Tag: 2020 News

The United States Attorney’s Office for the Northern District of California unsealed charges in a criminal complaint charging Rodney L. Stevenson II with wire fraud for his operation of an e-commerce website that allegedly scammed customers into paying for N95 masks that they never received.

Stevenson, 24, of Muskegon, Michigan, controlled EM General, a Michigan limited liability company created in September 2019.  EM General operated a website that purported to sell an available inventory of “Anti-Viral N95” respirator masks.  An N95 respirator mask is a particulate-filtering facepiece respirator that meets the U.S. National Institute for Occupational Safety and Health N95 standard of air filtration.  N95 masks, which cover the user’s nose and mouth, are required to filter at least 95% of airborne particles.

The complaint alleges that EM General, through its website, falsely claimed to have N95 respirator masks “in stock” and available for sale and shipment during the shortage caused by the COVID-19 pandemic.  Based on these and other representations, customers bought masks from the website, sometimes paying EM General more than $40 or more per mask.  

Stevenson is alleged to have taken several steps to fraudulently make EM General appear to be a legitimate company.  For example, Stevenson invented a fictional Chief Executive Officer, “Mike Thomas,” from whom fraudulent emails were sent, as well as several other fake officers or employees of the company.  

Stevenson also used stock photographs from the internet to create a page depicting this team of fake professional management staff.  After customers made their first purchase, the defendant offered additional masks to those customers at discounted prices.

The complaint describes how four victims paid for, but did not receive, N95-compliant masks.  Three of the four victims reside in the San Francisco Bay Area, including one hospital employee.  

Also described in the complaint are follow-up emails from EM General to customers in which false excuses about supply and shipping issues were made.  Three of the four customers in the complaint never received the promised products at all despite multiple representations that the masks had been shipped.  

The fourth customer paid over $400 on March 2, 2020, for N95 masks represented to be “in stock,” and, after raising several complaints, on March 27, 2020, received cheaply made fabric masks.  The masks, delivered in a white envelope with no return address, did not comply with the N95 standard that EM General purportedly sold.

Stevenson is charged with wire fraud, in violation of 18 U.S.C. § 1343.  A complaint merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt.

James P. Martinez suffered an admitted cumulative trauma injury to his neck, low back, knees, shoulders and hypertension, while he was employed as a correctional officer for the State of California, Department of Corrections.

The workers’ compensation administrative law judge found he sustained 79% permanent disability. This was based upon adding the disability from applicant’s hypertension to the combined rating of applicant’s orthopedic disabilities.

Defendant contests the WCJ’s rating of applicant’s permanent disability. Defendant contends that substantial medical evidence does not support adding applicant’s permanent disability, and that applicant has not rebutted the presumption favoring the use of the combined values chart (CVC) of the permanent disability rating schedule to rate multiple impairments.

The WCAB agreed, and reversed in the panel decision of Martinez v State of California Department of Corrections.

The DEU rating was a combined 66% orthopedic permanent disability and a 13% hypertension permanent disability, which added together equaled the 79% permanent disability awarded by the WCJ.

Defendant argues that the WCJ erred by instructing the DEU to use the addition method to combine applicant’s WPI ratings, rather than use the CVC, because just as the rating under the AMA Guides is presumed correct, the use of the CVC is presumed to provide the correct permanent disability rating where there are multiple disabilities.

The only reference in the record discussing the basis for the use of the additive method for rating applicant’s hypertension is in Dr. Hyman’s deposition testimony. In his testimony, Dr. Hyman stated that the reason the disability from applicant’s hypertension should be added to his orthopedic disability is due to the absence of overlap between the disabilities.

He explained that applicant’s hypertension does not impair his activities of daily living, and there is no overlap between his orthopedic and internal medicine impairments.

“Without more, this does not constitute substantial medical evidence to establish the primacy of the additive method over the use of the CVC, otherwise, the CVC would become irrelevant in any case involving injury to multiple body parts.”

As Americans delay elective surgeries and avoid doctors and hospitals during the coronavirus pandemic, a report in Reuters Health says that healthcare spending declines have more than offset the added costs of COVID-19 care, insurance executives and experts say, boosting U.S. health insurer profits.

Those gains, however, could be short term, depending on how quickly the coronavirus outbreak subsides and healthcare business begins to return to something close to normal.

UnitedHealth Group Inc, the largest U.S. health insurer, last week posted first-quarter earnings above Wall Street expectations and kept its profit forecast in place for 2020, despite an economy battered by massive layoffs and business shutdowns to slow the spread of the virus.

When Anthem Inc, Humana Inc and Cigna Corp report their first-quarter results this week, Wall Street analysts expect a similar trend. CVS Health, a pharmacy company that owns health insurer Aetna, reports in May.

“The costs from COVID-19 are going to be actually very small and more than outweighed by the deferral of elective procedures. The net impact is going to be positive for them,” said Jeff Jonas, portfolio manager with Gabelli Funds.

While extended hospital stays, particularly in intensive care units, can rack up massive bills for individuals, that pales compared to the savings from millions of Americans delaying care. Those savings also outpace the costs to insurers of waiving COVID-19 related co-pays, deductibles, tests and other care, which most insurers have agreed to waive.

Most of the country has been under stay-at-home orders, and many non-emergency care visits and elective procedures have been canceled to help hospitals manage the surge of coronavirus patients.

The largest U.S. for-profit hospital operator, HCA Healthcare Inc, said it has seen a 70% drop in outpatient surgeries so far in April compared with a year ago, while inpatient admissions declined 30%.

Federal authorities have said hospitals could resume more routine care as appropriate, as states begin to ease some social-distancing measures.

It is unclear how quickly that will happen. Much depends on how well contained the coronavirus outbreak is in a specific city or state. Hospitals will also need increased access to coronavirus testing and take additional precautions to help prevent transmission between staff and patients.

Health plans and employers who provide insurance have seen an overall decline in healthcare use of about 30% to 40% excluding COVID-19 patients, according to Tim Nimmer, the global chief actuary at Aon, a benefits company that advises large corporations and health plans.

“For each month that this goes on, we are expecting about 1.5% to 2% in annual costs to be reduced,” Nimmer said. “The number one issue is how long will this go on.”

Right now, that drop is outweighing the costs of patients with COVID-19, Nimmer said. Companies with younger, healthy employees are experiencing even less spending.

Based on claims information it has reviewed, Aon said the cost of a hospitalized patient runs from $30,000 to $80,000 while a patient who goes to the hospital and is sent home runs up claims of around $1,500 to $2,500.

Health insurers could largely benefit this year from a more gradual resumption of discretionary and elective care, analysts agreed.

The COVID-19 pandemic and resultant stay-at-home orders are significantly impacting California’s economic, health care and workers’ compensation systems.

Some COVID-19 workers’ compensation claims have already been filed. However, at this time, it is unclear what proportion of the illnesses and deaths directly resulting from the virus will ultimately be determined to be work-related.

Some states have enacted presumptions of COVID-19 claims being work-related for certain front line workers and similar proposals are under discussion in California.

On April 8, 2020, Assemblyman Tom Daly, Chair of the Assembly Insurance Committee, requested the WCIRB to provide an estimate of the potential cost impact of presumptions provided to front line workers in California. Specifically, the WCIRB was requested to provide the cost impact of a conclusive presumption for health care workers, firefighters, EMS and rescue employees, front line law enforcement officers and other essential critical infrastructure (ECI) employees.

In response and to provide insight on the potential cost impact of COVID-19 claims on the California workers’ compensation system, the WCIRB has completed an initial analysis of these costs.

The cost estimates in this report are based on WCIRB data including unit statistical reports, aggregate financial data calls and medical transaction data. We also relied upon external data from the American Community Survey1 (ACS), the Division of Workers’ Compensation (DWC) Official Medical Fee Schedule, and a number of published studies on COVID-19 incidence rates and medical treatment patterns and costs.

At times, it relied upon judgmental assumptions based on published research or feedback from workers’ compensation experts that may or may not materialize.

In general, the cost impact of COVID-19 claims will vary significantly based on the number of workers covered by a presumption, the proportion of these workers that have COVID-19 and the number of workers’ compensation claims that are filed as a result.

Given the current level of uncertainty surrounding these factors, the cost estimates in this Research Brief are presented as a range of potential impacts based on varying assumptions of the number of COVID-19 claims filed.

On this basis, the WCIRB estimates that the annual cost of COVID-19 claims on ECI workers under a conclusive presumption ranges from $2.2 billion to $33.6 billion with an approximate mid-range estimate of $11.2 billion, or 61% of the annual estimated cost of the total workers’ compensation system prior to the impact of the pandemic.

The complete analysis is available from the WCIRB

Labor and business leaders in California are furiously lobbying the governor’s office over a sweeping change the administration is said to be considering to the state workers’ compensation system for health care workers and others on the front lines of the Covid-19 pandemic.

According to Politico’s report, Gov. Gavin Newsom’s office did not provide a response Monday nor confirm that a proposal is in the works. But those familiar with the discussions, as well as letters sent to the governor in recent weeks by high-profile groups, suggest the change would create a presumption that certain “essential workers” who contract the disease were exposed on the job — and, therefore, entitled to workers’ compensation benefits.

Such a shift could cost employers between $2.2 billion and $33.6 billion per year, the Workers’ Compensation Insurance Rating Bureau of California estimated on Monday. The bureau’s mid-range estimate of $11.2 billion amounted to 61 percent of the system’s typical costs per year.

A bill amended in the state Senate last week would have a similar effect, though possibly with fewer types of workers. CA AB664 (19R) would extend to “certain state and local firefighting personnel, peace officers, certain hospital employees, and certain fire and rescue services coordinators.” Assemblymembers Jim Cooper (D-Elk Grove), a former Sacramento County Sheriff’s Department captain, and labor champion Lorena Gonzalez (D-San Diego) are its main authors.

Business leaders argue that shift could strain the system and cost employers billions of dollars in increased premiums at a time when many are laying off workers and trying to stay afloat.

“Many businesses and their owners are casualties of the necessary economic shutdown,” wrote California Chamber of Commerce President Allan Zaremberg to Newsom and his staff in a letter dated April 7. “They cannot be expected to shoulder a new employer-financed social safety net, with expensive new mandates, at precisely the moment when small businesses are shuttering, employee hours are cut, and uncertainty about the future is the new normal.”

In a statement Monday, CalChamber pointed to the new cost estimate and noted that the association had expressed concern to Newsom about “an overly broad executive order because it would create an enormous and unnecessary burden on the worker’s compensation system.”

But a prominent labor leader has argued that it is the right thing for the state to do.

“Workers on the frontlines of the COVID-19 pandemic put their lives at risk just doing their jobs,” wrote Art Pulaski, head of the California Labor Federation, in a late March letter to Newsom. “If they are infected with COVID-19, the workers’ compensation system must quickly provide medical and indemnity benefits — such workers should not have to fight denials and delays while fighting for their lives.”

Sean Walsh, who runs a consulting firm with former Gov. Pete Wilson and was a senior policy adviser to former Gov. Arnold Schwarzenegger, said he had briefings from four business groups on Monday about an executive order Newsom is contemplating that would alter the workers’ compensation system for those affected by the pandemic.

The California Farm Bureau Federation is a nonprofit organization of farmers and ranchers consisting of county Farm Bureaus from nearly every county in California, established in 1919 to work for the betterment of family farmers and ranchers in California.

“The problem is that it puts in the pockets of employers the responsibility for the costs of COVID-19 illnesses where the exposure and infection could have just as easily happened off the job as on the job,” said Bryan Little, Director of Employment Policy for California Farm Bureau Federation (CFBF).