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Tag: 2020 News

Beverly Hills Doctor Arrested for $52M Insurance Fraud

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.”

Telemedicine in Workers’ Comp – New Normal or Fraud Opportunity?

Telemedicine has grown more popular over the past few months as physicians utilized new methods to connect with and diagnose their patients in the wake of the COVID-19 shutdowns. However, even before these changes became necessary, a report by Property Casualty 360 says that many employers and medical offices found that virtual appointments delivered another alternative to providing care for some patients.

“When an injured employee suffers a serious or complex injury, nurses can be a valuable resource to promote recovery and return to work,” says Jennifer Cogbill, vice president, GBCARE at Gallagher Bassett.

There are a wide range of medical services that can be provided remotely from kiosks in airports and pharmacies that allow individuals to check their pulse, blood pressure, temperature and other vitals to triaging care through telehealth visits. In these cases, nurses usually serve as the gatekeepers who determine what level of care is required for a patient, from a bandage to something more serious.

Dave Lupinsky, vice president of medical review services at CorVel Corporation, which provides health care management services for employers, third-party administrators, insurers and government entities, finds that care management starts by assessing which level of care is required: self-care that patients can provide to themselves with guidance from a nurse or other service provider, telecare provided remotely or care in a traditional brick and mortar location such as an emergency room or occupational clinic for more serious situations.

For most patients, the visits are conducted either over a desktop computer or some sort of mobile device (e.g., cell phone or tablet).

Despite the convenience tele-visits provide, some very real limitations must be considered. Some patients may not be technology savvy and have trouble accessing the patient portal or getting their computer to operate correctly (i.e., turning on the camera or microphone). Telemedicine also is not applicable for all injury and treatment types due to the limitations with the exam and other services needed.

As telemedicine moves from a niche service to more mainstream use, the value in terms of insurance and workers’ compensation claims will grow exponentially. James Quiggle, senior director of communications for the Coalition Against Insurance Fraud, anticipates that a new surge of tele-scams could well become America’s next large surge of medical fraud.

Workers’ comp, auto and health insurers could find themselves confronting surges of false telemedicine claims. Insurers in each line have a unique vulnerability due to the large volume of medical claims,” he asserts. “

Scams focus on exams, tests and treatments that don’t require physical contact ” often abusing telemed codes. Many scams will be familiar, only using telemed as the fraud delivery vehicle. Providers might do dozens of perfunctory, two-minute, tele-consults to see if a patient is injured and needs physical therapy. Doctors bill insurers for one-hour sessions and receive kickbacks for referring patients to the physical therapist.”

Large crime rings will profit mightily from telemedicine. Telemarketing firms can hire phone boiler rooms to tele-recruit hundreds of bogus patients. The patients are referred to colluding providers for bogus tele-consults and treatment,” he says, outlining how the fraud process will develop.

While not a panacea, telemedicine does provide another tool for medical professionals to connect with patients, particularly in a time when social distancing seems prudent. However, like every aspect of new technology, it needs to be implemented wisely.

Tort Claim Rejected for SCIF Refusal to Pay WCAB Order

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.”

California Workers’ Compensation – Where Did $16.1B Go?

The Workers’ Compensation Insurance Rating Bureau has prepared its annual report containing estimated California workers’ compensation costs for 2019. The report in general terms explains how much money came into the system in premiums, and then discusses how it was spent. The report does not include self-insured costs and expenses.

Insurer Losses, Expenses and Profits – Calendar year 2019 earned premium totaled $16.1 billion (as compared to the $17.4 billion of premium earned in 2018). Total insurer paid losses in 2019 were $8.3 billion, or 51% of calendar year earned premium. California insurers incurred $5.4 billion in expenses in 2019, or 34% of 2019 earned premium. (For comparison purposes, in 2018, total incurred expenses were 34% of earned premium).

So how was the remaining 66% of the earned premium spent?

Physician and Medical-Legal Costs – In 2019, $4.6 billion, or 55% of total loss payments, were for medical services.

Indemnity Benefits – In 2019, $3.8 billion, or 45% of total loss payments, were for indemnity benefits (including vocational rehabilitation benefits).

Vocational Rehabilitation Benefits – About $73 million in vocational rehabilitation-related benefits were paid in calendar year 2019. This was 1.9% of all indemnity payments in 2019, of which 97% was for non-transferable education vouchers. (For comparison purposes, in 2018, vocational rehabilitation benefits paid was $87 million or 2.3% of all indemnity payments, of which 97% was for non-transferable education vouchers).

In total, incurred losses and expenses in calendar year 2019 were $13.2 billion, or 82% of earned premium. Based on insurer statutory Annual Statement information, the WCIRB estimates policyholder dividends incurred in 2019 to be 0.2% of 2019 earned premium, resulting in an underwriting profit of $2.9 billion, or 18% of premium. (For 2018, the underwriting profit was 23% of earned premium, or $4.1 billion.)

Fees Paid to Applicant Attorneys – Although generally part of incurred indemnity losses rather than expenses, the amount paid in 2019 to applicant attorneys was derived from the WCIRB’s Annual Expense Call. In 2019, applicant attorneys were paid $446 million. (In 2018, applicant attorneys were paid $386 million.)

CSHWC Publishes 2019 Annual Report

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.

Researchers Alarmed by Muscle Relaxer Prescription Increase

As U.S. opioid prescriptions continue to trend downwards, skeletal muscle relaxer scripts are on the rise, according to an analysis of the CDC’s National Ambulatory Medical Care Survey (NAMCS).

Between 2005 and 2016, the number of office visits in which muscle relaxers were prescribed, most commonly for back pain and musculoskeletal conditions, doubled from 15.5 million to 30.7 million, reported Charles E. Leonard, PharmD, MSCE, of the University of Pennsylvania in Philadelphia, and colleagues.

While office visits resulting in new skeletal muscle relaxer prescriptions during this period remained relatively stable at about six million per year, visits for continued therapy tripled from 8.5 million to 24.7 million, the researchers wrote in JAMA Network Open.

The proportion of older adults receiving muscle relaxant prescriptions increased three-fold across the study period such that by 2016, adults over 65 accounted for 22.2% of visits in which a muscle relaxant was prescribed, the team added. Also, 67.2% of continued muscle relaxant visits in 2016 were completed while the patient was on concomitant opioids.

“For a number of years now, the American Geriatrics Society has warned providers of prescribing skeletal muscle relaxers for older adults, and the long-term treatment with skeletal muscle relaxers was particularly concerning to us because most of the available data really only support short-term use of these drugs,” Leonard told MedPage Today, adding that in some cases, especially among younger people, the drugs may be considered.

Nationally, opioid prescriptions decreased by about 20% between 2006 and 2017, in part due to the CDC’s 2016 guidelines on opioid prescribing. Between 2015 and 2018, close to 11% of adults reported being on at least one pain medication prescription, and 6% said they were on opioids, per CDC data.

The take-home message here is that muscle relaxers are being overprescribed and we need to be aware they are not really innocent medication,” one researcher added.

Injured Worker Mail Order Pharmacy Settles Opiod Suit for $11M

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.

Texas Supreme Court Approves Limits on Air Ambulance Costs

More than a half a million individuals are transported via air ambulance services each year, according to the Association of Air Medical Services. The majority of these transports are via helicopter in emergency situations; the remainder are fixed-wing transports for longer distances.

While fees charged by traditional medical transport services in California workers’ compensation claims are regulated under the Official Medical Fee Schedule, air ambulance providers argue that they fall under the jurisdiction of the Airline Deregulation Act (ADA) of 1978, which prevents states from enacting or enforcing laws or regulations related to the price, route or service of an air transportation carrier.

In California workers’ compensation, the WCAB issued an en banc decision in 2013 ( Luis Enriquez (deceased) v Couto Dairy and Zenith Insurance Company ) conceding the preemption of federal law over Official Medial Fee Schedule limits if the air ambulance provider could establish that they were an “air carrier” that provides air transportation within the meaning of the Airline Deregulation Act.

Yet the litigation debate over the preemption issue continues to rage in other jurisdictions. The Texas Supreme Court just ruled that preemption does not apply in Texas.

Excessive helicopter transport bills were the crux of the lawsuit in PHI Air Medical, LLC v. Texas Mutual Insurance Company, et al. A trial court rendered judgment in favor of eight plaintiff insurers, which included Texas Mutual Insurance Company and Hartford Underwriters Insurance Company, who disagreed with PHI’s per-trip charge for medically transporting injured workers.

The Texas trial court held the insurers could not be asked to pay more than 125 percent of the Medicare amount for air ambulance transport. On Jan. 31, 2018, however, the Texas Court of Appeals remanded the case, holding that any rate provisions for air ambulance transports are preempted by the ADA.

In Split June 26, 2020 Opinion, the Supreme Court of Texas Rejected Preemption Argument in Worker’s Compensation Disputes. The Court held that the Airline Deregulation Act did not preempt state law pertaining to worker’s compensation insurance benefit payments because the law does not expressly refer to air ambulance providers, and the standard for establishing the amount of reimbursement also was not preempted.

Thus the workers’ compensation industry has not seen the final word on this issue.

25 Year Veteran CHP Officer Arrested for Comp Fraud

San Gorgonio Pass CHP Commander Captain Mike Alvarez announced.that a Banning California Highway Patrol officer was arrested Wednesday on suspicion of workers compensation insurance fraud.

Kathleen Beardsley, 46, was arrested by CHP investigators without incident at the Banning Police Department and was booked into Larry D. Smith Correctional Facility on suspicion of three felony charges tied to fraud as well as a felony grand theft charge, jail records show.

Her bail was set at $10,500. A court date has not been set, according to jail records.

The arrest was the culmination of a seven-month long investigation by the CHP’s Workers Compensation Fraud Investigations Unit based at the agency’s Sacramento headquarters, according to Alvarez.

The investigation began after Beardsley filed a workers compensation insurance claim on February 14, 2019 for unspecified injuries.

In October, a tip was received by the investigations unit about possible illicit activities by Beardsley. Surveillance was used on her by investigators, and she was observed “engaging in activities inconsistent with the limitations outlined in her claim,” according to Alvarez’s announcement.

Beardsley, who has been a CHP officer for 25 years, was summoned for questioning at the Banning Police Department, then arrested.

Beardsley, a 25-year veteran of the CHP, had been assigned to the San Gorgonio Pass Area since 2016. As a result of her arrest, she has been placed on administrative leave and her peace officer powers removed, according to Alvarez.

In addition to the criminal investigation, the CHP is also conducting an internal administrative investigation, according to Alvarez, although details were not released.

DWC Proposes Increased Fees for Med-Legal Evals

The Division of Workers’ Compensation (DWC) has posted proposed amendments to the Medical-Legal Fee Schedule to its online forum where members of the public may review and comment on the proposals.

The draft regulations include:

A 25% increase in the multiplier for setting fees for evaluations.
— Standardization of the fee that can be charged for a missed appointment.
Flat fees for comprehensive, follow-up, and supplemental medical-legal evaluations.
Rates for review of medical records based upon the amount of pages reviewed.
Elimination of complexity factors from the Medical-Legal Fee Schedule.
An increase in the hourly fee for medical-legal testimony.

The implementation of a predominantly fixed fee for all procedure billing codes is anticipated to reduce frictional costs. Moving to a flat-fee-based schedule and removing complexity factors is contemplated to reduce the incidence of disputes over billing.

The fee schedule was formulated after numerous stakeholder meetings where carriers, employers, physicians, and medical management companies were amply represented. The meetings took place over the course of approximately three months.

The forum can be found on the DWC forums web page under “current forums.” Comments will be accepted on the forum until 5 p.m. on Friday, July 10, 2020.