Tag: 2018 News

AmerisourceBergen Corporation (ABC), one of the nation’s largest wholesale drug companies, and some of its subsidiaries entered into a settlement with the United States in which it agreed to pay $625 million to resolve civil liability under the False Claims Act. The claims against ABC arise from its repackaging and distributing of Pre-Filled Syringes (PFS) that were not approved for sale or use by the U.S. Food and Drug Administration (FDA).

The term “overfill” is a frequently used term in the pharmaceutical industry generally meaning the amount of extra drug above and beyond the labeled dose that is contained in an FDA-approved vial of drug. The overfill is not listed on the FDA-approved drug label. The reason manufacturers put overfill in each vial of drug is to ensure that the health care provider administering the drug will be able to extract the full labeled dose from the vial to give to the patient.

ABC admitted its subsidiaries operated a program that created, packed and shipped millions of PFS to oncology practices after the drug product was removed from the original glass vials and multiple vials of the product were pooled in untested plastic containers. Then the drug, including the overfill, was extracted and repackaged into syringes.

By harvesting the overfill, ABC was able to create more doses than it bought from the original vial manufacturers and avoid opening some of the vials. ABC retained the unopened vials and sold them to other customers and to its subsidiary for resale. These syringes were sold throughout the United States.The profit from the PFS Program was between $2.3 and $14.4 million annually for a total profit of at least $99.6 million.

ABC’s scheme enabled it to bill multiple health care providers for the same vial of drug, causing some of those providers to bill the Federal Health Care Programs for the same vial more than once. The scheme also enabled ABC to increase its market share by offering various product discounts, which it leveraged to obtain new customers and to keep existing customers who purchased its entire portfolio of oncology drugs.

This civil settlement brings to $885 million the total penalties that ABC has paid to resolve liability resulting from the PFS Program.

The settlement also resolves allegations that ABC gave kickbacks to physicians to induce them to purchase drugs through the PFS program. The alleged kickbacks were in the form of general pharmacy credits provided to the customer.

AmerisourceBergen said in a statement that the settlement reflects its acknowledgment that some practices at the now-closed Medical Initiatives unit “were not consistent with AmerisourceBergen’s approach to corporate compliance.”

Four whistleblowers including Michael Mullen, the former chief operating officer of a subsidiary of AmerisourceBergen Corporation, played an instrumental role in the civil settlement. His amended qui tam complaint filed in the United States District Court for the Eastern District of New York, details AmerisourceBergen’s overfill laundering scheme and the executives who knew about the oncology business model and regulatory issues, including the former and current AmerisourceBergen CEOs.

The whistleblowers will share $99 million from the settlement.

Orange County District Attorney Tony Rackauckas recently formed the Sober Living-home Investigation and Prosecution (SLIP) task force to stop large scale insurance fraud and to address citizen and community complaints and concerns about criminal activities occurring within the addiction treatment industry. Rackauckas said Orange County has become known as “Rehab Riviera,” with many addicts coming to the region from out of state, and that sober living homes, which have quickly proliferated.

And his efforts seem to be paying off. SLIP just netted 11 defendants in a multi-million dollar, large scale insurance fraud scheme. Five doctors, two administrators, and four body brokers were charged with participating in this scheme.

The physicians charged in the case are:

— Dr. David Michael Scarpino, 53, of Huntington Beach, who faces one count of conspiring in aiding and abetting the unauthorized practice of medicine and 19 counts of insurance fraud, with sentencing enhancement allegations of aggravated white collar crime exceeding $100,000
— Dr. Gary Lamont Baker, 54, of Tustin, who is charged with one count of conspiring in the unauthorized practice of medicine, five counts of insurance fraud and one count of assault with force likely to produce great bodily injury
— Dr. Fritz John Baumgartner, 61, of Rancho Palos Verdes, who is charged with two counts of conspiring in the unauthorized practice of medicine, four counts of rebates for referral, three counts of conspiracy to commit medical insurance fraud, five counts of insurance fraud and one count of assault with force likely to produce great bodily injury, with a sentencing enhancement for aggravated white collar crime exceeding $500,000
— Dr. Michael Henry Wong, 53, of Irvine, and Dr. Nabil Charle Morcos, 66, of Irvine, who are both charged with one count of conspiring in the unauthorized practice of medicine and 22 counts of insurance fraud, with a sentencing enhancement for aggravated white collar crime exceeding $100,000.

Also charged are Thuy Rucks, 78, of Mission Viejo, the owner of SoberLife USA at 10900 Warner Ave. in Fountain Valley. He faces one count of unauthorized practice of medicine, four counts of unlawful offer or receipt of consideration by claims handler for referral, four counts of conspiracy to commit medical insurance fraud and three counts of insurance fraud, with a sentencing enhancement for aggravated white collar crime exceeding $100,000.

Christianne Tiemann, an administrator for SoberLife USA, is accused of hiring “body brokers” who recruited prospective patients who were paid $1,000 to receive a surgical implant of Naltrexone, an opioid blocker. The 66-year-old Trabuco Canyon resident is charged with one count of unauthorized practice of medicine, four counts of unlawful offer or receipt of consideration by claims handler for referral, four counts of conspiracy to commit medical insurance fraud and three counts of insurance fraud.

The defendants accused of recruiting patients are:

— Dylan James Walker, 27, of Huntington Beach, who is charged with 62 felony counts of false and fraudulent claims
— Harrison Anthony Romanowski, 27, of Huntington Beach, who is charged with 35 felony counts of false and fraudulent claims
— John T. Kahal, 67, of Dana Point, who is charged with 16 felony counts of false and fraudulent claims
— Jordan Tyler Hendrickson, 25, of Studio City, who is charged with 14 felony counts of false and fraudulent claims.

The recruiters allegedly mined for patients at sober living homes and AA meetings, among other venues, Rackauckas said.

The defendants are accused of participating in a scheme that subjected patients to a procedure that was experimental, not FDA approved, and dangerous and billing insurance companies such as Anthem Blue Cross, United Health Care and Centene (Healthnet) on average $40,000 per surgery. Some who received surgeries were addicted to methamphetamine and not opiates.

The Division of Workers’ Compensation has adopted amendments to the Official Medical Fee Schedule (OMFS) for Physician and Non-Physician Practitioner Services (California Code of Regulations, title 8, section 9789.12.1 through 9789.19.1) to replace the average statewide geographic adjustment factor with local geographic adjustment factors as of January 1.

The locality-specific geographic adjustment factors, known as the Geographic Practice Cost Index (GPCI), was implemented by Medicare in January 2017 as part of its Metropolitan Statistical Area (MSA) program. Geographic Practice Cost Index is used along with Relative Value Units by Medicare to determine allowable payment amounts for medical procedures.

Fee-for-service Medicare payments to physicians and certain other licensed clinical practitioners (including nurse practitioners, physician assistants, clinical nurse specialists, and occupational and physical therapists) are adjusted for geographic differences in market conditions and business costs. These geographic adjustments are intended to ensure that payment to providers reflects the local costs of providing care, so that the Medicare program does not overpay in certain areas and underpay in others.

Each of the three components of the Medicare Physician Fee Schedule (PFS) – physician work, practice expense (PE), and malpractice (MP) insurance – is adjusted for differences across geographic areas in the input prices related to each component. When they are combined, these three components are known as the geographic adjustment factor (GAF).1

The GPCI payment adjustments are made for 89 different geographic areas in the United States, also known as payment areas (or localities). Some are defined according to metropolitan areas, but there are 34 statewide payment areas that include both metropolitan and nonmetropolitan areas.

By federal statute, any changes to the GPCIs that do not explicitly receive additional funding must be budget neutral. In practice, budget neutrality requires that the total amount of payment be unaffected by new adjustments, so that any adjustment upward for one payment area must be paid for by a downward adjustment for other areas. This requirement creates significant tensions among providers in high-versus low-cost areas.

Another major source of disagreement is whether the geographic adjusters should be used as policy levers to help influence provider supply, particularly in nonmetropolitan areas. Some rural health policy experts and practitioners argue that because earning potential influences physicians’ decisions on where to practice, and because many private payers use Medicare prices as a basis for setting their own rates, the geographic adjustments should be used as policy tools to encourage physicians to practice in nonmetropolitan areas.

The DWC says that adoption of the Medicare MSA-based locality GPCIs will improve payment allowance accuracy by reflecting the resources required to provide a service according to specific regions.

The amendments also make minor clarifying revisions to the regulations.

DWC submitted a request to the California Office of Administrative Law to file the amended regulations with the Secretary of State and have them published in the California Code of Regulations. The regulations can be found on the DWC website.

Insurance Commissioner Dave Jones has approved a Universal Claims Certification (UCC) program from Claims and Litigation Management Alliance (CLM) designed to streamline the licensing process for independent insurance adjusters.

The UCC makes the process of licensing independent insurance adjusters who wish to acquire and manage their independent insurance adjuster licenses in multiple states more efficient. The UCC does not replace an independent insurance adjuster license, but makes the process of securing a license more efficient. Both licensed and unlicensed individuals can acquire a UCC. However, unlicensed individuals must first go through an intensive training by completing a 40-hour online pre-certification education program and successfully pass an examination to earn the UCC.

Insurance Commissioner Dave Jones said “The Universal Claims Certification process is designed to streamline the independent insurance adjuster licensing process and reduce costs. Also, the UCC program sets requirements for licensees that exceed the requirements under current California law, meaning it requires licensees to complete more continuing education, which greatly benefits the independent insurance adjusters and consumers.”

Currently, independent insurance adjuster applicants are not required to complete any prelicensing education. California’s applicants are only required to take and pass the independent insurance adjuster license examination and meet the license requirements to receive an independent insurance adjuster license.

For a licensee to maintain the UCC, the independent insurance adjusters must complete 24 hours of continuing education every two years including five hours of insurance law and ethics. The UCC program’s insurance law and ethics requirement exceeds California’s required three hours of law and ethics that is a part of and not in addition to the 24-hour continuing education requirement.

Once independent insurance adjusters acquire the UCC, they will be able to more quickly obtain a license in the states where the UCC is currently approved, including Alabama, Florida, Georgia, Mississippi, Texas, and now California. This will allow out-of-state adjusters to be more readily available when a natural disaster occurs.

“For years, the CLM membership has complained of the tedious state-by-state adjuster licensing process. We first worked to tackle the process of managing multiple licenses with our Tracker product, then we started to work with various states to actually change the licensing process,” says CLM Founder and former CEO Adam Potter. “It’s exciting to see this work come to life as we launch the UCC.”

CLM is an insurance industry association with more than 45,000 members that focuses on education and resources. CLM offers over 300 live courses, events and conferences annually.

A WCJ found Dean Fitzpatrick “100 percent permanently totally disabled” as a result of injury to his heart and psyche sustained during the course of his employment as a correctional officer. The award was based on the reports of two doctors regarding Fitzpatrick’s injury — Peter Chang-Sing for his heart and Richard Lieberman for his psyche.

Chang-Sing rated Fitzpatrick’s WPI for his heart at 75 percent and his resulting permanent disability at 97 percent. Lieberman rated Fitzpatrick’s GAF score at 45, resulting in 40 percent WPI, and permanent disability of 71 percent for his psyche. It is undisputed that, combining the 97 percent and 71 percent ratings under the Combined Values Chart Fitzpatrick’s permanent disability scheduled rating is 99 percent — permanent partial disability.

Thus Fitzpatrick’s permanent disability scheduled rating is 99 percent — permanent partial disability.

In the July 16, 2015 report, Dr. Lieberman felt that applicant was”on strict psychiatric grounds totally and permanently disabled” . . . Dr. Lieberman elaborated further: “I am dubious that this patient will return to work in any capacity.”

The ALJ concluded: “Based upon [Fitzpatrick’s] credible testimony, the medical reports of Dr. Chang-Sing and Dr. Lieberman, and in accordance with the facts (see Labor Code §4662(b)), it is found that applicant is permanently totally disabled.” The administrative law judge did not mention or discuss the combined rating under the 2005 Schedule. No vocational expert presented evidence in the case.

The Board affirmed the Decision in its opinion and order denying the petition for reconsideration. However, the Court of Appeal reversed in the published case of Department of Corrections v WCAB (Dean Fitzpatrick).

The question presented on appeal is whether the Board correctly interpreted and applied sections 4660 and 4662, subdivision (b).

“We easily harmonize sections 4660 and 4662, subdivision (b). Section 4662, subdivision (b), provides that, in nonconclusively presumed permanent total disability cases (i.e., those cases not enumerated in section 4662, subdivision (a)), permanent total disability may be found ‘in accordance with the fact.’ This section does not, however, address how such a determination shall be made; read plainly, it merely provides that a determination of permanent total disability shall be made on the facts of the case.”

Section 4660 addresses how the determination on the facts shall be made in each case for injuries occurring before January 1, 2013. Indeed, section 4660 expressly applies to the determination of “the percentages of permanent disability.” A “final permanent disability rating” is obtained by going through the steps outlined in the 2005 Schedule.

“Our interpretation of sections 4660 and 4662, subdivision (b), is squarely at odds with the Board panel’s interpretation of those statutes in Jaramillo (on which the administrative law judge and the Board relied in this case).” [Coca-Cola Enterprises, Inc. v. Workers’ Comp. Appeals Bd. (Jaramillo) (2012) 77 Cal.Comp.Cases 445 [writ. den.].

“We thus disapprove of Jaramillo with respect to its analysis on this issue, and annul the Board’s Opinion for the same reason.”