Tag: 2020 News

Workers’ Compensation has experienced a long-term decline in overall claim frequency. However, for motor vehicle claims, the story is quite different.

The National Council on Compensation Insurance (NCCI), just published an update to it’s 2018 research brief titled “Motor Vehicle Accidents in Workers Compensation,” which examined the frequency and severity of motor vehicle accidents (MVA) from 2000 to 2016.

The brief noted that frequency decreased for both MVAs and all claims from 2000 to 2011. However, a key finding was that from 2011 to 2016, while the frequency of all workers compensation claims continued to decrease, the frequency of MVAs increased in both WC and in the general population. It cited the rapid expansion of smartphone ownership during this period as a possible contributing factor. Some key findings of the new update show:

— MVA frequency increased. From 2011 to 2018, the frequency of MVA lost-time claims increased, while the frequency of all lost-time claims decreased. Our previous research showed that the same was true for the period 2011 to 2016.
— Smartphone ownership over 80%. Smartphone ownership skyrocketed after the introduction of the iPhone in 2007, but growth has tapered off in recent years. As of year-end 2018, the percentage of US adults who own a smartphone is estimated to be over 80%.
— Safety evolves. State-of-the-art vehicle safety features, such as automatic emergency braking, will take time to penetrate the driving pool, as the average car age is just under 12 years.
— MVA claim severity. MVA lost-time claims continue to cost over 80% more than the average lost-time claim, because MVA claims tend to involve severe injuries (e.g., head, neck, and spine).

There is a notable disparity in smartphone ownership between younger and older drivers. Nearly all drivers under age 30, but only half of drivers over age 65, own a smartphone. This suggests that smartphone ownership among employed drivers may creep further upward as younger individuals enter the workforce and older workers retire.

However, since the vast majority of drivers now own smartphones, we may not see the same MVA frequency increases that occurred during the period when smartphone ownership was significantly increasing.

Greater use of cell phone blocking technology would also be expected to make driving safer, if enabled by the driver. This technology, available through smartphone apps, prohibits calls or texts while the vehicle is in motion. Alternatively, Bluetooth technology allows for hands-free communication while driving.

Several factors that may put downward pressure on MVA claim frequency include (i) stricter state cell phone laws, and (ii) vehicle safety improvements.

The source of data for this study is Statistical Plan data for NCCI states. This database contains detailed policy information, which allows an analysis of frequency and severity by various claim characteristics.

A Beverly Hills anesthesiologist and his girlfriend, the owner of a Los Alamitos-based laboratory, are behind bars on charges of stealing about $52 million in an alleged insurance fraud scheme.

Dr. Randy Rosen, who was involved in a civil federal lawsuit involving a health care fraud scheme at a Long Beach hospital that was settled in 2017, was being held on $52 million bail along with co-defendant Liza Vismanos, who are both scheduled to be arraigned when a judge will also consider lowering their bail.

Vismanos owns the Wellness Wave surgical center in Beverly Hills and the Lotus Labs medical laboratory in Los Alamitos, according to the bail motion.

“In approximately June 2017, Rosen/Vismanos entered into a fraud scheme specifically targeting patients from addiction recovery rehabs to bill their private medical insurance carriers primarily for two types of procedures; a non-FDA approved Naltrexone implant and Cortisone injections,” according to the bail motion.

“Rosen put his patients under anesthesia for these procedures in order to bill insurance for a major medical surgery at an approximate cost of $80,000 per procedure,” according to the bail motion.

“Per Rosen’s records he performed these procedures in as little as one-minute increments with as many as 72 procedures per day. Additionally, Rosen collected blood and urine from his patients, which was processed at Lotus Labs at a cost of approximately $4,000 per day after the procedure with no known medical necessity.”

Investigators allege 18 insurance companies were billed from June 2017 to May 2019 $661,940,464 and the two received $51,060,523.

The two are also accused of using two “body-broker” groups that would “sell Rosen patients in exchange for a kickback of the insurance proceeds,” the bail motion alleges.

The “marketers” would – often pay the patients (oftentimes $500 to $2,000 per procedure) to incentivize them into returning to Rosen for multiple procedures,” the bail motion alleges.

Investigators also allege “at least 35 of Rosen’s patients involved in this scheme have passed away, many by overdose,” according to the bail motion.

Investigators also said the alleged scheme was the subject of a CBS report in July 2018 that “focused on the death of a patient,” but “despite this attention Rosen/Vismanos continued with their fraud scheme, continued paying kickbacks and patients continued to die.”

Misael Mendoza-Hernandez suffered a “non-catastrophic” injury in 2007 while working for his employer, Colosseum Athletics. State Fund was Colosseum’s workers’ compensation insurer.

In November 2008, a physician designated by State Fund injured Mendoza-Hernandez’s spine while giving him an epidural, rendering Mendoza-Hernandez “effectively quadriplegic.” As a result, he needs catheterization every four to six hours. He cannot use his hands to do this, so he needs skilled nursing care for the catheterization. He also needs rectal suppositories to be able to defecate and must rely on another person to insert the suppositories.

Mendoza-Hernandez and State Fund entered into a written stipulation that State Fund would pay for home health care for eight hours per day, seven days per week, “until such time” as the parties’ agreed medical examiner reviewed certain documents and issued a supplemental report on Mendoza-Hernandez’s home health care needs. State Fund was to “then abide by those recommendations.” State Fund was also to “restart rehab gym payments and authorizations until an AME report to [the] contrary.”

The AME his report, which recommended 24 hour home health care. State Fund did not abide by the AME recommendation, and did not pay for 24 hour home care or for the rehabilitative gym membership. Mendoza-Hernandez to engage in further litigation before the WCAB to enforce the order.

In 2014, the parties stipulated to 100 percent disability. The parties subsequently agreed on the amounts of attorney fees, penalties, and sanctions that State Fund should pay for its refusal to pay the prior order.

Mendoza-Hernandez’s filed a civil action against State Fund for a single cause of action for intentional infliction of emotional distress. State Fund demurred to the Complaint. The trial court sustained the demurrer without leave to amend. The Court of appeal affirmed the dismissal in the unpublished case of Misael Mendoza-Hernandez v State Compensation Insurance Fund.

In Unruh v. Truck Insurance Exchange (1972) 7 Cal.3d 616 (Unruh), our Supreme Court created an exception to exclusive jurisdiction “where an employer’s insurance carrier intentionally commits outrageous and extreme conduct totally unnecessary to and far beyond the bounds of normal investigation and defense of a worker’s claim.”

The trial court concluded that this exception did not apply to the facts that Mendoza-Hernandez alleged. The court cited Everfield v. State Compensation Insurance Fund (1981) 115 Cal.App.3d 15 (Everfield) for the proposition that an insurer’s “mere denial of payment, even if intentional, is still within the jurisdictional purview of the workers’ compensation scheme.”

The Court of Appeal agreed with this reasoning, adding “California courts have invariably barred statutory and tort claims alleging that an insurer unreasonably avoided or delayed payment of benefits even though the insurer committed fraud and other misdeeds in the course of doing so.”

The Commission on Health and Safety and Workers’ Compensation (CHSWC), which was established in 1994, examines the health and safety and workers’ compensation systems in California and makes recommendations to improve their operation. The 324 page 2019 Annual Report is now available on the CHSWC website.

Here are some highlights of the latest Report:

The California workers’ compensation system covers an estimated 16,775,000 employees working for over 1,019,255 employers in the state. These employees and employers generated a gross domestic product of $2,968,118,000,000 ($3.0 trillion) in 2018. A total of 682,160 occupational injuries and illnesses were reported for 2018, ranging from minor medical treatment cases to catastrophic injuries and deaths. The total paid cost to employers for workers’ compensation in 2018 was an estimated $23.5 billion.

The advisory pure premium rates approved January 1, 2019, are on average 41 percent below those as of January 1, 2015. The charged rate rose on average by 21 percent from the first period of 2012 to its peak in 2015 and then decreased by 33 percent from the first period of 2015 to the first period of 2019. According to the WCIRB this decrease is largely due to the significant savings from SB 863.

Another significant accomplishment was the development and implementation of a streamlined process for California employers who wish to become self-insured to accomplish this process in a “speed-of-business” manner. In 2011, the total time required to complete the private self-insured application process and be issued a certificate of authority to self-insure was nearly nine months. In 2012, this was shortened to four to six months, with additional reductions during 2013 to less than 30 days. In 2014, OSIP successfully worked with private employers and completed this process consistently in less than 14 days.

Research on the impact of the 2012 workers’ compensation reforms on earnings losses suggests that SB 863 is likely to meet its primary objective of restoring adequate wage replacement rates, although some inequities still exist in these rates across impairments.

Operators in the underground economy create an unfair advantage over their law-abiding competitors and cost the state an estimated $8.5 billion to $10 billion in uncollected tax revenues each year. CSHWC suggest continued research into ways to identify the underground economy and ensure compliance with workers’ compensation and health and safety laws.

In recent years, criminal indictments and prosecutions have highlighted the extent of medical provider fraud in the workers’ compensation system. Estimates of the cost of this fraud to participants in the workers’ compensation system are as high as $1 billion per year.

Attorney General Maura Healey announced a $11 million settlement with a mail-order pharmacy resolving allegations that it failed to implement adequate safeguards against unlawful and dangerous dispensing, resulting in the shipment of thousands of potentially illegitimate controlled substance prescriptions across the country.

In the complaint, filed along with a proposed consent judgment in Suffolk Superior Court, the AG’s Office alleges Injured Workers Pharmacy (IWP) violated Massachusetts consumer protection law by failing to implement effective policies and procedures for reviewing prescriptions to determine whether they were legitimate and by engaging in unlawful marketing practices to drive sales, including paying law firms for patient referrals.

“Injured Workers Pharmacy created an illegal operation that put dispensing speed and volume over patient and public safety,” AG Healey said. “They dispensed thousands of prescriptions for dangerous drugs, including opioids like fentanyl, with a shocking lack of regard for whether those prescriptions were legitimate. Combatting the opioid epidemic remains a top priority of my office and we will aggressively pursue those who break our laws to profit from this crisis.”

The AG’s Office began investigating IWP, which serves thousands of workers’ compensation patients nationwide, after learning that the pharmacy dispensed a high volume of controlled substances primarily to workers who had been injured on the job.

The AG’s complaint alleges that IWP pressured pharmacists to dispense prescriptions faster and implemented programs that prioritized dispensing speed and volume over protecting its patients and preventing diversion. The complaint further alleges that IWP’s dispensing and sales practices effectively precluded it from complying with statutory mandates and meeting its responsibility to fill only legitimate prescriptions issued in the usual course of professional treatment.

According to the AG’s complaint, IWP also used unlawful tactics to drive sales, including entering into illegal agreements to buy patient referrals and  encouraging sales staff to engage in their own misconduct and ignore red flags by paying them based on dispensing volume.

As a result of these unfair dispensing and sales practices, the complaint alleges IWP filled and shipped:

— Thousands of prescriptions written by problem prescribers who were ultimately disciplined, indicted or convicted for improper opioid prescribing. IWP did not stop dispensing their prescriptions until long after their behaviors were or should have been apparent to pharmacy and sales staff.
— Thousands of dangerous, high-dose prescriptions, including for fentanyl formulations known to be especially dangerous.
— Thousands of prescriptions for dangerous drug combinations known to be indicators of drug misuse and potential overdose, including the so-called “holy trinity” – a combination of an opioid, a benzodiazepine, and a muscle relaxant.

The proposed consent judgment, which remains subject to court approval, would require IWP to undertake significant changes to its operations and business practices.