Tag: 2016 News

Jose Tinoco, while employed by Fresh Express, injured Javier Escobar by negligently operating a vehicle. Escobar thereafter received treatment at Santa Clara Valley Medical Center, a hospital owned and operated by the County of Santa Clara. The reasonable value of the care provided by the County was alleged to be $1,249,545.38. Escobar sued Tinoco and Fresh Express in Monterey County Superior Court, where he eventually recovered a judgment for $5,689.624.87.

The County asserted a lien against the judgment pursuant to Government Code section 23004.1. Escobar’s attorney, who had stipulated at trial that County’s bill reflected reasonable and necessary charges, now contended that County was not entitled to the full amount of its bill but only to some lesser amount in accordance with schedules promulgated by the WCAB. Fresh Express did not pay the County, but instead delivered a check in the amount of $1,249,545.38 to Escobar’s attorney, Joseph Carcione, Jr., payable to both County and Carcione’s firm.

The County filed suit to recover the full amount, and the trial court sustained the Fresh Express demurer without leave to amend ruling that “the County can no longer pursue its own action against Fresh Express . . . , but must instead seek enforcement of the lien,” The court of appeal reversed in the published case of County of Santa Clara v Javier Escobar, and provided guidance on how lien rights are to be enforced.

The trial court concluded in essence that once a county’s lien has attached to a judgment, as it did here, the county’s independent right of action ceases to exist. The trial court took the language of Government Code section 23004.1 to mean in essence that a county’s right of action continues only as a lien. But the court of appeal disagreed noting that nothing in the language of the statute declares in definite language that the lien, once attached, is all that remains of the county’s original right of action. The manifest purpose of section 23004.1 is to provide counties with a source of recompense for the expenses incurred by them – and their taxpayers – in providing medical services necessitated by tortious conduct. “Obviously this purpose is ill served by permitting the tortfeasor to excuse itself from this obligation by turning control of the claimed funds over to the injured patient. The intent of the statute is best effectuated by providing counties with a straightforward remedy against the recalcitrant tortfeasor cum judgment creditor.”

The court agreed that Fresh Express should have been able to disentangle itself from any dispute between Escobar and County, and to obtain a satisfaction of judgment by paying the full amount of the judgment, but did not agree that it could accomplish these objectives by simply writing a check payable to both of the competing claimants. There were and are far more suitable remedies for one in Fresh Express’s situation. It has simply failed to avail itself of them. It could, for example, bring an action against the conflicting claimants to compel them to interplead and litigate their several claims.

“We conclude that County’s right of action under section 23004.1 survived the attachment of its lien and that County was entitled to revive it, as it sought to do here, when Fresh Express surrendered control of the liened funds to Escobar’s attorney. It follows that the trial court erred by sustaining Fresh Express’s demurrer and that the judgment predicated on that ruling must be reversed.”

Maria Soto sustained an injury to her right shoulder, neck and low back while employed as an assembler by Sambrailo Packaging in Santa Maria. She was referred for treatment to Zenith’s MPN in Santa Maria, Central Coast Industrial Care, where applicant lives and worked. Based upon her request for a referral from a primary treating physician to an orthopedic surgeon, Central Coast referred applicant to two orthopedic specialists in Solvang. Applicant states that the “MPN included 9 orthopedic doctors but only one would treat backs.” Applicant therefore notified Zenith that the MPN did not meet the applicable access standards and selected Dr. Scheinberg, a non-MPN physician located in Santa Barbara, approximately 70 miles away, to treat her shoulder and back. Defendant declined to authorize such treatment outside the MPN.

The parties stipulated that the defendant had a validly formed MPN. At issue was whether the MPN complied with the MPN physician access standards of having three orthopedists willing to treat the applicant. They stipulated there was only one. At a subsequent hearing applicant agreed to treat with an MPN neurosurgeon, Dr. Kissel, but Dr. Kissel declined to accept the applicant.

Zenith contends that that under rural access standards it has 46 physicians within 30 miles or 60 minutes who are fully qualified to act as a primary treating physician in this case (even though they were not orthopedists.)

The WCJ held that Soto was entitled to obtain medical treatment outside defendant’s MPN, finding defendant’s MPN was not in compliance with the applicable access standards by not having three orthopedic specialists willing to treat applicant within the applicable geographic area. On reconsideration, the WCAB reversed in the panel decision of Soto v Sambrailo Packaging; Zenith Insurance Co.

The MPN is required to have “an adequate number and type of physicians . . . to treat common injuries experienced by injured employees based on the type of occupation or industry in which the employee is engaged, and the geographic area where the employees are employed.” (Lab. Code, §4616(a)(l ).) The question is whether defendant’s MPN provides the requisite selection of physicians available to assume the role of a primary treating physician. The Legislature intended that an injured worker will be able to select a primary treating physician who has the necessary specialization or expertise in treating her injury. Labor Code section 4616.3(d)(2) provides that “[t]reatment by a specialist who is not a member of the medical provider network may be permitted on a case-by-case basis if the medical provider network does not contain a physician who can provide the approved treatment and the treatment is approved by the employer or insurer.”

A search of Zenith MPN physicians who were available within 60 miles of the employer’s zip code identified 79 providers, and there were 33 physicians within 30 miles. Of those, applicant’s condition could be treated by physicians who wished to practice as a primary treating physician who were familiar with treating the type of injury at issue. Thus, defendant has provided evidence that there are a sufficient number of available physicians within the rural geographic area with specialties capable of providing applicant’s primary care, even if a physician with the specific specialty selected by applicant is unavailable. If applicant requires specialty medical treatment, applicant can be referred to specialist by her primary treating physician selected from within the MPN. If an MPN specialist is not available within the applicable rural access standards, applicant may be referred to a non-MPN specialist. However, applicant has not establish that defendant has violated the applicable rural access standards for selecting her primary treating physician. Therefore, applicant is not entitled to select a physician as her primary treating physician, at defendant’s expense

On August 14, 2013, the WCJ in the case of Trinh v Tzeng Long USA Inc. issued an Order For Costs And Sanctions against Professional Lien Services, Inc., (PLS), ordering it to pay defendant’s costs and attorney’s fees in the amount of $2,355 along with a separate court sanction of $1,000. The sanctions were imposed for PLS’s bad faith and frivolous conduct in pursuing a trial on the issues of penalty and interest when it did not offer evidence at the trial adequate to meet its initial burden of proof.

Neither PLS nor its representative, Mike Traw petitioned for reconsideration or otherwise appealed the August 14, 2013 Sanction Order and it is now final and binding for all purposes.

Deputy Commissioner Rick Dietrich, Secretary of the Appeals Board, notified PLS in October 2013 that payment of the $1,000 court sanction was expected within ten days and further advised that failure to pay the sanction was grounds for suspending the privilege of appearing before the WCAB pursuant to section 4907. PLS replied that it was petitioning for reconsideration, but that was not the case.

Defendant also made unsuccessful efforts to recover the costs and attorney’s fees that PLS is obligated to pay as part of the Sanction Order. Thus the En Banc panel concluded “None of the efforts by the Appeals Board and the defendant have resulted in voluntary compliance with the August 14, 2013 Sanction Order by PLS and Mr. Traw, and it appears they are willfully disobeying the August 14, 2013 Sanction Order.”

Section 4907(a)(2) provides for suspension of the privilege of appearing before the WCAB for, “failure to pay final order of sanctions, attorney’s fees, or costs, issued under Section 5813.” The failure to comply with an order or regulation of the WCAB, including an order to pay a sanction, is an interference with the judicial process that provides good cause for suspending or removing the privilege of appearing before the WCAB.

For this reason it was ordered last August that “that the Appeals Board intends to suspend the privilege of Professional Lien Services, Inc., and Mike Traw of appearing before the Workers’ Compensation Appeals Board for ninety (90) days unless good cause is shown why the suspensions should not be imposed.”

Since then, no response to the Notice Of Intention was received from Mike Traw. The Appeals Board received a letter from Mark Blakely on the letterhead of PLS that stated that he acquired PLS from the prior owners and he requested a 60 day extension of the time which was granted. He requested a second 60 day extension which was also granted. No further response has been received from Mr. Blakely or PLS, and the two allowed extensions of time to respond have expired.

Thus, the WCAB sitting en banc issued its Decision After Removal, suspending the privilege of Mike Traw of appearing before the WCAB but did not suspend the privilege of Mark Blakely or PLS. However, the earlier ordered sanctions against PLS remain in full force and effect, and PLS continues to be liable sfor payment of those ordered sanctions.

MAXIMUS, is an American, for-profit, company that provides business process services to government health and human services agencies in the United States, Australia, Canada, Saudi Arabia and the United Kingdom. MAXIMUS focuses on administering government-sponsored programs, such as Medicaid, the Children’’s Health Insurance Program (CHIP), health care reform, welfare-to-work, Medicare, child support enforcement, and other government programs. It was selected by the DWC to provide IMR services for the California workers’ compensation community. The company is based in Reston, Virginia, and has more than 13,000 employees.

And MAXIMUS is financially prospering. This week it reported the financial results for the three months that ended December 31, 2015. It claimed a revenue growth of 19% to $556.7 million compared to the same period last year. It had year-to-date signed contract awards of $665 million and new contracts pending (awarded but unsigned) of $285 million at December 31, 2015. The increase in revenue was primarily driven by the acquisitions of Acentia and Remploy and organic growth in the Health Services Segment.

The company focuses primarily on “operating government-sponsored programs for vulnerable populations” according to one of its earlier annual reports. The outsourcing of health and human services function to private for-profit firms raises significant concerns, at least according to non-profit research group In the Public Interest, a comprehensive resource center on privatization and responsible contracting,

Maximus has been a Private Sector member of the American Legislative Exchange Council (ALEC) at least from 1994 to 1995. The American Legislative Exchange Council (ALEC) describes itself as the largest “membership association of state legislators,” but over 98% of its revenue comes from sources other than legislative dues, primarily from corporations and corporate foundations.

In March 2014, Maximus CEO Richard Montoni told Investors Business Daily that Maximus had booked $347 million in contracts related to the Affordable Care Act (Obamacare) in 2013 and that Maximus was expected to generate $200 million in annual revenue from work related to the ACA. In its 2013 annual statement, Maximus reported that 65 percent of its total revenue for that year came from its Health Services Segment and state that it expects health-sector-related revenue to continue to increase:

“We expect that demand for our core health and human services offerings will continue to increase over the next few years, driven by new legislation, austerity measures and increasing caseloads, as governments strive to deliver more services with fewer resources. Legislation, such as the Affordable Care Act in the United States as well as other health and welfare reform initiatives abroad, has created increased demand for our services, a trend we expect to continue over the next several years.”

More than a dozen major healthcare organizations and associations have jumped into a Supreme Court case over the validity of a legal theory now used to bring many fraud lawsuits against them. The case has the potential to reduce – or increase – the number of False Claims Act suits brought against healthcare providers and other companies, depending on which way the high court rules.

The US Supreme Court has agreed to hear Universal Health Services v. United States ex rel Escobar. The case focuses on situations in which whistle-blowers allege providers have submitted false claims to government programs by failing to follow certain regulations. That legal theory is known as “implied certification” and has been accepted by some federal appeals courts and rejected by others.

Organizations found liable under the False Claims Act, also called Qui Tam litigation, face penalties and triple damages. In 2015, two-thirds of federal whistle-blower lawsuits targeted healthcare entities. That’s prompted a number of healthcare organizations to file briefs siding with the Universal Health Services, which argues against the theory. Organizations that have filed briefs include the Pharmaceutical Research and Manufacturers of America, the Generic Pharmaceutical Association, the American Hospital Association and the Chamber of Commerce of the United States.

The American Medical Association argues in its brief that imperfect compliance is not the same as fraud. “The healthcare regulatory environment is especially complex, making it particularly inappropriate to use the hammer of (False Claims Act) liability to punish noncompliance,” according to the brief.

In their brief, the American Hospital Association, Federation of American Hospitals and Association of American Medical Colleges say the healthcare field is already targeted by whistle-blowers seeking massive payouts. In False Claims Act cases, whistle-blowers are entitled to a percentage of whatever money the government recovers. They argue in the brief that the implied-certification theory has exacerbated the filing of meritless suits against healthcare organizations. The suits “try to tap into the extreme complexity of Medicare and Medicaid and use that as a basis for asserting all sorts of hospitals, healthcare providers and others – have committed fraud for what might be fairly minor regulatory missteps,” said Jessica Ellsworth, a partner at Hogan Lovells who filed the brief on behalf of the hospital associations and medical college association.

The United States Chamber of Commerce claims that the theory “profoundly increases risk and uncertainty for government contractors, grantees, and program participants” and should be rejected.

But Patrick Burns, co-executive director of the Taxpayers Against Fraud Education Fund, a not-for-profit group that supports whistle-blower incentive programs, said implied certification is important for holding healthcare and other organizations accountable for doing the right thing – even if that right thing isn’t explicitly stated in a contract with the government.

He said the facts of this case before the Supreme Court are a prime illustration. The Universal Health Services case was brought by the parents of a patient who died at a Massachusetts mental health clinic. Her parents alleged that the clinic’s caregivers were not properly supervised and that the clinic did not employ a board-certified or board-eligible psychiatrist and a licensed psychologist, in violation of state Medicaid program regulations. The 1st U.S. Circuit Court of Appeals sided with the plaintiffs in that case.

It is difficult to understand how the facts of this case can be construed to be about “fairly minor regulatory missteps.” The teen who died, Yarushka Rivera began seeing Universal Health Services counselor Maria Pereyra in 2007 after experiencing behavioral problems at school. Pereyra, though on staff at its Arbour satellite clinic, had no professional license to provide mental-health therapy. After hearing parent complaints about the quality of her care, Yarushka was transferred to another staff member, Diana Casado. Like Pereyra, Casado was unlicensed. In February 2009, Yarushka was once again assigned to a new therapist, Anna Fuchu. Fuchu held herself out as a psychologist with a Ph.D., though the parents later learned that she had trained at an unaccredited online school and that her application for a professional license had been rejected. Notwithstanding Fuchu’s lack of essential credentials, she treated Yarushka and eventually diagnosed her with bipolar disorder.

Several months later, when Yarushka’s behavioral problems had not abated, officials at her school informed the parents that she would be permitted to attend classes only if she saw a psychiatrist. When the parents told this to Fuchu, she referred Yarushka to Maribel Ortiz, another staff member at Arbour. Believing Ortiz to be a psychiatrist, the parents referred to her as “Dr. Ortiz.” They eventually discovered, however, that she was not a psychiatrist, but rather a nurse, and that she was not under the supervision of the one Arbour staff psychiatrist, Maria Gaticales – herself not board-certified, or eligible for board certification, as contemplated by the regulations. Yarushka died after having a second seizure while under this care.

There is an old saying in the practice of appellate law “bad facts make bad law.” Cases with bad facts should not be appealed. It is very difficult to see how the U.S. Supreme Court can construe what happened in this case to be nothing more than quibbling over vague and ambiguous regulations dealing with being properly trained, licensed and supervised to provide health care.