Tag: 2017 News

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).

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.

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.

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.”

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.