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Tag: 2019 News

Walgreens Settles Fraud Claim for $269M

Walgreens Boots Alliance Inc. has entered into an agreement with federal prosecutors in Manhattan to settle Medicaid and Medicare fraud allegations in two separate actions brought against the national pharmacy chain, according to court records unsealed by U.S. District Judge Paul Crotty of the Southern District of New York.

The first settlement, approved on January 16, 2019 requires Walgreens to pay $209.2 million to resolve allegations that it improperly billed Medicare, Medicaid, and other federal healthcare programs for hundreds of thousands of insulin pens it knowingly dispensed to program beneficiaries who did not need them.

The second settlement, approved on January 15, 2019, requires Walgreens to pay $60 million to resolve allegations that it overbilled Medicaid by failing to disclose to and charge Medicaid the lower drug prices that Walgreens offered the public through a discount program.

The settlement requires Walgreens to pay approximately $168 million to the United States, and Walgreens has agreed separately to pay approximately $41.2 million to state governments.

In both settlements, prosecutors say Walgreens admitted and accepted responsibility for conduct the Government alleged in its complaints under the False Claims Act.

According to federal prosecutors, the insulin fraud occurred through two specific Walgreens policies. First, the company’s electronic management system prevented pharmacists from dispensing partial boxes of insulin pens, even when a patient didn’t require that much insulin.

Second, when the amount distributed exceeded what was prescribed for a total number of daily doses, Walgreens falsely stated in reimbursement forms that what was handed out did not go over that limit.  As part of the other fraudulent scheme, Walgreens used its Prescription Savings Program to overcharge federal health care programs, according to prosecutors.

While it was providing customers a discount on drugs ordered through the program, Walgreens was failing to tell Medicaid what the prices were when it billed for reimbursement. This led to Medicaid paying more than it should have for the discounted medications.

In a statement provided by a Walgreens spokesman, the company said it was pleased to have the issues resolved. The company claimed to have fully cooperated with the government, and to have admitted to no wrongdoing.

Employment Terminated for Violation of DIR Gift Policy

Tess Viceral, Cristina Cornell, and Imelda Canovas were long-term employees of the Department of Industrial Relations (DIR). Viceral worked as a supervisor under manager Cora Lee at times relevant to this appeal.

Viceral supervised Cornell and Canovas who were employed as Workers’ Compensation Consultants (WCCs). WCCs have the authority to settle workers’ compensation claims up to $75,000 and select third-party vendors to handle the claims.

DIR has policies against gifts received by a DIR employee from vendors with whom the DIR employee regularly does business if the gift is intended to reward the DIR employee for doing business with the gift giver.

This policy was not strictly enforced until Lee became manager in November 2012. Since the policy was not strictly enforced, vendors would sometimes take DIR employees to lunch, give gift cards, and bring edible treats to DIR offices.

Lee met with Viceral in late 2012 to remind Viceral of the gift policy and instructed Viceral to relay the message to the WCCs under her supervision, but Viceral failed to do so. Viceral and the WCCs continued to attend lunches and accept promotional gifts, and vendors continued to bring food to DIR offices.

Lee again reminded Viceral of the gift policy and sent her a confirming memorandum in early March 2013. A week or so later, Viceral finally held a meeting with the WCCs, reminding them of the gift policy and instructing them not to accept gifts from vendors. However, this did not seem to stop Viceral and the WCCs from attending lunches, and Canovas from handing out vendor gift cards.

An investigation was launched by DIR’s human resources division. Ultimately, Canovas, Cornell, and Viceral received notices of adverse action terminating their employment for improperly accepting gifts, falsifying their statements of economic interest, falsifying timesheets, and being dishonest in their investigatory interviews. Other WCCs involved either were not disciplined or had their terminations revoked after admitting dishonesty and settling for suspensions.

Canovas, Cornell, and Viceral appealed their terminations to the State Personnel Board. The ALJ found that Appellants were dishonest and that retaliation was not the primary basis for the termination, and he upheld the termination as proper. The Superior Court denied a petition for a writ of mandate. The Court of Appeal affirmed the termination in the unpublished case of Canovas v. State Personnel Bd.

The Court of Appeal concluded that the administrative hearing was fundamentally fair after noting that the appellants raised “a plethora of complaints, most of which are barely coherent.”

Political Battle Over ABC Employment Test Heats Up

When can companies in California classify their workers as independent contractors instead of employees?

According to a report by KQED, that’s the question that’s been hot on the minds of California lawmakers, labor unions and tech companies since April, when the California Supreme Court ruled that businesses must satisfy three guidelines to classify workers as contractors.

In Dynamex Operations West, Inc. v. Superior Court, the state Supreme Court ruled that a worker can be considered a contractor only if: A. The worker is free from the control and direction of the hirer in connection with the performance of the work. B. The worker performs work that is outside the usual course of the hiring entity’s business. C. The worker is customarily engaged in an independently established trade, occupation, or business. This is now known as the ABC Test.

Allan Zaremberg, head of the California Chamber of Commerce, said the ruling puts the Legislature in a unique position. A state law could override the court decision and return California to the pre-Dynamex test for employee status.

The court’s decision is especially concerning to tech companies like Uber, Lyft and Instacart, whose businesses rely heavily on a revolving army of contractors. They’re among a group of tech firms partnering with the state Chamber of Commerce to lobby for legislation that would loosen restrictions on who could be included as a contractor.

Without a new law, these companies would have to abide by the court’s guidelines.

Uber, which has long been the largest and most influential on-demand gig company in the country, has always insisted that its drivers are not employees. The San Francisco-based company argues that it’s not a taxi company, but rather a tech firm that creates a platform or marketplace to connect riders to independent drivers. In other words, it says, its employees are the people who build its technology, not the one who drive people around.

It’s the second requirement of the Dynamex ruling that poses the biggest dilemma for big gig-focussed companies like Uber. Because the San Francisco-based firm is in the business of giving rides, and its drivers are the ones who provide them, the company would be hard-pressed, under the court’s guidelines, to classify those workers as anything but employees.

Some companies feel like that test is going to alter their business model, and in some cases that’s true,” said Steve Smith, a spokesman for the California Labor Federation, which would like to see more workers classified as employees. If that presents a hardship for some tech companies, that’s just too bad, Smith added.

Assemblywoman Lorena Gonzalez, D-San Diego, authored AB 5, a bill that would require companies to follow the court’s guidelines. It might not make sense for all workers to be classified as employees, she said, but gig workers still need some protections.

Another bill, AB 71, would roll back the court’s recent decision.

Uber and other gig companies have taken various steps in recent years to ensure that they can continue categorizing their workers as contractors. In some cases, like New York, they have set up drivers’ organizations, which have less power than union organizations. Many workers don’t see this as a sufficient solution.

This fight also places Gov. Gavin Newsom, who received campaign support from both labor and the tech industry, in a particularly tricky position. He contends the issue should have been resolved before it went to court, and has urged both sides to find common ground.

He recently said his administration is even considering the creation of a committee to address the issue. “Because we could have been making determinations before that case ended up at the court,” he said.

Feds Indicted CompOne and Officers for Fraud

American Labor Alliance (ALA) and CompOne USA are subsidiaries of Agricultural Contracting Services Association, which is a Nevada not-for-profit corporation headquartered in Clovis, Calif.,

The ALA attracted customers by marketing low workers’ compensation premium rates. Its membership surged after it introduced its workers’ comp benefit. It had more than 400 employers with 30,000 members as of February 2017. Two-thirds of those employees are seasonal agricultural workers employed by roughly 50 farm labor contractors.

A number of other business entities were affiliates or subsidiaries of ALA, including CompOne USA, ALA Trust, California Analytics, Farmworkers Enterprise Foundation, Recruiters of America, CompassPilot, ALTA, and Life Abundantly/”LiBu.”

The California Insurance Commissioner issued a Decision and Order imposing a $4,345,000 penalty on American Labor Alliance and CompOne USA for selling workers’ compensation and liability policies to employers of farmworkers without being properly licensed with the Department of Insurance.

FBI agents on behalf of the U.S. Department of Labor served warrants for workplace injury benefit program records in July 2017 at the headquarters office of American Labor Alliance.

Prosecutors have now filed a Grand Jury indictment against American Labor Alliance, Marcus Asay the Co-Founder, chairman, and controlling individual behind ALA. And Antonio Gastelum who served a variety of supervisory roles regarding ALA, including at various times serving as ALA’s chief operations officer, overseeing legal compliance matters for ALA, and controlling a number of ALA’s financial affairs, working directly under defendant Asay.

In addition to selling workers’ compensation insurance, the Indictment claims that from at least 2011 onward, defendant ALA offered what it purported to be a retirement pension plan to its clients, known by a variety of names including the “ALA Trust,” the “ALA Retirement Plan Trust,” or the “ALA Retirement Plan & Trust.” (ALA Trust).

The defendants caused ALA to issue Certificates of Liability to the clients that purported to provide “Workers Compensation and Employers’ Liability” coverage. The defendants further caused the Certificates to list one or more of the National Insurance Companies as “insurers.” The Certificates were signed by defendant Asay.

Prosecutors allege that “Defendants caused the Certificates to contain materially false and fraudulent statements. The National Insurance Companies did not provide Workers’ Compensation insurance to ALA’s clients as the defendants purported in the Certificates. In some cases, the National Insurance Companies had issued liability policies or bonds to ALA itself, but would not have paid Worker’s Compensation benefits to any ALA client whose employee was injured or died.

In many of these cases, ALA-issued Certificates of Liability that contained a false policy number, not the real policy or bond number that pertained to ALA’s corporate coverage.”

EFTF Meeting to Discuss New Employment Laws

The Employer’s Fraud Task Force will discuss “The NEW 2019 Employment Laws That Will Impact Your Workplace” at its next luncheon meeting on January 22. Registration begins at 11:00 am.

Those who attend will learn about the new 2019 Employment Laws of California, most of which will became effective January 2019. Training will include an Overview of:

– The New #Metoo Harassment Laws
– The New Harassment Training Requirements
– Miscellaneous Employment Related Laws

The speaker is Bernadette O’Brien, ESQ .She is a Partner at Floyd Skeren Manukian Langevin, LLP and an SPHR certified/SHRM-SCP Human Resources Executive.

Ms. O’Brien serves as general counsel and executive advisor to the law firm’s Human Resources Department and is Managing Attorney of the firm’s Employment Law Department and HR Consultation Department. She is the Managing Attorney-Employment Law Department of the firm.

Ms. O’Brien is author of the popular LexisNexis publication Labor and Employment in California: A Guide to Employment Laws, Regulations and Practices, co-author of California Leave Law: A Practical Guide for Employers, and co-author of California Unemployment Insurance and Disability Compensation Programs.

Ms. O’Brien has been a frequent contributor to, and reporter for, the LexisNexis employment law newsletter Bender’s California Labor & Employment Bulletin.

She is also editor and developer of Floyd Skeren Manukian Langevin’s employment related websites:,, and, which provide the latest news and information related to employment law.

The meeting will take place at the Steven’s Steak House, located at 5332 Steven’s Place in Commerce, California. If you plan to attend, you may register online at the EFTF website.

Hearing Set For MTUS Updates

The Division of Workers’ Compensation (DWC) has issued a notice of public hearing for proposed evidence-based updates to the Medical Treatment Utilization Schedule (MTUS), which can be found at California Code of Regulations, title 8, section 9792.23.

The public hearing is scheduled for Friday, February 15 at 10 a.m. in the auditorium of the Elihu Harris Building, 1515 Clay Street, Oakland. Members of the public may review and comment on the proposed updates no later than February 15.

The proposed evidence-based updates to the MTUS incorporate by reference the latest published guidelines from American College of Occupational and Environmental Medicine (ACOEM) for the following:

– Cervical and Thoracic Spine Disorders Guideline (ACOEM October 17, 2018)
– Elbow Disorders Guideline (ACOEM August 23, 2018)
– Hand, Wrist, and Forearm Guideline (ACOEM January 7, 2019)
– Ankle and Foot Disorders Guideline (ACOEM July 16, 2018)
– Workplace Mental Health: Posttraumatic Stress Disorder and Acute Stress Disorder Guideline (ACOEM December 18, 2018)

The proposed evidence-based updates to the MTUS regulations are exempt from Labor Code sections 5307.3 and 5307.4 and the rulemaking provisions of the Administrative Procedure Act.

However, DWC is required under Labor Code section 5307.27 to have a 30-day public comment period, hold a public hearing, respond to all the comments received during the public comment period and publish the order adopting the updates online.

DWC Posts Several OMFS Changes

DWC posts additional adjustments to Official Medical Fee Schedule for Pathology and Clinical Laboratory, for Hospital Outpatient Departments / Ambulatory Surgical Centers, for Physician Services/Non-Physician Practitioner Services, and posts updated MTUS Drug List Effective February 15.

The order is the second Administrative Director order for the January 2019 annual update to the Pathology and Clinical Laboratory Fee Schedule. The Centers for Medicare and Medicaid Services issued a revised 2019 Pathology and Clinical Laboratory Fee Schedule file on January 15, 2019.

The revised file corrects various technical errors and supersedes the original file.

The initial update to the Physician and Non-Physician Practitioner Fee Schedule. effective for services rendered on or after January 1, 2019, was posted to the DWC website on December 10, 2018.  The Centers for Medicare and Medicaid Services subsequently issued a revised update to the 2019 Physician Fee Schedule on December 20 that made corrections to the Relative Value Unit file and the Geographic Practice Cost Index file.

This second order adopts those corrections.

The update orders adopting the adjustments can be found on the DWC website.

The changes to the MTUS Drug List, based on the American College of Occupational and Environmental Medicine (ACOEM) Practice Guidelines, including the following:

– Addition of drugs addressed in the Traumatic Brain Injury Guideline
– New and Revised, Drug Recommendations (related to the Traumatic Brain Injury Guideline)
– Designation of additional drugs as “special fill” eligible, due to treatment recommendation in the Traumatic Brain Injury Guideline

Additional information regarding the MTUS drug formulary may be found on the MTUS Drug Formulary webpage.

Walgreens and Microsoft to Create Digital Ecosystem

Walgreens Boots Alliance Inc. and Microsoft Corp. have joined forces to develop new health care delivery models, technology and retail innovations to advance and improve the future of health care.

Current health care systems are a complex combination of public- and private-sector organizations, providers, payors, pharmaceutical companies and other adjacent players. While there has been innovation in pockets of health care, there is both a need and an opportunity to fully integrate the system, ultimately making health care more convenient to people through data-driven insights.

The companies have committed to a multiyear research and development investment to build health care solutions, improve health outcomes and lower the cost of care. This investment will include funding, subject-matter experts, technology and tools. The companies will also explore the potential to establish joint innovation centers in key markets.

The companies will focus on connecting WBA stores and health information systems to people wherever they are through their digital devices. This will allow people to access health care services, such as virtual care – when, where and how they need it.

Working with patients’ health care providers, the companies will proactively engage their patients to improve medication adherence, reduce emergency room visits and decrease hospital readmissions. Core to this model is data privacy, security and consent, which will be fundamental design principles, underscored by Microsoft’s investments in building a trusted cloud platform.

WBA and Microsoft will also focus on enabling more personalized health care experiences from preventative self-care to chronic disease management. WBA will pursue lifestyle management solutions in areas such as nutrition and wellness via customers’ delivery method of choice, including digital devices and digital applications or in-store expert advice.

Through a combination of dedicated R&D and external partnerships, a suite of chronic disease management and patient engagement applications are planned for development, alongside a portfolio of connected Internet of Things (IoT) devices for nonacute chronic care management, delivered by Microsoft’s cloud, AI and IoT technologies.

The companies will work to build a seamless ecosystem of participating organizations to better connect consumers, providers – including Walgreens and Boots pharmacists – pharmaceutical manufacturers and payors. Microsoft and WBA will leverage each other’s market research and identify the right partners to develop solutions.

Early last year, Inc, Berkshire Hathaway Inc and JPMorgan Chase & Co had said they will form a company that could eventually negotiate directly with drugmakers and healthcare providers and use their vast databases to get a better handle on costs.

44 Percent of Physicians are Burned Out

Close to 44 percent of U.S. physicians are burned out, and 15 percent are depressed and thinking about suicide, according to a survey conducted by Medscape and summarized by Reuters Health.

More than one doctor per day commits suicide – a rate higher than in any other profession and more than twice that of the general population, Medscape reports.

The findings come as no surprise to Dr. Carter Lebares, Director of the Center for Mindfulness in Surgery at the University of California, San Francisco, who has studied burnout among surgical residents but was not involved in the survey.

“There is a passionate argument surrounding the data and discourse about who’s to blame for this situation,” Lebares told Reuters Health in an email. “Quotes from respondents in the Medscape survey capture this very poignantly: anger over a broken system, loss of time with patients, being asked to sacrifice dwindling personal time to ‘fix ourselves,’ and demoralization that the only way out is to quit or severely curtail our work.”

The Medscape survey found that male physicians are more likely to cope with burnout by exercising (51 percent males vs. 43 percent females), whereas female physicians are more likely to talk with friends and family (52 percent females vs. 37 percent males). More women eat junk food to cope (38 percent vs. 27 percent) and similar percentages of men and women drink alcohol (23 percent men; 21 percent women).

The Medscape survey pinpointed too many administrative tasks as a leading cause of physician burnout (59 percent), as well as spending too many hours at work (34 percent). Other factors included electronic health records (32 percent), insufficient compensation/reimbursement (29 percent) and “feeling like just a cog in a wheel” (20 percent).

“Data are coming to suggest that an institutionally supported network of choices for wellbeing will be the answer – some combination of things like limited EHR time, increased ratio of patient time, better food choices at work and home, room for personal health (like exercise breaks), tailored mindfulness-based interventions, financial planning services or untraditionally structured jobs,” Lebares said.

Although the survey did not ask how burnout might affect patient care, “we did ask how depression affects (it),” Leslie Kane, Senior Director of Medscape Business of Medicine told Reuters Health by email. “Fourteen percent of physicians said they made errors they might not ordinarily make; 16 percent are more apt to express frustration in front of the patient; and 26 percent say they are less motivated to be careful taking patient notes.”

Depression also affects physicians’ dealings with colleagues or staff, with 47 percent stating that they are more easily exasperated with staff/peers, and 40 percent stating they express their frustration in front of their colleagues.

Yet 64 percent of respondents said they don’t plan to seek help for depression or burnout and they have not sought help in the past.

Comments in the survey suggest that some physicians are retiring earlier because of burnout or depression.

“The fact that physicians are retiring earlier may exacerbate the physician shortage that appears to exist,” Kane said. “In years past, physicians who ‘retired’ often worked part time or kept a small patient base. However, with high malpractice premiums, rules and regulations, and the stress and aggravation that physicians experience, they are often more likely to just want out.”

House Launches Drug Pricing Investigation

The Chairman of the Committee on Oversight and Reform, launched one of the most wide-ranging investigations in decades into the prescription drug industry’s pricing practices.

“The Committee on Oversight and Reform is investigating the actions of drug companies in raising prescription drug prices in the United States, as well as the effects of these actions on federal and state budgets and on American families,” Cummings wrote.

“For years, drug companies have been aggressively increasing prices on existing drugs and setting higher launch prices for new drugs while recording windfall profits. The goals of this investigation are to determine why drug companies are increasing prices so dramatically, how drug companies are using the proceeds, and what steps can be taken to reduce prescription drug prices.”

Cummings sent letters to 12 drug companies seeking detailed information and documents about the companies’ pricing practices. The letters seek information and communications on price increases, investments in research and development, and corporate strategies to preserve market share and pricing power. The letters are the first step in the Committee’s comprehensive review of pricing practices. The Committee will hold its first of several hearings in the coming weeks to hear from experts, as well as patients affected by rising drug prices.

The Centers for Medicare and Medicaid Services projects that spending on prescription drugs will increase more rapidly than spending on any other health care sector over the next ten years. The federal government bears much of the financial burden of escalating drug prices through Medicare Part D, which provides drug coverage to approximately 43 million people. The government is projected to spend $99 billion on Medicare Part D in 2019. In 2016, the 20 most expensive drugs to Medicare Part D accounted for roughly $37.7 billion in spending.

A review by the Inspector General of the Department of Health and Human Services found that ten of the most expensive brand-name drugs accounted for $15.6 billion of spending in the catastrophic coverage phase of the Medicare Part D benefit in 2015. The Inspector General has also found that Part D payments for brand-name drugs increased by 62% from 2011 to 2015—after taking into account manufacturer rebates—even though the number of prescriptions fell by 17%.

Approximately 94% of widely-used brand-name drugs on the market between 2005 and 2017 more than doubled in price during that time, and the average price increase in 2017 was 8.4% – four times the rate of inflation – according to an analysis conducted by AARP. A recent Associated Press analysis found that more than 4,400 brand-name drugs increased in price in the first seven months of 2018 alone, compared to 46 price decreases.

In today’s letters, Cummings is focusing on drugs that are among the costliest to Medicare Part D, among the costliest per beneficiary, or had the largest price increases over a five-year period.