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Tag: 2017 News

Hartford Faces West Coast Medicare Double Damage Test Case

The risk of double damages claimed against California workers compensation carriers may be increasing for failure to reimburse Medicare Advantage Plans for medical care of an injured worker when a claim is settled.

Hartford Casualty Insurance Company is the target of a new complaint recently filed in the United States District Court, Western District of Washington (Seattle) by Humana Health Plan.

Humana, as a Medicare Advantage Plan (MAP) is seeking a declaratory judgment as to Hartford’s obligation to reimburse conditional payments made before settlement of its claim, as well as a private cause of action pursuant to 42 USC 1395y(b)(3)(A) for the recovery of double damages for the alleged failure to reimburse Humana.

If Humana ultimately prevails and Hartford appeals to the Ninth Circuit Court of Appeals, precedent may be set determining that MAPs have the same recovery rights as traditional Medicare (a right to double damages for failure to reimburse MAP conditional payments within 60 days of issuance of the settlement check) in the largest Circuit in the United States including California.

These states would be added to the growing list of the 3rd and 11th Circuits from the In Re Avandia and Western Heritage litigation which has now established this double damages private cause of action right for MAPs in the states of: Pennsylvania, Delaware, New Jersey, Alabama, Georgia and Florida.

The Medicare beneficiary in this test case was injured in a car accident. The Enrollee received medical treatment related to the collision which was paid for by Humana totaling at least $161,853.14 in conditional payments. On February 19, 2015 Humana sent Hartford a written notice of its right to recovery of the conditional payments pursuant to the Medicare Secondary Payer Act (MSP).

Later in 2015 Hartford entered into a settlement with Enrollee. Enrollee was responsible for reimbursing Humana within 60 days of the Hartford’s payment of the settlement amount; however, Enrollee did not reimburse Humana.

Even though Hartford had already paid Enrollee the settlement funds, Humana alleges that the Hartford remains responsible to ensure that Humana was reimbursed pursuant to 42 CFR 411.24(i)(1).

The issue of a MAP’s ability to bring a double damages private cause of action was brought to the Ninth Circuit Court of Appeals in Parra v. PacifiCare of Arizona back in 2012. The MAP in Parra was unsuccessful in its double damages pursuit and simply awarded a contractual right of recovery.The Parra court determined that double damages was not available, because the carrier had already interpleaded the funds to the Court, and at that point had no control over such funds. The MAP had a remedy by exercising its recovery directly against the beneficiary from that fund.

However, this new complaint filed by Humana may establish MSP double damages if the allegations that Hartford ignored Humana’s request for reimbursement holds true.

Thus far, Circuit Courts and District Courts nationwide tend to be favoring MAPs having the same rights to recovery as Medicare. Further, the circumstances and legalities behind this complaint are quite simple: Hartford was on notice of Humana’s claim for recovery and did not respond/reimburse. Despite Hartford already having paid Enrollee, Humana purport to have a solid legal basis to pursue recovery from Hartford pursuant to 42 CFR 411.24(i)(1).

Eight More Vendors Added to DWC Suspension List

The Division of Workers’ Compensation (DWC) has suspended eight more medical providers from participating in California’s workers’ compensation system, bringing the total number of providers suspended this year to 46.

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

– Abraham Khorshad of Beverly Hills, investor in Aspen Medical Resources and co-conspirator with Jeffrey Campau and Landen Mirallegro, who were suspended from the workers’ compensation system last month. Khorshad and his codefendants pled guilty in Orange County Superior Court on May 5 to medical insurance fraud for their involvement in an overbilling scheme in which they defrauded insurance companies of more than $70 million. The three providers agreed to pay more than $8 million in restitution to several insurers and selfinsured employers, and to voluntarily dismiss liens of nearly $140 million.

– Joseff Sales of Buena Park, physical therapist, and Danniel Goyena of Whittier, physical therapist assistant, pled guilty in federal court on November 17, 2015 for paying illegal kickbacks as part of a Medicare fraud scheme. Both providers were co-owners and operators of Rehab, Inc., Rehab Dynamics, Inc. and Innovation Physical Therapy, Inc. They surrendered their licenses and were each sentenced to 51 months in federal prison. The pair were ordered to pay restitution of up to $7.9 million.

– Edgar Pogosian (also known as Edgar Hakobyan) of Glendale was found guilty in federal court on February 26, 2016 for money laundering and conspiring to commit money laundering. He took part in a health care fraud scheme to bill Medicare for equipment and tests that were not medically necessary and sometimes were not provided. He received 150 checks and laundered over $700,000 in health care fraud proceeds. Pogosian was sentenced to 18 months in federal prison.

– Timothy Martin of Benicia, osteopathic physician and surgeon, had his medical certificate revoked on June 1, 2015 by the Medical Board of California.

– Alex Abbassi of Tarzana, surrendered his physician and surgeon’s certificate on August 31, 2015 to the Medical Board of California.

– Nicole Hlava of Palo Alto, surrendered her medical license on August 11, 2016 to the Medical Board of California.

– Maher Abadir of Modesto, surrendered his medical license on May 20, 2016 to the Medical Board of California.

AB 1244 (Gray and Daly), which went into effect January 1, introduced new changes to the workers’ compensation system and requires the division’s Administrative Director to suspend any medical provider, physician or practitioner from participating in the workers’ compensation system for various reasons.

Newly Joined Defendants Protected by Statute of Limitation

Ramiro Zapata Jimenez was injured on May 19, 2003 at work. He filed a timely workers’ compensation claim on August 1, 2003 naming Luis Aragon, an uninsured contractor, as the employer. Zapata sustained injury to his head, brain, right knee, internal system, and urinary tract and is totally and permanently disabled.

Aragon was refurbishing an apartment complex located in Long Beach for the owner of the complex, Marco Bolanos. Aragon was a licensed contractor but his workers’ compensation insurance had lapsed on April 9, 2002. Aragon filed for bankruptcy in 2011.

Bolanos did not recall whether he asked Aragon if he had workers’ compensation insurance when Bolanos hired Aragon to refurbish the apartment complex. Bolanos did not inquire with the Contractors State License Board about the status of Aragon’s license.

On August 26, 2003, Zapata’s counsel sent a letter to Bolanos notifying him of Zapata’s injury. This letter was Bolanos’ first notice of Zapata’s accident and injury. Bolanos did not reply to the letter and did not at any time after the accident provide a claim form to Zapata.

Upon confirming Aragon’s uninsured status from the Workers’ Compensation Insurance Rating Bureau on August 28, 2003, Zapata joined the UEBTF as a defendant on February 26, 2004.

The WCJ, on the UEBTF’s motion, joined Bolanos as a party defendant on June 17, 2009, six years after the accident occurred. Bolanos raised the statute of limitations and laches as defenses.

Zapata also sued Bolanos in a civil action in 2011, represented by the same attorney who represented him in the workers’ compensation proceeding. The Superior Court sustained Bolanos’s demurrer without leave to amend in 2012 based on the statute of limitations.

The WCJ issued findings and an award on July 31, 2015 and found Bolanos to be the ultimate employer of Zapata because Aragon was both uninsured and unlicensed by operation of law. The WCJ rejected the statute of limitations defense. The Workers’ Compensation Appeal Board in a split decision, held that the statute of limitations was tolled. The Court of Appeal reversed in the unpublished opinion of Bolanos v WCAB.

Labor Code 5405 provides that a workers’ compensation claim must be filed one year after the date of injury. A new defendant cannot be added after the statute of limitations has run. (McGee Street Productions v. Workers’ Comp. Appeals Bd. (2003) 108 Cal.App.4th 717, 724-725 (McGee).) “The general rule is well settled that, when new parties are brought in by amendment, the statute of limitations continues to run in their favor until thus made parties. The suit cannot be considered as having been commenced against them until they are made parties.” (Ingram v. Department of Industrial Relations (1930) 208 Cal. 633, 643; see also McGee, supra, 108 Cal.App.4th at pp. 724-726.)

The statute of limitations is tolled if the employee is unaware of his right to file a workers’ compensation claim. Zapata was not ignorant of his right to apply for benefits under the workers’ compensation laws for this injury, as demonstrated by his filing a workers’ compensation claim on August 1, 2003. After that date, there was no need for a claim form and “notice of potential eligibility for benefits.” (Kaiser Foundation Hospitals, supra, 39 Cal.3d at pp. 64-65, § 5401.) Nor was there any reason for tolling the statute of limitations after that date.

New Cigna Opioid Strategy – Contracted Financial Dosage Metrics

Cigna has taken a multi-faceted approach to reducing opioid use among its customers by 25 percent by 2019. The company’s covered drug lists are regularly evaluated. As a result of a recent review, the brand OxyContin will no longer be covered as a preferred option on Cigna’s group commercial drug lists effective January 1, 2018.

Cigna is in the process of notifying customers with current OxyContin prescriptions and their doctors of the upcoming change so that they have time to discuss treatment options and covered oxycodone clinical alternatives.

Individuals who have started using OxyContin for hospice care or cancer treatments will continue to have the medication covered in 2018. As with other medications that are not on covered drug lists, Cigna will consider approving coverage for OxyContin if a customer’s doctor feels that treatment using OxyContin is medically necessary.

Cigna has signed a value-based contract with Collegium Pharmaceutical for the drug Xtampza® ER, an oxycodone equivalent with abuse deterrent properties. Xtampza ER’s abuse deterrent platform allows the product to maintain its extended release profile even when cut, crushed, chewed or otherwise manipulated.

Under the terms of the contract, Collegium is financially accountable if the average daily dosage strengths of Xtampza ER prescribed for Cigna customers exceed a specific threshold. If the threshold is exceeded, Collegium will reduce the cost of the medication for many of Cigna’s benefit plans.

Linking financial terms to dosage metrics may encourage more education to prevent overprescribing. The contract is effective January 1, 2018 for Cigna’s commercial business.

“While drug companies don’t control prescriptions, they can help influence patient and doctor conversations by educating people about their medications. The insights we obtain from the metrics in the new value-based contract will help us continue to evolve our opioid management strategies to assist our customers and their doctors,” says Jon Maesner, PharmD, Cigna’s chief pharmacy officer.

Lien Claimants Tell Federal Judge DIR “Corralled” the Legislature

Dr. Eduardo Anguizola, who is facing multiple counts of insurance fraud filed by Orange County prosecutors, is one the plaintiffs who claims Labor Code 4615 – the automatic lien stay law – violates the procedural component of the due process clause because it immediately stays all liens without notice or a hearing. His motion in federal court for a preliminary injunction halting the implementation of the new law has been pending since early this year.

As the Anguizola case headed for its final hearing on September 28, Governor Brown signed AB 1422 into law. According to the Governor’s signing memo he said “I am signing AB 1422 which is clean-up legislation to last year’s workers’ compensation anti-fraud bills, AB 1244 and SB 1160. Those measures established new requirements and authority to help prevent and reduce fraud in the workers’ compensation system. Specifically, they require the suspension of medical providers who have been convicted of crimes involving fraud or abuse. They also require placing a stay on any liens filed by providers charged with such crimes (pending disposition of the charges).”

AB 1422 contains a new LC 4615 subsection (e) which reads “The automatic stay required by this section shall not preclude the appeals board from inquiring into and determining within a workers’ compensation proceeding whether a lien is stayed pursuant to subdivision (a) or whether a lien claimant is controlled by a physician, practitioner, or provider.”

The DIR filed a “Notice of New Law” in federal court the day before the September 28, hearing set before Judge Wu which would have been the final hearing before his ruling. Accordingly, Judge Wu continued the September 28 hearing to October 19, and provided the parties with a briefing schedule to discuss the impact of AB 1422, the newly passed law.

In the “final” closing brief just filed in support of a preliminary injunction, attorneys for the lien claimants respond to the new law saying that they are making “a facial constitutional attack on a statute, which cannot be cured by a hastily passed amendment.”

They go on to claim that “Recognizing the deficiencies in their evidence, the State appears to have corralled the Legislature into intervening by rushing through ‘amended’ legislation in the hopes of making an end run around this litigation, accompanied with a signing message directed to this Court.”

They go on to argue that “the California Legislature’s recent amendment to Section 4615 does not repair the law’s constitutional defects. Indeed, the amendment merely serves to highlight those defects while doing nothing to ameliorate the Due Process and Sixth Amendment quagmire created by the law. Its language establishes no right to a hearing, which is required under both the Due Process Clause and the Supreme Court’s interpretation of the Sixth Amendment.”

They support the argument by saying “Notably, subsection (e) does not provide any stayed lien claimant with the right to a hearing. It merely states that the stay ‘shall not preclude the appeals board’ from ‘inquiring into and determining’ whether a lien is stayed. Id. The statute appears to give the appeals board (not workers’ compensation judges) the limited ability to consider the narrow issue of whether the lien falls within the scope of Section 4615 and therefore, whether the appeals board is required to treat it as automatically stayed.”

“Notably, it does not require  the appeals board to allow a lien claimant to be heard on this issue, or even to consider any protest raised by a lien claimant – it merely gives the appeals board permission to consider such a grievance.”

They go on to conclude that “In other words, new subsection (e) gives lien claimants no right at all to a hearing, even when it is abundantly clear that a lien claimant should not have been on the published list, the secret list, the double-secret list, or any other list that might be available to the appeals board. Although the appeals board can choose  to hear what the lien claimant has to say, there is no direction that the appeals board must  make an inquiry and determine whether the law applies. This does not suffice to protect lien claimants’ due process rights.”

The DIR will file their response by October 10, and Judge Wu will hold another hearing in federal court on October 19.

DWC Backtracks on List of Dismissed Liens

The Department of Industrial Relations’ Division of Workers’ Compensation (DWC) announced that it will this week lift the notation in its Electronic Adjudication Management System (EAMS) that indicates all liens with Labor Code section 4903.05(c) declarations filed on July 2 and July 3 were dismissed.

Under this Labor Code provision, a Senate Bill 1160 mandate to combat workers’ compensation fraud, all lien claimants who filed a lien between January 1, 2013 and December 31, 2016, and paid a filing fee, were required to file the “Supplemental Lien Form and 4903.05(c) Declaration” form by July 1, 2017. The declarations confirm that the liens are valid and appropriately filed.

A total of 2,794 liens with declarations filed on July 2 and 3 were administratively designated as dismissed for failure to comply with the July 1 filing deadline. Because July 1 fell on a weekend, workers’ compensation administrative law judges will adjudicate the timeliness of lien declarations filed on July 2 and July 3 on a case-by-case basis. DWC’s reversal of the dismissal notation is not a decision or order on the timeliness of the declarations, and shall not be construed as such.

Liens with declarations filed after July 3 and liens where no declaration was filed will remain dismissed by operation of law under Labor Code section 4903.05(c)(3).

TD and PD Awarded For UR/IMR Denied Treatment

Belinda Go sustained industrial injury to her neck while working for Sutter Solano Medical Center as a registered nurse in 2013.

On May 7, 2015, one of her treating physicians, Christopher Neuberger, M.D. submitted a request for authorization (RFA) for cervical spine surgery and related treatment and services. The RFA was submitted by defendant to its UR provider, which denied authorization. Applicant obtained IMR pursuant to Labor Code section 4610.5, but the UR denial was upheld in a July 22, 2015 IMR determination.

On September 11, 2015, her condition was found to be permanent and stationary following the UR denial by her primary treating physician. A consulting physician said that her neck disability caused 5% whole person impairment (WPI), which rated 7% permanent disability after apportionment of 20% to nonindustrial factors.

Belinda Go returned to work for a period of time until March 22, 2016, and experienced increased symptoms during that time. On March 28, 2016, she followed Dr. Nueberger’s recommendation for cervical spine surgery and self-procured it from Jason Huffman, M.D.

On August 1, 2016, applicant was evaluated by PQME Dr. Zwerin, who found that applicant’s condition became permanent and stationary on July 28, 2016, four months after the surgery. Dr. Zwerin further determined that as a result of the unauthorized surgery, applicant’s neck disability caused 17% WPI and that 20% of the permanent disability is properly apportioned to nonindustrial factors.

Defendant disputed the determination of Dr. Zwerin and argued that because authorization for the cervical spine surgery was denied through the UR and IMR processes that it has no liability for permanent or temporary disability that the surgery caused. Defendant further contends that the pre-surgery reporting of Dr. Cohen should be followed to award 7% permanent disability.

The WCJ found that applicant was entitled to temporary disability indemnity for a period of time following the cervical spine surgery, and finding that the industrial injury caused 23% permanent disability after apportionment, as opined by PQME Dr. Zwerin. The defendant’s petition for reconsideration was denied in the panel decision of Go v Sutter Solano Medial Center.

After reviewing several conflicting panel decisions on this issue, this panel concluded that “An employee is entitled to unapportioned compensation for permanent disability caused by reasonable medical treatment of the industrial injury. (See, Hikida v. Workers’ Comp. Appeals Bd. (2017) 12 Cal.App.5th 1249 [82 Cal.Comp.Cases 679] [2017 Cal. App. LEXIS 572].) In that the UR and IMR statutes are silent on the question of temporary disability indemnity, an employee is not precluded from claiming it even if the disability results from reasonable medical treatment that is self-procured pursuant to section 4605.”

Glendale Physician Sentenced to 37 Months in Fraud Case

Federal prosecutors announced that the owner-operator of a Burbank medical clinic was sentenced to 37 months in federal prison on federal healthcare fraud charges for participating in a scheme to defraud Medicare by prescribing unnecessary services and equipment, which often were not even provided.

Knarik Vardumyan, 53, of Burbank, who formerly owned and operated the medical clinic, was sentenced by United States District Judge Dale S. Fischer who also ordered Vardumyan to pay $1,711,789 in restitution to the Centers for Medicare & Medicaid Services.

Vardumyan pleaded guilty in April to two counts of federal healthcare fraud.

According to court documents, Vardumyan admitted that she knowingly and unlawfully participated in a scheme to defraud Medicare by billing Medicare for “medically unnecessary office visits and diagnostic tests,” and by arranging “for the issuance of . . . prescriptions and orders for medically unnecessary durable medical equipment” and “home health services.”

Vardumyan further admitted, “many, if not all” of the people who visited her clinic “were brought . . . by co-schemers known as ‘marketers,’ who offered promises of free, medically unnecessary [equipment] or food” to those Medicare beneficiaries who were willing to attend Vardumyan’s clinic.

In documents filed in relation to thesentence, the government noted that Medicare paid $1,711,789 as a result of this fraudulent scheme, and that a 37-month term of imprisonment appropriately reflects the nature and circumstances of the offense, as well as the need for the sentence to “promote respect for the law and afford adequate deterrence against this kind of serious fraud against our healthcare system and the public fisc.”

The case against Vardumyan was investigated by the Federal Bureau of Investigation and Assistant United States Attorneys Kristen Williams, Cathy J. Ostiller, and Julian André of the Major Frauds Section and prosecuted by Assistant United States Attorney Adam P. Schleifer.

FDA Adds “Drug Prices” to Approval Policies

The U.S. Food and Drug Administration just announced a series of measures designed to speed to market generic versions of complex drugs in an effort to address the rising cost of pharmaceuticals.

The measures, announced in a blog post by Commissioner Scott Gottlieb, stray into an area that has not previously been the FDA’s purview: drug prices. The agency has typically made its decisions based on safety and efficacy without regard to cost.

Gottlieb said the measures are designed to increase competition in the market by enabling generic competition to complex drugs, something he has long argued for.

Earlier this year, he announced the Drug Competition Action Plan to advance new policies aimed at bringing more competition to the drug market. The goal was to improve access consumers have to the medicines that they need. Access to medicine is a matter of public health. “If consumers are priced out of the drugs they need, that’s a public health concern that FDA should address, within the scope of its mandate and authorities.”

The plan has a number of different domains. Among them is a compilation of efforts to improve the efficiency of the generic drug approval process; and another is a group of policies aimed at closing loopholes that allow branded drug companies to game FDA rules in ways that forestall the generic competition that Congress intended.

One important group of policies is aimed at making it easier to bring generic competition to a category of branded drugs known as complex drugs. Thus the FDA announced a major new set of policies to advance these goals.

Complex drugs comprise high cost medicines like metered dose inhalers used to treat asthma, as well as some costly injectable drugs. These medicines generally have at least one feature that makes them harder to “genericize” under traditional approaches. As a consequence, these drugs can face less competition. In some cases, costly, branded drugs that are complex drugs have lost their exclusivity, but are subject to no generic competition.

The new policies just announced are aimed at ensuring that the FDA provides as much scientific and regulatory clarity as possible with respect to complex generic drugs. The new guidance provides information on requesting and conducting product development meetings, pre-submission meetings, and mid-review cycle meetings with FDA. These meetings will allow for enhanced communication between generic drug applicants and FDA early in the generic drug development process, allowing for more efficient generic drug development, review, and approval pathways.

The FDA commissioner says it will soon release other important policies aimed at spurring competition to complex drugs.

New Osteoarthritis Medication Reduces Bone Damage

A daily pill which halts the disabling bone loss caused by osteoarthritis is being hailed as a new dawn in the treatment of the disease. The new drug has excited scientists after trials showed that after just six months it reduced bone damage around knee joints and also maintained cartilage thickness. It is the first time a drug has been shown to tackle underlying bone structure changes in diseased joints. Current treatments have aimed only at helping patients manage pain symptoms.

The pan-European study was carried out over six months with 244 patients aged between 40 and 80 with osteoarthritis in the knee. “This drug heralds a new dawn in the treatment of this disease as it is the first evidence we have of a drug which can have a significant benefit on the structure of the bone.”

Professor Conaghan, previously chairman of the National Institute for Health and Care Excellence group on the management of osteoarthritis, added: “We now need larger studies to replicate these findings, the results of which we hope will open up a new class of drug.”

The treatment, known as M1V-711, is based on a molecule involved in the turnover of bone and cartilage in the joints. It works by interfering with the process that leads to joint breakdown. It was tested against patients given a placebo and after six months those receiving the treatment showed a 65 per cent reduction in bone loss.

Those on the dummy pills showed slight increases in bone loss. The drug, which was shown to have relatively few side effects, also halted cartilage loss, with those on low doses experiencing a 70 per cent reduction in cartilage thickness and those on higher doses showing a slight increase in cartilage thickness.

Experts hope over a longer period the results may be greater, and could have an impact on significantly reducing pain from the condition. The results of the trial are likely to be revealed next month at a conference in San Diego.

The news comes as experts call for an end to the widespread long-term use of painkillers such as paracetamol and antiinflammatories such as ibuprofen for osteo arthritis, following research showing they may be doing more harm than good.

Current guidance from Nice still recommends paracetamol and anti-infl ammatories as treatments for this disabling condition. However, in one large US study people who regularly took paracetamol over 12 years had a 35 per cent increased risk of a stroke or fatal heart attack. Other recent studies have linked long term use of anti-inflammatory drugs to an increased risk of stomach ulcers and kidney failure.

One of the UK’s leading experts on arthritis, Dr Rod Hughes, former president of rheumatology at The Royal Society of Medicine, said: “There are numerous side effects linked with anti-infl ammatory drugs and we need to look at safer longterm alternatives for those living with joint pain.”