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Tag: 2019 News

Double Dipping Business Owner Pleads Guilty

Charles Ruben (DOB 9/13/1951), formerly of Simi Valley,  pleaded guilty to a felony violation of Insurance Code section 1871.4(a)(l} – making a fraudulent statement of a material fact for the purpose of obtaining workers’ compensation benefits. Previously he was President of Cr’s Gate Service, Inc.

Cr’s Gate Service, Inc. is a California Domestic Corporation filed on March 9, 2006. The company’s filing status is listed as Suspended and its File Number is C2869102. The Registered Agent on file for this company is Charles Ronald Ruben and was located at 1596 Kane Ave, Simi Valley, CA 93065-3625.

Between May 11, 2016, and November 23, 2016, Ruben was placed off work for an injury sustained while employed at his electric gate company in Simi Valley.

During that time, he collected disability payments that totaled $34,981.33 and systematically failed to report that he earned $48,686.20 while working as a self-employed contractor.

Sentencing for Ruben is scheduled June 7, 2019, at 9:00 a.m. in courtroom 12 of the Ventura Superior Court, County of Ventura.

He faces a maximum of five years in jail.

At the time he entered his plea, Ruben provided a check to the victim, State Compensation Insurance Fund, for the full amount of restitution due in this case for $41,326.45.

Drobot Forfeits Plea Agreement Benefits

Prosecutors alleged that Michael D. Drobot, the former owner of the Pacific Hospital of Long Beach,orchestrated a massive kickback scheme where he paid $50 million dollars in kickbacks to dozens of physicians in order to steer surgeries to his hospital, Pacific Hospital of Long Beach. The kickback scheme was effective and resulted in over $500 million in kickback induced surgeries being performed at Pacific Hospital.

In 2014, Drobot entered into a pre-indictment cooperation plea agreement with the government where he agreed to plead guilty to conspiracy to commit wire/mail fraud (18 U.S.C. § 371) and a violation of the anti- kickback statute (42 U.S.C. § 1320a-7b(b)(2)(A)).

The plea agreement provided that the government would forgo any additional charges against Drobot that could have been filed based on the kickback scheme. The plea agreement required him to cooperate with authorities as well as to obey all Court orders. His “cooperation” lead to the prosecution and conviction of many of his cohorts, including well known physicians in the California workers’ Compensation industry.

On January 10, 2018, pursuant to the plea agreement the Court sentenced him to 63 months in prison, and ordered him to forfeit $10 million to the United States and to partially satisfy the forfeiture order as follows: (1) by a date agreed to with the government, paying $300,000 to the government; (2) by a date agreed to with the government, selling properties in Oregon and providing the proceeds to the government, and (3) by a date agreed to with the government, selling defendant’s 1965 Aston Martin, 1958 Porsche, and 1971 Mercedes Benz, and paying the proceeds to the government. Drobot and the government agreed the cars – with an estimated value of nearly $2 million – would be sold by July 5, 2018.

In June 2018, Drobot told the government that he was trying to sell the cars but needed an extension through the end of August 2018 so that he could sell them at maximum value at the Pebble Beach car auction. The government granted him an extension and provided Drobot written wiring instructions for the proceeds. The parties also made arrangements for the sale proceeds to be transferred directly from the auction house to the government in order to ensure that the proceeds would go to the government.

The auction house records reveal that Drobot diverted the car sales proceeds on June 22, 2018 by taking a $1 million dollar advance on the sale of the cars And, on September 14, 2018 diverted the remaining $675,795.89 proceeds..

As a result, last October, prosecutors filed a motion asking the Court to find Drobot in breach of his plea agreement.

On January 14, 2019 Federal Judge Josephine Staton found that Drobot “ntentionally violated the Court’s order when he diverted the proceeds from the sale of 1965 Aston Martin and 1971 Mercedes Benz to bank accounts that he controlled and ultimately used the funds for personal purposes. In addition, Defendant has failed to abide by the Court’s order that he sell the 1958 Porsche and provided the proceeds to the Government.”

Slow Adoption of WC Telemedicine

Telemedicine is the use of electronic communication technologies to provide clinical services to patients without an in-person visit, with the goal of improving the patient’s health status. The electronic communications or monitoring may be used for follow-up visits, management of chronic conditions, medication management, consultation with specialists, or other clinical services that can be provided remotely via secure video and audio connections.

According to a representative from Kaiser Permanente, a leader in telemedicine services, the number of telemedicine customers is expected to increase to roughly 7 million by 2018 (up from 350,000 in 2013). In 2015, of KP’s 110 million interactions between physicians and members, 56% were virtual, surpassing physical visits for the first time.

The Department of Veterans Affairs, which operates the nation’s largest healthcare system and is recognized as a world leader in the development and use of telehealth services, has achieved better results through telemedicine. According to the VA, telemedicine has increased access to high-quality healthcare services and has proven to be an effective and convenient way for patients to receive—and medical providers to provide—medical care.

A 2014 report by Towers Watson estimated that US businesses could save more than $6 billion a year by using telemedicine

When it comes to legislation and rule changes to advance the use of telemedicine, some states are moving more quickly than others.

In 2017 Harbor Health Systems, a One Call Care Management company, announced that it is one of the first companies to receive approval from the California Department of Workers’ Compensation to offer telemedicine through its medical provider networks. Harbor’s MPN networks cover approximately 2 million employees in the state of California.

In early 2018, Texas proposed a rule that would expand injured workers’ access to telemedicine services by lifting a restriction in the Medicare-based reimbursement policy that limits the use of telemedicine to underserved areas—typically rural regions with few healthcare providers.In April 2018, the Texas Department of Insurance, Division of Workers’ Compensation, announced a new fee schedule applicable to telemedicine and telehealth services provided on or after September 1, 2018.

Also in 2018, legislators in Florida proposed two telehealth-related bills, House Bill 793 and Senate Bill 280. Among other provisions, these bills attempted to establish a standard of care for telehealth providers and authorize them to use telehealth to perform patient evaluations and prescribe certain controlled substances. However, neither bill advanced.

Now in 2019, a bill submitted in New York, SB 1042, proposes creating a task force to study how telehealth and telemedicine might help employees in workers comp, as well as the providers treating them and the businesses employing them.

Prices Increased on Hundreds of Drugs

Time to re-evaluate medical reserves on open claims.

Johnson & Johnson raised U.S. prices on around two dozen prescription drugs on Thursday, including the psoriasis treatment Stelara, prostate cancer drug Zytiga and blood thinner Xarelto, all among its top-selling products. It joined many other companies that raised U.S. prices on hundreds of prescription medicines earlier this month.

Most of the J&J increases were between 6 percent and 7 percent, according to data from Rx Savings Solutions, which helps health plans and employers seek lower cost prescription medicines. The company does not plan to raise prices on any more drugs this year, J&J spokesman Ernie Knewitz said.

The increases came on the same day that Democratic members of Congress introduced proposed legislation aimed at lowering the cost of prescription drugs for American consumers.

J&J said the average list price increase on its drugs will be 4.2 percent this year. However, it expects the net price it actually receives for its medicines to drop. That is because drugmakers negotiate rebates and discounts off the list price with payers in order to ensure patient access to their products.

Drugmakers kicked off 2019 with U.S. price increases on more than 250 prescription medicines by Jan. 2. That total has almost doubled, with pharmaceutical companies hiking prices on nearly 490 drugs by Jan. 10, according to Rx Savings. This includes insulin price hikes of between 4.4 percent and 5.2 percent by Sanofi and 4.9 percent by Novo Nordisk.

Sanofi said its increases were below the Centers for Medicare & Medicaid Services projections for medical inflation, and that it expects net prices to drop in 2019. Novo Nordisk said its raised list prices help offset increases in rebates to insurers and pharmacy benefit managers.

With pressure from lawmakers and the administration of President Donald Trump intensifying, the pace of drug increases has been slower than last year, when drugmakers raised prices on around 650 drugs over the first 10 days of 2018.

The United States, which leaves drug pricing to market competition, has higher prices than in other countries, where governments directly or indirectly control costs. That makes it by far the world’s most lucrative market for manufacturers.

The U.S. Department of Health and Human Services has proposed policy changes aimed at lowering drug prices and passing on more of the discounts negotiated by health insurers to patients. Those measures are not expected to provide relief to consumers in the short-term, however, and fall short of giving government health agencies direct authority to negotiate or regulate drug prices.

Focus Group Studies Medical Costs

Since 2013, the annual Workers’ Compensation Benchmarking Study has taken a broad look at the drivers of workers’ comp claims outcomes. The 2018 edition features a notable shift in focus, taking a deep dive into the most critical claims outcome driver identified in past years: medical performance management.

Through think-tank sessions and focus group research, study researchers distilled the input of a diverse group of industry executives to compile their ideas on the most promising and realistic medical management strategies of interest for employers, insurers, TPAs and government entities, as well as brokers and consultants.

According to the summary published in Risk and Insurance, leaders surveyed suggest that organizations must align their goals around quality and outcomes in order to move what has proved to be a tough-to-budge needle. Researchers identified three core goals shared by industry respondents:

    Investing in health outcomes
    Encouraging employee engagement and empowerment, and
    Promoting population health and injury prevention

The organizations surveyed are actively employing or evaluating a spectrum of strategies for meeting these goals, from the familiar to what once might have been seen as fringe.

The ‘N Factor’: Executives surveyed ranked the use of nurse case management as the #1 most critical medical management program for impacting claims outcomes. (Followed by return-to-work services and nurse triage.)

Study after study backs up the ranking. A 2016 Helmsman report used a set of 4,000 claims normalized for injury, patient and biopsychosocial factors, with half having nurse involvement. The nurse-involved claims had 16 percent lower future medical costs, 15 percent lower overall costs and 12 percent faster claims resolutions. A similar Helmsman study done for a single employer showed nurse-involved claims having 57 percent fewer disability days.

In the past, the “Us vs. Them” employer-employee paradigm put the focus on fighting tooth and nail to avoid paying for any comorbidities. It also fostered a belief that worker health is of no concern to workers’ comp programs unless a workplace condition was the cause of a specific health problem.

Times have changed, largely with the growing body of research showing a substantive connection between conditions like diabetes and obesity and claim cost/duration. A growing number of employers are recognizing how healthier employees are less likely to be injured, and recover faster and with less complications if they do get injured.

Embrace Technology: Executives surveyed report they are leveraging technology to improve communication with both providers and workers. One large employer surveyed is using FaceTime to meet with injured workers and providers and to speed recovery by approving treatment decisions on the spot.

The availability of things such as app-based physical therapy and health coaching allows more flexibility for both employers and employees, putting the necessary tools for a positive outcome literally in the hands of the injured worker.

Trusting Employees: Once a rare practice, employee self-reporting is gaining traction among employers, with large employers such as Starbucks embracing it as an extension of its employee advocacy philosophy. Those employing such programs report decreased litigation and increased employee engagement. But another strong argument in favor of self-reporting is the ability to decrease lag time and reporting errors made by supervisors, and speed time to triage and treatment.

To read the rest: The Workers’ Compensation Benchmarking Study is a national research program designed to advance claims management. As in prior years, the 2018 Report will be available to all without cost or obligation as a contribution to the workers’ compensation industry. The 2018 Report as well as prior reports may be requested here.

Arbitration Agreement Must Explicitly Include FEHA

Save Mart Supermarkets Inc. was unable to convince the California 3rd District Court of Appeal to compel three injured workers, to arbitration in suits over alleged violation of state law statutory employment claims.

Plaintiffs Jose Robles, Christopher Rymel, and David Hagins sued defendant Save Mart Supermarkets, Inc., alleging various state law statutory employment claims.

Plaintiff Jose Robles alleged he experienced an industrial injury to his thumb and his doctor said he could work with restrictions. “He was then demeaned by having to ask permission to use the bathroom and having to wear a degrading safety vest, and when he complained he was suspended without pay,” according to the opinion.

Plaintiff Christopher Rymel alleged he had an industrial injury to his back and was on Workers’ Compensation leave. He alleged he was also ordered to do what he described as degrading work conditions when he returned to work.

Plaintiff David Hagins alleged he suffered retaliaton following his reporting of a workplace hazard. The manager replied that if Save Mart had to fix the problem it would instead shut down the warehouse and fire everyone. Soon thereafter Save Mart was cited by Cal-OSHA for this violation. Four months later Hagins suffered an industrial injury.

After he saw his doctor he was placed on light duty. Save Mart then fired him. He alleges statutory theories of medical condition discrimination, retaliation, whistleblower retaliation, failure to prevent discrimination and retaliation, and termination in violation of public policies set by statute (FEHA and the workers’ compensation laws).

After successfully moving to sever, Save Mart moved to compel arbitration as to each plaintiff. The motions were heard together, and the trial court denied the motions by substantively identical orders. The trial court reasoned that the CBA at issue did not clearly and unmistakably provide for arbitration of the claims asserted.Save Mart timely appealed in each case. The court of appeal affirmed in the published case of Rymel et. al. v Save Mart Supermarkets Inc.

Generally, a collective bargaining agreement (CBA) providing for arbitration of employment grievances does not provide for arbitration of a worker’s claims based on violations of state anti-discrimination or retaliation statutes, nor do federal labor relations laws preempt such claims.

The parties agreed that the CBA did not explicitly refer to FEHA, the whistleblower statute, and the California workers’ compensation laws. Thus the CBA was silent on the California statutes plaintiffs contend Save Mart violated.

To be valid, an arbitration agreement must reflect the mutual intention of the parties that disputes between them will be resolved out of court; in doing so it operates as a waiver of the right to sue for redress of grievances. A party is not generally compelled to arbitrate a claim unless she has agreed to do so; arbitration is conducted by consent.

GoPro Footage Convicts Correctional Officer

A 44-year-old San Mateo County sheriff’s correctional officer pleaded no contest Wednesday to misdemeanor worker’s compensation fraud and was sentenced to 10 days in county jail, District Attorney Steve Wagstaffe said.

According to the report in SFGate, Edmundo Rocha reported an injury in October 2016 that he said resulted from defensive tactics training the previous month, San Mateo County prosecutors said.

Rocha was diagnosed with a left shoulder sprain and was offered workers’ compensation benefits. His doctor ordered him to be on modified duty, but the sheriff’s office eventually had him stay out of work on total temporary disability, prosecutors said.

However, while on disability, he ran in a Spartan Race and a GoPro camera worn by a fellow sheriff’s employee captured Rocha navigating obstacles in the course. When he went to see a specialist weeks later, he did not disclose that he was able to participate in the race.

Wagstaffe said the sheriff’s office eventually reported the case to the district attorney’s office, and investigators learned from interviewing employees that there was the video from the race.

Rocha’s attorney Josh Bentley entered the no contest plea on his behalf Wednesday morning, according to Wagstaffe.

Along with the 10-day jail sentence, which can be served in Sacramento County where Rocha lives, he was also sentenced to two years of probation and ordered to pay $5,000 in restitution, Wagstaffe said.

Bentley, who was not immediately available for comment, presented a check for $5,000 in restitution to the court, the district attorney said.

Rocha will surrender to authorities on March 23 to serve the jail sentence, Wagstaffe said.

He said Rocha was on administrative leave from the sheriff’s office as of last week. A sheriff’s spokesperson was not immediately available to comment on Rocha’s current employment status.

Drug Marketing Costs Increased to $20.3 Billion

A new study published in the JAMA Network and summarized by Reuters Health says that spending on health care advertising in the U.S. has almost doubled over the past two decades as companies compete for their share of the world’s biggest health care market.

Annual health care marketing surged from $17.7 billion in 1997 to at least $29.9 billion in 2016, driven by a rapid spike in spending on direct-to-consumer (DTC) advertisements for prescription drugs, the study found. Over this period, DTC spending climbed from $2.1 billion to $9.6 billion.

Pharmaceutical marketing to health professionals accounted for the biggest outlay, and climbed from $15.6 billion to $20.3 billion despite new policies at hospitals and medical schools designed to limit industry influence over prescribing.

While marketing may have positive effects like destigmatizing diseases (e.g., HIV) or embarrassing symptoms (e.g., impotence) it can also expand or even create disease or raise false hopes by exaggerating treatment effects – for example marketing of marginally effective Alzheimer’s drugs,” said study coauthor Dr. Steven Woloshin of the Dartmouth Institute for Health Policy and Clinical Practice in Lebanon, New Hampshire.

“This can lead to overdiagnosis, overtreatment (with associated harms) and wasted resources,” Woloshin said by email.

To compete for market share, just about every player in the industry from drugmakers to insurers to hospitals to diagnostic test makers invest in marketing to insiders who make prescribing and purchasing decisions as well as to consumers.

Health spending in the U.S. is the highest in the world, totaling $3.3 trillion in 2016, or 17.8 percent of the gross domestic product, researchers report in JAMA.

The industry marketing outlays in the current study match the roughly $30 billion budget of the National Institutes of Health and far outstrip the budget of about $5 billion for the agency in charge of policing the industry, the U.S. Food and Drug Administration (FDA), Woloshin noted.

The study focused on marketing of prescription drugs, disease awareness campaigns, health services, and laboratory tests to consumers and professionals. It underestimates total spending because researchers lacked data on so-called detailing, or sales calls to clinicians, coupons or rebates, online promotions, and spending on medical meetings and other events, the authors note.

Industry marketing budgets also include numerous other outlays that weren’t counted in the study, like the cost of training and salaries for sales reps, marketing research, fees paid to advertising agencies and lobbying campaigns, the authors also point out.

Still, it is the most comprehensive analysis of medical marketing in the U.S. that has ever been done, said Dr. Howard Bauchner, editor-in-chief of JAMA.

“For clinicians, policy makers, and patients it is important for them to be aware of the extent of medical marketing,” Bauchner said by email.

And marketing can be a mixed bag for patients.

“DTC for health services might also encourage consumers to get services they don’t need – tests in particular, and these can have negative consequences (false positives, worry about small risks),” Rosenthal added. “On the benefit side, some DTC advertisements help de-stigmatize conditions like sexually transmitted infections or depression and encourage people to seek care.”

CDI Publishes Drug Transparency Report

The California Department of Insurance (CDI) issued its first Prescription Drug Cost Transparency Report as required by Senate Bill 17 (Hernandez).

This year is the first year insurance companies must report prescription drug data to the department pursuant to CIC § 10123.205. The department received filings from all insurers required to report prescription drug data.

The report compiles information submitted by nine health insurers in California about covered prescription drugs, including prescription drugs dispensed at a plan pharmacy, network pharmacy, or mail order pharmacy for outpatient use, and include the following drug categories: generic, brand name, and specialty.

CDI-regulated insurers reported to the department the 25 most frequently prescribed drugs, the 25 most costly drugs by total annual plan spending, and the 25 drugs with the highest year-over-year increase in total annual plan spending for calendar year 2017 for individual and group coverage.

This mandated reporting by insurers is meant to demonstrate the overall impact of drug costs on health insurance premiums in California.

“Our Prescription Drug Cost Transparency Report is an important first step toward providing more information for consumers and policymakers regarding the cost of drugs,” said Commissioner Jones.

For the 2017 calendar experience year, total combined annual prescription drug spending (insurer payment plus member cost-share) was more than $1.2 billion.

Generic drugs comprise 84 percent of prescriptions and 21 percent of spending, while specialty drugs comprised only 3 percent of prescriptions, but 52 percent of spending.

The cost of prescription drugs (after considering rebates) is 13.4 percent of premiums.

The 25 most costly specialty drugs alone accounted for more than a quarter of the total annual spend for all drugs.

Newsom Tackles Drug Prices on First Day

Hours into his new job, California Governor Gavin Newsom signed an executive order on Monday that could dramatically reshape the way prescription drugs are paid for and acquired in California.

The order, along with another naming the state’s first-ever surgeon general, marks a fast start for a governor.

In his executive order, Newsom directed state officials to set up what he said would ultimately be the nation’s largest single-purchaser system for prescription drugs. Currently, public and private purchasers of prescription drugs for Medi-Cal, California’s largest purchaser of pharmaceutical services, are fragmented, left to negotiate against drug companies alone.

Newsome claims the executive order will allow all Californians – including private employers – to sit together at the bargaining table across from big drug companies when negotiating prescription drug prices.

It directed California’s massive Medicaid system to negotiate prescription drug prices for all of its 13 million recipients, changing their benefits from a managed-care or HMO approach to one that allows the state to handle all the purchases. Medicaid is the joint federal-state program that provides health insurance for the low income.

The state would create a list of drugs to be purchased in bulk or targeted for price negotiations.

The executive order also took the first steps to allow private companies and other governmental agencies to participate in the process of negotiating drug prices with pharmaceutical companies.

Newsom has hired numerous health-care advocates as aides and is expected to focus heavily on initiatives related to public health and health care as his administration moves forward.

Under a proposal expected to be released as part of the state’s budget plan later this week, Newsom will ask the legislature to allow all undocumented immigrant young adults under the age of 26 to participate in the state’s Medicaid plan.

The budget proposal will also contain a plan to increase the federal subsidy for participation in Affordable Care Act policies to families of four making as much as $150,000, and reinstate the mandate requiring people to purchase health care.