Tag: 2017 News

Businesses located in Washington, D.C., Nevada, Delaware, New Mexico and California face the highest risk of being sued by their employees when compared to the national average, according to a new study released by global insurer Hiscox. The study revealed that US-based companies have just over a 10 percent chance of having an employment charge filed against them.

The 2017 Hiscox Guide to Employee Lawsuits identifies the total impact of employee administrative charges and litigation, and exposes the markets where employee lawsuits are most prevalent. The report was compiled using the latest data on employment charge activity from the Equal Employment Opportunity Commission (EEOC) and its state counterparts across the US.

“Recent public accusations of discrimination and harassment are a stark reminder of the importance of creating an army of vigilant employees who can recognize the warning signs of unlawful behavior,” said Patrick Mitchell, Management Liability Product head at Hiscox USA. “It’s also critical to be acutely aware of your state’s laws. We found that many of the higher-risk states have laws in place that go beyond federal legislation. Varying state laws can impact the risk business owners face and play a role in the number of employee lawsuits in a given state. Business owners must stay aware as legislation evolves, and ensure that their businesses are compliant and that they have a plan in place should a lawsuit be filed.”

According to the study, businesses based in Washington, D.C., face the greatest risk of being sued by their employees, 81 percent higher than the national average. Other states where employers are at a high risk of facing employee charges when compared to the national average include Delaware and Nevada (+55%, respectively), New Mexico (+50%), California (+46%), Mississippi (+43%), Alabama (+39%), Illinois (+35%), and Connecticut and Georgia (+19%, respectively).

Claims against an employer can occur when an employee or job applicant feels they have been discriminated against in the workplace for reasons including, but not limited to, their age, disability, religion, race or color. Unlawful retaliation against job applicants or employees, who had alleged that they had been punished for asserting their rights to be free from employment discrimination, is the most common claim asserted in federal employment cases.

State laws can also have a significant impact on the risks businesses face from employee lawsuits and are drivers of increased employee charge activity. According to the study, this is because some state laws are more stringent than federal statutes. The following states, according to the report, allow employees the ability to go to court with filing a federal or state charge. These include: Alaska, Washington, D.C., Kentucky, Louisiana, Michigan, Maine, Nebraska, New Jersey, New York, Ohio, Oklahoma, Oregon, Vermont and Washington.

Discrimination can be perpetrated by management, another employee, or even someone outside the organization. Collectively, Hiscox claims data for small and mid-sized enterprises (under 500 employees) indicates that one in 10 businesses will face an employee charge. On average, it will take these businesses 318 days to resolve a claim. Without employment practices liability insurance, each of these companies would face an average $160,000 payment for defense and settlement charges. This payment can potentially be avoided by preventing the behavior that could cause a lawsuit through training or routine enforcement of employment policies, detecting discriminatory behavior even if it’s not reported, and mitigating the impact on your business in the event of a charge.

Workers’ Compensation Medicare Set-Aside (WCMSA) plans are required to set up reserves to cover Medicare beneficiaries’ future medical care for injured workers who are or will soon be Medicare eligible.

And now a new California Workers’ Compensation Institute (CWCI) study examines data from 7,926 California WCMSA plans completed, submitted and approved by the Centers for Medicare and Medicaid Services (CMS) in 2015 and 2016

The study reports that nearly 70% of federally mandated and approved Medicare settlements for injured workers require funding for decades of opioid use, often at dangerously high levels and in conjunction with other high-risk drugs. Such a requirement exceeds federal and state clinical guidelines and places patients at high levels of risk.

This of course raises the question – why are employers paying in advance for the costs of opiate medications that are inappropriate by today’s standards? And more importantly, how can employers contest a CMS demand for such opiate funding?

Authors Alex Swedlow and Dr. David Deitz found that on average, insurers allocated $103,393 at the time of the injured workers’ settlements to cover the future medical expenses associated with their work injuries, with $48,986 (47%) of that amount set aside to pay for prescription drugs.  

Opioids were the number one type of drug included in WCMSAs, found in 69.4% of the approved plans, and overall, opioids accounted for 27.7% of all WCMSA prescriptions – more than twice the proportion of any other drug category.  In terms of costs, the study found that with an average allocation of $33,113, opioids accounted for almost 1/3 of the total dollars reserved for prescription drugs.  

The opioid combination drug Hydrocodone-Acetaminophen (generally known as Vicodin® or Norco®) was the most common opioid found in the WCMSAs (44% of the opioid prescriptions in the plans, 20.7% of the dollars allocated for opioids), followed by Tramadol HCI and Oxycodone HCI, though even more powerful Fentanyl, linked to more than 20,000 deaths in 2016, accounted for 2.2% of the opioids and 6.6% of the total amount allocated for opioids in the approved plans.  

Comparing opioids found in WCMSAs to a case-matched control group of closed workers’ comp permanent disability claims for similar injuries, the authors found that the WCMSAs called for much stronger opioids, as average cumulative morphine milligram equivalents (MMEs) allocated to WCMSAs with opioids were 45 times the level used in the control group during the life of the claim.  

Likewise, approved WCMSAs with opioids required funding for an average daily dose of 54.7 morphine equivalents (MEDs) for a period of 20.9 years, while 1 in 10 had allocations for a daily dose of 90 MEDs, a marker for elevated risk to the patient.  In addition to requiring funds for long-term opioid use, many of the WCMSA plans also included reserves for simultaneous, long-term use of other potentially risky medications.  

For example, 14.5% of the WCMSAs with opioids also had reserves for sedative-hypnotics, and nearly 5% had allocations for sedative-hypnotics, muscle relaxants, and opioids.

The Division of Workers’ Compensation has suspended nine more medical providers from participating in California’s workers’ compensation system, bringing the total number of providers suspended this year to 94. The providers were suspended for fraud or other criminal actions.

DWC Administrative Director George Parisotto issued suspension orders against the following providers:

– Sathish Narayanappa Babu of Bolingbrook, Illinois, physician, was convicted on federal charges of Medicare fraud and of fraudulently obtaining controlled substances in February 2015. The Medical Board of California has revoked his medical license.

– Uche Chukwudi of Gardena, physician, was indicted in 2013 in federal court on felony conspiracy and health care fraud charges for defrauding Medicare in a scheme involving durable medical equipment (DME) provider Adeline Ekwebelem, Uche Chukwudi, Charles Okoye and others. He failed to appear at pre-trial proceedings and was declared a fugitive. The Medical Board of California revoked his license in 2017.

– Charles Ikechukwu Okoye of Carson, physician, was convicted in federal court for conspiracy to commit health care fraud for defrauding Medicare in a scheme involving DME provider Adeline Ekwebelem, Uche Chukwudi and others in 2014. Okoye surrendered his physician’s and surgeon’s certificate in 2015.

– Adeline Ekwebelem of Gardena, DME provider who worked with Uche Chukwudi, Charles Okoye and others, was convicted in federal court on multiple counts of health care fraud, conspiracy and illegal kickbacks for patient referrals in 2014.

– Victoria Kim of Los Angeles, physician, pled guilty in federal court on a felony charge of receiving illegal kickbacks for home health care referrals. The Medical Board of California revoked her medical license in 2016.

– Daria Renee Million of Corona, registered nurse, pled guilty in Riverside County in May 2015 to DUI and in December 2015 to misdemeanor child endangerment. The California Board of Registered Nursing revoked her license in 2016.

The following providers participated in an illegal kickback scheme to issue medically-unnecessary DME prescriptions to Medicare patients:

– Victoria Onyeabor of Ontario, DME provider and former owner of Fendih Medical Supplies Inc., was convicted in federal court for conspiracy to commit health care fraud in 2012 for submitting false and fraudulent claims to Medicare.

– Godwin Onyeabor of Ontario, DME provider and corporate officer of Fendih Medical Supplies Inc., was convicted in federal court in 2013 for conspiracy to commit health care fraud, health care fraud, and conspiracy to pay and receive health care kickbacks.

– Sri Jayantha Wijegunaratne of Anaheim Hills, physician, was convicted in federal court in 2013 for conspiracy to commit health care fraud, health care fraud, and conspiracy to pay and receive health care kickbacks. His medical license was revoked in 2016.

AB 1244, which went into effect January 1, requires DWC’s Administrative Director to suspend any medical provider, physician or practitioner from participating in the workers’ compensation system in cases such as these.

Jaime Rosario Del Real, 61, and son Israel Del Real, 37,both pleaded guilty to four felony counts for their role in a $400,000 insurance fraud scheme denying workers’ compensation insurance and medical care for injured workers.

The father and son duo were sentenced to 250 days in jail, 10 years felony probation, and ordered to pay $382,951 in restitution. This case was prosecuted by the Monterey County District Attorney’s Office.

Doing business as Del Real Produce and Packing and Del Real Packing, LLC, the Del Reals worked as farm labor contractors providing laborers for picking and packing lettuce for growers in Monterey County and Yuma Arizona. After receiving information from an insurer, Department of Insurance detectives found the Del Reals had concealed injuries their workers sustained and refused to pay for medical treatment or provide other benefits the injured workers were entitled to.

The investigation also revealed that over a five year period, the Del Reals lied more than 20 times in order to obtain reduced insurance premiums. As part of their premium theft the Del Reals kept two sets of Employment Development Division (EDD) forms, with different employees and a different number of employees listed, which allowed the Del Reals to evade paying payroll taxes.

“Business owners are responsible for the safety and care of their employees,” said Insurance Commissioner Dave Jones. “Employers who fail to carry workers’ compensation insurance or pay for the medical care for injured workers violate the law and put their employees at risk. Our detectives and the Monterey County District Attorney’s team succeeded in taking another dishonest employer out of the underground marketplace.”

Daniel Rush was sentenced to 37 months in prison for breaching his fiduciary duties to the United Food and Commercial Workers Union (UFCW) and participating in a money laundering scheme. The sentence was handed down by the Honorable Haywood S. Gilliam, Jr., U.S. District Judge, following Rush’s guilty pleas on June 22, 2017.

Rush pleaded guilty to one count of receiving an illegal payment as a union employee, in violation of 29 U.S.C. § 186(b)(1); one count of honest services wire fraud, in violation of 18 U.S.C. §§ 1343, 1346; and one count of conspiracy to commit structuring and money laundering, in violation of 18 U.S.C. § 371.

According to his plea agreement, between 2010 and 2015, Rush engaged in a series of schemes to enrich himself in violation of federal law and his fiduciary duties:

In 2010, he conspired with attorney Marc L. TerBeek and others to structure approximately $420,000 in illegal drug proceeds into the banking system. Although the money was a loan from someone in the cannabis industry, Rush deliberately mischaracterized monthly interest payments as consulting fees.

While serving as the Organizing Coordinator for the unofficial cannabis division at UFCW, Rush gave an employer a corrupted neutrality agreement in exchange for personal loan forgiveness. He also accepted kickbacks from TerBeek in exchange for referring cannabis businesses he encountered in his union role to TerBeek’s law practice.

Rush abused his position as Executive Treasurer and Board Member at the Instituto de la Raza Laboral (Instituto) in similar fashion by demanding and accepting remuneration from TerBeek in exchange for establishing TerBeek as an approved legal provider for workers’ compensation cases at the Insituto.

Finally, Rush engaged in corrupt conduct as a Commissioner on the Berkeley Medical Cannabis Commission when he attempted to extort a business that had applied for a dispensary permit. Using TerBeek as an intermediary, Rush communicated that if the applicant did not offer him a salaried job, with benefits, he would take adverse action against its application.

In addition to the prison term, the Court also sentenced the Rush to a three-year term of supervised release and ordered him to pay a fine of $7500.

Rush’s coconspirator, East Bay attorney Marc L. TerBeek pleaded guilty on February 16, 2017, to one count of making an illegal payment to a union employee, in violation of 29 U.S.C. § 186(a) and one count of willfully violating an anti-structuring regulation, in violation of 12 U.S.C. § 1956. Judge Gilliam scheduled TerBeek’s sentencing hearing for November 27, 2017.

Last August, the California State Bar issued the following Order regarding attorney Marc TerBeek. “Since respondent Marc Lawrence Terbeek, State Bar Number 166098, has been convicted of violating title 29 United States Code section 186(a) (making payment to an employee of union organization), a felony which may or may not involve moral turpitude, and title 12 United States Code section 1956 (willful Violation of anti-structuring regulation), a misdemeanor which may or may not involve moral turpitude, it is ordered pursuant to Business and Professions Code section 6102 that respondent be suspended from the practice of law effective September 5, 2017, pending final disposition of this proceeding.”

The prosecution is the result of an investigation by the FBI and the Internal Revenue Service-Criminal Investigation Division.