Tag: 2017 News

The Division of Workers’ Compensation (DWC) has suspended three more medical providers from participating in California’s workers’ compensation system, bringing the total number of providers suspended this year to 49.

DWC Acting Administrative Director George Parisotto issued Orders of Suspension against the following providers:

1) Samuel H. Albert of Tustin, psychiatrist, pled guilty in the U.S. District Court for the Central District of California on June 20, 2016 to conspiracy to commit health care fraud. Albert had submitted over $4.2 million in fraudulent claims to the Federal Office of Workers’ Compensation Programs.

2) Barry Julian Broomberg of San Diego, physician and owner of La Jolla Medical Associates, pled guilty in the U.S. District Court for the Southern District of California on September 4, 2013 to visa fraud, and surrendered his Physician’s and Surgeon’s Certificate on September 9, 2014. Broomberg knowingly made false statements under penalty of perjury on visa applicants’ Report of Medical Examination and Vaccination Record forms (United States Citizenship and Immigration Services Form I-693) without performing the required tests and examinations.

3) Robert E. Brizendine of San Diego, psychologist, surrendered his Psychologist’s License to the California Board of Psychology on March 20, 2014.

New law requires the division’s Administrative Director to suspend any medical provider, physician or practitioner from participating in the workers’ compensation system in circumstances as described above.

A Rancho Mirage cosmetic surgeon who has been on the run for four months after pleading guilty in a scheme that duped health insurance companies into paying tens of millions of dollars for procedures that were not medically necessary was sentenced in absentia to 20 years in federal prison.

Dr. David M. Morrow, 72, a former Rancho Mirage resident whose current whereabouts are unknown, was sentenced by United States District Judge Josephine L. Staton. Judge Staton imposed the sentence after Morrow pleaded guilty last year to conspiracy to commit mail fraud and filing a false tax return.

Judge Staton noted that Morrow’s “greed knew no bounds,” and that he showed an “utter disregard for patients’ well-being and safety.” As part of the sentencing, Judge Staton found that the intended loss from Morrow’s scheme was $44,265,211.

“This defendant was a successful doctor who owned a medical clinic and multiple valuable residences, yet he engaged in a scheme designed to steal tens of millions of dollars from insurance companies by tricking them into paying for cosmetic surgery,” said Acting United States Attorney Sandra R. Brown. “After admitting guilt, he went on the lam in the hopes of avoiding the punishment that was sure to come. When he is taken into custody – and he will definitely be captured – he will serve the lengthy sentence he deserves as a result of his greed and fraud.”

Morrow, a dermatologist-turned-cosmetic-surgeon who was the owner of the Morrow Institute (TMI) in Rancho Mirage, specifically admitted that he submitted millions of dollars in claims for procedures that he certified were “medically necessary” – but in fact were cosmetic procedures. In some cases, according to court documents, patients underwent procedures they did not want in exchange for promises from Morrow that he would perform the cosmetic procedures that they really wanted.

When he pleaded guilty in March 2016, Morrow admitted participating in a health care fraud scheme, which included submitting altered documents to private insurance companies that claimed various procedures were “medically necessary” to induce insurers to pay for them. The guilty pleas followed a grand jury indictment two years ago that alleged Morrow, his wife, and TMI lured patients to the Coachella Valley surgery center with promises that cosmetic procedures would be paid for by their union or PPO health insurance plans. The victim health insurance companies included Anthem Blue Cross, Blue Cross/Blue Shield of California, Blue Cross/Blue Shield of Massachusetts, Regional Employer/Employee Partnership for Benefits, formerly known as Riverside Employer/Employee Partnership (REEP), and Cigna.

Some of the insurance companies refused to pay for patients who were employed by public entities. According to prosecutors, the Morrows then made claims against those entities, demanding more than $15 million from the California Highway Patrol, Desert Sands Unified School District, Palm Springs Unified School District and the city of Palm Springs.

Morrow and his wife are believed to have fled in May 2017. Prior to becoming fugitives, they failed to report to court officials, among other things, the sale of their $9.45 million home in Beverly Hills. Last month, prosecutors filed notice with the court that Morrow had breached his plea agreement by becoming a fugitive.

Charges against Morrow’s wife, Linda Morrow, 65, are currently pending.

The investigation into the Morrows and TMI was conducted by the Federal Bureau of Investigation, IRS – Criminal Investigation, and the California Department of Insurance.

Anna Nicole Smith was an American model, actress and television personality. On February 8, 2007, Smith was found dead at the Seminole Hard Rock Hotel and Casino in Hollywood, Florida. Broward County Medical Examiner and Forensic Pathologist Dr. Joshua Perper announced that Smith died of “combined drug intoxication” with the sleeping medication chloral hydrate as the “major component.”

The sedative chloral hydrate that became increasingly lethal when combined with other prescription drugs in her system, specifically four benzodiazepines: Klonopin (Clonazepam), Ativan (Lorazepam), Serax (Oxazepam), and Valium (Diazepam). Furthermore, she had taken Benadryl (Diphenhydramine) and Topamax (Topiramate), an anticonvulsant AMPA/Kainate antagonist, which likely contributed to the sedative effect of chloral hydrate and the benzodiazepines.

Dr. Perper claimed that Dr. Khristine Elaine Eroshevich, an Encino psychiatrist had issued 11 prescriptions to Smith. Eroshevich was with Smith when she checked into the Florida hotel, where she later died. More than 600 pills – including about 450 muscle relaxants – were missing from prescriptions that were no more than five weeks old.

Eroshevich was charged in California and initially convicted of two felonies in the drug trial involving the treatment of Smith. One charge was later thrown out and the other was reduced to a misdemeanor (Health and Safety Code 11173(A) unlawful prescribing. The case has even been the subject of a California Supreme Court Decision in People v Eroshevich which reviewed the issue of double jeopardy as applied to an order for retrial in her case.

Khristine Erosevich M.D. was a 1975 graduate of Ohio State University College of Medicine. She became licensed as a physician and surgeon in California in 1978. A Second Amended Accusation was filed before the Medical Board in 2011 seeking the revocation of her license or other relief. The Sixth Cause for Discipline cited the Anna Nichole Smith criminal case number BA 353907 as grounds for discipline. Other Causes alleged that “she engaged in dishonest acts by making false statements in a psychiatric report and billing statement regarding a workers compensation claimant.”

On March 12, 2012 the Medical Board ordered approval of her stipulation in which “Respondent admits the truth of each and every charge and allegation in the First and Sixth Causes for Discipline in Second Amended Accusation No. 17-2009-197998.” On March 17, 2016, after a hearing, an ALJ ruled “The petition of Khristine Elaine Eroshevich, M.D. for termination of probation is granted. Physician’s and Surgeon’s Certificate Number C 37980 is fully restored.

On September 8, 2017 the DWC notified Eroshevich of its intention to suspend her from participation in the worker’s compensation system pursuant to labor code 139.21 for the reasons stated above, as well as her suspension from the Medi-Cal program. On September 18 she requested a hearing, and a hearing before the WCAB was set for October 10.

On October 6, 2017  Eroshevich filed a federal lawsuit against officials of the DIR. She alleges that the remaining misdemeanor count “was ordered set aside, a plea of not guilty was entered, and it was also dismissed by the Superior Court.” Thus it could not be used as grounds for her suspension.

With regard to the other reasons for suspension “Plaintiff has never applied or participated in the federal Medicare program and hence was not suspended from that program.” Her petition for reinstatement in the Medi-Cal program is currently pending before the Director of the California Department of Health Care Services. She claims it would be unfair for her to have a hearing on her suspension at the WCAB on October 10 before that petition has been decide.

She alleges a number of constitutional challenges to the law as well, including the prohibition against ex post facto laws contained in by the United States and the California Constitutions. The case has been re-assigned to federal Judge Wu (the same federal judge involved in prior lien claimant constitutional challenges to workers’ compensation law). She also filed an ex parte application for a temporary restraining order seeking an order enjoining the scheduled suspension hearing from going forward on October 10, 2017. On October 6, Judge Wu denied her request. He set a status conference for October 12 to “discuss further proceedings.”

Governor Jerry Brown signed SB 17, state legislation requiring drug companies to report certain price hikes for prescription medicines in a move that could set a model for other states to follow.

The law, which aims to provide more transparency around pharmaceutical and biotech company pricing methods for their medicines, requires drug manufacturers to give a 60-day notice if prices are raised more than 16 percent over a two-year period.

It also requires drug manufacturers to notify state purchasers (CalPERS, Medi-Cal, Department of Corrections and Rehabilitation, and Department of General Services), health plans and insurers, and PBMs at least 90 days prior to the planned effective date, of an increase in the WAC of a prescription drug, as specified.

The law also requires health plans and insurers to file annual reports outlining how drug costs affect healthcare premiums in California. Health plans and insurers that report rate information in the small and large group markets, beginning October 1, 2018, for example must annually report to regulators
– the 25 most frequently prescribed drugs,
– the 25 most costly drugs by total annual spending; and,
– the 25 drugs with the highest year-over-year increase in total annual spending.

And health plans that report as part of the large group process among other things must report
– the percentage of the premium attributable to prescription drug costs for the prior year for each category of prescription drugs;
– the year-over-year increase, as a percentage, in per-member, per-month total health plan spending for each category of prescription drugs;
– the year-over-year increase in per-member, per-month costs for drug prices compared to other components of the health care premium;
– the specialty tier formulary list; the percentage of the premium attributable to prescription drugs administered in a doctor’s office that are covered under the medical benefit as separate from the pharmacy benefit, if available;
– and, information on its use of a pharmacy benefit manager (PBM), if any, including its name and which components of the prescription drug coverage are managed by the PBM.

The bill has been opposed by drugmakers, who argue that wholesale price increases do not reflect the actual prices paid for medicines after discounts and rebates.

Biotechnology Innovation Organization (BIO), the leading biotech industry trade group, issued a statement condemning the bill and arguing that it would not serve its intended purpose. “This law will neither provide meaningful information to patients nor lower prescription drug costs,” the group said, adding that the law “seriously jeopardizes the future of California’s leadership in this innovative industry.” California is home to hundreds of biotechnology companies.

PhRMA condemned the law in a press release that claimed “California’s latest bill falls short of offering patients, providers or policymakers any meaningful improvements on medicine access, affordability or coverage. Rather, it calls for mounds of red tape and government reports that look only at the list price of a prescription drug rather than considering actual patient spending after negotiated discounts and rebates.”

Pharmaceutical companies have so far dodged stricter federal oversight despite growing public and political outrage over pricing practices for both branded and some generic medicines.

But states, struggling to cover rising healthcare costs, have been addressing the issue rather than wait for federal help. At least 176 bills on pharmaceutical pricing and payment have been introduced this year in 36 states, according to the National Conference of State Legislatures.

A new Maryland law takes aims at egregious price hikes on generic versions of older off-patent drugs that are supposed to be far cheaper than the original branded medicines after some companies took massive increases on generic drugs not facing competition from other distributors.

Amid the furor some drugmakers, including Allergan Plc and AbbVie Inc, have voluntarily pledged one annual price increase of under 10 percent on branded prescription medicines. It had been common industry practice to raise prices twice a year, often by double-digit percentages.

However, even annual price hikes of 9 percent over a two-year period would put a company in the crosshairs of the new California legislation.

The Court of Appeal ruled that “In specified circumstances, a worker who engages in criminal fraud in attempting to recover workers’ compensation benefits and is convicted of doing so is thereafter barred from recovering benefits growing out of the fraud. However, in given circumstances where, independent of any fraud, a worker is able to establish his or her entitlement to benefits, benefits may be awarded.”

In 2006, while working at Pearson Ford, Leopoldo Hernandez accidentally slammed the trunk of a car on his left hand and crushed one of his fingers. He applied for and received workers’ compensation benefits.

Dr. Byron King, an orthopedic AME, had some difficulty in examining Hernandez’s left arm and hand; in particular, although Hernandez complained about his inability to use his left hand and arm, he would not permit Dr. King to perform grip or pinch strength tests on the hand..

Subsequently, Hernandez was examined three times by Dr. Walter Strauser, a pain specialist who had been treating Hernandez. On each of his visits, Hernandez wore a sling on his left arm and complained of continuing severe pain and an inability to use his left arm and hand.

Video surveillance was conducted following each of the three visits to Dr. Strauser in early 2010. Following each visit, Hernandez was observed taking off his sling, using his left hand to get in and out of his truck or a car, using his left hand to steer his truck or car, and on one occasion stopping at a grocery store and using his left hand to carry a bag of groceries.

Hernandez’s also saw Dr. Greg M. Balourdas, acting as Hernandez’s primary physician. As he did when he was examined by Dr. Strauser, Hernandez appeared wearing a sling on his left arm. Following his visit to Dr. Balourdas, Hernandez was observed once again taking off his sling, driving his car and stopping at an appliance store where, using both hands, he lifted a washing machine into the back of the car he was driving.

After AME King was made aware of the surveillance, Hernandez appeared for another exam, more cooperative than before. King performed a number of objective tests and concluded that his hand was severely compromised, and had suffered a 38 percent impairment. He said the videos were not very helpful in making any diagnosis because “it was difficult to identify any actual finger motions of the left hand other than using the left hand and thumb to hold and move objects.”

In March 2011, Hernandez was charged with four counts of violating Insurance Code section 1871.4 ; three counts were based on his three visits in 2010 to Dr. Strauser and one count was based on his 2010 visit to Dr. Balourdas. Hernandez was also charged with insurance fraud within the meaning of Penal Code section 550 subdivision (b)(3). On May 10, 2012, Hernandez pled guilty to one count of violating Insurance Code section 1871.4, based on his May 2010 visit to Dr. Strauser. He was placed on summary probation and required to pay $9,000 in restitution.

In 2016, a WCJ, relying on Dr. King’s conclusions found that Hernandez suffered a 70 percent permanent disability. The WCAB denied reconsideration, and the Court of Appeal affirmed in the unpublished case of Pearson Ford v WCAB.

The main issue on appeal was the employer’s argument that any award to Hernandez for the injury is barred by Labor Code section 1871.5. which provides “”Any person convicted of workers’ compensation fraud pursuant to Section 1871.4 . . . shall be ineligible to receive or retain any compensation, as defined in Section 3207[ ] of the Labor Code, where that compensation was owed or received as a result of a violation of Section 1871.4 . . . for which the recipient of the compensation was convicted.”

The leading case interpreting section 1871.4 is Tensfeldt v. Workers Compensation Appeals Board (1998) 66 Cal.App.4th 116. The court in Tensfeldt took pains to expressly limit the scope of its holding so that section 1871.5 would not be used as an automatic or broad prohibition on the payment of benefits which were not directly connected to a worker’s fraudulent misrepresentation.

Here, the WCJ found Hernandez met the three requirements set forth in Tensfeldt, and the WCAB adopted those findings. The WCJ found that Hernandez suffered a compensable injury, there was substantial medical evidence supporting an award which did not stem from his fraudulent statements, and his credibility had not been so damaged as to make him unbelievable concerning the underlying compensation case.