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Tag: 2016 News

Fontana Auto Shop Worker Faces 5 Years in Fraud Case

A Fontana man was arrested on insurance fraud charges earlier this month following an investigation conducted by the San Bernardino County District Attorney’s Workers’ Compensation Insurance Fraud Unit.

Jamie Gallardo, 45, is charged with a violation of Insurance Code § 1871.4, Workers’ Compensation Insurance Fraud.

It is alleged that on or about April 21, 2010 through April 19, 2014, Gallardo was employed at California Coach and Body located in the City of Walnut. During this time, Gallardo filed a workers’ compensation claim alleging he sustained injuries to his chest and back while performing his job duties.

According to Senior District Attorney Investigator Rodney Tamparong, an investigation into possible fraud resulted in the current allegation that Gallardo presented a knowingly false or fraudulent statement in order to obtain Workers’ Compensation benefits.

After obtaining an arrest warrant, investigators–with assistance from officers from the Fontana Police Department–arrested Gallardo at his place of residence Feb. 2. Gallardo was transported and booked into the West Valley Detention Center.

This case will be prosecuted by Deputy District Attorney Scott Byrd. If convicted, Gallardo faces five years County prison. Arraignment is scheduled March 24 at the Rancho Cucamonga Superior Court.

Little Known California Healthcare Fraud Whistleblower Law Gains Attention

California got a $3.1-million piece of the settlement pie when drugmaker Warner Chilcott agreed to pay the federal government $125 million in October over allegations it defrauded Medicare and Medicaid. But the state did much better in a second, lesser known settlement with the drugmaker just two months later. It got $11.8 million. That heftier payout stemmed from a separate but similar case brought under a California law that allows whistle-blowers to file lawsuits alleging fraud against private insurers.

ModernHealthcare.com reports that California and Illinois are the only states with such laws, and until now, not many healthcare lawsuits have been filed under those statutes. That, however, may change, as awareness of the laws — and recognition of the potential rewards for those who use them — grows. Fraudsters face triple damages under the laws, and whistle-blowers are often entitled to larger shares of recovered money than what they can get under the federal False Claims Act.

“We have found that health insurance fraud is one of the biggest problems we have,” said Nancy Kincaid, a spokesperson with the California Department of Insurance. “It’s a multi-billion dollar problem. Everybody is paying for these losses.” Kincaid also expects to see more such cases in California.

The idea behind the laws, which have been on the books for years, is that it’s in a state’s interest to pursue fraud against private insurers because such misdeeds raise healthcare costs for everyone.

An even larger healthcare-related case preceded the Warner Chilcott one in California. In 2013, Sutter Health, which has hospitals throughout northern California, settled a case brought under the statute for $46 million. The whistle-blower in that case alleged that Sutter included extra, false charges for anesthesia on bills sent to patients and insurers. Sutter did not admit to any wrongdoing as part of the settlement.

There are rich rewards for whistle-blowers who file successful cases under the two laws. Whistle-blowers are entitled to 30% to 50% of the money that is recovered. In the Warner Chilcott case, the whistle-blowers got 49% of the recoveries, amounting to about $11.4 million. In the Sutter case, the whistle-blower received about $13.2 million, according to the California Department of Insurance.

There’s no way to track exactly how many cases are now being brought under these laws in California and Illinois. The cases typically remain private – or under seal – at first. In some cases, the cases can stay under seal for years.

But R. Scott Oswald, managing principal of The Employment Law Group in Illinois, which represents whistle-blowers, said he and his colleagues are seeing more whistle-blowers taking action under the Illinois statute. His firm has several cases that have been under seal for years, he said.

Justin Berger, a principal at Cotchett Pitre and McCarthy who represents whistle-blowers in such cases in California, said his firm also seems to be filing more of the cases lately. Berger said he’s also hearing from U.S. attorneys that they’re seeing more of the lawsuits filed in conjunction with Medicare fraud cases. “It’s becoming more common because there’s a little more visibility,” Berger said.

Historically, the California and Illinois laws haven’t grabbed much attention. Over the years, not too many healthcare related lawsuits had been filed under the California law and even fewer had been filed in Illinois, Simmer said.

Insurance companies may not have traditionally been very interested in the laws because they can simply raise rates to absorb the costs of fraud, said Patrick Burns, a co-executive director of the Taxpayers Against Fraud Education Fund, a not-for-profit supporting whistle-blower incentive programs. It’s also possible not as much fraud slips under the noses of private insurers as it does in Medicare and Medicaid because private insurers have their own robust fraud detection programs, Oswald said. A lack of awareness about the laws is also likely to blame for the slow drip of cases filed under them over the years, Oswald said.

Recent cases, however, are raising the profile of the laws, he said.

The California Department of Insurance is now using $4 million set aside from that Sutter settlement to fund a special health insurance enforcement team that investigates complaints and claims of wrongdoing, Kincaid said. “The commissioner is concerned that there have been a number of these that have been brought forward, typically by whistle-blowers or insiders,” Kincaid said of cases brought under the California law.

In recent years, the number of False Claims Act cases involving healthcare has exploded. Two-thirds of federal whistle-blower lawsuits last year were healthcare-related.

Feds Start Slow Crackdown on Compound Drugs

The federal government saw a spike in utilization in the prescription compounding industry that led investigators to an estimated $2 billion in fraud in claims to Tricare nationally beginning in 2013 and running into last year. There have been civil settlements and federal investigators said criminal charges are likely early this year.

Across the country compounding pharmacies were charging as much as $10,000 to $20,000 each for prescriptions and some hired marketers who used Facebook and other social media to target military families, enticing them with inclusion in research studies and telling them of creams and salves that were pain relievers, migraine headache medicines and scar reducers, said Jason Mehta, a Jacksonville-based assistant U.S. attorney for the Middle District of Florida.

The cost to actually compound these creams was often only about 5 percent of the submitted cost, according to the Department of Justice. Compounding pharmacies were making in the range of 90 percent profit on each prescription.

According to the Defense Health Agency that oversees Tricare, costs for compound drugs skyrocketed from $5 million in 2004 to $514 million in 2014. Costs topped $1 billion in the first six months of 2015. Tricare went to Congress for help so the agency could make the payments, and rules were changed to make approvals of compound prescriptions more stringent. The agency was on track to lose $2 billion in 2015 alone until the controls were put in place in May, said George Jones, chief of pharmacy operations at the agency.

The safeguards have resulted in a 98 percent reduction in cost, he said.

Of the $2 billion in estimated fraud, about $500 million is believed to have occurred in Florida, Mehta said. One-quarter to a third of that was in the Jacksonville region. Since March the U.S. Attorney’s Office that covers Florida from Jacksonville to Fort Myers has collected at least $50 million in civil settlements related to compounding pharmacies.

Investigations are taking place in other states, Mehta said. In Mississippi recently about 1,000 federal agents conducted a mass seizure of about $15 million, as well as boats, cars and airplanes all related to compounding cases, Mehta said. So far Florida is the only state to have settlements.

Injured Correctional Officer Caught Playing Baseball Pleads Guilty

A state correctional officer accused of playing baseball while collecting disability leave benefits for a foot injury has pleaded guilty to workers’ compensation fraud.

Todd Phillips, a correctional officer with the California Department of Corrections and Rehabilitation, was charged with intentionally making false statements regarding his physical abilities and failing to disclose participation in certain events and activities. Had his participation in those activities been known, it would have affected his workers’ compensation benefits, according to a Sacramento County District Attorney’s Office news release.

On Nov. 10, 2010, Phillips injured his right foot while working for the Department of Corrections and Rehabilitation. He continued to work after the injury until he was taken off work by his doctors on Dec. 27, 2011, pending surgery on his foot on Feb. 15, 2012. Phillips continued to tell his doctors that he was unable to return to work because of pain in his foot, prosecutors said.

While off work due to the foot injury and while receiving industrial disability leave benefits, Phillips was filmed by Department of Corrections and Rehabilitation investigators playing in nine police softball games in September 2012. He was filmed running the bases, aggressively running to catch balls in the outfield, hitting his right foot with the bat and pivoting on the right foot while swinging and hitting the ball, authorities said.

Investigators also determined through interviews with other peace officers that Phillips was an active and aggressive participant in softball games during tournaments in July and August 2012.

Sacramento Superior Court Judge Marjorie Koller ordered Phillips to serve 60 days in county jail with the sheriff’s release program recommended. He also was ordered to serve three years probation and to pay $12,823.77 in restitution to the Department of Corrections and Rehabilitation.

Researchers Question Effectiveness of Partial Meniscectomy

Partial meniscectomy – a form of arthroscopic surgery for patients with a torn meniscus, a rupture of the fibrocartilage strips in the knee – is ineffective for individuals with mechanical symptoms of degenerative knee. This is a conclusion of a new study recently published in The Annals of Internal Medicine.

A torn meniscus is one of the most common symptoms of degenerative knee – the deterioration of the knee joint with age. It occurs when one of the two menisci in the knee – the C-shaped pieces of cartilage that protect and cushion the thighbone and shinbone – become damaged. Many people with knee degeneration may experience mechanical symptoms such as joint locking or catching, which are often attributed to a section of the knee joint becoming lodged between the joint surfaces as a result of friction caused by a torn meniscus.

According to the story in Medical News Today, partial meniscectomy – the surgical removal of the damaged part of a torn meniscus – has become standard practice for patients with mechanical symptoms, despite there being insufficient evidence that it is beneficial. “Orthopedists are largely unanimous on the benefits of arthroscopic surgery on patients suffering from mechanical symptoms. However, scientific proof of the benefits is scarce, and before our study, entirely based on uncontrolled follow-up studies,” says coauthor Dr. Raine Sihvonen, a specialist in orthopedics at the Hatanpää Hospital in Tampere, Finland.

For their study, the researchers set out to gain a better understanding of the effectiveness of partial meniscectomy for such patients. The team analyzed the data of 146 patients aged 35-65 who were part of the Finnish Degenerative Meniscal Lesion Study (FIDELITY). All patients had experienced pain in the inner side of their knee for at least 3 months, which clinical examination and MRI suggested was down to a torn meniscus.
The patients were free of knee osteoarthritis – a condition commonly associated with degenerative knee – and meniscus damage had not been caused by an isolated trauma. Each patient’s torn meniscus was confirmed through diagnostic keyhole surgery. The patients were then randomized to receive either a partial meniscectomy or a sham treatment.

Based on their findings, Prof. Järvinen concludes that “the partial removal of a degenerative torn meniscus does not reduce or alleviate mechanical symptoms when compared with sham surgery.” Additionally, the researchers say their findings suggest that trauma-related meniscal tearing and degenerative meniscal tearing are two separate conditions and should be treated as such.

CWCI Appoints New General Counsel

Ellen Sims Langille has been named to succeed Michael McClain as general counsel of the California Workers’ Compensation Institute according to Alex Swedlow, president of the Oakland-based research group.

Ms. Langille received her undergraduate degree from UC Santa Cruz and her law degree from the University of California, Hastings College of the Law. Certified as a specialist in workers’ compensation by the State Bar of California, Ms. Langille is currently a partner at the defense firm of Finnegan, Marks, Theofel & Desmond in San Francisco. She brings nearly 25 years of industry experience to the Institute, having specialized in appellate level workers’ compensation cases throughout her career, as well as having served as amicus counsel for the Institute and other organizations in a number of important cases, including Angelotti Chiropractic v. Baker; Dubon v. World Restoration; Brodie v. WCAB; Lockheed Martin v. WCAB; Stuart v. WCAB; and Avalon Bay Foods v. WCAB (Moore). In addition, she has extensive experience in client training, was the editor of “Workers’ Compensation” – California Labor Law Digest, 2014-2016, published by the California Chamber of Commerce, and has been a frequent speaker at industry seminars and conferences.

In her new capacity, Ms. Langille will manage the Institute’s internal and external legal affairs; serve as staff liaison to the Legal Committee, which directs CWCI’s amicus activities; analyze regulatory and legal issues affecting California workers’ compensation; and help develop and present research and legal programs for Institute members and other members of the workers’ compensation community.

In announcing her appointment, Mr. Swedlow said, “The Institute is fortunate to have found someone of Ellen’s caliber for this key position. Her knowledge and expertise, her reputation throughout the California workers’ compensation community, and her familiarity with CWCI’s goals, operations and staff made her an ideal choice. She will begin working at the Institute in early April which should make for a seamless transition as Mike McClain moves toward his retirement in late May.”

DWC Proposes Changes to WCIS Regulations and EDI Implementation Guides

The Division of Workers’ Compensation posted proposed regulations revising its Workers’ Compensation Information System (WCIS) regulations and Electronic Data Interchange (EDI) Implementation Guides. A public hearing has been scheduled for 10:00 a.m., Monday, March 28, 2016, in the Auditorium of the Elihu Harris State Office Building, 1515 Clay Street, Oakland, CA 94612. Members of the public may also submit written comments on the regulations until 5 p.m. that day.

The regulations contain proposed revisions to the WCIS Regulations and the two California EDI Implementation Guides published by the DWC:

1) The Guide for First and Subsequent Reports of Injury. This guide has not been updated since 2011. It is being revised to correct minor reporting inefficiencies, improve file transfer security through the use of secure file transfer protocol and a new file naming convention, as well as an enhanced claim validation process.
2) The EDI Implementation Guide for Medical Bill Payment Records, Version 2.0. This guide, though updated in 2015, requires additional revisions to comply with reporting standards set forth in the International Association of Industrial Accident Boards and Commissions (IAIABC) Workers’ Compensation Medical Bill Reporting Implementation Guide, Release 2.0, February 1, 2015 Publication. Compliance with this newer standard is essential in order for WCIS to be able to collect data regarding compound and repackaged drugs.

These materials can be found on the proposed regulations page.

DWC Prepares for Drug Formulary Public Meeting

The Division of Workers’ Compensation has posted the Agenda and background materials for the February 17th Drug Formulary Public Meeting. The meeting is being held to solicit public input on issues relating to implementation of Assembly Bill 1124, which requires the adoption of a workers’ compensation drug formulary by July 1, 2017.

The meeting is scheduled from 10 a.m. until noon on Wednesday, February 17, 2016 in the auditorium of the Elihu Harris State Office Building, 1515 Clay Street, Oakland, CA 94612.

The Agenda and background materials may be accessed on the DWC Forum. The Agenda includes a presentation by Barbara Wynn, Senior Health Policy Analyst with RAND and a public discussion of formulary issues identified by RAND.

The DWC contracted with RAND to provide assistance in the design and implementation of the formulary and related policies and in estimating the economic impact of the formulary. Key questions that RAND researchers will address include:

1) How should the drug formulary be structured? What are the advantages and disadvantages of existing formularies that might be considered by the California WC program?
2) What implementation policies should be considered to address the AB 1124 requirements and promote the provision of appropriate pharmaceuticals expeditiously while minimizing administrative burden?
3) What are the likely impacts of implementing the formulary on drug utilization patterns and spending? What are the costs and benefits of implementing an evidence-based formulary consistent with the AB 1124 requirements for injured workers, providers,employers, and society?
4) What are the key indicators and measures that should be used to monitor implementation of the formulary?

The DWC will also gather and analyze information on potential formularies that DWC might consider and the ancillary policies that other state WC programs have adopted in implementing drug formularies, including how the formulary is integrated with medical treatment guidelines. It will consider the feasibility of DWC constructing a formulary tailored to its medical treatment utilization guidelines and review the evidence-based formularies from American College of Occupational and Environmental Medicine (ACOEM), the Official Disability Guidelines (ODG), the Washington Department of Labor and Industries, and the California Department of Health Care Services (MediCal).

The review of the regulatory policies that other WC programs have adopted in implementing a WC formulary will include the states of Ohio, Oklahoma, Texas, Tennessee and Washington.

Former Workers’ Compensation Judge Frank Kleeman Dies at 82

Former Workers’ Compensation Judge Frank Lynn Kleeman passed away peacefully on February 5, 2016 at UCLA Ronald Reagan Medical Center of Cardiac Arrest with his wife, Charlotte, and daughter, Shari, by his side. He was 82.

Judge Kleeman led an incredibly diverse life, serving in the US Navy, Air Force Reserve, and as a Los Angeles County Sheriff’s Deputy. He went on to be an attorney in 1977, Workers Compensation Judge in the 1980s, and later an Arbitrator.

After moving to the Santa Clarita Valley, Judge Kleeman became actively involved in the community, supporting many organizations including the Boys and Girls Club of Santa Clarita Valley, the College of the Canyons Foundation, the SCV Repertory Theater, and the Newhall Redevelopment Committee. He was Board Emeritus of The Pasadena Playhouse. He was named Santa Clarita Valley Man of the Year in 2002, and he was also named Philanthropist of the Year for the Network of California Community Colleges in 2002..

Judge Kleeman leaves behind his wife Charlotte, son Jeff, daughters Shari, Robin, and Suzette, grandchildren Elijah, Maxwell and Destiny, brother Dr. Charles Kleeman and wife, Annette, many nieces and nephews and, his beloved dogs, Cookie and Oreo. Frank was preceded in death by his brother Stanley Kleeman, and sister Ruth Pelter.

“He was so very well-liked in this community,” said Cheryl Jones, vice president of the Child and Family Center Foundation. “He volunteered with us and his efforts were substantial,” she said. He served on the foundation’s Board of Directors for more than 20 years.

LA Physician Gets 30 Years to Life For Pain Pill Conviction

The second-degree murder convictions last October 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.

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.

This month she was sentenced to 30 years to life in prison for the overdose deaths, in a case that could change how doctors prescribe medication.

The 46-year-old mother of two, wearing blue jail scrubs, apologized to the families of her victims, but the judge sentenced her based on Tseng refusing to take responsibility for her actions during the trial and blaming her patients or pharmacists or even other doctors instead. “[She’]) a person who seemingly did not care about the lives of her patients in this case but rather appeared more concerned about distributing dangerous controlled substances in an assembly line fashion so as to collect payments which amounted to her amassing several million dollars,” Los Angeles County Superior Court Judge George Lomeli said.

But April Rovero, the mother of one of the victims, was mostly unmoved by Tseng’s apologies. Her son, Joey, died after mixing Xanax and oxycodone — which he had both been prescribed by Tseng — with alcohol. “It feels too late,” Rovero said outside the courtroom. “But it was better to hear something than nothing. But Rovero, who, founded the National Coalition Against Prescription Drug Abuse after her son’s death, praised the sentence. “Justice has been served,” she said.

Outside the courtroom, Peter Osinoff, who represented Tseng before the state medical board said Tseng’s prosecution has had a negative impact on physicians and patients. “The doctors are scared out of their minds,” he said. “The pendulum has swung so far. The people who need [pain medication] can’t get it now.”

Other medical experts have echoed his concerns since Tseng was charged in 2012. “When you use the word ‘murder,'” said Dr. Peter Staats, president of the American Society of Interventional Pain Physicians, “of course it’s going to have a chilling effect.” Staats said he believes an aggressive medical board — not prosecutors — should go after reckless doctors. But, he added, any doctor who is prescribing pills knowing that they are being abused or diverted shouldn’t be called a doctor.