Tag: 2019 News

Business Insurance reports that OxyContin maker Purdue Pharma LP is exploring filing for bankruptcy to address potentially significant liabilities from thousands of lawsuits alleging the drug manufacturer contributed to the deadly opioid crisis sweeping the United States, people familiar with the matter said Monday.

Purdue and its wealthy owners, the Sackler family, are under pressure to respond to mounting litigation accusing the pharmaceutical company of misleading doctors and patients about risks associated with prolonged use of its prescription opioids.

Purdue denies the allegations, arguing that the U.S. Food and Drug Administration-approved labels for its opioids carried warnings about the risk of abuse and misuse associated with the drugs.

Filing for Chapter 11 protection would halt the lawsuits and allow the drugmaker to negotiate legal claims with plaintiffs under the supervision of a U.S. bankruptcy judge, the sources said.

More than 1,000 lawsuits accusing Purdue and other opioid manufacturers of using deceptive practices to push addictive drugs that led to fatal overdoses are consolidated in an Ohio federal court.

A lesser-known opioid case: Oklahoma v. Purdue Pharma, is scheduled for trial in May in Norman, Oklahoma. The Oklahoma trial could presage many of the arguments the jury may be presented in the national case set in the fall on 2019.

The Oklahoma lawsuit seeks to hold Purdue and three other opioid-makers, Allergan, Cephalon and Janssen Pharmaceuticals, responsible for economic damages to the state and its residents stemming from the opioid addiction and overdose crisis.

The presiding judge in the Oklahoma case ruled that television cameras may be used in the courtroom, every detail of what promises to be a dramatic trial could be broadcast to the American public, potentially affecting the outcome of any future opioid trials.

A Purdue bankruptcy filing is not certain, the sources said. The Stamford, Connecticut, drugmaker has not made any final decisions and could instead continue fighting the lawsuits, they said.

Purdue tapped law firm Davis Polk & Wardwell LLP for restructuring advice, Reuters reported in August, fueling concerns among litigants including Oklahoma Attorney General Mike Hunter that the company might seek bankruptcy protection before the trial.

The Supreme Court has ruled that payments to injured employees for lost wages by a railway company are taxable under the Railroad Retirement Tax Act (RRTA).

The opinion in BNSF Railway Co. vs. Loos by Justice Ruth Bader Ginsburg, in which six other justices joined, likens the payments to wages under the Social Security system.

Michael Loos sued BNSF Railway Co. under the Federal Employers’ Liability Act (FELA) for injuries he received while working at BNSF’s rail yard. A jury awarded him $126,212.78, with $30,000 of that amount ascribed to wages lost during the time Loos was unable to work.

BNSF claimed that the lost wages constituted “compensation” that is taxable under the Railroad Retirement Tax Act (RRTA) and asked to withhold $3,765 of the $30,000 to cover Loos’s share of the RRTA taxes.

The District Court and the Eighth Circuit rejected BNSF’s requested offset, holding that an award of damages compensating an injured railroad worker for lost wages is not taxable under the RRTA.

But the high court has now overturned those lower courts with this ruling that a railroad’s payment to an employee for working time lost due to an on-the-job injury is taxable “compensation” under the RRTA.

The RRTA is a self-sustaining retirement benefits system for railroad workers that is funded by a payroll tax on both railroads and their employees, referring to the railroad’s contribution as an “excise” tax and the employee’s share as an “income” tax. The Railroad Retirement Act (RRA) entitles railroad workers to various benefits.

Taxes under the RRTA and benefits under the RRA are measured by the employee’s “compensation,” which both statutes define as “any form of money remuneration paid to an individual for services rendered as an employee.”

According to the court, the railroad retirement system mirrors that of the Social Security system. The Federal Insurance Contributions Act (FICA) taxes employers and employees to fund benefits distributed pursuant to the Social Security Act (SSA). Tax and benefit amounts are determined by the worker’s “wages,” the Social Security equivalent to “compensation.” Both the FICA and the SSA define “wages” employing language resembling the RRTA and the RRA definitions of “compensation.”

Citing previous decisions, the court held that “compensation” under the RRTA “encompasses not simply pay for active service but also pay for periods of absence from active service” provided that the remuneration in question stems from the “employer-employee relationship.”

Justice Gorsuch filed a dissenting opinion in which Justice Thomas joined.

Two recent California Department of Insurance investigations have led to the arrests of insurance agents who allegedly stole tens of thousands of dollars from clients and failed to place insurance coverage for those clients, exposing them to significant financial risk.

Maria Aquino, 34, of South Gate, was charged with multiple felony counts of embezzlement and theft for allegedly pocketing over $48,000 in clients’ insurance premium payments and failing to place insurance coverage for her clients between 2011 and 2018.

The premium payments collected by Aquino, while doing business as Kino Insurance and Tax Services, were never sent to insurance carriers.

Aquino falsified certificates of insurance for more than eight clients in order to hide her embezzlement. Aquino’s license was revoked on July 12, 2018.

In a separate case, Chih Ming Huang, also known as James Huang, 41, of Rowland Heights, was charged with multiple counts of embezzlement, theft and forgery after allegedly stealing nearly $14,000 dollars from more than three clients and also failing to place insurance coverage for his clients.

After receiving a complaint from Farmers Insurance, where Huang had been previously employed, the department found that between 2011 and 2013, Huang embezzled premium payments by placing coverage for clients then canceling the coverage without his clients’ knowledge.

Cancelling the coverage generated refund checks to his clients, which he received because he had changed their address on record to a location he controlled.

Huang then applied the refunds to policies in the names of his aliases and cancelled those polices to get refunds in his own name, which he deposited into his personal bank account. The department is taking immediate action against Huang’s license.

Both of these cases are being prosecuted by the Los Angeles County District Attorney’s Office. Aquino surrendered on February 27, 2019 to the Downey Police Department. Huang will surrender on March 4, 2019.

If traditional drug delivery were a type of painting, it might be akin to paintball. With good aim, a majority of the paint ends on the bullseye, but it also drips and splashes, carrying streams of paint across the target.

If the drug needs to enter the bloodstream and circulate throughout your body for treating disease wherever it may be, this paintball-like delivery system may work. But it won’t work for targeted and precise drug delivery.

A more acute delivery approach would look more like “painting by numbers,” a technique that would allow precise delivery of a certain amount of drugs to an exact location. Researchers at the James McKelvey School of Engineering and the School of Medicine at Washington University in St. Louis are developing the tools necessary for such a drug delivery system, which they call cavitation dose painting.

Their research was published online this week in Scientific Reports.

Using focused ultrasound with its contrast agent, microbubbles, to deliver drugs across the blood-brain barrier (FUS-BBBD), the research team, led by Hong Chen, assistant professor of biomedical engineering at McKelvey School of Engineering, and assistant professor of radiation oncology at the School of Medicine, was able to overcome some of the uncertainty of drug delivery.

This method takes advantage of the microbubbles expanding and contracting when they interact with the ultrasound, essentially pumping the intravenously-delivered drug to wherever the ultrasound is pointing.

To determine where and how much of the drugs were being delivered, the researchers used nanoparticles tagged with radio labels to represent drug particles, then used positron emission tomography (PET) imaging to track their whereabouts and concentrations. They could then create a detailed image, showing where the nanoparticles were going and in what concentrations.

There’s one hitch, though. “The problem is, PET imaging is expensive and associated with radioactive exposure,” Chen said.

So the team turned to passive cavitation imaging (PCI), an ultrasound imaging technique that has been under development by several groups for imaging the spatial distribution of microbubble cavitation, or the oscillation of microbubbles in the ultrasound field.

To determine whether PCI could also accurately determine the amount of drugs at a certain location, they correlated a PCI image with a PET image (which they knew can quantify the concentration of radioactive agents).

“We found there’s pixel by pixel correlation between the ultrasound imaging and the PET imaging,” said Yaoheng Yang, the lead author of this study and a second-year PhD student in the Department of Biomedical Engineering. The PCI image, therefore, can be used to predict where a drug goes and how much drug is there. Hence, she called the new technique cavitation dose painting.

Going forward, Chen believes this method could drastically change the way some drugs are delivered. Using cavitation dose painting in tandem with focused ultrasound will allow doctors to deliver precise amounts of drugs to specific locations, for example, targeting different areas of a tumor with exactitude.

“I think this cavitation dose painting technique in combination with focused ultrasound-enabled brain drug delivery opens new horizons in spatially targeted and modulated brain drug delivery,” Chen said.

She has recently received a $1.6 million grant from the National Institutes of Health (NIH)’s National Institute of Biomedical Imaging and Bioengineering to work on combining intranasal drug delivery and focused ultrasound (FUSIN) with this research.

This month a slew of conspirators involved in a massive Workers’ Compensation kickback scheme were ordered to serve prison sentences and pay millions in financial penalties for their roles in the corrupt payment of millions of dollars to induce doctors and other medical professionals to refer hundreds of injured workers for medical treatments and services.

Defendant Fermin Iglesias and co-defendant Carlos Arguello operated a patient-capping enterprise, in which they found individuals who would file Workers’ Compensation claims against their employers. Iglesias and Arguello then sold, bartered and exchanged these applicants with others in the Workers’ Compensation industry, including attorneys, primary care physicians, and providers of medical goods and services.

Each of these entities had to “pay to play,” and as the patient was referred throughout this corrupt system, money changed hands at each step.

Arguello operated several patient-recruitment entities, including one called Centro Legal. Through billboards, flyers, advertisements and business cards, Centro Legal recruited persons to seek workers’ compensation benefits from their employers or former employers. When the injured worker called the 1-800 number on the billboard or card, he or she reached a call center, which might be located in another country. From there, Iglesias’ company, Providence Scheduling, took over brokering the patient to maximize the profit that could be extracted from him or her.

Centro Legal referred the newly-acquired patient to complicit Workers’ Compensation attorneys, including, in San Diego, attorney Sean O’Keefe, who had one of the largest Workers’ Comp caseloads in the region. To get these new clients, the attorneys in the corrupt network were expected to comply with certain conditions.

First, they had to use Arguello’s copying service to fulfil document requests for all of the new client’s medical records. Next, they had to agree to designate as their client’s primary treating physician (“PTP”) one of the complicit physicians within the corrupt network.

In exchange, the attorneys received compensation. For O’Keefe, the compensation took a variety of forms. One hospital administrator paid the salaries of two employees of O’Keefe’s law firm, as a kickback to O’Keefe for referring spinal surgeries to that hospital. In another variation, the kickback payments were disguised as payments for nonexistent legal services, for which O’Keefe generated phony “legal invoices” to cover up those obviously illegal payments.

The corrupt physician could serve as the patients’ primary care physician in the Workers’ Comp system. Iglesias required that the chiropractors prescribe a certain minimum quota of goods and services, on average, for each patient. If the chiropractor failed to live up to the quota, Iglesias would cut off the flow of new patients.

Dr. Steven Rigler was one of the chiropractors involved in the corrupt referral network. He had clinics in Calexico, San Diego, and Escondido.

Jennifer Louise White represented providers of other types of services, namely, Autonomic Nervous System (“ANS”) studies and sleep studies. She worked with Alex Martinez and with providers of the ANS and sleep studies to pay nearly $200,000 in kickbacks to Rigler to refer patients for these services.

SENTENCES
Ronald Grusd, Los Angeles, CA – – 10 years, $1.3 million forfeiture, $250,000 fine
California Imaging Network Medical Group – – 5 years’ Probation, $500,000 fine
Willows Consulting Company – – 5 years’ Probation, $500,000 fine
Alex Martinez, El Centro, CA – – 37 months’ custody
Ruben Martinez, Murietta, CA – – 33 months’ custody
Line of Sight, Inc. – – 5 years’ Probation, $45,000 fine
Desert Blue Moon, Inc. – – 5 years’ Probation, $20,000 fine
Fermin Iglesias – – 60 months’ custody, $1,005,000 forfeiture
MedEx Solutions – – 5 years’ Probation, $500,000 fine
Meridian Medical Resources – – 5 years’ Probation, $500,000 fine
Miguel Morales – – 12 months 1 day custody, $140,000 forfeiture
Julian K. Garcia, National City, CA – – 33 months’ custody, $10,000 fine
Jennifer Louise White, Glendale, CA – – 24 months, $25,000 fine
Sean Enrique O’Keefe – – 13 months, $300,000 forfeiture
Steven J. Rigler – – 6 months, $150,000 forfeiture