Tag: 2020 News

The California Attorney General issued a letter conditionally approving the sale of St. Francis Medical Center, a Verity Health System medical facility in Los Angeles County, to Prime Healthcare, Inc.

Daughters of Charity of St. Vincent de Paul, Province of the West, a religious organization, originally owned Verity. In 2015, the Daughters recapitalize the system with an investment of about $250 million. Verity was losing close to $175 million per year on a cash flow basis. In 2018 it filed for bankruptcy to help resolve a cash crunch while it found a buyer.

Under California law, any proposed sale of a non-profit health facility to a for-profit corporation must secure the approval of the state Attorney General, whose statutory charge is to consider the factors set forth in the law, including whether the transaction is in the public interest and whether the transaction affects the availability or accessibility of healthcare services to the affected community.

The Attorney General’s conditional consent represented in the letter seeks to protect access to care for the Los Angeles communities served by the hospital. If Verity and Prime close on the sale with the conditions outlined in the letter, they are consenting to comply with the conditions. The transaction must still be approved in Court where Verity has filed for bankruptcy.

The Attorney General’s conditions are based on an independent health expert’s in-depth analysis of the health and medical needs in the surrounding communities. Among other things, these conditions call for Prime, the prospective purchaser, to:

— Keep St. Francis open for at least ten years after sale and continue operating as a Trauma II Center. St. Francis will continue to provide cancer services, cardiac services, women’s health services, neonatal intensive care, perinatal and pediatric services, psychiatric and other critical services recommended by the health expert;
— Increase of its reach of charity care policy at St. Francis by covering care in full, serving those who earn at the 400 percent of federal poverty level ($51,040 for an individual and $86,880 for a family of three) and up to 600 percent of federal poverty for the discount payment policy;
— Commit $10,186,173 in charity care for patients in the surrounding community, and Prime has agreed to improve its charity care policies to cover significantly more patients;
— Increase the community benefit of St. Francis to $1,597,077 for six years exclusive of any grants received, to support the Southern California Crossroads Program, the Health Benefit Resource Center, Welcome Baby Program, Healthy Community Initiatives, American Career College access for onsite training, Paramedic Training and Education, and Patient Transportation Support;
— Maintain admitting privileges for staff in good standing, maintain on-call coverage contracts and comparable arrangements with physicians at fair market value to maintain Level II trauma care at St. Francis;
— Commit the necessary investments required to maintain seismic compliance at St. Francis. Prime will be required to expend at least $35 million for capital improvements, excluding seismic retrofit costs, at St. Francis Medical Center over the five-year period from the closing date, including but not limited to upgrading its electronic medical records system. The expert report identified seismic issues at St. Francis; and
— Maintain access to women’s healthcare services for ten years, and no limitations on LGBTQ healthcare services offered at St. Francis.

The global insurance industry could be hit with losses of $203 billion this year because of the coronavirus pandemic, according to Lloyd’s of London, the world’s largest insurance exchange. The claims costs are on a par with some of the most catastrophic hurricanes of recent years and could rise further if the virus isn’t contained, Lloyd’s said.

“Once the scale and complexity of the social and economic impact of COVID-19 is fully understood, the overall cost to the global insurance non-life industry is likely to be far in excess of those historical events,” Lloyd’s said.

Chubb’s disclosure of second quarter 2020 global net catastrophe losses underscores the damage COVID-19 is doing to some carriers’ bottom lines. The global property/casualty insurer estimated $1.8 billion in pretax catastrophe losses for Q2. Of that number, close to $1.4 billion in pretax catastrophe losses stem from the coronavirus pandemic. Losses from severe U.S. weather events and U.S. civil unrest constitute the difference.

Coronavirus losses could be an issue for some time, Chubb Chairman and CEO Evan Greenberg suggested during his comments about 2020 first-quarter earnings earlier this year. “In this case the degree of revenue impact is simply unknowable,” Greenberg said at the time.

CNA Financial Corporation announced that it expects to report net catastrophe losses in the second quarter of 2020 of $182 million related to COVID-19, $61 million related to civil unrest and $58 million related primarily to severe weather-related events, for a total catastrophe loss estimate of $301 million pretax.

The losses are substantially driven by healthcare professional liability with additional impacts from workers’ compensation, management liability, commercial property, trade credit, and surety. Due to the recent timing of the event, emergence pattern of claims, and long tail nature of certain exposures the losses are substantially classified as incurred but not reported (IBNR) reserves.

W.R. Berkley Corp. cautioned that its 2020 second quarter pretax catastrophe losses will reach $145 million, with more than half of that coming from COVID-19 related costs. Out of that total, $85 million stems from COVID-19 claims, the specialty insurer and reinsurer said. Civil unrest created another $20 million in pretax catastrophe losses, and $40 million stems from severe weather-related events, W.R. Berkley said.

W.R. Berkley indicated its COVID-19 claims, due to the pandemic and resulting economic crisis, consist of losses mostly from “contingency and event cancellation policies, workers compensation, professional liability and other liability-related products, as well as commercial property-related business interruption coverages.

The WCIRB estimates about 30,000 COVID-19 claims will be filed in California, generating about $1.2 billion in costs. About 15,000 have been filed so far. Medical research on causative and risk factors are in the process of being created and published. This research will be critical evidence as causation and apportionment issues are litigated in these claims.

COVID-19 morbidity and mortality reports in the U.S. have not included findings specific to young adults. The Centers for Disease Control and Prevention provides a list of conditions and associated behaviors, including smoking, conferring risk of severe COVID-19 illness regardless of age.

A new University of California San Francisco study published this month in the Journal of Adolescent Health, examined young adults’ medical vulnerability to severe COVID-19 illness, focusing on smoking-related behavior.

A young adult subsample (aged 18-25 years) was developed from the National Health Interview Survey, a nationally representative data set, pooling years 2016-2108. The medical vulnerability measure (yes vs. no) was developed, guided by the Centers for Disease Control and Prevention risk indicators. The estimates of medical vulnerability were developed for the full sample, the nonsmoking sample, and the individual risk indicators. Logistic regressions were conducted to examine differences by sex, race/ethnicity, income, and insurance.

Smoking was the most common risk factor for severe COVID-19 complications among otherwise largely healthy young people. For young men, smoking or vaping may more than double the potential of being hospitalized, needing intensive care or even dying from the virus. For young women, it could increase the possibility 1½ times.

The findings from this analysis indicate that nearly one in three young adults are medically vulnerable to severe COVID-19 illness (32%).

In contrast, in the nonsmoking young adult group, only about one in six is medically vulnerable to severe COVID-19 illness (16%).

This difference between estimates is driven largely by the sizable portion of young adults who reported that they engaged in past 30-day smoking (1 in 10) and past 30-day e-cigarette use (1 in 14).

By contrast, relatively fewer young adults reported medical conditions identified by the CDC as conferring severe illness risk.

Dr. Marco Antonio Chavez was sentenced to 21 months in custody and ordered to pay restitution of $783,764.37 for defrauding TRICARE, the health care benefits program for military service members and their dependents.

Chavez was a physician licensed by the State of California who provided psychiatry services, including therapy and prescription medications for children and adults diagnosed with ADHD and depression, for San Diego patients. He is a 2006 graduate of the University of Texas Medical School.

Chavez defrauded TRICARE by using the personal information of these patients to create and submit false and fraudulent claims for nonexistent appointments when he did not actually treat those patients. And he routinely selected the billing code for the highest-level (and highest-reimbursement) patient visit for these fabricated appointments, to maximize the fraudulent reimbursements he received from TRICARE.

Chavez became a network provider for TRICARE in 2013 under contract with United Health Care Military & Veterans, West. That August, Chavez became eligible to submit claims directly to TRICARE through XPressClaim (“XPC”), a web-based system. Chavez used that access to help his scheme to defraud TRICARE, using his unique personal security key code to avoid review by other billing staff. He then caused the payments to be electronically transferred into an account that was in his name, which he controlled.

Chavez tried to deflect attention and avoid detection of his fraudulent billing through a variety of deceptive means. For example, he notified patients that they might see entries on their Explanation of Benefit (“EOB”) forms from TRICARE that they would not recognize. This was an attempt to prevent patients from complaining to TRICARE and drawing attention to the false bills. In reality, Chavez knew that the reason the patients would not recognize the entries on their EOBs was because they had not actually occurred – Chavez had simply made them up.

When the TRICARE contractor conducted an audit and requested certain of Chavez’s patient files, Chavez falsely claimed that he had already sent the files, when he knew those files did not exist and could not have been sent. Chavez also misrepresented that a member of the office staff had stolen his TRICARE checks and deposited them without his permission.

Over the course of his scheme, Chavez submitted approximately $928,800 in false and fraudulent claims to TRICARE via XPC, and was paid $783,764.37 on those claims by TRICARE.

Separately, records of the State of California reflect that Chavez’s medical license was suspended in May 2018, upon the finding of an administrative judge that Chavez had treated patients while under the influence of a narcotic or alcohol.

Longwood Management Corporation and 27 affiliated skilled nursing facilities have agreed to resolve allegations that they violated the False Claims Act by submitting false claims to Medicare for rehabilitation therapy services that were not reasonable or necessary, the Department of Justice announced today. Longwood is headquartered in Los Angeles, and the 27 skilled nursing facilities are located in Southern California.

The settlement covers conduct that occurred from May 1, 2008 through August 1, 2012 at six facilities: Alameda Care Center in Burbank, Burbank Rehabilitation Center, Magnolia Gardens Convalescent Hospital in Granada Hills, Montrose Healthcare Center, Sherman Oaks Health & Rehab Center, and West Hills Health & Rehab Center.

The settlement also covers conduct that occurred from January 1, 2006 through October 10, 2014 at 21 facilities: Burlington Convalescent Hospital in the Westlake District of Los Angeles, Chino Valley Rehabilitation Center LLC, Colonial Care Center in Long Beach, Covina Rehabilitation Center, Crenshaw Nursing Home, Green Acres Lodge in Rosemead, Imperial Care Center in Studio City, Imperial Crest Health Care Center in Hawthorne, Laurel Convalescent Hospital in Fontana, Live Oak Rehabilitation Center in San Gabriel, Longwood Manor Convalescent Hospital in the Mid-City District of Los Angeles, Monterey Care Center in Rosemead, Intercommunity Healthcare Center in Norwalk, Park Anaheim Healthcare Center, Pico Rivera Healthcare Center, San Gabriel Convalescent Center, Whittier Pacific Care Center, Studio City Rehabilitation Center, Sunnyview Care Center in the Pico Union District of Los Angeles, View Park Convalescent Center in Baldwin Hills, and Western Convalescent Hospital in the Jefferson Park District of Los Angeles.

Longwood allegedly submitted false and fraudulent claims to Medicare for medically unreasonable and unnecessary Ultra High levels of rehabilitation therapy for Medicare Part A residents. Specifically, Longwood allegedly pressured therapists to increase the amount of therapy provided to patients to meet pre-planned targets for Medicare revenue. These targets were alleged to have been set without regard to patients’ individual therapy needs and could only be achieved by billing for a high percentage of patients at the Ultra High level.

The settlement partially resolves allegations brought in two lawsuits filed by whistleblowers under the qui tam provisions of the False Claims Act, which allows private parties to bring suit on behalf of the government and to share in any recovery. The whistleblowers – Judy Boyce, Benjamin Monsod and Keith Pennetti – will collectively receive $3,006,000 of the settlement proceeds.