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Tag: 2020 News

Memorial Health Services Resolves $31.5M Overbilling Dispute

Memorial Health Services, a Fountain Valley-based non-profit health care organization, has agreed to pay more than $31.5 million to resolve allegations that it overbilled Medicaid for prescription medication purchased and reimbursed under a federal drug pricing program.

The settlement agreement is the result of a voluntary disclosure made in October 2019 by Memorial Health, which under the name MemorialCare Health System operates Long Beach Memorial Medical Center, Miller Children’s and Women’s Hospital, and Orange Coast Memorial Medical Center.

After an internal audit, Memorial Health determined that its hospitals and pharmacies overbilled the United States and California, which jointly fund Medicaid – known in California as Medi-Cal – a program that helps lower-income people with their medical costs.

According to the settlement agreement, from December 2016 to October 2019, Memorial Health improperly charged higher “usual and customary” costs, rather than lower “actual acquisition costs,” as required under the 340B Drug Pricing Program. This federal program requires drug manufacturers to provide outpatient medication to eligible health care organizations at significantly reduced prices.

The overbilling allegedly resulted from Memorial Health billing for its usual costs following a federal court’s temporary stay of the implementation of the California law requiring 340B providers to bill Medi-Cal at actual acquisition cost rates. But once a court lifted the temporary ban, Memorial Health failed to implement actual acquisition cost pricing.

Memorial Health ultimately overbilled the United States and California $21,021,786 and the $31.5 million settlement represents 1.5 times the alleged overbilling, the agreement states. Memorial Health has agreed to pay the United States $12,613,071.60 and California $18,919,607.40 to resolve the allegations, bringing the total settlement amount to $31,532,679.

After making its voluntary disclosure, Memorial Health cooperated with the federal and state authorities’ investigation.

Benefit Rates Set to Increase in 2021

The Division of Workers’ Compensation announces that the 2021 minimum and maximum temporary total disability rates will increase on January 1, 2021. The minimum TTD rate will increase from $194.91 to $203.44 and the maximum TTD rate will increase from $1,299.43 to $1,356.31 per week.

Labor Code Section 4453(a) (10) requires the maximum and minimum weekly earnings upon which TTD is based be increased by an amount equal to percentage increase in the State Average Weekly Wage (SAWW) as compared to the prior year. The SAWW is defined as the average weekly wage paid to employees covered by unemployment insurance as reported by the U.S. Department of Labor for California for the 12 months ending March 31 in the year preceding the injury. In the 12 months ending March 31, 2020, the SAWW increased from $1,325 to $1,383—an increase of 4.3774 percent.

The calculation of the 2021 SAWW increase is as follows:
2021 SAWW – 2020 SAWW/2020 SAWW
$1,383-$1,325 = 58/1325 = 4.3774%

The calculation of 2021 minimum TTD rate for 2021 is as follows:
Minimum earnings for 2020 x SAWW increase x 2/3 = minimum TTD rate for 2021
292.36 x 1.043774 = $305.16 minimum TTD earnings x 2/3 =$203.44 minimum rate for 2021

The calculation of maximum TTD rate for 2021 is as follows:
Maximum earnings for 2020 x SAWW increase x 2/3 = maximum TTD rate for 2021
1949.15 x 1.043774 = $2,034.47 maximum TTD earnings x 2/3 = $1356.31 maximum rate

Under Labor Code Section 4659(c), workers with a date of injury on or after January 1, 2003 who receiving life pension (LP) or permanent total disability (PTD) benefits are also entitled to have their weekly LP or PTD rate adjusted based on the SAWW.

SAWW figures may be verified using the U.S. Department of Labor’s Unemployment Insurance Database.

1 in 5 California Comp Spine Surgeries Require Readmission

A new study from the Workers Compensation Research Institute (WCRI) quantifies the 30-day and 90-day reoperation and readmission rates for workers’ compensation patients undergoing lumbar spine surgeries, and compares these rates with those for non-workers’ compensation patients reported by other studies.

The study, Reoperation & Readmission Rates for Workers’ Compensation Patients Undergoing Lumbar Surgery, also discusses the major types of reoperations and the main reasons for readmissions, examines medical payments per claim, and describes interstate variation in the prevalence of reoperation and readmission.

The following is a sample of the study’s major findings:

Seven and eight percent of workers’ compensation patients undergoing lumbar spine surgery had a reoperation and/or readmission within 30 and 90 days after their operation, respectively. These percentages are higher than reported in the literature for non-workers’ compensation patients.
Seventeen percent of patients were readmitted within 30 days of a fusion, largely for nonoperative reasons. This readmission rate was two to seven times higher than the rate for non-workers’ compensation patients reported in other studies. This was the primary driver of the higher 30-day all-cause readmission rate for discectomy/decompression and fusion groups combined in workers’ compensation patients compared with other patients.
— There was considerable variation in the prevalence of reoperation and readmission across the study states. The percentages of lumbar spine surgery cases with reoperations and/or readmissions within two years ranged from about 1 in 10 workers’ compensation patients in North Carolina and Minnesota to more than 1 in 5 in California.

The study analyzes workers with low back pain who underwent either lumbar discectomy/decompression or lumbar fusion surgery in 18 states for injuries that arose between October 1, 2015, and September 30, 2016, and follows the postoperative experience for each case through March 31, 2018.

The 18 study states, which represent 61 percent of all workers’ compensation benefits paid nationwide, are Arkansas, California, Florida, Georgia, Illinois, Indiana, Iowa, Louisiana, Massachusetts, Michigan, Minnesota, New Jersey, North Carolina, Pennsylvania, Tennessee, Texas, Virginia, and Wisconsin.

“Post-surgery readmissions and reoperations are the primary quality indicators being used by commercial, governmental, and a limited number of workers’ compensation payors in their value-based purchasing programs,” said John Ruser, President and CEO of WCRI. “The study can help policymakers and other stakeholders shed light on the areas where quality improvement is most needed. It can also prove to be useful to patients as they consider treatment options.”

For more information about this study or to download a copy, visit www.wcrinet.org.

Owner of Janitorial Service Faces $2.5M Fraud Charges

Almirante Perez, 43, of Highland, was arraigned on multiple felony counts of insurance fraud and tax evasion after allegedly underreporting employees and wages in an attempt to reduce his businesses’ insurance premiums and payroll taxes by over $2.5 million.

Perez was the owner of Capital Janitorial Services, Cal Best Service Group Inc., Southern Pacific Janitorial Group and United Pacific Contractors Inc., from March 2013 to November 2018.

An investigation by the Department of Insurance revealed Perez failed to report employees and wages to his workers’ compensation insurance carrier and to the Employment Development Department (EDD). The investigation discovered $1,982,597 in underreported premium fraud and $609,430 in payroll taxes owed to the EDD.

It is further alleged, as to some of the counts, that the offenses alleged are related felonies, a material element of which is fraud and embezzlement, which involved a pattern of related felony conduct, and the pattern of related felony conduct involved the taking of, and resulted in the loss by Republic Underwriters Insurance Company, NorGuard Insurance Company, dba Atlas General Insurance Company, and Ohio Security Insurance Company of more than five hundred thousand dollars ($500,000).

These allegations subject Almirante Perez to the additional punishment provided for in Penal Code sections 186.11(a)(2), which is the aggravated white collar crime enhancement. White collar crime generally refers to non-violent crime, often involving professionals, for financial gain. White collar crime may involve small amounts of money or millions of dollars. The penalties for white collar crimes in California depend, in part, on the extent of the alleged crime.

The Insurance Commissioner said that “Legitimate businesses and California consumers pay the price when business owners cheat the system by illegally underreporting employees and wages.”

Perez was arraigned on October 22, 2020, at San Bernardino County Superior Court and pleaded not guilty to all charges. The San Bernardino County District Attorney’s Office is prosecuting this case.

DWC Sets Zoom Hearing on Changes to Med-Legal Fees

The Division of Workers’ Compensation has issued a notice of public hearing for the amendment of the Medical-Legal Fee Schedule, which can be found at California Code of Regulations, title 8, sections 9793-9795.

The public hearing will be held via Zoom on Monday, December 14, 2020 at 10 a.m. Options for participation are at the bottom of this notice.

The proposed amendments to the medical-legal fee schedule include, but are not limited to, the following:

— A 25% increase in the multiplier used 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.
A single rate for review of medical records based upon the amount of pages reviewed.
— A meet and confer requirement for records sent to the physician.
Elimination of complexity factors from the Medical-Legal Fee Schedule.
An increased modifier for reports dealing with psychiatric issues.
— 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 multiple stakeholder meetings where carriers, employers, physicians, and medical management companies were able to provide input. In addition, the proposed regulations were revised after review of the results of a 15-day comment period from a prior forum posting of the proposed regulations. The notice and text of regulations can be found at the proposed regulations page.

The proposed amendment to revise the Medical-Legal Fee Schedule is exempt from the rulemaking provisions of the Administrative Procedure Act. However, DWC is required under Labor Code sections 5307.3 and 5307.4 to have a 30-day public comment period, hold a public hearing, respond to all the comments received during the public comment period and publish the order adopting the new regulations online.

Members of the public may attend the public meeting as follows:

— Computer: Join from PC, Mac, Linux, iOS or Android: https://dir-ca-gov.zoom.us/j/92474087436
— Or Telephone Dial options: +1 253 215 8782 +1 301 715 8592 +1 312 626 6799 +1 346 248 7799 +1 669 900 6833 +1 929 205 6099 USA 1 (866) 434-5269 (US Toll Free) – Conference code: 956474
— Find local AT&T Numbers: https://www.teleconference.att.com/servlet/glbAccess?process=1&accessNumber=2532158782&accessCode=956474

Members of the public may review and comment on the proposed regulations no later than December 15, 2020.

Technical Training School Owner Sentenced for $30M Fraud

Nimesh Shah, owner of Blue Star Learning, a technical training school in San Diego, was sentenced to 45 months in custody as a result of a multi-year scheme that defrauded the Department of Veterans Affairs out of almost $30 million in education benefits.

Shah was ordered to forfeit about $3 million and pay the VA more than $29 million in restitution. Shah’s wife Nidhi Shah, who was the vice president and director of education at the school, was sentenced to two years of probation as a result of lying to investigators in the course of the investigation into the school.

Shah took extraordinary efforts to deceive regulators from the Department of Veterans Affairs to ensure the school continued to receive VA funds.

Shah provided the VA with false documents, invented fake students and created fake student files. He provided spreadsheets with false employment information and fraudulent contact information for purported graduates of the school and their made up employers.

Eligible schools must be accredited yearly and as part of the process must show that graduates are successfully finding work in their field. To comply, Shah created fictional graduates and hired people overseas to pose as satisfied alumni with fake emails and phone numbers.

He purchased cellular telephones so that he and his employees could field VA regulator calls to purported employers of school graduates, and hired individuals overseas to pretend to be satisfied Blue Star Learning students in response to VA regulator emails.

In reality, the vast majority of actual graduates of the program were working in jobs not related to the training, prosecutors said.

As laid out in court records, Shah’s scheme appears to be one of the largest Post-9/11 G.I. Bill fraud cases that has been prosecuted around the country.

As a result of Shah’s fraud, the VA issued over $11 million in tuition payments to Blue Star Learning, and over $18 million in housing allowances and stipends. In total, as a result of Shah’s fraud, the VA lost $29,350,999.

SCIF Claims Adjuster and Chiropractor Face Fraud Charges

The Los Angeles County District Attorney’s Office announced that a chiropractor and a claims adjuster have been charged with conspiring to process false insurance claims for payment amounting to more than $1.6 million.

65 year old Agop Sarafian, the claims adjuster of La Crescenta, and 65 year old Shahe Kevork Topjian, the chiropractor of Granada Hills, each face one felony count of insurance fraud in case BA491001. Their arraignment will be scheduled at Department 30 of the Foltz Criminal Justice Center.

HIs office was located at 22030 Clarendon Street, Suite 111, in Woodland Hills. His NPI number is 1477817898 and was assigned on June 2012. The practitioner’s primary taxonomy code is 111N00000X with California license number 21857.

Head Deputy Marc Beaart of the Healthcare Fraud Division said that the alleged insurance fraud occurred between June 8, 2007 and November 25, 2019. In November 2019, State Compensation Insurance Fund where Sarafian worked began an internal investigation before the California Department of Insurance and the Los Angeles County District Attorney’s Office became involved.

The pair is accused of defrauding State Fund by setting up fake workers’ compensation lien settlements to receive undeserved insurance payouts.

If convicted as charged, the defendants each face a maximum sentence of five years in county jail.

The case remains under investigation by the California Department of Insurance, Fraud Division.

National Battle Heats Up Over Future of Gig Economy

On September 22, 2020, the U.S. Department of Labor announced a proposed rule addressing how to determine whether a worker is an employee under the Fair Labor Standards Act (FLSA) or an independent contractor.

In this rulemaking, the Department proposes to:

Adopt an “economic reality” test to determine a worker’s status as an FLSA employee or an independent contractor. The test considers whether a worker is in business for themselves (independent contractor) or is economically dependent on a putative employer for work (employee);
Identify and explain two “core factors,” specifically: the nature and degree of the worker’s control over the work; and the worker’s opportunity for profit or loss based on initiative and/or investment. These factors help determine if a worker is economically dependent on someone else’s business or is in business for themselves;
— Identify three other factors that may serve as additional guideposts in the analysis including: the amount of skill required for the work; the degree of permanence of the working relationship between the worker and the potential employer; and whether the work is part of an integrated unit of production; an Advise that the actual practice is more relevant than what may be contractually or theoretically possible in determining whether a worker is an employee or an independent contractor.

This proposed rule has triggered a heated battle over the requirements for being an independent contractor.

Weighing in on the battle is the California Attorney General as well as what he says is ” a coalition of 24 attorneys general – as well as local authorities in Chicago, New York City, Philadelphia, and Pittsburgh” who oppose the proposed rule. The coalition joined in writing a comment letter that opposed the DOL position on the rule.

They say that the “proposal upends the test currently used under the federal Fair Labor Standards Act (FLSA) that determines whether workers are entitled to critical employee protections such as paid sick leave, overtime, and unemployment insurance.”

In the comment letter, the coalition urges the Trump Administration to withdraw what they call “the unlawful proposal.”

WCAB Reinstates 5 Rules in 2 New En Banc Decisions

The Workers’ Compensation Appeals Board issued two En Banc decisions reinstating a few of the Rules of Practice and Procedure that had been suspended earlier this year as a result of limitations caused by the COVID-19 pandemic.

The first case was Workers’ Compensation Appeals Board State of California In Re: Covid-19 State Of Emergency En Banc – No. 5 – Case No. Misc. No. 264.

The relevant section of the Opinion provided that “The Appeals Board hereby rescinds its suspension of WCAB Rules 10755, 10756 and 10888 effective as of the date of this decision. Suspension of the other Rules as outlined in the March 18, 2020 In Re: COVID-19 State of Emergency En Banc (Misc. No. 260) remains in effect until further notice.”

These three rules pertain to sanctions available to the WCJ for failure to appear and scheduled hearings. The rules that are now renstated can be reviewed using the links below.

§ 10755. Failure to Appear at Mandatory Settlement Conference in Case in Chief.
§ 10756. Failure to Appear at Trial in Case in Chief.
§ 10888. Dismissal of Lien Claims.

The second case was Workers’ Compensation Appeals Board State of California In Re: Covid-19 State Of Emergency En Banc – No. 6 – Case No. Misc. No. 265.

The relevant section of the Opinion provided that “The Appeals Board hereby rescinds its suspension of WCAB Rules 10620 and 10670(b)(3) as of December 1, 2020. These Rules will become effective again with respect to all workers’ compensation matters on December 1, 2020. Therefore, WCAB Rules 10620 and 10670(b)(3) apply to all trials on or after December 1, 2020.”

These two rules pertain to requirements for filing and service is proposed exhibits for trial. The rules that will be reinstated on December 1 can be reviewed using the links below.

§ 10620. Filing Proposed Exhibits.
§ 10670. Documentary Evidence.

Other than these five rules, all other Emergency Orders of prior En Banc decisions remain in effect.

DWC Adds 11 New Telehealth Codes Into OMFS

The Centers for Medicare & Medicaid Services added 11 codes to the list of telehealth services payable under the Medicare Physician Fee Schedule (MPFS). Coverage which are retroactive to March 1, 2020, and is effective for the duration of the public health emergency (PHE) for COVID-19.

Alex Azar has once again renewed the public health emergency (PHE) for the coronavirus pandemic (COVID-19). Set to expire Oct. 23, the PHE is now set to expire Jan. 21, 2021 – one year after declaring a PHE for COVID-19 in the United States.

As a result, the Division of Workers’ Compensation (DWC) has posted an order dated October 20, 2020 adjusting the Physician and Non-Physician Practitioner Services section of the Official Medical Fee Schedule (OMFS) to conform to additional Medicare fee schedule changes pursuant to Labor Code section 5307.1.

DWC has adopted the updated telehealth list which includes 11 new codes which are effective for services rendered on or after October 14, 2020.

The order adopting the updated Physician and Non-Physician Practitioner fee schedule can be found on the DWC fee schedule web page.

The following are the new telehealth codes added by this order:

— 93797 Physician or other qualified health care professional services for outpatient cardiac rehabilitation; without continuous ECG monitoring (per session)
— 93798 with continuous ECG monitoring (per session)
— 93750 Interrogation of ventricular assist device (VAD), in person, with physician or other qualified health care professional analysis of device parameters (eg, drivelines, alarms, power surges), review of device function (eg, flow and volume status, septum status, recovery), with programming, if performed, and report
— 95970 Electronic analysis of implanted neurostimulator pulse generator/transmitter (eg, contact group[s], interleaving, amplitude, pulse width, frequency [Hz], on/off cycling, burst, magnet mode, dose lockout, patient selectable parameters, responsive neurostimulation, detection algorithms, closed loop parameters, and passive parameters) by physician or other qualified health care professional; with brain, cranial nerve, spinal cord, peripheral nerve, or sacral nerve, neurostimulator pulse generator/transmitter, without programming
— 95971 with simple spinal cord or peripheral nerve (eg, sacral nerve) neurostimulator pulse generator/transmitter programming by physician or other qualified health care professional
— 95972 with complex spinal cord or peripheral nerve (eg, sacral nerve) neurostimulator pulse generator/transmitter programming by physician or other qualified health care professional
— 95983 with brain neurostimulator pulse generator/transmitter programming, first 15 minutes face-to-face time with physician or other qualified health care professional
— 95984 with brain neurostimulator pulse generator/transmitter programming, each additional 15 minutes face-to-face time with physician or other qualified health care professional (List separately in addition to code for primary procedure)
— G0422 Intensive cardiac rehabilitation; with or without continuous ECG monitoring with exercise, per session
— G0423 with or without continuous ECG monitoring; without exercise, per session
— G0424 Pulmonary rehabilitation, including exercise (includes monitoring), one hour, per session, up to two sessions per day