Tag: 2016 News

The United States has intervened in a lawsuit against Prime Healthcare Services, the company’s founder and chief executive officer, Dr. Prem Reddy; and 14 Prime hospitals in California that alleges Emergency Departments at Prime facilities improperly admitted patients to the hospitals and submitted false claims to Medicare. Most of these hospitals are in Southern California, including Centinela Hospital Medical Center in Inglewood, Encino Hospital Medical Center, Sherman Oaks Hospital and Huntington Beach Hospital.

The lawsuit alleges that Dr. Reddy, the CEO, directed the corporate practice of pressuring Prime’s Emergency Department physicians and hospital administrators to raise inpatient admission rates, regardless of whether it was medically necessary to admit the patients. The lawsuit alleges that Prime’s corporate officers, at Reddy’s direction, exerted immense pressure on doctors in the Emergency Departments to admit patients who could have been placed in observation, treated as outpatients or discharged. As a result of these medically unnecessary admissions from the Emergency Departments, Prime hospitals allegedly submitted false claims to federal health care programs, such as Medicare.

The lawsuit filed in 2011, United States ex rel. Berntsen v. Prime Healthcare Services, et al., CV11-8214-PJW (MG), was filed in the U.S. District Court in Los Angeles by relator Karin Bernsten, who worked at one of the Prime hospitals where the allegedly improper inpatient admissions took place. She serves as director of performance improvement at Prime’s Alvarado Hospital in San Diego. The lawsuit was filed under the qui tam provisions of the False Claims Act, which permit private parties to sue on behalf of the United States when they believe that a party has submitted false claims for government funds, and to receive a share of any recovery. The False Claims Act permits the government to intervene in such a lawsuit, as it has done in a portion of this case.

Berntsen’s lawsuit describes multiple instances when chain Chief Executive Prem Reddy asked staff to improperly admit patients from the emergency room into the hospital instead of observing them on an outpatient basis. Medicare reimburses hospitals more for patients who are admitted, compared to those who are observed on an outpatient basis and released. Berntsen recounted a January 2011 meeting where Reddy allegedly told doctors that “you can always find a reason to make the (emergency room) patient an inpatient.” Berntsen also alleges that unlicensed “clinical documentation specialists” were coached to exaggerate patient medical conditions in medical records to justify admitting them to the hospital.

The DOJ filing says that since late 2013, investigators have talked to witnesses at different Prime hospitals who said Reddy would demand the firing of ER doctors who passed up opportunities to admit patients into the hospital. Investigators also learned that Reddy told physicians to find a way to admit all seniors older than 65, since they were covered by Medicare.

Prime Healthcare General Counsel Troy Schell said he’s confident the hospital network will be exonerated. “The allegations under investigation arise from complex regulation and a lack of clarity between what federal regulators and physicians believe necessary to adequately document medical necessity for hospital admission,” Mr. Schell said. “Similar investigations have involved almost every major health system and hundreds of hospitals across the country.”

A Glendale doctor has agreed to plead guilty to a federal drug trafficking charge for illegally distributing hydrocodone, a powerful painkiller best known by the brand names Vicodin and Norco.

Dr. Manasseh Nwaigwe, 72, who resides in Glendale and operated a medical office in Boyle Heights, agreed to plead guilty to one count of illegal distribution of hydrocodone. As part of the agreement with the government, Nwaigwe will forfeit to the government more than $97,000 in cash that Nwaigwe admits were proceeds derived from his illegal prescriptions.

In the plea agreement, Nwaigwe admits that, on five occasions in May and July 2015, he wrote prescriptions for drugs to undercover law enforcement officers in exchange for cash.

Nwaigwe prescribed the drugs hydrocodone, clonazepam (commonly known by the brand name Klonopin), and promethazine with codeine (a narcotic cough syrup known on the streets as “purple drank” or “sizzurp”) to undercover agents who “did not in fact have a medical need for those prescriptions.” In exchange, Nwaigwe received $90 cash for each prescription.

Subsequent to the undercover visits, a medical board expert reviewed The CURES report for Respondent, and chose several patients whose prescribing looked suspicious. The expert reviewed patient records for about 12 random patients, which totaled approximately 225 visits. He noticed that there was a pattern with all of these patients, notwithstanding age or sex. The most glaring thing was that every single patient was prescribed the same medications each time they went to see Respondent. They were prescribed a combination of Norco or Vicodin, plus Klonopin or Valium, and Phenergan with Codeine. For each patient, there were no referrals for imaging, physical therapy, urine drug screens or a check of CURES. Each and every patient had the following diagnoses (without evaluations): Chronic Anemia; Hypertension; COPD; UTI or Cystitis; and fatigue/weakness.

Under the terms plea agreement, Nwagiwe will cooperate with the Medical Board of California by surrendering his medical license, which will effectively resolve a pending action filed by the Medical Board against Nwaigwe earlier this year. On March 8, the Medical Board filed an accusation against Nwaigwe that alleged sexual misconduct, prescribing without an appropriate exam and gross negligence.

Under the plea agreement, Nwaigwe also will surrender his DEA registration, which is the federal license that all physicians must have to prescribe controlled substances.

Nwaigwe is expected to appear in United States District Court in Los Angeles on June 7 for an arraignment, at which point a hearing to enter his guilty plea will be scheduled. The drug distribution charge against Nwagiwe carries a statutory maximum penalty of 20 years in federal prison.

The investigation into Nwaigwe was conducted by the Drug Enforcement Administration, the Medical Board of California, the Los Angeles Police Department, the Los Angeles County Sheriff’s Department, the Torrance Police Department, and the Redondo Beach Police Department.

Former San Diego Chargers great Ron Mix, a member of the Pro Football Hall of Fame, pleaded guilty Monday in federal court in Missouri to a tax fraud charge stemming from his post-football career as a California workers compensation lawyer. Mix, 78, faces a potential sentence of three years in prison and $250,000 fine. Mix agreed to pay $49,543 in restitution to the IRS.

Mix has been a successful workers compensation lawyers since his retirement from the game. Many of his clients are former professional athletes who made claims for injuries suffered during their playing days, usually years after their careers ended. Mix filed about 300 such cases in the final month before the law changed in late 2013, according to news reports at the time. But this federal criminal case was prosecuted in Kansas City because some of the clients referred to Mix lived in the Western District of Missouri. None of their names was released.

According to the plea agreement filed in federal court attorney Mix admitted the following, “Between October 18, 2010 and December 16, 2013 in the Western District of Missouri and elsewhere, the defendant, RONALD JACK MIX (“MIX”), doing business as the LAW OFFICES OF RON MIX, entered into an arrangement whereby INDIVIDUAL F, who is not an attorney, would refer professional athletes to MIX and the LAW OFFICES OF RON MIX, so that defendant, MIX, could file workers’ compensation claims in the state of California on behalf of these former professional athletes. MIX then agreed to make donations to a charity as directed by INDIVIDUAL F. The charity was THE SIXTH MAN FOUNDATION d/b/a PROJECT CONTACT AFRICA (“PCA”), a federally-registered tax exempt 501(c)(3) charity. The individuals referred were in need of the services provided by MIX, he was well-qualified to perform these services, and he properly performed the services to the individuals who were referred.”

“MIX admits that he wrote checks out of his personal bank account and his law firm’s bank account to the charity as directed by INDIVIDUAL F while the latter made referrals of potential workman’s compensation cases. These donative payments ranged anywhere from $5,000 to $25,000. Mix admits that some of the professional athletes referred to him by INDIVIDUAL F, resided in the Western District of Missouri, so that he could file workers’ compensation claims in the state of California on their behalf, which was a proper venue under California law.”

“MIX admits that from 2010 through 2013, he made approximately $155,000 in donations for client referrals.”

“MIX also admits that the payments to PCA were listed as “charitable contributions” on his Form 1040s, U.S. Individual Income Tax Returns, for calendar years 2010, 2011, 2012, and 2013.” However you cannot make a charitable contribution that is deductible when you get something back in return.

Jean Paul Bradshaw, Mix’s lawyer in Kansas City said Mix was told that the referrals would stop unless he donated more and more money to the charity. Prosecutors said that Mix’s donations ranged between $5,000 and $25,000.

The practice of paying a non-lawyer a fee for a referral is known as “capping,” and is illegal in California. Mix’s guilty plea will have to be reported to the State Bar. It is not clear at this time what action the California State Bar may take as a result of this plea agreement.

In exchange for his plea, the government agreed “not to bring any additional charges against defendant for any federal criminal offenses related to conspiracy to defraud the IRS or the United States, wire fraud, mail fraud, or filing a false tax return, or any other charge related to the conduct set forth in Paragraph 3 of this plea agreement for which it has venue and which arose out of the defendant’s conduct described above.”

A Santa Clara  jury awarded Aetna, Inc. $37.4 million from Bay Area Surgical Management, LLC (“BASM”) six of its affiliated surgery centers and its three principals. Aetna had accused the surgery center company of a massive conspiracy to defraud Aetna and other carriers who offer out-of-network benefits by paying off doctors, lying to patients and lying to carriers and employers, the result of which was overpayment by Aetna for surgeries to the extent of tens of millions of dollars. Aetna asserted causes of action for fraud, intentional interference with contractual relations and unjust enrichment. The BASM defendants have announced that they will appeal.

According to the report on Lexology.com, Aetna’s specific complaints in the 2012 lawsuit were several: first, Aetna contended, BASM paid off doctors by selling them ownership interests at a price far below fair market value. Because physicians paid only a nominal price for their ownership interests, BASM was able to pay annual rates of return of several hundred percent. In return, Aetna claimed, the owner physicians shifted their cases to BASM centers, and especially their high-price procedures with good coverage. BASM also reallocated ownership to reward high producing physicians and punish those who were less profitable.

BASM also concealed from patients how much the surgery centers were charging for procedures by not collecting the patients’ co-payment or, Aetna, claimed, telling the patient that the charge was substantially lower than the amount the surgery centers billed to Aetna. Aetna presented testimony that the waiver of coinsurance skews the healthcare system by encouraging patients to get procedures at more costly facilities. Aetna also presented evidence that BASM’s charges were significantly higher than other area facilities, both in and out of network.

Aetna further presented evidence that the BASM surgery centers actively sought patients with good out-of-network benefits. BASM surgical schedulers were instructed not to schedule patients whose plans had a daily max for out-of-network benefits and emails and text messages from BASM principals to owner physicians emphasized the kinds of cases they were to bring in order to maximize profit.

The result of these practices, Aetna argued, was an insidious conspiracy to bilk the insurance company out of multiple millions of dollars.

BASM had argued that it was the insurance company’s responsibility to protect itself. Further, per BASM, everyone in the health care industry knows that billed charges are arbitrary. Only payers can determine what to pay for a particular procedure at a particular facility and “no one ever pays the sticker price.”

The jury unanimously sided with Aetna and awarded all of the damages Aetna claimed. Still pending in California state court is a similar case by United Healthcare Services, Inc. set for trial later this year and a case in California federal court by BASM against Aetna, United and some in-network surgery centers alleging an anti-competitive conspiracy to destroy BASM’s business.

The company continues to run six surgical care centers from Burlingame to San Jose to Los Gatos. Court documents show the FBI and the U.S. Attorney’s Office in San Jose are making inquiries in the case. The latter has already issued a subpoena seeking information from Aetna. Aetna has filed two similar lawsuits against physician-owned surgery centers in Texas and one in Pennsylvania.

It is critical that claims administrators and treating physicians obtain an accurate history of illegal substance use and abuse from an injured workers. This history is important when there is a physical injury for purposes of appropriately prescribing an opioid pain medication. This history is important when there is a psychiatric injury in order to determine causation and apportionment.

With regard to physical injuries, the DWC is currently in the process of developing the Medical Treatment Utilization Schedule with a new 137 page Opioid Treatment Guideline. Section 3.3.1.1 “Screening for Drug Misuse/ Abuse” mandates that physicians “use validated screening tools for predicting the risk of drug misuse … before beginning chronic opioid treatment.” These screening tools document the claimant’s “personal history of substance abuse” in order to determine risk of abuse of pain medication. This new proposed DWC guideline makes the importance of obtaining a drug history from a claimant not only quite clear but also a mandatory requirement.

Yet it is rare to see a claimant actually admit to illicit drug use in a workers’ compensation claim. What are the odds that illicit drug use is as rare as these common California workers’ compensation histories suggest?

The New York Times reports that all over the country, employers say they are struggling to find workers who can pass a pre-employment drug test. That hurdle partly stems from the growing ubiquity of drug testing, at corporations with big human resources departments, in industries like trucking where testing is mandated by federal law for safety reasons, and increasingly at smaller companies.

But data suggest employers’ difficulties also reflect an increase in the use of drugs, especially marijuana – employers’ main gripe – and also heroin and other opioid drugs much in the news.

Drug use in the work force “is not a new problem. Back in the ’80s, it was pretty bad, and we brought it down,” said Calvina L. Fay, executive director of the Drug Free America Foundation. But, she added, “we’ve seen it edging back up some,” and increasingly, both employers and industry associations “have expressed exasperation.”

Data on the scope of the problem is sketchy because figures on job applicants who test positive for drugs miss the many people who simply skip tests they cannot pass. Nonetheless, in its most recent report, Quest Diagnostics, which has compiled employer-testing data since 1988, documented an increase for a second consecutive year in the percentage of American workers who tested positive for illicit drugs – to 4.7 percent in 2014 from 4.3 percent in 2013. And 2013 was the first year in a decade to show an increase.

In Colorado, “to find a roofer or a painter that can pass a drug test is unheard-of,” said Jesse Russow, owner of Avalanche Roofing & Exteriors, in Colorado Springs. That was true even before Colorado, like a few other states, legalized recreational use of marijuana. In a sector where employers like himself tend to rely on Latino workers, Mr. Russow tried to diversify three years ago by recruiting white workers, vetting about 80 people. But, he said, “As soon as I say ‘criminal background check,’ ‘drug test,’ they’re out the door.”

A much broader data trove, the federal government’s annual National Survey on Drug Use and Health, reported in September that one in 10 Americans ages 12 and older reported in 2014 that they had used illicit drugs within the last month – the largest share since 2001

If this data is correct, a random sample of 100 open workers’ compensation claims in a typical inventory should have 10 cases with an admission of use of illicit drugs within the prior month. Should any inventory of claims show a lower percentage, or worse yet, not a single case of an admission of illegal drug use, the odds are high that several of the claimants are lying. Then the question of course is “which ones?”