of illicit drug use are more likely to misuse prescription opioids. The new study is one of the first to focus on rates of illicit drug use among Americans with cLBP.

The nationwide data show that people with cLBP have higher rates of illicit drug use, and those with a past history of illicit drug use are more likely to be current users of opioid analgesics. The researchers note some important limitations of their study–including a lack of data on whether illicit drug use occurred before or after cLBP. They also suggest that the true scope of the problem may be even greater, since NHANES excludes some groups at high risk of illicit drug use.

Pending further research, doctors may want to consider theses associations when evaluating pain relief options for patients with cLBP, Dr. Shmagel and coauthors believe. They write, “As we face a prescription opioid addiction epidemic, careful assessment of illicit drug use history may aid prescribing decisions.”

Thomas M. Calderon, a former member of the California State Assembly who became a political consultant, was sentenced this week to one year and one day of incarceration after he pleaded guilty to money laundering for allowing bribe money to be funneled through his firm.

Tom Calderon was sentenced by United States District Judge Christina A. Snyder, who ordered that the sentence be served half in federal prison and half in home detention. In addition to the period of incarceration, Judge Snyder ordered Tom Calderon to serve 100 hours of community service.

Tom Calderon, 62, of Montebello, pleaded guilty on June 6 to one count of money laundering and admitted that he agreed to conceal bribe payments coming from two undercover FBI agents by having the money go through his political consulting company, the Calderon Group.

The bribes were made to Tom Calderon’s brother, Ronald S. Calderon, who at the time was a California State Senator. Ron Calderon pleaded guilty on June 21 and admitted accepting bribes from the undercover agents and a businessman in exchange for performing official acts as a legislator. Ron Calderon, 59, also of Montebello, is scheduled to be sentenced by Judge Snyder next Monday, although he has asked to continue his sentencing date.

When he pleaded guilty, Tom Calderon specifically admitted that in 2013 he deposited a $30,000 bribe payment from an undercover agent into the Calderon Group’s bank account and then wrote a $9,000 check to Ron Calderon’s daughter.

“Tom Calderon was all too aware of the bribe payments to his brother and that his brother had agreed to a quid pro quo with the undercover agents,” said United States Attorney Eileen M. Decker. “Tom Calderon facilitated these bribe payments by helping to conceal his brother’s corrupt activities from the public.”

“Today’s sentencing sends a message to those interested in using access to public office in order to reap personal benefits that they will be held responsible for their actions,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Mr. Calderon used his family ties to benefit personally at the expense of the constituents represented by his brother’s office.”

Tom Calderon and his brother were both indicted by a federal grand jury in 2014. Tom Calderon was charged with conspiring with his brother to commit money laundering and seven substantive counts of money laundering. The money laundering charge that Tom Calderon pleaded guilty to was count 22 in the indictment.

“IRS Criminal Investigation tirelessly untangled the web of illicit transactions that lead to Thomas Calderon being held accountable for his role in this scheme,” stated IRS Criminal Investigation’s Acting Special Agent in Charge, Anthony J. Orlando. “IRS CI remains committed to investigating those who engage in political corruption and tarnish our democratic system.”

Three days after Berkshire Hathaway Inc. subsidiaries Applied Underwriters and its California Insurance Co affiliate agreed to stop selling disputed workers’ compensation policies in California, the company has again been has been sued now by a New York bicycle courier company over another alleged illegal scheme to cheat employers buying workers’ compensation policies.

California’s insurance commissioner ruled against Berkshire in June over workers’ compensation policies after determining that the company duped a small business, Shasta Linen Supply, and circumvented a review of rates. Earlier this month, the company agreed to stop selling the policies in dispute in California. The regulator said the Berkshire businesses charged customers’ rates which hadn’t been approved by the regulator.

According to a Reuters report, the new civil complaint, filed late Friday by Breakaway Courier Systems, came as Berkshire’s Applied Underwriters unit faces scrutiny over its workers’ compensation policies, including some that have been banned by California, Vermont and Wisconsin.

Breakaway, with about 300 employees, accused Berkshire and Applied of “siphoning” premiums through a web of illegal shell companies, with diverted premiums going to unlicensed out-of-state insurers.

The plan amounted to a “reverse Ponzi scheme” where unsuspecting employers expecting to buy affordable policies instead bought costly “reinsurance” requiring them to cover each other’s losses, leaving taxpayers on the hook for shortfalls when too many workers are injured on the job, Breakaway said.

“Breakaway thought it was purchasing a workers’ comp policy with a profit-sharing component if its losses were low,” Raymond Dowd, its lawyer, said in an interview. “Instead it purchased a complex derivative swap labeled misleadingly as a ‘reinsurance participation agreement’ that put all the risk on Breakaway.

“Berkshire’s schemes break multiple laws, including that you cannot collect insurance premiums if you are not licensed,” Dowd added.

Neither Berkshire nor Applied immediately responded to requests by Reuters for comment.

The lawsuit, filed in the state supreme court in Manhattan, seeks at least $18 million of damages, plus a declaration that the reinsurance participation agreements (RPAs) are void and against public policy.

It shines a spotlight on a lesser-known part of Berkshire’s insurance operations, which also include Geico car insurance and General Re reinsurance.

In the recently settled California case, both insurers denied wrongdoing. California Insurance Commissioner Dave Jones said their sale of a policy to Shasta Linen Supply Inc of Sacramento subjected the employer of 63 to hundreds of thousands of dollars of extra costs.

Similarly, Breakaway’s RPA put that company at “imminent financial risk,” and was “not understandable” by ordinary purchasers, Martin Schwartzman, former first deputy superintendent of New York’s insurance department, said in a filing accompanying the complaint.

The case is Breakaway Courier Corp d/b/a Breakaway Courier Systems v. Berkshire Hathaway Inc et al, New York State Supreme Court, New York County, No. 654806/2016.

Central Freight Lines Inc. and Trendsetter HR have settled a lawsuit over workers’ compensation, ending a three-year litigated dispute.

The carrier, based in Waco, Texas, signed a deal with Trendsetter in 2008 to perform administrative services for the company and its employees. For more than three years, Central Freight alleged Trendsetter accepted payments but failed to deposit the funds for workers’ compensation coverage.

Central Freight stopped making payments after it conducted an audit, and Trendsetter sued for breach of contract in 2013.

However, a jury in December 2015 ruled Trendsetter breached the contract and awarded Central Freight $1.85 million. Jurors found that Trendsetter-HR and its owner, D.W. Bobst, failed to honor the terms of the contract and wrongfully billed Central Freight for services and coverage that were never provided. Central Freight is asking that interest be added to the verdict amount, which could push the final award to more than $2 million.

“It’s rare to receive a verdict of this magnitude in a counterclaim, but Trendsetter’s failures and wrongs were particularly egregious,” said attorney William Chamblee, who is with the Dallas firm of Chamblee Ryan, which represented Central Freight. “Trendsetter, its affiliates and its owner made numerous misstatements to my client in an effort to hide the facts and justify their wrongdoing,” Chamblee said.

Trendsetter reportedly signed a contract with Central Freight in 2008 before adding several amendments to broaden the administrative services provided to the company and its employees, according to a statement from the law office. “For more than three years, Trendsetter accepted payments from Central Freight but failed to properly deposit the funds for workers’ compensation coverage,” according to the statement.

Central Freight Lines ranks No. 94 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers, and has operations in California.

The case was on appeal when the deal was reached. “Central is satisfied that this settlement will allow both parties to move on.” said its attorneys.

Trendsetter owner D.W. Bobst said in a statement that neither he nor any affiliates were implicated in any wrongdoing, calling this a resolution to a contract dispute.

Terms of the settlement were not disclosed

Trendsetter also sued AIG for failure to provide workers’ compensation to Central Freight Lines, claiming that it directed the insurer to do so. That case is ongoing.

Los Angeles County Superior Court ruled in favor of Allstate Insurance Company and the State of California in a lawsuit topping more than $2.3 million that ends the illegal ownership, kickbacks and fraudulent operation of two medical clinics in Los Angeles.

In its lawsuit, Allstate alleged chiropractor Byum Suk Kim violated the state’s Insurance Frauds Prevention Act when he submitted to Allstate more than 90 claims for treatment of patients at the two clinics that were illegally owned in violation of California’s Moscone Knox Professional Corporation Act. In its complaint, Allstate alleged the two clinics, Wilshire Spinal Disc Clinic, Inc. and Allied Medical, Inc. were held out to the public as legitimate medical clinics incorporated in the State of California, but were actually owned and operated by Byum Suk Kim, D.C. in violation of the Moscone Knox Professional Corporation Act and Business & Professions Code sections 2052, and 2400, commonly referred to as the “corporate practice of medicine bar.” Both clinics are no longer operating.

Judge Terry A. Green agreed with Allstate and ordered Kim to pay $1.8 million in penalties, plus over $582,000 in assessments and fees – a $2.3 million judgment.

“Submitting even one false insurance claim is more than just a bad idea; it’s fraud, and insurance fraud is a crime,” said Allstate’s California Field Senior Vice President Phil Telgenhoff. “Fraud drives up the cost we all pay for insurance by stealing millions of dollars from insurers. This cannot and will not be tolerated in California or anywhere. Allstate will fight fraud to help protect our customers and keep insurance costs down.”

Allstate’s suit identified Kim as a chiropractor owning and operating the two medical clinics. The judgment was based on evidence submitted by Allstate showing Kim engaged in clinical and billing fraud in connection with claims that were submitted to Allstate, which included hundreds of individual violations of California Penal Code section 550. Specifically, the evidence showed Kim was responsible for the preparation of 91 separate reports for patients allegedly treated by him at Wilshire and Allied, each of which contained misrepresentations in violation of section 550 regarding the level and type of treatment purportedly provided.

Additionally, the billing records for the treatment allegedly provided were likewise fraudulent, as the evidence presented by Allstate showed there was illegal “up-coding” for services. The judgment was based on Allstate proving the medical records, narrative reports, and bills of patients purportedly treated by Kim amounted to billing and clinical frauds perpetrated and carried out by Kim on a systematic basis at both Wilshire Spinal Disc Clinic, Inc. and Allied Medical, Inc.

This is the second multimillion-dollar ruling against insurance fraud that Allstate has successfully argued in Los Angeles County Superior Court in 2016.