Tag: 2018 News

Governor Brown has signed new provisions that apply to California Workers’ Compensation Benefits. Here are highlights of new law that will take effect next January.

AB 1749 Workers’ compensation: off-duty peace officers.  This new law was created as a result of the October 1, 2017, mass shooting in Las Vegas, Nevada.  The new law provides that an employer, at its discretion or in accordance with specified policies, is not precluded from accepting liability for compensation for an injury sustained by a peace officer by reason of engaging in the apprehension or attempted apprehension of law violators or suspected law violators, or protection or preservation of life or property, or the preservation of the peace, outside the state of California.

AB 2046 Workers’ compensation insurance fraud reporting. Requires data sharing between governmental agencies involved in combating workers’ compensation fraud, and grants the Fraud Assessment Commission (FAC) discretion to augment an assessment with unused funds from a prior year’s assessment.

SB 880 Workers’ compensation prepaid cards. This bill would authorize an employer, with the written consent of the employee, to deposit disability indemnity payments for the employee in a prepaid card account. The bill would require the Commission on Health and Safety and Workers’ Compensation to issue a report  to the Legislature regarding payments made to those prepaid card accounts.

SB 1086 Workers’ compensation: firefighters and peace officers. Section 5406.7 of the Labor Code currently sets extended time limits for death claims for firefighters and peace officers. By its terms, this provision was to expire on January 1, 2019.  The new law  deletes the January 1, 2019, date of repeal of Section 5406.7 so that the time limits will now apply to death cases after January 2019.

Governor Brown has vetoed several bills passed by the legislature that pertain to California Workers’ Compensation Benefits. Here are highlights of what he chose not to sign into law.

AB 479 Workers’ compensation: permanent disability apportionment. This proposed law would have set limits to apportionment of permanent disability in cases involving breast cancer. The veto message notes that is similar to three previous measures that he has vetoed, Assembly Bill 570 in 2017, Assembly Bill 1643 in 2016 and Assembly 305 in 2015. He said that this bill and its predecessors have repeatedly singled out specific conditions and proposed a special set of rules that apply to them. This would result in an even more complex workers’ compensation system that would essentially be “disease by statute,” which would ultimately burden injured workers seeking quick resolution to their claims.

AB 553 Workers’ compensation: return-to-work program. This bill would have required the Department of Industrial Relations to completely disburse $120 million annually from the Workers’ Compensation Return to Work Fund to eligible injured workers. The veto message noted that the Return-to-Work Program began in 2015 and is relatively new. He was concerned this measure proposes sweeping revisions to the Return-to-Work program that are premature.

AB 1697 Workers’ compensation fraud unit. This would have required the DIR  to establish an anti-fraud unit within the DWC. The veto message notes that the work required by this measure is already underway.

AB 2496 Janitorial employees.The proposed law was a codification of the California Supreme Court new ABC test for an employment relationship in Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903. The bill was vetoed because the Administration and the Legislature are still reviewing this decision and any statutory changes to such tests would be premature.

SB 899 Workers’ compensation permanent disability apportionment. This measure seeks to preclude a physician from using race, gender, or national origin as a basis for apportionment. The Governor vetoed this bill for many of the same reasons that he returned a similar measure in 2011 – Assembly Bill 1155. This bill is unnecessary as it would not change existing law and may disturb settled court decisions, which already provide protection from the inappropriate application of the apportionment statutes.

Barrett Business Services Inc. (BBSI) has agreed to pay a $1.5 million civil penalty to resolve accounting fraud allegations by the U.S. Securities and Exchange Commission.

BBSI, a publicly traded company, provides human resources and other business management services. It reported $920 million in revenue last year and profits of $25.2 million.Clients hire BBSI to process payroll and payroll taxes, to provide workers’ compensation coverage, and to perform other business administration and consulting services. It has over 50 offices in 12 states and lists 24 offices in Northern and Southern California.

According to the SEC settlement, BBSI’s former chief financial officer, James Douglas Miller hid negative trends in BBSI’s financials by concealing the company’s workers’ compensation expense and liabilities. The SEC said former controller Mark Cannon approved improper journal entries created by Miller to manipulate BBSI’s tax expenses.

Separately, Cannon agreed to pay a $20,000 penalty, the agency said.

Concurrently, federal prosecutors announced they have obtained a criminal indictment against Miller, who’s been accused of falsifying financial reports. Miller served as the CFO of BBSI from 2008 to 2016. He was fired in 2016 when he disclosed to the company that he had falsified entries in the company’s books to improperly report workers’ compensation expenses as payroll taxes and fees.

As a result of Miller’s accounting improprieties, BBSI under reported approximately $12 million in workman’s compensation expenses in 2013. At the same time as he falsified BBSI’s books and falsely certified the periodic reports filed with the U.S. Securities and Exchange Commission,

Miler allegedly profited on BBSI stock, by exercising stock options worth 35,300 shares for $467,261 and selling it for more than $2.4 million.

According to records filed in the case, on four different occasions in 2013 and 2014, Miller falsely certified periodic reports filed with the SEC. His certifications contained a number of false statements including statements that BBSI’s periodic reports fairly presented, in all material respects, the results of BBSI’s operations.

Contrary to his representations, Miller allegedly knew that during each calendar quarter of 2013, he had circumvented BBSI’s internal controls and created a number of accounting entries that improperly classified workers’ compensation expenses as payroll and payroll tax expenses in violation of generally accepted accounting procedures.

“Mr. Miller will be pleading not guilty to the charge and defending the matter vigorously,” said his lawyer, Portland attorney Janet Hoffman.  Willful certification of a false periodic report is punishable by up to 20 years in prison and a fine of up to $5,000,000.  

Governor Brown has signed AB 2334 into law. The new law requires that, as part of occupational injury and illness reporting, employers additionally file specified injury and illness forms electronically with Cal/OSHA no later than February 1 of each year.

And requires Cal/OSHA to develop a searchable database for one of those forms relating to summary information on its web site by a date specified and further requires Cal/OSHA to post those forms on the database within 90 days of receipt. “While posting of injury information at each worksite is important, specific workplace injury and illness information is not accessible to the public and prospective employees in an easily accessible database on the Internet.”

The new law seems to have been triggered by federal initiatives to reduce employer reporting requirements.

The federal Occupational Safety and Health Administration (OSHA) adopted the Improve Tracking of Workplace Injuries and Illnesses rule in 2016. This rule requires electronic submission of certain occupational injury and illness reports by covered employers with at least 250 employees and by smaller employers in high-risk industries. In the fall of 2017,

However, OSHA issued a Notice of Proposed Rulemaking to potentially relax these workplace injury and illness reporting requirements.

In response to the federal initiative to reduce employer reporting requirements, California decided to pass a new law that went the other way – Increase employer reporting requirements.

Along the way, the bill was amended in the senate to authorize the director of the DIR to publish information regarding the costs of administration, workers’ compensation benefit expenditures, and solvency and performance of public self-insured employers’ workers’ compensation programs.

As expected, support and opposition of AB 2334 polarized around the allegiance of advocacy groups. Labor Unions and employee groups were in favor, while employer groups were opposed.

In support, a coalition of labor organizations, including UNITE-HERE, AFL-CIO, states that “by making these annual summaries text-searchable, AB 2334 will simply improve public access to these important reports. We believe that spreading awareness can in turn only foster safer workplaces.”

The bill’s sponsor, California Professional Firefighters, contends that “firefighters and all workers in California will benefit from public access to workplace injury and illness data in a searchable database.”

It further claims that the “current system of posting Form 300A [the annual summary of injuries and illnesses] at the workplace benefits workers at the site or facility but does not provide an opportunity for review by the public. Reporting to Cal/OSHA will strengthen California’s access to data regarding workplace injuries, will help further drive data supported solutions to improve workplace safety and ensure California required reporting is in place if the U.S. Department of Labor relaxes federal reporting rules.”

In opposition, a group of employer organizations, including the California Chamber of Commerce, argues that the bill ‘seeks to publicly shame employers by disclosing for public review on a searchable website, each employer’s injury and illness records, that can be misconstrued and distorted in a manner that does not reflect employers’ commitment to the safety of their employees while providing no advancement of worker safety.”

The National Football League, which entered a concussion-related settlement that has been valued at approximately $1 billion, is far from the only organization affected by the emergence of civil and workers’ compensation claims alleging long-term injuries from repeated blows to the head.

Sports organizations at all levels, from youth clubs to colleges to professional leagues, as well as coaches and other individuals, have faced lawsuits claiming that athletes suffered from such progressive injuries, including an alleged brain disease known as chronic traumatic encephalopathy (“CTE”).

Not all of these claims succeed. U.S. District Judge Vanessa Bryant in Hartford, Connecticut, ruled on Monday that claims filed on behalf of 53 wrestlers like Joseph “Road Warrior Animal” Laurinaitis and Jimmy “Superfly” Snuka were brought too late and some were frivolous.

Bryant also found no basis to suggest the defendants, including WWE Chief Executive Officer Vince McMahon, knew of any link between wrestling and CTE before 2007, which was after most of the plaintiffs had retired.

“The court is also unwilling to find that the diagnosis of one wrestler with CTE is sufficient to imbue WWE with actual awareness of a probable link between wrestling and CTE,” Bryant added.

CTE is a neurodegenerative disease often caused by repeated trauma to the head, and cannot be diagnosed before death.

A large part of Bryant’s 40-page decision focused on the plaintiffs’ lawyer Konstantine Kyros, who the judge said “persistently” ignored her orders and caused a “considerable waste” of time and resources over 3-1/2 years of litigation.

“The opinions expressed about my strong advocacy are inaccurate, bizarre and unworthy of the court,” Kyros said in an email to Reuters on Tuesday, adding that Bryant should have let the case go to a jury. “We trust the wrestlers’ claims will be better received in the appeals courts,” he added.

Jerry McDevitt, a partner at K&L Gates representing Stamford, Connecticut-based WWE, welcomed the ruling according to the Reuters report.

“It was a thoughtful decision,” he said in an interview. “The WWE did not engage in misconduct, and had educated wrestlers about the risks.”

Laurinaitis has experienced memory loss, dizzy spells and sleep apnea, according to an amended complaint filed last November, while Snuka had CTE, dementia and Alzheimer’s disease when he died in January 2017 at age 73.

Humira is one of the best selling drugs in the world. Televised commercials show that a woman with rheumatoid arthritis can wash her puppy in the bathtub, another with colitis can stroll happily through a fair packed with food vendors, while a third suffering from psoriasis can go to the gym without hiding her neck.

The price of Humira, an anti-inflammatory drug dispensed in an injectable pen, has risen from about $19,000 a year in 2012, to more than $38,000 today, per patient, after rebates. Its maker, AbbVie, which was spun from Abbott Laboratories in 2013, has now been accused of illegal kickbacks in the largest health care fraud case in the California Department of Insurance History. Humira accounted for more than two-thirds of AbbVie’s $25.6 billion in revenue in 2016.

The California Insurance Commissioner filed a civil fraud complaint in Alameda County Superior Court on behalf of the State of California against AbbVie alleging the company gave illegal kickbacks to health care providers to prescribe HUMIRA – an expensive and dangerous drug with potentially deadly side effects. The case, which is filed on behalf of the State under the Insurance Frauds Prevention Act, alleges that private insurers have paid out $1.2 billion in HUMIRA-related pharmacy claims, making this the largest health insurance fraud case in department history.

According to the complaint, AbbVie engaged in a far-reaching scheme including both classic kickbacks – cash, meals, drinks, gifts, trips, and patient referrals – and more sophisticated ones – free and valuable professional goods and services to physicians to induce and reward HUMIRA prescriptions. These professional goods and services included free insurance processing and prior authorizations, gifts of medical practice management hardware and software, and even marketing assistance, all of which save physicians valuable staff time and resources.

“AbbVie spent millions convincing patients and health care professionals that AbbVie Ambassadors were patient advocates – in fact, the Ambassadors were HUMIRA advocates hired to do one thing, keep patients on a dangerous drug at any cost,” said Insurance Commissioner Dave Jones. “Pharmaceutical companies know financial inducements are illegal, and patients depend on their health care professionals for straight forward honest information about their care and medication risks. In this case, patient care was traded for $1.2 billion in ill-gotten gains.”

The key to AbbVie’s success in pulling off its scheme, and among the most troubling aspects of it, is the fact that AbbVie inserts its own personnel directly into the homes of patients. When doctors prescribe HUMIRA, AbbVie sends its registered nurses—which AbbVie calls “Ambassadors” nto patients’ homes, representing them to be an extension of the doctor’s office.

The system AbbVie established takes advantage of the Ambassadors’ nursing background and direct access to patients to serve the biopharma giant’s financial interest in getting patients to take HUMIRA by downplaying its risks. Ambassadors are trained to send patient complaints directly to AbbVie and not the patients’ treating physicians. Ambassadors also provide unbalanced information, as they are trained to tout the drug while at the same time also instructed on methods to avoid directly answering patient questions about risks of the medication, including those pertaining to HUMIRA’s serious and important side effects.

At no cost and considerable gain to the physician’s office, AbbVie nurses provide pharmacy and insurance authorization assistance, open enrollment resources, paperwork help, advice on insurance products, and other services, all of which provide a substantial value and save physicians’ time, money, and resources. The catch is AbbVie only provides the Ambassadors as long as the physicians continue to prescribe AbbVie’s drug instead of selecting another course of treatment.

The allegations of AbbVie’s misconduct were brought to the attention of the department by a whistleblower. The whistleblower, referred to legally as a relator, is a registered nurse and was employed as an AbbVie Nurse Ambassador in Florida. The relator continues to be a party to this action and is represented by Rachel Geman, Robert Nelson,and Jason Lichtman of the law firm of Lieff Cabraser Heimann & Bernstein, LLP.