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Tag: 2018 News

Andrew Jarminski M.D. License Restricted by Medical Board

A Brea physician, who is being prosecuted in a baby’s death and for being part of an alleged $100 million workers compensation fraud scam, recently had his medical license restricted pending the outcome of criminal proceedings filed in Orange County.

The interim suspension order agreed to by Dr. Andrew Robert Jarminski, his attorney Peter R. Osinoff and counsel for the Medical Board of California went into effect on Dec. 22.

Jaminski’s legal problems date back to criminal proceedings commenced in 2014 by an Orange County grand jury indictment of Kareem Ahmed of Landmark Medical Management in Ontario and 15 people including Jarminski.

The OCWeekly recent case summary notes that the original indictment specifically cast Ahmed as the ringleader, accusing him of: hiring pharmacists to produce compounded transdermal creams and  paying kickbacks to several physicians and chiropractors, including Dr. Jarminski, for prescribing the cream to their workers’ compensation patients.

Ahmed’s attorneys managed to get most of the counts against their client tossed in March 2016. But the OCDA refiled charges against Ahmed and others that pushed the number of defendants up to 21 people and the alleged fraud ballooned to $100 million. Hearings in the case are set for Feb. 9 and 26 in Orange County Superior Court. Jarminski, had offices in Long Beach and Lawndale when he was first accused of having received $1.9 million in Landmark kickbacks.

As a result of events alleged in the OCDA criminal prosecution, the California Medical Board issued an Accusation against Jarminski in June, 2017 seeking to revoke his license. They claim he commenced treating Priscilla Lujan, an injured worker, in 2011. During the course of her treatment she gave birth to a child who was breastfeeding. The child died after ingesting residue from the compounded transdermal medication he prescribed for her. The ODCA pursued manslaughter charges against Jarminski, and others, for this death.

Attorneys for the defendants have vehemently denied the charges against them. As for Jarminski’s medical license, his lawyers argued that staying a suspension is appropriate because he is presumed innocent until proven guilty, and if he is convicted his license will be revoked by the medical board anyway.

Late last month, Administrative Law Judge Susan L. Formaker agreed that the public can be protected through the restrictions of the interim suspension order, which stipulates that Jarminski cannot dispense or prescribe non-FDA approved compounded medications before the matters before the criminal court and medical board are resolved.

LAPD Employee Arrested for Exaggerated Comp Claim

A former civilian Los Angeles Police Department employee was arrested on suspicion of workers’ compensation fraud, authorities said.

Gerald Pulley, 51, was arrested last Thursday on suspicion of the felony-level crime, Los Angeles police said in a press release.

Pulley has since been released on $20,000 bail. No court date was set.

Pulley had worked for the LAPD for 18 years, authorities said. He was last assigned to the Records and Identification Division.

Authorities said Pulley “concealed material documentation and exaggerated the extent of his injuries, while receiving temporary total disability monetary benefits from the LAPD.”

Police said Pulley also maintained secondary employment during this time.

The LAPD’s Workers’ Compensation Fraud Unit conducted an investigation that stemmed from a medical claim Pulley filed in 2016.

LAPD investigators worked with the Los Angeles County District Attorney’s Office and the Los Angeles City Attorney’s Office in the investigation, police said.

Court of Appeal Rejects Zuniga IMR Constitutional Challenge

The case of Saul Zuniga involves another challenge to the constitutionality of certain provisions of the IMR process. He asserts that the anonymity of the IMR reviewers violates his right to due process and that the IMR statute violates the guarantee of right to appellate review.

After successfully appealing an IMR determination and obtaining an order remanding the matter back to IMR for review by a different physician reviewer, Zuniga filed a discovery motion seeking the disclosure of the IMR reviewers’ identities. The Workers’ Compensation Judge ruled that he could not release the names of the IMR physicians pursuant to Labor Code section 4610.6(f).

Zuniga filed a petition for reconsideration, which was denied. He then filed a petition in the Court of Appeal arguing that the anonymity of the IMR reviewers violates due process and that the IMR statutes violate the guaranteed right to appellate review. The Court of Appeal rejected his constitutional challenge, and affirmed the WCAB in the unpublished case of Zuniga v WCAB.

Zuniga argued that it is a denial of due process for an IMR to refuse to disclose the identities of the reviewers when the decision of the first reviewer is reversed and the dispute is referred to a different reviewer in the organization. He claimed that without knowing the identities of the reviewers, an applicant is deprived of the opportunity to “dispute the findings of the second reviewer on the ground that they were made by the same reviewer whose opinion was reversed.”

The Court of Appeal responded by noting that under Article XIV, Section 4 of the California Constitution, the Legislature “is . . . expressly vested with plenary power unlimited by any provision of this Constitution, to create, and enforce a complete system of worker’s compensation by appropriate legislation.”

As the Court of Appeal held in Stevens, the due process clause of the California Constitution (Cal. Const., art. I, § 7, subd. (a)) does not limit the Legislature’s authority to create a workers’ compensation system. (Stevens, supra, 241 Cal.App.4th at pp. 1092-1093.) Section 4 therefore “supersedes the state Constitution’s due process clause with respect to legislation passed under the Legislature’s plenary powers over the workers’ compensation system.”

The Court also ruled that Zuniga’s federal due process claim fails as well. The Court of Appeal in Stevens  concluded that the IMR process, including the confidentiality requirement of section 4610.6, subdivision (f), does not violate the federal due process clause. (Stevens, supra, 241 Cal.App.4th at pp. 1096-1101; see also Ramirez, supra, 10 Cal.App.5th at pp. 227-229.)

The Court of Appeal in Stevens assumed that an IMR determination is state action and implicates a protected property interest, which are prerequisites to a federal due process claim. (Stevens, supra, 241 Cal.App.4th at pp. 1096-1098.) The court concluded that even so, Stevens’s due process claim failed because the IMR process “afford[s] ample process. ‘The core of due process is the right to notice and a meaningful opportunity to be heard.’”

When due process must be afforded, the amount of process required is determined by balancing the affected private interest, the risk of erroneous deprivation of this interest, the probable value, if any, of additional or substitute safeguards, and the government’s interest in the process.

Michael D. Drobot to Serve 63 Months in Prison

Last Friday, a federal judge sentenced the former owner of Pacific Hospital in Long Beach to 63 months in prison for overseeing a 15-year-long health care fraud scheme that involved more than $40 million in illegal kickbacks paid to doctors and other medical professionals in exchange for referring thousands of patients who received spinal surgeries.

The scheme operated by Michael D. Drobot led to more than $500 million in fraudulent bills being submitted during last five years of the scheme – much of which was paid by the California worker’s compensation system.

Drobot, 73, of Corona Del Mar, was sentencing by United States District Judge Josephine L. Staton, who noted that Drobot “introduced greed into the doctor-patient relationship.”

Drobot pleaded guilty in 2014 to charges of conspiracy and paying illegal kickbacks, admitting that he orchestrated a wide-ranging fraud scheme in which “[t]housands of patients received surgeries at Pacific Hospital not knowing that [Drobot] bribed their physician to perform their surgery at Pacific Hospital,” prosecutors wrote in a sentencing memorandum filed with the court. Drobot “was motivated by greed and ultimately profited millions of dollars through the scheme.”

From at least 1997 thorugh 2013, Drobot, who owned and/or operated Pacific Hospital during this time, ran a scheme in which he billed workers’ compensation insurers hundreds of millions of dollars for spinal surgeries performed on patients who had been referred by dozens of doctors, chiropractors and others who were paid illegal kickbacks.

“The patients believed that they were receiving conflict-free medical advice when, in fact, [Drobot] illegally incentivized their physician to perform the surgery at Pacific Hospital,” prosecutors said in court documents.

The kickbacks were financed largely by money generated from Drobot’s sale of medical devices implanted into state workers’ comp patients during spinal surgeries. Drobot set up a scheme that exploited a now-repealed California law known as the spinal “pass-through” legislation, which permitted hospitals to pass on to workers’ comp insurers the full cost of medical devices implanted in spinal surgery patients.

Drobot generated the kickback money through his own medical hardware company – the Newport Beach-based International Implants (I2) to sell hardware used in spinal surgeries performed at Pacific Hospital. I2 submitted bills to Drobot’s Hospital and tacked on an additional $250 per device knowing that the “pass-through” law required to state to pay the full amount of the invoices.

“Through the operation of I2, [Drobot] generated substantial profits that he used to pay at least $40 million dollars in kickbacks,” prosecutors wrote in court papers. “According to the former CFO of Pacific Hospital, his income, bonuses, and other compensation at the hospital was in excess of $20,000,000.”

As part of the health care fraud scheme, Drobot paid bribes to California State Senator Ronald Calderon in exchange for Calderon performing official acts to keep the spinal pass-through law on the books. Calderon is currently serving a 3½-year sentence in federal prison after admitting that he took bribes from Drobot and undercover FBI agents.

Drobot typically paid a kickback of $15,000 per lumbar fusion surgery and $10,000 per cervical fusion surgery. Some of the patients lived as much as hundreds of miles away from Pacific Hospital, and closer to other qualified medical facilities.

Drobot and his co-conspirators concealed the kickback payments by entering into bogus contracts with the doctors, chiropractors, and others who received kickbacks. In reality, the contracts merely provided a cover story for the kickback payments.

In addition to the prison term, which Drobot will begin serving on June 4, Judge Staton imposed a $500,000 criminal fine and issued an order directing Drobot to forfeit $10 million to the government. As part of the forfeiture judgment, which Judge Staton signed on Wednesday, Drobot was ordered to liquidate assets that include real estate and a 1965 Aston Martin, a 1958 Porsche, and a 1971 Mercedes Benz.

Judge Staton has scheduled a restitution hearing for May 11.

In addition to Drobot, prosecutors have charged seven other defendants in relation to the kickback scheme.

Michael D. Drobot Forfeits $10M, Including Classic Car Collection

On February 20, 2014, the owner of the Pacific Hospital of Long Beach, Michael D. Drobot, entered into a plea agreement in the case captioned United States v. Michael D. Drobot, pursuant to which he agreed to plead guilty to conspiracy and payment of kickbacks in connection with a federal health care program.

Pursuant to his plea agreement, Drobot agreed to forfeit all “right title, and interest” in assets “derived from or acquired as a result of, or used to facilitate the commission of, defendant’s illegal activities.” Drobot further agreed “[t]o the Court’s entry of an order of forfeiture at or before sentencing with respect to these assets and to the forfeiture of the assets.”

After a number of “sealed” documents were filed by the parties, and reviewed by the court on the topic of this forfeiture, Federal Judge Josephine L. Staton signed an Order on January 10, 2018 directing a personal money judgment of forfeiture in the amount of $10,000,000.00 in favor of the United States of America against defendant Michael D. Drobot.

The terms of the forfeiture require the payment of $300,000 in cash. In addition liens were imposed on in the favor of the United States Attorney’s Office (USAO) on all properties in Oregon owner by Drobot. He was then ordered to sell the Oregon properties and pay all net proceeds (gross proceeds less taxes, costs, and other normal and customary costs associated with the sale) to the USAO.

He was also ordered to sell his 1965 Aston Martin, 1958 Porsche, and 1971 Mercedes Benz, and pay the proceeds to the USAO.

This personal money judgment of forfeiture is part of the sentence imposed on defendant in this case. The Court retained jurisdiction to enforce this judgment.

But that is not all for Mr. Drobot.

A hearing to determine victim losses pursuant to 18 U.S.C. § 3664(d)(5) and to determine the final amount of restitution is scheduled for May 11, 2018 at 10:30 a.m. And the Court will determine his criminal sentence this week.

However, Drobot plead guilty early in the case, and agreed to “cooperate” with authorities. Conceptually, as a result of his cooperation, many successful prosecutions of well known physicians were successful. No doubt this will be taken into consideration.

Drobot has also filed letters from various supporters asking for leniency.

Attorney Donald G. Norris authored a support letter dated January 11. He handleled many of Mr. Drobot’s civil matters, both before and after the government investigation and prosecution in the case now before the Court, including the civil RICO case that was brought by State Compensation Insurance Fund before Judge Andrew Guilford. He argues that Drobot “already suffered considerable punishment” as a result of the many criminal and civil cases. He asks that “this Court not impose a sentence of imprisonment, and if one is imposed, a short term.”

DWC Suspends President of Premiere Medical Management

The Division of Workers’ Compensation last week suspended seven more medical providers from participating in California’s workers’ compensation system, bringing the total number of providers suspended to 166.

The providers were suspended for fraud or other criminal actions, or the loss of their license.

The most notable new suspension announced was “David Wayne Fish, Los Angeles businessperson, was convicted in Los Angeles County Superior Court in 2010 for receiving compensation or inducement for the referral of clients. Fish organized dozens of lawyers and doctors to steer more than 4,000 cases to preferred medical providers in order to run up high bills. Fish was ordered to pay $10,000 in restitution and approximately $390,000 in unpaid taxes.”

One might say “it’s about time!”

Fish at the time was the president of Premier Medical Management Systems. He and former attorney Birger Greg Bacino of Rancho Santa Fe, were each charged in 2010 with one felony count of compensation or inducement for referring clients. Premier was also charged in the complaint for submitting a false and fraudulent workers’ compensation claim and for filing a false tax return.

Albert MacKenzie, deputy-in-charge of the Fraud Interdiction Program, said the investigation revealed that Fish and Bacino engaged in the illegal acquisition of patients through an elaborate scheme through which they purchased several thousand workers’ compensation client referrals from an attorney television advertising service.

When a referral was received for a prospective workers’ compensation case, the client was sent to doctors and other healthcare providers within the defendants’ business network. Premier Medical Management Systems handled the billing and collection work in return for a 50-percent or greater fee. After meeting with a healthcare provider, the client was sent to a workers’ compensation attorney with whom the defendants also had a business relationship.

Fish and Bacino paid $750,000 and $150,000 respectively to the State of California Department of Insurance Fraud Division for costs associated with carrying out the investigation. Under the terms of the plea agreement, Bacino was ordered to additionally pay $210,000 — and Fish $390,000 — to the California Franchise Tax Board in unpaid taxes.

As part of the negotiated settlement, the duo waived all rights to any benefits or proceeds from the more than $60 million in liens and bills pending in the workers’ compensation system.

But that was not the end of the story. Later, in 2013, the Court of Appeal agreed to arguments presented by Universal Psychiatric Medical Center Inc. that Fish did not have authority to waive its liens, and WCAB dismissals of those liens were reversed.

Judge Chastises 100 Attorneys at Consolidated Opioid Hearing

A massive federal lawsuit aims to hold pharmaceutical companies responsible for contributing to the opioid crisis, and a federal judge is seeking a quick resolution.

More than 200 individual cases have been consolidated in a multi-district process being overseen by U.S. District Judge Dan A. Polster in Cleveland.,

The governments are suing over what they claim are false marketing practices by pharmaceutical companies that manufacture prescription painkillers, as well as claims that drug wholesalers brought more pills than needed into areas with high levels of addiction, knowing that the pills would be diverted for illegal use.

At an initial hearing on Tuesday, Judge Polster pushed for the pharmaceutical manufacturers and governments to settle the dispute quickly. Attorneys from across the country filled every corner of Polster’s courtroom at the federal courthouse in downtown Cleveland, with others either in an overflow room watching a video feed or listening on the phone.

According to the transcript of the hearing and news reports, he told more than 100 attorneys that the United States is at risk this year of seeing life expectancy go down for the third straight year, a statistic unmatched since the 1918 influenza pandemic, which killed at least 50 million people worldwide, including 550,000 in the United States.

But unlike that particularly deadly strain of flu virus, “this is 100 percent manmade,” Polster said. “I’m pretty ashamed that this has occurred while I’ve been around.”

“I don’t think anyone in the country is interested in a whole lot of finger pointing at this point, and I’m not either. People aren’t interested in depositions, and discovery,and trials. People aren’t interested in figuring out the answer to interesting legal questions like preemption and learned intermediary,or unraveling complicated conspiracy theories.”

Among other things, he said that “what I’m interested in doing is not just moving money around, because this is an ongoing crisis. What we’ve got to do is dramatically reduce the number of the pills that are out there and make sure that the pills that are out there are being used properly. … So that’s what I want to accomplish. And then we’ll deal with the money. We can deal with the money also and the treatment. I mean, that’s what — you know, we need a whole lot — some new systems in place, and we need some treatment.”

He acknowledged to those in the courtroom that his statements were likely not what they expected to hear in the first hearing but that he had given it a lot of thought prior to hearing. He wants to find a way to stop the flow of pills onto the street, while still ensuring that those who really need them can still acquire them.

Despite Polster’s call for a quick settlement, Young predicted that the litigation would involve months of discovery, test cases and monthly meetings before the judge. “We don’t need a lot of briefs and we don’t need trials.”

Sedgwick Maps Out Industry Trends for 2018

Finding alternatives for pain management, expanding autonomous claims processes and controlling the opioid prescription drug crisis are among the workers compensation issues and trends that employers should watch for in 2018, according to a report from Sedgwick Claims Management Services Inc.

Pain management will remain at the forefront of workers compensation industry discussions, and experts say they anticipate that there will be more collaboration between employers, physicians, pharmacists, claims specialists and patients as they move away from long-term drug therapy and test alternatives.

These may include physical therapy, pharmacy management, physician-patient opioid contracts, pain coaching partnerships, behavioral health networks or alternative therapies, Sedgwick said in its Navigating 2018 report, released Tuesday.

Sedgwick also says that the movement toward a whole health approach increases trust and engagement, and places less influence on individual providers in favor of a more holistic, consensus view of treatments and interventions. Under the new norm, centralized support links cross-disciplinary teams, all focused on quality care. More and more employers will be embracing principles of advocacy, empathy and responsiveness within a whole health environment.

The claims process will continue to become more autonomous, meaning on-demand claims adjusting services and smart interfaces that push low-touch claims through the process more efficiently and effectively, according to the report.

Smart interfaces that push low-touch claims through the process more efficiently and effectively are on the horizon. In addition, on-demand claims adjusting services will allow more flexibility and self-sufficiency when facing property claims. The goal: Speeding up the turnaround for high frequency/low severity claims and easing the process for consumers.

Chatbots and avatars will become more prevalent as support and service options for all lines of business; the industry is even seeing potential for these tools as virtual health coaches for workers’ compensation, disability and wellness programs. What are the possible advantages, limitations and liability risks of these cutting-edge virtual assistants?

To avoid getting caught in the compliance web of ERISA, MSA, FMLA, ADA and state requirements, collaboration becomes more necessary between disability, leave of absence and workers’ compensation. We expect regulatory complexity to continue to increase, and fines and litigation to be a looming threat for non-compliance.

Additionally, diversity and inclusion with claims management will be a key issue. With different populations and generations, the industry will need to adapt to address the needs of everyone, according to the report.

Operator of Assisted Living Facilities Cited for Wage Theft

The California Labor Commissioner issued citations totaling $7,137,036 to the operator of six adult care facilities in Los Angeles for wage theft and other labor law violations.

Adat Shalom Board & Care, Inc. was ordered to pay underpaid wages and penalties to 149 former and current employees who provided care to elderly residents 24 hours a day, six days a week. For years, officials say the caregivers were paid less than $3 an hour for their work.

The Labor Commissioner’s Office opened its investigation last June after receiving a report of labor law violations. The investigation uncovered that from July 2014 to July 2017, the caregivers at the six facilities in West Hills were:

– Paid less than the minimum wage for each hour they worked.
– Not paid overtime for working 24-hour shifts, six days a week.
– Not relieved from their duties to take meal or rest breaks.
– Provided pay stubs that withheld key information such as hourly rate of pay and total number of hours worked.

The live-in caregivers were responsible for monitoring and caring for elderly residents and hospice patients, many of them suffering from Alzheimer’s or dementia. The caregivers were paid fixed amounts ranging from $1,500 to $1,800 per month, or $2.40 to $2.88 per hour.

The citations issued against Adat Shalom Board & Care include $2,272,343 for under payment of minimum wages, $1,871,990 in overtime wages, $128,196 for meal period violations, and $2,689,907 in liquidated damages.

When workers are paid less than minimum wage, they are entitled to liquidated damages that equal the amount of underpaid minimum wages plus interest.

In addition to the money for the workers, $174,600 in civil penalties were levied for nonpayment of overtime and minimum wages, meal period violations as well as for failing to provide workers accurate itemized wage statements with their paychecks. The civil penalties collected will be transferred to the State’s General Fund, as required by law.

Visalia Public Employee Says Arrest was “Retaliation” for Comp Claim

Authorities arrested former Visalia Public Cemetery manager Dona Shores last month on charges of embezzling and laundering as much as $1.3 million over a five-year period between July 1, 2011, and June 30, 2016.

Shores was arrested on Dec. 22 on suspicion of embezzlement and money laundering charges after a year-long investigation by Visalia Police.

Attorney Kris Pederson, who represents the Visalia Cemetery, said she now believes the embezzlement dates back to 2005 when a new accounting system was adopted – and that more than $1.3 million was stolen.

Pederson said Shores was getting ready to retire at the end of 2016. Ahead of her retirement, Shores handed in the cemetery’s accounting books and a forensic audit revealed the allegedly missing funds, she said,

Shores, who managed the Visalia Cemetery for nearly 20 years, was fired in late 2016 before she could officially retire.

Citing the forensic audit’s findings, Pederson said cash funds had been recorded as received by the district for services, but the money was never deposited into the cemetery’s bank account.

Earlier this week, Shores appeared before Tulare County Superior Court Judge Brett Alldredge. During the quick hearing, Shores spoke only once, saying she agreed to a delay on the court procedures.

Attorney Charles Magill, who’s representing Shores, denied all charges. “I believe there’s a government conspiracy against Ms. Shores,” he said. “I believe it’s politically motivated.” Magill, whose office is in Fresno, said the conspiracy against Shores includes the Visalia police officers investigating the case.

Magill said Shores’ arrest was retaliation for a workers’ compensation case the former manager has filed. Shores was injured on the job when she was struck by a vehicle, Magill said.

Magill also lamented Shores’ arrest timing. “There’s no reason to arrest her on the Friday before Christmas,” Magill said. “She spent Christmas in jail. That was punitive.”

There’s also no evidence that proves the embezzlement, Magill said. “At no time was her accounting ever out of balance,” he said. “They have no evidence of money she received. Where’s the money?”

Magill plans to have a new forensic accounting investigation into the cemetery’s finances to help clear his client. “I will try this case and then sue the board, the cemetery and the county for malicious prosecution,” he said.