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Tag: 2020 News

Owner of Studio City Sleep Clinic to Serve 3 Years for $11.5M Fraud

Anna Vishnevsky, 52, of Valley Village, the former owner of a Studio City medical clinic was sentenced to 37 months in federal prison for causing more than $11.5 million in bills to be submitted to health care benefit programs for unnecessary – and sometimes nonexistent – sleep studies, primarily for employees of United Parcel Service, Inc., and Costco Wholesale Corp.

She was also ordered her to pay $2,747,071 in restitution.

Vishnevsky, who owned Atlas Diagnostic Services, Inc., pleaded guilty in November 2018 to one count of health care fraud.

From March 2014 until June 2016, Vishnevsky participated in a scheme to defraud health care benefit plans. Vishnevsky and others working at her direction recruited patients to participate in sleep study testing at Atlas by offering them cash. She also offered them additional cash if they brought in other sleep study participants, including their co-workers and relatives.

Vishnevsky recruited patients, knowing that no doctor had prescribed sleep study testing for them and regardless of whether the testing was medically necessary or appropriate. Vishnevsky did not score or interpret the data from the testing or send it to anyone who could score or interpret it, which is necessary for diagnosis and treatment.

She submitted insurance claims for sleep study testing performed on the recruited patients, listing physicians that had never treated the patients. She also billed not only for the one night of sleep study testing that the patients had purportedly undergone – regardless of medical necessity – but also for an additional, consecutive night of sleep study testing that was never performed.

In total, Vishnevsky submitted more than $11.5 million in fraudulent insurance claims to health care benefit plans. She received approximately $3 million on those claims, of which $2,747,071 is still outstanding.

A co-defendant, Eddie Hernandez, 46, of Torrance, pleaded guilty in November 2018 to one count of health care fraud and is serving a 30-month federal prison sentence in this case. Hernandez was a UPS driver who helped Vishnevsky recruit people to participate in the fraudulent sleep studies.

Coronavirus: Factors for the Insurance Industry to Consider

If the coronavirus continues to spread worldwide, insurers are likely to confront liability claims that span the spectrum of their insurance product lines. This issue was explored in part 3 of an article on this topic published in the National Law Review.

Workers’ compensation policies generally extend insurance benefits to employees for injuries “arising out of or in the course of employment.” Workers’ compensation actions concerning the language often address whether the claimed injury is truly work-related, focusing on such factors related to the loss as its nature, the injured employee’s activity, the time and the location. Consequently, employees and employers whose work is related to coronavirus should maintain detailed records identifying potential exposures.

General Liability Insurance may also be subject to increased claims. Businesses, particularly those that open their doors to the general public, may find themselves targets of claims that their negligence led to the exposure and infection of clients:

— Exposure resulting in bodily injury or property damage
— Negligence related to visitors to businesses or locations such as offices, daycare centers, retail shops, hotels and places of worship
— Product liability related to air filtration and recirculation, particularly in situations involving airplanes and hospitals
— Personal injury involving occurrences such as wrongful eviction or imprisonment
— Constitutional claims involving the quarantine or restriction of infected or exposed persons
— Negligence or other liability suits against a company or organization that fails to implement a pandemic contingency plan.

Errors & Omissions (E&O) Insurance may also see the effects. There is an adage that the most likely place to get sick is in a hospital. Medical care and managed care providers purchase errors and omissions (E&O) insurance that provides coverage for bodily injury arising out of their providing or failing to provide medical care. While such policies generally preclude coverage for bodily injury to employees during the course of their employment (i.e., an employee being exposed to an infectious or contagious disease), such policies may respond to claims that a health care professional acted or failed to act in a manner that led to a patient (non-employee) contracting a coronavirus bodily injury.

And even Directors & Officers (D&O) Insurance may become involved. The coronavirus has roiled stock markets worldwide, resulting in ups and downs depending on whether the market perceives that the crisis is being managed appropriately and whether global supply chains will be impacted. Ultimately, how a company responds to the coronavirus may subject its directors and officers to the scrutiny of the company’s shareholders. Shareholder suits have become commonplace when market valuations are purported to have unreasonably dipped. In response to a coronavirus-based loss in value, shareholders may argue that the directors and officers committed acts or omissions responsible for the loss in valuation and, in turn, the loss befalling the individual shareholder.

Spine and Joint Pain Most Costly Health Problem in U.S.

What healthcare problems are consuming the largest share of healthcare dollars? Researchers decided to answer that question.

In total, the researchers analyzed 5.9 billion unique insurance claims, 150.4 million ambulance rides, dental procedures, and emergency room visits, 1.5 billion days spent within inpatient or nursing home care, and 5.9 million drug prescriptions. And they just published their results in the Journal of the American Medical Association.

Researchers say that when neck and low back pain are combined with other musculoskeletal disorders, including joint and limb troubles, Americans are spending more for treatment than on any other ailment or condition.

Just how much does that add up to? According to data from 2016, an almost inconceivable $380 billion was spent on spinal issues and joint pain.

In all (individuals, public insurance, private insurance), $3.1 trillion was spent on healthcare in the United States in 2016. That comes out to $9,655 for every U.S. citizen, and roughly 17.9% of the U.S. GDP. For reference on just how high prices have skyrocketed, in 1996, healthcare costs only represented 13.3% of the GDP.

“The vast costs associated with healthcare represent one of the most important and contentious issues facing Americans today,” says Dr. Joseph Dieleman of the Institute for Health Metrics and Evaluation (IHME) at the University of Washington’s School of Medicine and lead author of the study, in a release. “Our study provides comprehensive estimates over a 20-year period that highlight how healthcare and prescription drugs are paid for, what they are spent on, and how such payments have changed over time.”

Of all 154 medical conditions included in this research, just lower back and neck pain alone accumulated the highest expenditures ($134.5 billion). After that, diabetes ($111.2 billion), ischemic heart disease ($89.3 billion), and falls ($87.4 billion) weren’t far behind in terms of costs.

Predictably, the majority of those costs were paid for by insurance providers, both public and private.  Regarding lower back and neck pain; $76.9 billion was paid for by private insurance, and $45.2 billion was paid for by public insurance. Still, that left $12.3 billion that had to come out of someone’s pockets.

Meanwhile, private insurers paid $73.3 billion for other musculoskeletal disorders, public insurers covered $46.9 billion in costs, and $9.7 billion was paid for by individuals out of pocket.

For diabetes, $55.4 billion was paid by public insurance, $49.1 billion by private, and $6.7 billion was paid out of pocket.

How about ischemic heart disease? In all, $48.2 billion was paid for by public insurers, $37.9 billion worth of costs were covered by private insurers, and $3.2 billion was paid by individuals.

Finally, falls tallied a hefty tab as well; $40.7 billion was paid for by public insurance, $34.8 billion was paid for by private insurance, and $11.9 billion was settled out of pocket.

Most of that public insurance spending (58.6%) covered bill accumulated by patients over the age of 65. After adjusting for population and age fluctuations, public insurance spending increased much faster than private insurance. The study’s authors attribute this observation to Medicaid expansions.

DEA Describes the Opioid Supply Chain “Shell Game”

Opioid addiction and abuse is one of the factors driving legacy workers’ compensation claims, and extending claim closure time. Recent California and national statistics show a decline in opioid prescribing patterns in claims, suggesting that perhaps the “opioid crisis” is no longer a crisis in claims.

An alternative hypothesis is that those addicted to opioids, remain addicted, and the “crisis” may still be present – just more hidden from view.

The supply chain seems to have shifted from pharmacies to cartels, or perhaps a mixture of the two, the combination of supply may result in a continuation of legacy claims driven mostly by addiction demands made on one supplier, or the other, or both.

In the past few years, Mexican drug cartels have been flooding the United States with methamphetamines and fentanyl, driving the supply so hard and dropping the price so low that it pushes up addiction rates and the market then demands more drugs.

Fentanyl, a synthetic opioid, is 100 times more potent than morphine.

The 2019 National Drug Threat Assessment from the DEA states that “Mexican cartels began to manufacture their own fentanyl and press the drug into pill form as the primary opioid substance, marketing the pills as ‘Mexican oxy’ to those seeking opiate-based pills on the street.”

Meth and fentanyl are both made in labs, making it easier and cheaper for cartels to produce year-round, without the land area and large staff needed for crop maintenance that heroin and cocaine require.

In the past, fentanyl had mainly been mixed into heroin to boost the high, but now it’s often pressed into small blue tablets and stamped with “M30” to closely match the color and markings of prescription oxycodone pills.

Buyers may be unaware the pills contain fentanyl, of which a 2mg dose can be fatal.

“Fentanyl and other highly potent synthetic opioids – primarily sourced from China and Mexico – continue to be the most lethal category of illicit substances misused in the United States,” the 2019 DEA report says.

The volume of fentanyl trafficked from Mexico is high, but the purity is typically low (less than 10 percent pure on average), according to the DEA.

“Conversely, fentanyl trafficked through the mail from China typically arrives in smaller quantities that are highly pure (frequently 90 percent or higher purity),” the DEA report states.

Clandestine fentanyl pill pressing operations are dotted all over the United States, according to the DEA.

These operations are popular since traffickers can invest in as little as a kilogram of fentanyl powder and produce hundreds of thousands of counterfeit fentanyl-containing pills to generate large amounts of revenue,” the report states.

The use of the dark web and cryptocurrency has made it more difficult for law enforcement to track transactions and communications.

Mitchell | Genex Acquires Coventry Workers’ Comp Services

Mitchell | Genex, a provider of cost containment technology, clinical services, and disability management, has announced an agreement to acquire Coventry Workers’ Comp Services from CVS Health. Coventry Workers’ Comp Services is a provider of care and cost management programs for workers’ compensation and auto insurance carriers, third-party administrators, and self-insured employers. Coventry Workers’ Comp Services is currently a division of Aetna, a CVS Health company.

With this acquisition, Mitchell | Genex will expand its capabilities, and add Coventry’s leading PPO network to its continuum of care and cost containment offerings.

Peter Madeja, Genex Services President and CEO said  “We are extremely proud and excited about adding another long-standing, reputable organization to the Mitchell | Genex team. This move will expand the breadth of our cutting-edge cost containment technology and clinical services with the deepest understanding of the workers’ compensation industry and will significantly build upon our network offerings. It reinforces our continuous commitment to help clients navigate through today’s challenges and build better outcomes to improve the lives of injured parties.”

Based in Downers Grove, IL, Coventry Workers’ Comp Services has been a full-service managed care organization for more than 35 years. The company brings approximately 2,000 professionals with deep industry expertise, along with a broad suite of services – network, clinical and specialty – powered by technology to enhance network development, clinical integration and operational efficiencies with a focus on total claims cost.

Following the closing of this acquisition, Coventry Workers’ Comp will continue to be led by Art Lynch, President and CEO, and operate under its brand.

“We are very excited to join Mitchell | Genex and further meet the needs of our ever-changing industry,” said Lynch. “This is a forward-thinking partnership that combines one of the most robust PPO networks with an equally positioned firm in cost containment technology and clinical solutions. These capabilities, when combined with artificial intelligence and advanced analytics, will maximize our clients’ performance today and into the future.”

Kramer Levin Naftalis & Frankel LLP and Axinn, Veltrop & Harkrider LLP are acting as legal advisors to Mitchell | Genex. Fried, Frank, Harris, Shriver & Jacobson LLP and Dechert LLP are acting as legal advisors to CVS Health. BofA Securities is acting as exclusive financial advisor to CVS Health.

The acquisition is subject to customary closing conditions, including applicable regulatory approvals. The financial terms of the transaction are not being disclosed.

San Mateo Physician Faces 20 Years for Illegal Prescribing

A federal grand jury indicted Dr. Timothy Mulligan for the unlawful distribution of opioids, including fentanyl, outside the scope of professional practice and health care fraud.

According to the indictment, Mulligan, 67, of Santa Clara, Calif., is a licensed physician practicing in San Mateo County. A substantial part of Mulligan’s medical practice involved providing prescriptions for controlled substances – primarily opioids.

Mulligan issued an unusually high volume of prescriptions for potent opioids, including fentanyl. For example, according to a state government database, from about August 2014 through June 2018, Mulligan issued more than 9,000 prescriptions for opioids (totaling over 700,000 dosage units) to more than 250 patients.

Overall, Mulligan predominantly prescribed the strongest strength dosages when prescribing fentanyl, oxycodone, and hydrocodone. In certain instances, Mulligan issued opioid prescriptions in quantities that significantly exceeded generally accepted daily quantities for the drug.

The indictment states that because of the unusual pattern and volume of prescriptions issued by Mulligan and other warning signs, certain pharmacies declined to fill prescriptions issued by Mulligan or restricted the types of Mulligan’s prescriptions that they would fill.

As further alleged in the indictment, some individuals who obtained medically unnecessary prescriptions from Mulligan used private insurance or Medi-Cal to cover their office visits or pay for the drugs; others paid with cash. The insurance companies and Medi-Cal would not have paid for the office visits or paid out the pharmacy claims had they known the prescriptions were not medically necessary or were over-prescribed.

The indictment filed on February 27, 2020, charges Mulligan with three counts of distributing controlled substances outside the scope of professional practice, in violation of 21 U.S.C. §§ 84l(a)(l) & 841(b)(l)(C); and two counts of health care fraud, in violation of 18 U.S.C. § 1347.

If convicted, he faces a maximum sentence of 20 years in prison, a $1,000,000 fine, and a life term of supervised release for each count of distributing controlled substances; and 10 years in prison, a $250,000 fine, and a three-year term of supervised release for each count of health care fraud.

Anyone, including pharmacists and medical professionals, with information about prescriptions issued without a legitimate medical purpose is urged to contact the FBI Tip Line at (415) 553-7400.

Serial Claimant Arrested After 6 Different Fake Claims

The Contra Costa County District Attorney’s Office charged 52-years-old Maria Mendoza with numerous counts of insurance fraud. The charges allege four specific instances of workers’ compensation fraud against four different employers, and two additional instances of auto insurance fraud.

The investigation originated after reports of a staged slip and fall in October 2017 at an Olive Garden restaurant located in Pittsburg California. The suspect’s insurance claims history revealed a pattern of short stints of employment followed by claims against the employer.

The first workers’ compensation fraud charge relates to Mendoza’s employment at Pronto Cleaning Services in early 2014. The charge alleges that Mendoza’s employment terminated after only three months of work. She hired a workers’ compensation attorney to file multiple workers compensation claims, including an allegation that her three months of cleaning resulted in cumulative trauma to her hands, wrists, and knees. She and her attorney litigated the claim throughout 2016 and 2017.

The complaint further alleges that Mendoza obtained employment at Architectural Glass & Aluminum Company and worked in a factory setting in late 2014. Her employment terminated there after two months and again a workers’ compensation claim followed. The complaint alleges that she told medical professionals evaluating her that she made no prior claims and is not a party to any civil litigation.

The third workers’ compensation fraud charged relates to employment at Olive Garden. Olive Garden hired Mendoza for work in 2017, but after approximately five months several employees and a manager reported that Mendoza faked a slip and fall on her way to a scheduled disciplinary hearing. She again hired an attorney to file and litigate a workers’ compensation insurance claim for injuries to her knees and ankles from the fall.

The final workers’ compensation fraud charged relates to yet another slip and fall claim at Claim Jumper in 2018. After approximately one month at Claim Jumper Restaurant, Mendoza visited a doctor to report a new slip and fall at work. The complaint again alleges that she falsely told the doctor evaluating her that she never previously filed a workers’ compensation insurance claim.

She is also charged with filing an auto insurance claim alleging an accident in April of 2014. Mendoza claimed the same injuries that she pursued in her workers’ compensation claim against Pronto Cleaning, as well as filing a 2018 auto insurance claim for damage to the same vehicle that her attorney claimed was totaled in the 2014 accident.

$3M Subro Lien Not Defeated by “Virtual Admission” of Employment

Andrews International assigned its employee Steven Paul Picazzo to work at Loyola Marymount University as a security officer between 2006 and 2013. In August 2013, LMU was erecting a new building on campus. C.W. Driver, Inc., was the project’s general contractor.

While on duty, Picazzo suffered a spinal cord injury when he tripped and struck his head against a railing at the construction site. He is now a quadriplegic. Andrews’s workers’ compensation carrier, Liberty Insurance Corporation, paid benefits to Picazzo.

Picazzo sued, among others, the general contractor Driver for negligence and for premises liability. LMU was not a named defendant. Liberty filed a complaint in intervention seeking reimbursement from any third party tortfeasor for benefits Liberty had paid. At trial, Liberty stipulated that it paid $2,849,209.62 in benefits to Picazzo.

The matter was tried by a jury, which found Driver, LMU, Picazzo, and Andrews negligent. However, the jury also found that Andrews’s negligence was not a substantial factor in causing harm to Picazzo, and therefore Andrews was not liable for damages. The jury awarded Picazzo total damages of $16,322,950.62

The jury allocated responsibility for the harm to Picazzo as follows: 40 percent to Driver, 15 percent to Picazzo, 45 percent to LMU, and zero percent to Andrews.

After trial, Driver moved to void Liberty’s lien on the theory LMU had a special employment relationship with Picazzo. Under this theory, if LMU specially employed Picazzo and the benefits Liberty paid were also paid on LMU’s behalf, then Liberty was not entitled to recover, as LMU was 45 percent at fault.

Liberty opposed the motion on the ground that whether LMU was Picazzo’s special employer was not submitted to the jury.

The trial court found against Liberty. Given what the trial court called Liberty’s “virtual admission” at trial that LMU was Picazzo’s special employer, the trial court found that Liberty’s lien should be reduced by the amount of LMU’s fault. Thus, the lien was wholly offset by LMU’s negligence, and Liberty recovered nothing on its lien from Driver.

Liberty appealed and the Court of Appeal reversed the judgment against Liberty on its complaint in intervention in the unpublished case of Picazzo v. C.W. Driver, Inc.

Whether a special employment relationship exists is generally a question of fact reserved for the trier of fact. (Kowalski, supra, 23 Cal.3d at p. 175; Wedeck v. Unocal Corp. (1997) 59 Cal.App.4th 848, 857.) Hence, the jury should have decided the issue.

Even if the trial court, rather than the jury, properly decided the special employer issue, the Court of Appeal still could not uphold the trial court’s ruling. That is, the trial court did not make its finding based on evidence that LMU specially employed Picazzo. Rather, the trial court based its finding of special employment on Liberty’s supposed “virtual admission” to that fact. However, there was no such admission.

Santa Rosa Physicians Face $3.9M Fraud Charges

A federal grand jury returned a superseding indictment against Robert Rowen and Teresa Su, charging them with conspiracy to defraud the United States. In addition, each defendant also was charged with a separate count of tax evasion.

Robert Rowen, M.D., has been practicing medicine for more than three decades. He graduated Phi Beta Kappa from Johns Hopkins University before attending medical school at the University of California, San Francisco. Terri Su, M.D., has practiced integrative medicine for nearly 40 years. She is a Phi Beta Kappa and summa cum laude graduate of UCLA with a degree in biochemistry. She graduated UC Irvine Medical School in the top quarter of her class. The husband and wife team operate the Rowen Su Clinic in Santa Rosa, serving patients in Sonoma County and the Bay Area.

The medical doctors allegedly conspired to evade payment of Rowen’s federal income tax liabilities by concealing Rowen’s ability to pay his 1992 through 1997 and 2003 through 2008 federal income tax liabilities. Specifically, Rowen and Su allegedly placed his assets out of the reach of the United States Government, placed assets in the names of other persons or entities, deposited Rowen’s revenue into nominee bank accounts, used cash to conduct personal and professional business, converted his revenue into gold and silver coins, and provided false information to the IRS.

The indictment provides a description of various methods the couple allegedly used to conceal Rowen’s income. For example, the indictment describes how the couple instructed patients to make their checks for medical services payable to gold dealers who, in turn, purchased gold and silver coins.

In addition, the indictment alleges Rowen formed a company named Lotus Management LLC to receive revenue from a different company. Rowen then deposited the funds into a bank account opened in the name of Lotus Management LLC, and used the proceeds to purchase gold and silver coins.

Further, the couple allegedly used cash to pay the rent for the medical practice as well as to pay the balance on credit cards used to cover various business and personal expenses.

In sum, the indictment alleges that between January 3, 2007, and April 11, 2014, Rowen, both individually and through nominees, converted over $3,900,000 of his revenue to gold and silver coins. Count one of the superseding indictment charges Rowen and Su with conspiracy to defraud the United States, in violation of 18 U.S.C. § 371, and counts two and three of the superseding indictment charges the defendants each with one count of tax evasion, in violation of 26 U.S.C. § 7201.

The defendants face a maximum sentence of five years imprisonment, and a fine of $250,000, plus restitution. If convicted of tax evasion, the defendant faces a maximum sentence of three years in prison and a $250,000 fine.

The defendants currently are released on a $200,000 bond.

Novato Uninsured Contractor Arrested – For the Third Time

The Marin County District Attorney’s Office reported that a Novato man, already on probation for contracting without a license in a prior case, has been charged with committing the same crime again.

Victor Mauricio Mendez Rodas, 40, is also charged with failing to secure worker’s compensation insurance for crew members. He could face jail time and up to $15,000 in fines, the prosecution said.

Rodas is scheduled to appear in court on March 10.

The district attorney’s insurance fraud unit opened the case after learning that Rodas was allegedly performing work for an 83-year-old homeowner in San Rafael. The alleged crimes occurred from September to December.

“The homeowner reported that they became suspicious when Rodas demanded additional payments for unauthorized work and failed to get required permits for the work,” the district attorney’s office said.

Authorities obtained an arrest warrant for Rodas, who is not licensed with the state Contractor’s State Licensing Board, the prosecution said. The warrant was served Friday with assistance from the Marin County Probation Department Enforcement team.

Residents who hired Rodas or received solicitations from him can contact the Marin County District Attorney’s Office Insurance Fraud Unit at 415-473-6450.

Rodas was convicted of unlicensed contracting in April 2016 and March 2019, according to the criminal complaint filed by Deputy District Attorney Sean Kensinger on Feb. 19.

The 2016 case stemmed from a sting by the Marin district attorney’s office and the Contractors State License Board. Ten suspects were snared by undercover investigators offering work on a residential job in Novato.

The state had 285,630 licensed contractors as of Dec. 31, according to Kevin Durawa, a spokesman for the licensing board. He said investigations by the agency resulted in 3,957 legal actions against violators last year.