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Tag: 2020 News

WCJ Dismisses Michael Barri Liens Worth $18M

An administrative law judge has dismissed liens valued at $18 million filed by convicted medical provider Michael E. Barri, bringing to a close one of the earliest cases aimed at combatting fraud in California’s workers’ compensation system.

“The anti-fraud statutes that took effect in January 2017 were designed to prevent convicted medical providers from continuing to file lien claims and profiting from fraud,” said Division of Workers’ Compensation (DWC) Administrative Director George Parisotto. “The dismissal of millions of dollars’ worth of liens shows the strategy to fight those schemes works.”

DWC suspended Barri from participating in California’s workers’ compensation system after he pled guilty in 2016 to federal conspiracy charges and admitted receiving $206,506 in illegal kickbacks for referring dozens of patients for spinal surgeries and other medical services to Pacific Hospital of Long Beach and related entities.

The San Clemente chiropractor challenged his suspension in court and pursued collection of $18,161,362 in liens he had filed in 944 individual workers’ compensation cases through the entities he controlled.

An Appeals Court denied Barri’s writ in 2018 and upheld the anti-fraud legislation that led to his suspension, sending the matter of the liens back to the Workers’ Compensation Appeals Board (WCAB).

Administrative Law Judge Alan Skelly held several hearings in Anaheim in which the lien claimants, insurance carriers and members of the Department of Industrial Relations’ Anti-Fraud Unit were represented by counsel. Barri contested discovery related to his 944 liens, then filed a Notice of Withdrawal with Prejudice of liens of Tristar Medical Group, Jojaso Management, Inc., Michael E. Barri Chiropractic Corporation and Michael E. Barri, D.C. Judge Skelly accepted the notice and issued the order dismissing the liens.

Barri was one of many chiropractors, physicians and others who received lucrative kickbacks for each lumbar surgery and cervical fusion surgery referred to Pacific Hospital. During the last eight years of the scheme, the hospital submitted more than $580 million in fraudulent bills. Because of his referrals, Pacific Hospital billed insurance carriers approximately $3.9 million for spinal surgeries and other medical services.

Worker’s compensation reforms that went into effect in January 2017 required DWC to suspend certain medical providers from participating in the workers’ compensation system, including those who are convicted of a felony or misdemeanor involving fraud or abuse of any patient, the Medi-Cal or Medicare programs, or the workers’ compensation system itself. Labor Code section 139.21 provides for a hearing process regarding the suspension and a special lien adjudication procedure to address pending liens of those providers suspended based upon a criminal conviction.  

The Department of Industrial Relation’s (DIR’s) fraud prevention efforts are posted online, including information on lien consolidations and the Special Adjudication Unit, frequently updated lists for physicians, practitioners, and providers who have been issued notices of suspension and those who have been suspended pursuant to Labor Code §139.21(a)(1).

Updated Formulary Indicates New Exempt Anti-Depressants

The Division of Workers’ Compensation has issued an order updating the Medical Treatment Utilization Schedule Drug List effective November 1, 2020.

The update order adopts changes to the MTUS Drug List, based on the American College of Occupational and Environmental Medicine (ACOEM) Practice Guidelines, which provide new drug recommendations addressed in the Depressive Disorders Guideline. The updated MTUS Drug List v.7 and the Administrative Director Order can be accessed on the DWC MTUS drug formulary webpage.
A drug listed as “Exempt” indicates the drug may be prescribed/dispensed without seeking authorization through Prospective Review if in accordance with MTUS. Examples of depressive disorder medications that are now exempt include the following brand names.

— Elavil.
— Wellbutrin, WellbutrinXL, WellbutrinSR.
— Anafranil.
— Pristiq.
— Sinequan.
— Cymbalta.
— Lexapro.
— Luvox.
— Tofranil.
— Marplan.
— Fetzima.
— Latuda.
— Ludiomil.
— Savella.
— Pamelor.
— Zyprexa.
— Symbyax.
— Paxil.
— Pexeva.
— Seroquel.
— Risperdal.
— Emsam.
— Parnate.
— Desyrel, Oleptro.
— Trintellix.
— Geodon.

DWC welcomes comment on the formulary drug list at

New Law Allows Workers’ Compensation Remote Depositions

Some of the sweeping changes just made to the California Superior Court system will apply to depositions in worker’s compensation litigation, and will permanently allow remote depositions without consent of all parties.

The superior court system and the Appeals Board have distinct and separate rules of practice and procedures. Most of the new law will therefore not apply to worker’s compensation litigation.

But, both systems share the discovery statutes. Depositions in workers’ compensation are allowed by Labor Code section 5710 provides that “the deposition of witnesses residing within or without the state to be taken in the manner prescribed by law for like depositions in civil actions in the superior courts of this state under Title 4 (commencing with Section 2016.010) of Part 4 of the Code of Civil Procedure.”

Governor Newsom just signed Senate Bill No. 1146, a new law that makes substantial changes to litigation in superior courts. However, since some of these changes pertain to how depositions are taken in superior courts, Labor Code 5710 would make those changes applicable to discovery in worker’s compensation as well.

The new law amends Section 2025.310 of the Code of Civil Procedure, which is also specifically applicable to workers’ compensation depositions. The following are the key new provisions of the deposition process.

A deponent is not required to be physically present with the deposition officer when being sworn in at the time of the deposition.”

“Subject to Section 2025.420, any party or attorney of record may, but is not required to, be physically present at the deposition at the location of the deponent.”

In essence, these provisions eliminate the requirement that consent is required to conduct a deposition by remote methods. Although workers’ compensation depositions have been conducted remotely since the beginning of the pandemic as a result of temporary workers’ compensation rules, the remote deposition process is now a permanent part of the litigation landscape in both civil and workers’ compensation proceedings.

Senate Bill 1146 was declared an “urgency statute” and thus takes effect immediately.

Cal/OSHA Cites So. Cal. Groceries for COVID-19 Violations

Cal/OSHA has cited five grocery stores in Southern California for failing to protect their employees from COVID-19. The retailers were cited for various health and safety violations including some classified as serious, with proposed penalties ranging from $13,500 to $25,560.

The grocery stores owned and operated by Cincinnati-based Kroger Company, were cited for failing to protect workers from exposure to COVID-19 because they did not update their workplace safety plans to properly address hazards related to the virus.

The Food 4 Less in Los Angeles and Ralphs grocery stores in Studio City, Sherman Oaks and West Hollywood put their workers at risk for serious illness by allowing too many customers in the store, which prevented workers from maintaining at least 6 feet of physical distance.

The Studio City location exposed workers in the cheese department to hazards related to COVID-19 as they did not install physical barriers between employees and customers. Plexiglas or other required barriers were not installed at registers 1-8 at the West Hollywood location.

Cal/OSHA inspectors determined that both the Culver City and West Hollywood locations failed to provide effective training for their employees, including instruction on how the virus is spread, measures to avoid infection, signs and symptoms of infection, and how to safely use cleaners and disinfectants.

The Culver City and Sherman Oaks grocery stores failed to report a worker’s fatal COVID-19 illness at each location. Cal/OSHA learned of the fatality seven days after the worker’s death in Culver City, and six days after the fatality in Sherman Oaks.

“Grocery retail workers are on the front lines and face a higher risk of exposure to COVID-19,” said Cal/OSHA Chief Doug Parker. “Employers in this industry must investigate possible causes of employee illness and put in place the necessary measures to protect their staff.”

Cal/OSHA has created guidance for many industries in multiple languages including videos, daily checklists and detailed guidelines on how to protect workers from the virus. This guidance provides a roadmap for employers on their existing obligations to protect workers from COVID-19.

Cal/OSHA reminds all employers and workers that any suspected cases of COVID-19 must be promptly reported to the local public health department. California employers must also report to Cal/OSHA any serious illness, serious injury or death of an employee that occurred at work or in connection with work within eight hours of when they knew or should have known of the illness.

Gallagher Bassett “Restarting” Systems After Ransomware Attack

Arthur J. Gallagher disclosed that it was hit with a ransomware attack, prompting the world’s fourth-largest insurance broker by revenue to take its computer systems offline.

The Rolling Meadows, Illinois-based broker said in a securities filing late Monday that it is in “the process of restarting most of our business systems” after discovering the threat a few days ago. The incident affected Gallagher and Gallagher Bassett Services units.

“We promptly took all of our global systems offline as a precautionary measure, initiated response protocols, launched an investigation, engaged the services of external cybersecurity and forensics professionals, and implemented our business continuity plans to minimize disruption to our customers,” the broker said in the disclosure.

Gallagher said it is still in the early stages of assessing the incident, which it does not expect to have “a material impact on our business, operations or financial conditions.” Gallagher Bassett’s website remained offline and inaccessible amid a “system outage” as of Tuesday afternoon.

According to the report by, the attack highlights increasing risk financial firms face from hackers. Ransomware, a malicious software used to export payment by blocking a company or individual’s access to their data, is one of the most common types of cyberattacks and has grown in both size and scope in recent years.

While the frequency of new attacks have slowed by 18% in the first half of 2020, more hackers are finding success with their attacks and are making larger demands, according to a recent report by cyber insurance and security firm Coalition.

The company found that the average demand among its policyholders has doubled from 2019 through the first quarter of 2020 and increased 47% in the second quarter to more than $338,000, resulting in higher cyber losses for insurers.

Worsening the trend is the emergence of dangerous new strains of ransomware such as DoppelPaymer. The average size of ransom demands also vary sharply by malware strain.

Financial firms such as insurance carriers and brokers face a double threat, experts say. Not only do they write or sell cyber insurance, but they themselves are a popular target of hackers due to the large volume of personal information they handle.

Chubb, one of the largest carriers of cyber insurance as part of a policy package, was hit with a Maze ransomware attack in late March. Unlike other malware, Maze infects every computer in its path and not just an organization’s network, TechCrunch reported. A year earlier, Target sued Chubb for $74 million, alleging that the carrier did not properly compensate the retailer after a massive data breach in 2013.

At least 29 financial institutions worldwide including were targeted in ransomware attacks this year, according to the Carnegie Endowment for International Peace.

Nursery Worker Arraigned for Insurance Fraud

Fernando Torres Garcia, 46, self-surrendered and was arraigned at the Kern County Superior Court on nearly a dozen felony counts of insurance fraud after allegedly misrepresenting an injury in order to receive undeserved workers’ compensation insurance benefits.

On July 16, 2018, Garcia reported to his employer that he injured his lower back and hip after he slipped while working in a trench to repair a water line. Garcia was diagnosed with a lumbar strain and was placed on modified duty, to which his employer accommodated.

Garcia continued to see his doctor as he claimed he was not improving and continued to suffer from pain. Garcia then amended his original workers’ compensation claim to include his entire back, right hip, right thigh, right leg, right elbow, both knees and cumulative trauma.

An investigation by the California Department of Insurance revealed Garcia had numerous doctor visits between August 2018 and March 2019. During this time, surveillance was conducted on Garcia, and revealed he was able to lift heavy objects multiple times. However, since Garcia continuously claimed he was not improving he was referred for an orthopedic evaluation and given a rating of five percent impairment for his lumbar spine.

On June 21, 2019, Garcia underwent a Panel Qualified Medical Evaluation. After the evaluator reviewed Garcia’s medical reports, the surveillance footage, and Garcia’s physical examination and abilities, he determined Garcia did not meet the requirements for any permanent disability or ratable impairment. It was his opinion that Garcia misrepresented his complaints during his examination.

Garcia’s material misrepresentations caused deposition and surveillance expenses totaling $5,873.50.

The Kern County District Attorney’s Office is prosecuting this case. Garcia is scheduled to return to court on November 20, 2020.

New Law Launches Cal Rx – The State Generic Drug Label

California adopted a law to allow the state to develop its own line of generic drugs, a notion designed to address the rising cost of prescription medicines that is straining many government budgets across the U.S.

Earlier this year, Governor Newsom announced a first-in-the-nation plan to lower the cost of prescription drugs by creating Cal Rx – a state-sponsored generic drug label.

Newsom has now signed SB 852, a new law that advances his proposal in January to leverage California’s purchasing power to increase generic drug manufacturing as one solution to the prescription drug affordability crisis.

The new law requires the California Health and Human Services Agency (CHHSA) to enter into partnerships, in consultation with other state departments as necessary to, among other things, increase patient access to affordable drugs.

The new law requires CHHSA to enter into partnerships to produce or distribute generic prescription drugs and at least one form of insulin, provided that a viable pathway for manufacturing a more affordable form of insulin exists at a price that results in savings.

SB 852 requires CHHSA to submit a report to the Legislature on or before July 1, 2023, that, among other things, assesses the feasibility and advantages of directly manufacturing generic prescription drugs and selling generic prescription drugs at a fair price.

The law requires CHHSA to report to the Legislature on or before July 1, 2022, a description of the status of the drugs targeted for manufacture and an analysis of how CHHSA’s activities have impacted competition, access, and costs for those drugs.

The law exempts all nonpublic information and documents relating to this program from disclosure under the California Public Records Act in order to protect proprietary, confidential information regarding manufacturer or distribution costs and drug pricing, utilization, and rebates.

The state has already begun to identify potential target medications and develop a strategic plan to promote state-led generic drug purchasing and manufacturing.

California is also transitioning all Medi-Cal pharmacy services from managed care to direct state payment in 2021, strengthening California’s ability to negotiate better prices with drug manufacturers.

DWC Proposes Changes to Copy Service Fee Schedule

The Division of Workers’ Compensation (DWC) has posted proposed amendments to the Copy Service Fee Schedule to its online forum where members of the public may review and comment on the proposal. The proposed updates to the regulations include:

— An increase of the flat fee rate for copy services from $180 to $210.
— Fees will no longer be provided for records from the Workers’ Compensation Insurance Rating Bureau (WCIRB) or the Employment Development Department (EDD).
— Mandatory billing codes, including proposed new codes for sales tax, and contracted fees.
— To prevent fraud, each request for records requires a statement from the requesting party that the request was issued in good faith, is not duplicative, and that the records are necessary to the litigation of the claim.

Comments will be accepted on the forum until 5 p.m. on October 8, 2020.

TD Required if Modified Work Limited by COVID Restrictions

Salvador Corona was a warehouse worker employed by California Walls, Inc. dba Crown Industrial Operators. He injured his knees on the job in February 2020. He was placed on modified work and did return to work.

On 03/16/2020 the employer sent all employees home due to the state and local emergency orders related to COVID-19. Applicant did not work for the employer from 03/17/2020 through 05/10/2020, and did not receive any state or federal COVID-19-related benefits.

There was no dispute that the employer did not offer modified or alternate work for the period 03/17/2020 through 05/10/2020, that his condition was not yet permanent and stationary, and that he was available to work.

Applicant sought TD indemnity from Defendant due to the employer not offering modified work during the period 03/17/2020 through 05/10/2020. The employer and Defendant carrier denied those benefits due to COVID-19.

The WCJ awarded the TD benefits and a petition for reconsideration was denied in the panel decision of Corona v. California Walls, Inc. dba Crown Industrial Operators.

The employer contended that its obligation to pay temporary disability ended when applicant returned to work with modified duties and that applicant’s inability to work was caused by the COVID-19 shelter-in-place orders and not the industrial injury.

“Here, we have the unprecedented circumstance of applicant returning to work with restrictions, which the employer accommodated for approximately one month until the COVID-19 shelter-in-place orders, which placed all the employees out of work, including applicant. Applicant was left temporarily disabled with no employment for approximately two months. The issue is whether defendant owes applicant temporary disability benefits for this two-month period.”

Here, applicant’s termination from employment was not for cause, or due to his own misconduct, but was due to COVID-19 shelter-in-place orders. As a result, defendant has not met its burden to show that it is released from paying applicant temporary disability benefits during the period in question.

The fact that it was impossible for defendant to offer modified duties to applicant because of the COVID-19 orders is inconsequential.

In Dennis v. State of California (April 30, 2020) 85 Cal.Comp.Cases 389, 406 [2020 Cal. Wrk. Comp. LEXIS 19] (Appeals Board en banc), the WCAB explained that an employer’s inability to offer regular, modified, or alternative work does not release an employer from its obligation to provide a supplemental job displacement benefits voucher.

Similarly, an employer’s inability to accommodate a temporarily disabled employee’s work restrictions does not release it from its obligation to pay temporary disability benefits. “Labor Code section 3202 requires the courts to view the Workers’ Compensation Act from the standpoint of the injured worker, with the objective of securing the maximum benefits to which he or she is entitled.”

Here, applicant was temporarily disabled due to an industrial injury and there is no misconduct on the part of applicant to justify the termination of temporary disability benefits. Therefore, applicant is entitled to temporary disability benefits regardless of whether defendant is able to provide modified work.

That defendant is not able to release itself from paying temporary disability benefits because of its inability to provide modified work is inconsequential.

Hospital Self-Referral Law Violation Settlements Continue Nationwide

The recent settlement by the Department of Justice (DOJ) with Wheeling Hospital in West Virginia for $50 million is a recent example of a continuation of the practice of hospitals overpaying physicians who are able to refer patients to their hospitals.

There have been numerous other settlements over the years with Beaumont Hospital in Michigan being fined $85 million, Kalispell Regional Healthcare in Montana being fined $24 million, Broward Health in Florida being fined $70 million, and Adventist Health in Florida being fined $119 million just to name a few.

At Wheeling Hospital, two radiation oncologists and one ob/gyn were paid $1.2 million yearly, a cardiologist received $780,000 but only worked three-quarters of the year, and especially egregious, a pain doctor was paid $1.5 million yearly. Arrangements with reimbursement above and beyond the 99th percentile were the norm.

On November 15, 2019, the Department of Justice announced it had reached a settlement with Sutter Health and Sacramento Cardiovascular Surgeons Medical Group Inc. to resolve alleged violations of the Physician Self-Referral Law (PSR Law), commonly known as the Stark Law.

Sutter is a California-based health services provider; Sac Cardio is a Sacramento-based practice group of three cardiovascular surgeons. The total settlement in excess of $46 million includes $30.5 million from Sutter to resolve allegations of an improper financial relationship specific to compensation arrangements with Sac Cardio. Sac Cardio has agreed to pay $506,000 to resolve allegations of duplicative billing associated with one of these compensation arrangements.

Separately, the settlement includes another $15,117,516 from Sutter to resolve self-disclosed conduct principally concerning the PSR Law.

Hospitals know that a surgeon or proceduralist will often bring them more than $3 million in downstream revenue. A family physician will bring the hospital $2 million. Nearly half of all physicians in the country are now employed by hospitals. This is largely fed by downstream revenue. Employed physicians cost the healthcare system significantly more than non-employed physicians. About 70% of the increase in healthcare costs in the last 10 years comes from hospitals.

So why do the hospitals keep making these deals and getting into trouble? Of course when in doubt just follow the money. Hospitals continue to profit by these employed arrangements. But according to an op-ed published in MedPage Today, so do physicians.

“A hospital decides they are not making enough money so they hire physicians paying well above the 90th percentile. All the physicians have to do is refer all their patients “in-house” and are financially incentivized to hit certain benchmarks.”

The five most important Federal fraud and abuse laws that apply to physicians are the False Claims Act (FCA), the Anti-Kickback Statute (AKS), the Physician Self-Referral Law (Stark law), the Exclusion Authorities, and the Civil Monetary Penalties Law (CMPL).

Physicians are constantly being reminded not to violate the “Stark Law” and related statutes. When Pete Stark designed these laws, he was directly pointing at independent physicians who were making increased profits by self-referral to their own facilities. Being hired by a hospital that shares their profits with an employed physician is skirting that law in the most unscrupulous manner.